Today's Trends: Permitting in The GOM

We are starting to see permitting behavior by operators change in reaction to the newly implemented rules governing drilling offshore and the procedural changes within the BOEM itself. From a sheer numbers standpoint, the government is approving fewer permits and taking longer to do so.

Prior to the oil spill, the MMS (now the BOEM) was approving on average 37 permits monthly with an average approval time of roughly six days. Over the last four months permitting approvals by the BOEM have dropped on average to just 12 per month while the average approval time has increased to nearly 18 days.

Based on recent patterns, it appears that operators are slowing their pace of applications for new approvals. Specifically, the average number of APDs submitted was nearly 36 per month prior to the oil spill and the government's response. Now operators are requesting permits at a rate of eleven per month on average. August will likely end up with fewer requests than the recent average considering that just four permits have been submitted so far. Furthermore, approximately 71% of all requests were approved within the month requested prior to the changes. Since May the number of approvals granted within the same month requested is less than half of all permits filed.

Besides backing off in an attempt to give the agency a little breathing room to implement new rules and the timing necessary to interpret and implement the new rules; the slowing by operators represents a shift in focus. Industry commentary suggests that operators are less focused on building an inventory of drilling projects and instead are pouring more resources into ensuring that the jobs nearest to commencement are approved to proceed as scheduled. In a planning environment that more resembles a "just-in-time" system, drillers may find it more difficult to pin-point demand and the number of rigs bidding on the spot market for short-term work will likely increase.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Justin Foster | Sep. 6, 2010
Stephen: I like your thoughts. They run on. Vivian: Good point. Who would ever expect expediency from the people who brought Amtrak to the post office?

Bud Wilson | Sep. 3, 2010
I think the government should leave us alone and let the gulf coast do what we know how to do. Drill baby Drill

Vivian Bourgeois | Sep. 1, 2010
What do we expect from this US Government. When have we seen anything happen quickly when the government is involved. The oil industry will do what is necessary to make it through these issues. (Government Issues) We are not the auto or housing industry. The oil industry made it through the 70s and 80s we can make it through this government.

stephen Hewitt | Aug. 31, 2010
If the US moves towards a regulated offshore environment inline with the North Sea /Norway/Australian model {safety case} then the spot market should actually drop away as operators & contractors will be required to have binding approvals in place & with the time constraints associated with the development and approvals process this by nature would have a direct impact on the ability of a operator to pick up a MODU and start operating in the same historical time frames that they have are accustomed to more emphasis would I expect be placed on advanced option sharing with a core balance of rigs types covering the majority of the work and with a rationalization of longer term day rates to follow as has been experienced in regulated waters outside of the US.

Herman | Aug. 31, 2010
I understand the new rules and regulations that are in place,will may a change in the way drilling operations are run;but they will see more jobs lost with the permitting process and the economy will continue to fall apart.So I hope they can pay all the unemployment they are about to set up for them selves.

guy yates | Aug. 31, 2010
i feel like the time it takes to get a apd approved has put a lot of people out of work. shallow water operations was not what caused the BP incident. this has really hurt our economy. deep water drilling should of never shut down, only the parties involved. kind of like one bad apple ruins it for all companies. we need to get all of our rigs working again today! to many people are hurting because of our government in more ways than one!


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