US to Toughen Drilling Rules

Deepwater Horizon Gulf of Mexico Oil Spill

WASHINGTON (Dow Jones Newswires), May 26, 2010

President Barack Obama, fighting to stay ahead of the political storm over the Gulf oil spill, is expected to announce on Thursday that the government will impose tougher safety requirements and a more rigorous inspections on offshore drilling operations.

The steps come at what could be a turning point for Mr. Obama. His administration faces growing criticism that it has done too little, too late in the face of an environmental catastrophe that threatens some of the nation's richest fisheries, popular tourist beaches and, potentially, thousands of jobs in the offshore oil industry.

Mr. Obama is scheduled to fly to Louisiana Friday for his second visit in a month, the latest step in the administration's intensified efforts to show a vigorous response to the disaster. But the success of the White House effort to prevent political damage depends to a great degree on events it cannot control. Chief among these is whether BP's latest effort to stop the flow -- a method of injecting drilling mud and cement known as "top kill" -- will work.

BP has said it will attempt the operation today. Company officials have cautioned the maneuver has never been done in such deep water. The leaking well is a mile below the surface.

If the top kill fails, BP could try again to lower an oil-containing dome over the spewing well, although an earlier effort to use the same tactic failed. Government and BP officials fear the gusher will flow until August, when a relief well is completed to help plug the leak.

The president plans a speech Thursday, after he receives a Department of Interior report on what led to the April 20 explosion aboard the Deepwater Horizon drilling rig, which touched off the oil flow. Mr. Obama is expected to detail changes to offshore drilling permits.

Administration officials say those changes will include new permitting procedures to ensure rig safety. Additional inspections of the rigs will be required, in part to verify that safety features and environmental precautions accepted during the permitting process were in place. Those regulatory changes are detailed in a 30-day review that was ordered by the president last month and due on his desk on Thursday. Interior Secretary Ken Salazar is expected to reveal many of the review's recommendations during congressional testimony on Wednesday.

If the oil is still flowing Thursday, Mr. Obama will also address what more can be done.

White House energy-and-environment czar Carol Browner said Tuesday that a device known as a blow-out preventer has been moved to the ocean floor. BP plans to try inserting it on top of a blow-out preventer that failed to close down the well after the explosion that sank the Deepwater Horizon, killing 11 people.

Ms. Browner said the administration was looking at options short of waiting for relief wells to be drilled.

"This is probably going to be the worst spill we've ever seen, and possibly the worst environmental disaster this country has ever seen," Ms. Browner said.

Mr. Obama's stepped up response comes as political heat is rising. Some critics said the federal government had been too dependent on BP for solutions. Others said the government's response to the challenge of containing the spilled oil has been sluggish and poorly coordinated.

The Republican National Committee and National Republican Senatorial Committee criticized Mr. Obama for flying Tuesday to San Francisco to raise money for Sen. Barbara Boxer (D, Calif.) while the oil is still flowing. Democratic Sen. Bill Nelson, a fierce oil-drilling opponent from Florida, called on the president to put the military in charge of the cleanup.

"This administration likes to say that it will 'keep the boot on the throat of BP.' Well, it's time to use the other boot to actually stop the spill," Sen. John Barrasso (R, Wyo.) said at a Senate hearing on the spill Tuesday.

Dan Weiss, an energy specialist at the Center for American Progress, a liberal think tank with close White House ties, said he had talked with White House officials about pressing BP to set up an escrow account to ensure timely payments on environmental and economic damages. He suggested $5 billion, roughly equal to BP's first-quarter profits. The administration is also eyeing studies to set economic, environmental and health baselines in the Gulf region quickly, so the damage can be more accurately measured if and when the impacts are felt.

Until this week, criticism of the administration response had been relatively restrained in Washington. Republicans allied with the oil industry didn't want to align with Democratic complaints laying the blame at BP, and by extension, with the push for more off-shore drilling. Democrats have not wanted to criticize the president.

The most pointed criticism of the federal response has come from Louisiana's Republican Gov. Bobby Jindal and other officials in his state, so far the hardest hit by the spill.

A key problem is a lack of oil-blocking booms to lay along the coast to keep oil offshore. Mr. Jindal said Monday that state officials on May 2 and May 3 called for more than 8 million feet of boom. As of May 24, Mr. Jindal said, the state had received just over 815,000 feet of boom.

Even when booms were available, the government was criticized for not having the material positioned in the right spots on the coast and not having it installed quickly enough.

Late last week, for instance, in Terrebonne Parish, west of the Mississippi River along the coast, booms sat waiting to be installed for more than a day. Local leaders were incensed, and lashed out at federal officials and BP in community meetings.

Edwin Stanton, the Coast Guard official who is in charge of the New Orleans area and is one of the senior Coast Guard officials fighting the spill, told a community gathering in Houma, La., on Saturday that he had had "a heated moment" the day before, when he had learned "that some of the equipment on the beach hadn't been deployed as I directed it to be deployed" in Terrebonne Parish.

"Believe me, I fixed it," he said.

Louisiana officials continue to feud with administration regulators over a state proposal to build up barrier islands between the coast's marshes and the gulf.

Federal officials have so far refused to permit the work, fearing that it would create unintended long-term environmental damage, such as killing wildlife that lives in the area.

Copyright (c) 2010 Dow Jones & Company, Inc.

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