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Interior Takes First Critical Step in Deepwater GOM

While most of the agency's activities have focused on resuming pre-existing oil and gas drilling activities that were halted by the Deepwater Horizon rig tragedy, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) on Monday approved the first new deepwater exploration plan -- for Shell Offshore Inc. -- since the rig explosion and resulting oil spill.

Approval of the exploration plan is the first step. Shell still must apply for drilling permits. To get those it will have to demonstrate that it could contain a deepwater well blowout.

It also will have to pass an environmental assessment for the three exploratory wells it plans to drill in 2,950 feet of water in the Augur Field about 130 miles off the Louisiana coast in the Gulf of Mexico (GOM). Its detailed exploration plan explains what drill ships it will use and how it will meet safety and environmental standards.

BOEM Director Michael Bromwich said Shell's plan should provide a template for other companies.

"Shell's submission has satisfied the heightened environmental standards that we are now applying, and I am confident that other operators can satisfy the same standards," Bromwich said. Currently there are 13 similar exploration plans pending, and the agency expects to see many more filed.

The Interior Department action brought praise from the National Ocean Industries Association (NOIA). "This decision is a huge first step in the process which we hope will successfully lead to new operations and a rapid return to work for the thousands of people employed by our member companies," said Randall Luthi, NOIA president.

Interior's BOEM on Friday approved a third additional deepwater drilling permit that complies with all of the new safety standards, including the need to contain blowouts such as the one aboard the Deepwater Horizon rig off the southern coast of Louisiana last April (see Daily GPI, April 22, 2010).

The revised permit allows ATP Oil & Gas Corp. to drill a new well for the company's Well #4 in Mississippi Canyon Block 941, located approximately 90 miles south of Venice, LA. Initially drilling on ATP's Well #4 began in August 2008 in 4,000 feet of water. Drilling was suspended in July 2009, and a rig was on location April 2010 to prepare for installation of a production facility when activities were suspended due to the deepwater GOM moratorium that followed the Deepwater Horizon blowout.

Prior to issuing the ATP deepwater drilling permit Friday, BOEM had awarded only two other permits to drill in the deepwater GOM -- to Noble Energy and Australia-based BHP Billiton -- since it lifted the moratorium last October, and awarded 38 permits to drill in shallow waters of the Gulf (see Daily GPI, March 1). Because of the sluggish pace of the permitting, Republican lawmakers, state regulators and producers contend that -- despite the federal government's lifting of the official ban on deepwater drilling in the GOM last October -- a de facto moratorium remains in place.

Oil and gas drilling services companies recently told attendees at CERAWeek in Houston earlier this month that while the effects from the months-long de facto moratorium on GOM drilling are already being felt, the shockwaves from the U.S. government action are likely to reverberate for many years to come, even after the permitting flowrate gets back up to speed.

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