A bipartisan group of senators led by Kay Bailey Hutchison (R-TX) and Mary Landrieu (D-LA) has called on the Interior Department to expedite consideration of shallow-watering drilling applications and to provide adequate guidance to those companies seeking new permits.

Hutchison and Landrieu were joined by Sens. Roger Wicker (R-MS), Thad Cochran (R-MS), David Vitter (R-LA), John Cornyn (R-TX), Jeff Sessions (R-AL), Lisa Murkowski (R-AK), Mark Begich (D-AK) and Richard Shelby (R-AL) in introducing a Senate resolution urging swift review of applications. The lawmakers also sent Interior Secretary Ken Salazar a letter asking that guidance be given to the shallow-water industry as to how new requirements can be satisfied so the agency can resume and expedite approval of permits.

Even though the Obama administration says the current moratorium in the Gulf of Mexico does not extend to shallow-water drilling (water depths of 500 feet or less), only one new permit — to Apache Corp. — for drilling in shallow water has been approved in the past 10 weeks, according to the senators (see related story).

That’s because Interior’s new safety and environmental requirements have not been clearly outlined to shallow-water operators, they said. As a result, more than 35% of available shallow-water drilling rigs in the Gulf are idle and awaiting application approval. If shallow-water permits continued to be held up, the senators estimated that nearly 75% of the shallow-water fleet will be without work by the end of the summer.

In June Interior issued Notice to Lessees (NTL) 05 and 06 imposing new safety and environment requirements that had to be satisfied in order for lessees to receive new shallow-water drilling permits (see NGI, June 14). Interior “has provided some assistance to applicants to how to satisfy NTL 05; however, [Interior] has not provided adequate guidance and information for shallow-water operators to comply with NTL 06, resulting in only one shallow-water permit being issue,” the senators wrote in their letter to Salazar Thursday.

“Shallow-water operators must abide by all safety and environment regulations, but without clear guidance on how to meet those standards, they are being forced to shut down operations or are facing application delays. These bureaucratic delays are becoming a de facto moratorium on shallow-water drilling,” said Hutchison.

“Although shallow water was excluded in Secretary Salazar’s drilling suspension, the department bureaucrats clearly are dragging their feet on processing safe shallow-water leases,” said Wicker.

“Shallow-water rigs have operated without a major incident for over 50 years,” Cornyn said.

At a joint hearing on the House side last Monday, Rep. Gene Green (D-TX) also pressed Interior to expedite the processing of permits for shallow-water drillers.”Hopefully that one permit that was issued [to Apache]…for production” is the start of something, and “[we] will see more permits in the next few days,” he said during a joint hearing of the House Energy and Commerce’s Subcommittee on Oversight and Investigations and Subcommittee on Energy and Environment.

In addition to more shallow-water permitting, Green called on Salazar to adjust the moratorium on deepwater drilling to allow workers on the less-risky wells to go back to work. “That way we wouldn’t have these rigs sailing off to somewhere else,” he said.

Diamond Offshore Drilling announced this month that it is sending one of its Gulf of Mexico deepwater rigs to Egypt and another to the Congo.

Bush administration Interior secretaries — Gale Norton and Dirk Kempthorne — were called to testify. Democratic leaders of the subcommittees tried to pin the blame for the Gulf disaster on Bush policies, while Republicans pointed an accusing finger at the Democrats.

The offshore moratorium will “have repercussions far beyond the six months,” Norton said, adding it could result in “many, many years of delay.”

She said she would not have used the Gulf disaster as the basis to restructure the Minerals Management Service (MMS). The agency has been renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). Norton noted that the structure of BOEMRE doesn’t differ much from the structure of the now-defunct MMS (see NGI, May 17).

It’s sort of like “rearranging the deck chairs on the Titanic,” agreed Rep. Phil Gingrey (R-GA), and giving the agency a new “alphabet soup” name.

In other action, Murkowski, Landrieu and 22 other senators last Thursday sent a letter to their Senate colleagues urging them to support revenue sharing for energy production on the Outer Continental Shelf if it comes up in legislation. “This issue may arise in the context of the Senate’s response to the Deepwater Horizon oil spill as well as debates on other measures including climate and energy legislation,” they wrote.

The 24 senators said they hold “varying views on offshore energy production in the federal waters seaward of our states,” but “we are united…in our position that any such production in federal waters must include a program in which affected coastal states and coastal political subdivisions are entitled to a share of the federal revenues resulting from such production.”

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