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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