At a face-to-face meeting with the oil and natural gas industry Monday, Interior Department officials pledged to work as expeditiously as is safely possible to review permits for new drilling in the Gulf of Mexico (GOM). But oil and gas representatives were anything but encouraged when they left the meeting in Houma, LA.
Interior Secretary Ken Salazar, Interior Assistant Secretary Tom Strickland and Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM), agreed to meet with offshore producers as a condition of an agreement with Sen. Mary Landrieu (D-LA) last week to remove her long-standing hold on the nomination of Jacob "Jack" Lew to head the Office of Management and Budget (see Daily GPI, Oct. 14).
In lifting the hold, Landrieu said she was assured by Salazar that he would meet with producers in Louisiana to outline a path forward so that permits would be issued and the people of Louisiana can get back to work in the oil and gas industry. Like the oil and gas representatives, Landrieu was far from satisfied with Salazar's performance Monday.
"I am extremely disappointed that Secretary Salazar's presentation today failed to provide regulatory certainty and a clear path for speeding up the process of issuing drilling permits. Our industry leaders are skeptical and have every right to be. They received a commitment to the tiered permitting process, which is a start, but the Gulf Coast needs much more clarity and specificity to move forward," Landrieu said.
"I was assured a clear path forward [on permitting] was imminent, and I hope it still is. However, there are many other tools at our disposal, and our delegation will use every one to send the message that it is harmful to our economy and our national security to keep this industry in the dark and on the sidelines. We now have this administration's attention, but the fight is not over," she said.
"While we appreciate his [Salazar's] promise of forthcoming decisions and announcements, it will be his deeds, not his words, that will enable the offshore industry to return to work," said Randall Luthi, president of the National Offshore Industries Association. "The industry is waiting for action from the department, not words. They want to get back to work."
"We are encouraged by the secretary's efforts to reallocate personnel and obtain new hires to process permits. The resumption of the responsible issuance of permits for shallow-water operations in the Gulf would be a good start, but the real signal to industry that [the] deepwater and de facto moratoria are truly over, and that certainty and regulatory clarity are returning, will be the issuance of the first permit for new exploratory drilling in the deepwater Gulf," Luthi said.
"In addition to a growing backlog of permit applications, the secretary has multiple irons in the fire, including decisions on seismic studies, categorical exclusions, completion of sales in the 2007-2012 offshore leasing plan, formulation of the 2012-2017 offshore leasing plan, and the necessary environmental analyses required for these plans and lease sales in both the Gulf and [offshore] Alaska. Now would be a good time for the secretary to take an iron out of the fire and put his brand on a positive decision that will put industry back to work producing oil and gas," Luthi declared.
The Shallow Water Energy Security Coalition, which represents producers in the shallow waters (500 feet or below) in the GOM, echoed the same sentiment. While appreciating the efforts of the Interior officials, "we are disappointed that the federal government gave us no commitments at this meeting. While candid discussions are important to frame the issues, unfortunately the time for discussion has passed for many of our most expert and productive drillers in the Gulf," said Jim Noe, executive director of the coalition.
"Continual slowdown in permitting has gone situation critical, leaving them [producers] with the uncomfortable choice between economic ruin or leaving the Gulf entirely for other regions of the world," he said. "The continued radical uncertainty over what is sufficient to meet new government pronouncements has slowed activities in the Gulf's shallow waters to a trickle."
BOEM reported that as of Monday it had approved 16 new shallow-water applications for permits to drill and 48 revised applications for permits for existing wells submitted since early June. The agency further said it has reallocated about 20 personnel internally and across the bureau's regions to assist with the review and processing of permits in the GOM on an interim basis.
BOEM is awaiting congressional action on President Obama's fiscal year 2011 budget amendment, which includes funding for the hiring of 24 full-time employees -- including engineers, geologists and other professionals -- who would be involved in permitting.
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