Interior Dept. Defends Drilling Permit Process

WASHINGTON (Dow Jones Newswires), Sep. 13, 2010

A top official at the U.S. Interior Department is defending the speed at which the department issues new permits for shallow-water drilling.

The official is addressing shallow-water permits after weeks of intense criticism from oil and gas companies, which say the Interior Department has started to drag its heels on application approvals.

The companies say the length of the department's review process represents a de facto moratorium on shallow-water drilling, even though the administration's real moratorium applies only to deep-water drilling activity.

In a statement Monday, however, the director of the influential Bureau of Ocean Energy Management, Regulation and Enforcement said newly adopted safety requirements have lengthened the application review process.

"We will not approve applications until and unless they fully comply with the new requirements," said the director, Michael Bromwich. "That will not make everyone happy, but it is the right way to proceed."

Bromwich pointed to two sets of requirements that the Interior Department adopted following the Deepwater Horizon oil spill, which require oil and gas companies to submit a raft of technical and environmental information when applying for permits.

In the weeks since those requirements were issued, the Interior Department says it has received 13 drilling applications and has approved five of them.

"The central fact is that it has taken time to submit and verify the additional required information," Bromwich said.

Bromwich released his statement after meeting with Louisiana Lt. Governor Scott Angelle and representatives of the shallow-water drilling agency.

The speed at which the department has granted new shallow-water permits has become a sensitive topic for oil and gas companies. They assert that 44 rigs in the Gulf of Mexico, or more than 75% of the rigs in that area, will go idle by the end of the month if the department does not speed up its approval process, according to the Shallow Water Energy Security Coalition's web site.

Coalition Executive Director Jim Noe urged the Interior Department to develop a tiered review process that takes into account the safety record of shallow-water drillers.

The bureau of ocean energy "must recognize that it cannot continue to shove a square peg into a round hole by treating all offshore drilling operations the same," Noe said.

Companies operating in shallow water include Apache, Rowan and Hercules Offshore.

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


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