Obama Administration Will Issue 'Handful' of Drilling Permits

WASHINGTON (Dow Jones Newswires), March 10, 2011

The Obama administration will issue a "handful" of deep-water oil drilling permits the near future, a cabinet official said Wednesday.

Interior Secretary Ken Salazar said the permits would be coming as he faced more questions from U.S. lawmakers about pending applications to drill in the Gulf of Mexico.

"We have in hand in a number of other permits that we expect to issue very soon in the deep water," Salazar said at a hearing of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies. "These first permits hopefully will become a template allowing other deep-water permits to be issued."

Salazar's comments came as the Obama administration appeals a ruling from a federal judge who has ordered it to act on pending permits.

The administration has said it will comply with the judge's order to act on five pending applications by the end of next week, but has indicated the proposals are incomplete and that it could be forced to reject the permits if the judge does not give it more time.

The administration is also disputing the court's authority to make such orders. The appeal will target "what I consider to be an overreach into administrative authority," Salazar said.

A federal judge made the order on Feb. 17, ruling in favor of London-based Ensco, which had sued the Interior Department. Ensco's lawsuit centers on five permit applications in which the company holds a stake and which have been pending for as long as nine months. Ruling for Ensco, Judge Martin Feldman of U.S. District Court in the Eastern District of Louisiana said Mr. Salazar's agency is required to act in an "expeditious manner."

Lawmakers again pressed Salazar to move quickly on the permits Wednesday. Sen. Mary Landrieu (D., La.) said Salazar still needed to "press forward on the accelerator" even though one deep-water permit was issued last week, the first since the oil spill that began in April 2010. Landrieu said she supported Salazar's request for increased funding for federal regulation of offshore drilling.

"I am interested in providing additional resources to you," Landrieu told Salazar Wednesday.

Salazar said oil production in the Gulf of Mexico would not drop significantly as a result of the administration's delay in issuing permits, which it says was necessary to comply with new safety standards.

"You may see a blip," Salazar said, referring to drops in future oil production in the Gulf. But he said any drop would be "modest."

Separately, Landrieu and Sen. Kay Bailey Hutchinson (R., Texas) introduced a bill Wednesday that would extend drilling leases in the Gulf of Mexico for one year. Landrieu said in a statement that companies who hold leases deserved the extra time to drill as "a matter of fairness" after the administration temporarily halted their operations in the Gulf last year.

Copyright (c) 2011 Dow Jones & Company, Inc.


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