US House Debates Drilling as BP Begins Top Kill

WASHINGTON (Dow Jones Newswires), May 26, 2010

U.S. House lawmakers pressured the Interior Department from all sides Wednesday over a Gulf of Mexico oil spill, as the Obama administration maintained that tighter regulation would allow offshore energy development to continue.

The lobbying, in a House Natural Resources Committee hearing, came as BP prepared to pour heavy drilling fluids into a damaged well on the sea floor in an attempt to plug a leak. Interior Secretary Ken Salazar defended the administration's handling of the oil spill before departing the hearing in order to watch the "top kill," which began at about 2 p.m. EDT. Previous efforts to shut off the leak have been unsuccessful.

The debate reflected the political forces at work as the Interior Department determines the direction of U.S. energy policy. The department is set to provide U.S. President Barack Obama on Thursday a report on offshore-drilling safety that will form the basis for decisions for moving beyond a current moratorium on new offshore-drilling permits.

"There are significant enhancements that can be made with respect to the safety of Outercontinental Shelf oil and gas development, and I think that is the way for us to go," Salazar told the panel in a preview of the report's broad themes.

Moderates within the Democratic party said the answer was more drilling safeguards, not shutting off offshore production. Environmentally minded Democrats said problems controlling the leak show that offshore drilling should be curbed.

"This government has got to claw back any of these leases that have been let since you've come to office," said Rep. George Miller (D, Calif.), referring to the Obama administration. "These assurances about whether or not we're going to have an accident--you can't go to the bank on them."

Signs emerged that the Obama administration might change its thinking on Shell plans to drill exploratory wells in the Beaufort and Chukchi seas in Alaskan coastal waters this summer. Shell has said that its exploratory wells will involve drilling in about 150 feet of water, not the 5,000-foot depths where oil is gushing out of the damaged BP well.

Shell's plans "are being examined," Salazar said. "Adjustments will be made in the days or weeks ahead that we'll address after the hearing."

According to David Hayes, the No. 2 person at Interior, Shell has yet to submit applications for permits to drill, the last step in the regulatory process. One problem for Shell is that Jane Lubchenco, the head of the National Oceanic and Atmospheric Administration, said in prepared testimony that no one knows how oil spills would affect Arctic waters and shores.

"We currently lack the information to determine how oil will behave in icy environments or when it sinks below the surface," she said. "We also lack a basic understanding of the current environmental conditions, which is important for conducting injury assessments and developing restoration strategies."

Rep. Dan Boren (D., Okla.) said that a current moratorium on permits to drill new wells is harming companies that operate in shallow waters. The Interior Department has said that it put new drilling permits on hold at least until the completion of the safety review.

"There could be literally thousands of people laid off if the moratorium continues," Boren said.

If the "top kill" doesn't succeed, a backup plan is under discussion, Hayes told the panel.

Rep. Ed Markey (D., Mass.) said Wednesday that new internal BP documents show that the oil company was not forthright about the extent of the spill in the week after it began.

"BP has not been entirely candid and open with the American people about this disaster," Markey said.

The document, provided Tuesday and dated April 27, showed that as much as 14,266 barrels of oil a day could be leaking, Markey said at the hearing. The company's best guess was a leak of 5,758 barrels, while its lowest estimate was a leak of 1,063 barrels a day, Markey said.

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


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