As complaints and protests grew last week against the Gulf of Mexico moratoriums, both the six month ban on deepwater drilling and the indefinite suspension of drilling in shallow water, the Department of Interior backed off somewhat on the shallow water ban, issuing a directive for Outer Continental Shelf (OCS) activities implementing stronger safety requirements, and saying shallow-water drilling that is in compliance with the new requirements could continue.
Shallow-water producers are required to meet new reporting requirements on blowout preventers by June 17 and to submit the required safety certifications by June 28. Failure to provide the required certifications would result in the issuance of an incident of noncompliances and potentially a shut-in order.
Deepwater drillers also will have to comply with the new directive, but those operations will continue under a six-month moratorium.
"The deepwater drilling moratorium that is in place will provide time for the Presidential Commission to complete its work, but production and shallow-water drilling may continue under the stronger safety requirements that we are implementing today," Interior Secretary Ken Salazar said Tuesday.
The secretary then went before a congressional committee Wednesday to defend the administration's actions in response to the blowout of BP's Magonda well which is continuing to spew thousands of barrels of oil into the Gulf. The administration has hit the "pause button" on deepwater drilling in the Gulf of Mexico (GOM), but it's "not the stop button." Salazar said during the fourth oil spill hearing of the Senate Energy and Natural Resources Committee.
Sen Mary Landrieu (D-LA) said several of the experts that the Interior Department consulted with on the issue have voiced their opposition to the administration's decision to ban deepwater drilling for six months (see NGI, May 31). They said that if the drilling freeze lasted for more than a few months, it would "potentially wreak havoc" on the Gulf Coast. In Louisiana alone the economic impact of the moratorium could affect 330,000 people, Landrieu said.
At the end of the week Landrieu sent the president a letter urging him to lift the moratorium and offering eight recommendations to be imposed to insure safe operations. The moratorium is expected to cause some drilling rigs to exit the GOM and head to foreign waters, especially if it is extended beyond the initial six months. One analyst predicted an extended ban would affect the U.S. natural gas market more than the oil market (see related story)
Sen. John Barrasso (R-WY) pressed Salazar about the possibility of removing the ban before six months. "If it [the commission report] can be done before six months, there's a possibility that we could take a look at it [moratorium] before then," Salazar said. But he quickly added that "I think it would be unwise" to move forward with deepwater drilling until a recently announced presidential commission issues its recommendations.
There's the potential of a longer moratorium. Even if the commission comes out with its recommendations by November, the drilling timeout could remain in effect beyond then to give Interior time to issue new rules based on the recommendations and producers time to comply before resuming operations.
The administration's drilling moratorium covers the "33 deepwater drilling operations that were under way" at the time of the April 20 explosion of the Deepwater Horizon rig, Salazar said. They have been ordered by Interior to drill to a safe stage, secure their wells and then stop.
Activity in the shallow waters (500 feet or less) of the Gulf, which is dominated mostly by independent producers involved in natural gas drilling, is not covered under the moratorium. These producers can continue with their shallow-water efforts, but only after they "can certify to us that they can meet the [new] safety requirements," Salazar said.
The new rules from the Interior Department came as complaints grew that the confusion over the cessation of shallow-water drilling was only serving to exacerbate the already devastating economic impact on the Gulf Coast of the BP oil spill and the moratorium on deepwater drilling. The new directives on shallow water drilling amounted to a de facto moratorium there as well.
The new safety Notice to Lessees (NTL) from Interior said drilling operations that are not subject to the deepwater drilling moratorium must fulfill their blowout preventer (BOP) reporting requirements listed below by June 17 and submit the required safety certifications by June 28. Failure to provide required certifications will result in the issuance of an incident of noncompliance and may result in a shut-in order, the directive said.
The safety NTL implements the seven safety requirements that Salazar's 30-day safety report to the President determined could be implemented immediately. Under the NTL, lessees and operators are required to:
In the coming days, DOI will be issuing expanded requirements for exploration plans and development plans on the OCS, government officials said. DOI and the Council on Environmental Quality are also conducting a review of MMS' procedures under the National Environmental Policy Act.
Directives from MMS the previous week said that it would be issuing no new shallow-water drilling permits and could be suspending existing drilling operations until drillers could comply with new safety and environmental rules that had not yet been issued (see NGI, June 7), leading to charges of a "de facto moratorium" in the shallow waters of the Gulf.
At that point, several shallow-water producers and rig operators had been notified to suspend operations, while others essentially were in the dark as to whether they could proceed with drilling. Some queries to MMS met with the response that all drilling in the Gulf was suspended, while others at MMS said the suspension would only affect new drilling.
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