Bureau of Ocean Energy Management (BOEM) chief Tommy Beaudreau said Wednesday federal officials would meet their obligations regarding offshore activity, but the automatic sequestration imposed by Congress is presenting “enormous challenges.”

Beaudreau testified via video teleconference from Washington, DC, before a hearing called by Alaska’s Democratic Sen. Mark Begich, who is chair of the Senate Subcommittee on Oceans, Atmosphere, Fisheries and Coast Guard. Begich invited seven speakers, including Beaudreau, to discuss the 2012 Arctic offshore drilling season and maritime safety in the region.

Begich asked if the sequestration might cause any delays for operators trying to procure permits for Arctic drilling. Royal Dutch Shell plc, which completed a widely criticized inaugural program last year, is delaying its Arctic program until 2014 (see Daily GPI, March 18). ConocoPhillips now is laying the groundwork to launch an offshore program in 2014 (see Daily GPI, March 12).

The Arctic region is nothing like the Gulf of Mexico, in terms of how many operators are overseen, Beaudreau noted. There are only two projects that BOEM now is reviewing for offshore Alaska exploration: Shell’s and ConocoPhillips — and neither plan to drill this summer. However, the automatic budget cuts have presented a lot of challenges across the department, which filter into everything that occurs.

“Sequestration presents enormous challenges across federal government…It’s certainly true for the agencies for which I’m responsible,” said Beaudreau. “We will do our utmost, as always, to complete our work in a very thorough way and demand compliance, but we will complete our work promptly as well…It requires a lot of resource management, and frankly, I am concerned about the potential impact of the sequester.”

Beaudreau noted that the Department of Interior was overhauled by Congress after the former Minerals Management Service (MMS) was disbanded following numerous scandals.

“The MMS was a severely under-resourced agency,” he told Begich. “We have worked with Congress on a reform effort to remedy that in large part. I’m concerned that the sequester represents a step backwards.”

Begich expressed concerns about a “slowdown” in the Arctic planning region, where “a timetable is critical” because the remote location and environmental challenges require years of advance planning. Shell officials had to delay their Arctic project over several years because they were unable to obtain permits when they were needed, which hampered operations down the line.

“Permitting in Alaska presents a challenge,” said Beaudreau, but he added that the BOEM would do its work in an “efficient and timely process. From a regulatory standpoint, there are also certain advantages. The volume [in business] is not as large as the Gulf of Mexico, for example, and we are able to do some advance planning.

“For Shell and ConocoPhillips, this offers opportunities for advanced planning, including around internal resources.”

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