The Department of Interior considered preventing BP plc from bidding in the Gulf of Mexico (GOM) oil and gas lease sale slated for December but in the end decided against it, Michael Bromwich, head of the Bureau of Safety and Environmental Enforcement, said at a House hearing on Thursday.

The first lease sale since the deepwater Macondo well blowout is scheduled for Dec. 14 in New Orleans (see NGI, Aug. 29). BP continues to be the biggest oil and gas producer in the GOM.

“We are not going to suspend or de-bar BP from that lease sale,” Bromwich said at a hearing by the House Natural Resources Committee, which centered on the Macondo well blowout. “We have considered and thought about this issue quite a lot and we don’t think it is appropriate in these circumstances.”

BP, Bromwich said, has made a commitment to adhere to additional, voluntary drilling safety measures that are more stringent than federal safety rules enacted since last year’s massive oil spill.

BP America Vice President Raymond C. Dempsey Jr., a 20-year veteran of the company, told legislators that the company had learned “important lessons” from the offshore tragedy that it is sharing with industry participants and government officials around the globe. “We believe that we have the necessary systems and capabilities in place to continue to enhance the safety of deepwater drilling,” Dempsey said.

However, industry critic Rep. Ed Markey (D-MA) said at the hearing Interior should consider barring BP from the December sale. In addition to the Macondo well, an explosion at BP’s Texas City, TX, refinery in 2005 killed 15 people. An oil spill from an Alaskan pipeline at BP’s Prudhoe Bay field in 2006 temporarily halted production.

“I think we should take another look at whether or not BP should be allowed to participate,” Markey said. “It is still in my mind an open question that should be dealt with as part of this entire process.”

The hearing came one day after Interior issued safety citations to BP and Macondo contractors Halliburton Co. and Transocean Ltd. While the citations against BP, the operator, were expected, including the contractors is a rarity; the contracting industry typically has avoided liability in drilling accidents.

The decision to penalize Halliburton and Transocean as well “reflects the severity of the incident,” Interior said. The government is committed “to holding all parties accountable.” The citations are expected to result in large fines. Interior said it had identified 15 incidents of noncompliance with federal rules at the Macondo well site, including the failure to perform operations in a safe manner and failure to conduct accurate pressure integrity tests.

BP said the citations against the two contractors makes “clear that contractors, like operator, are responsible for properly conducting their deepwater drilling activities and are accountable to the U.S. government and the American public for their conduct.”

Transocean, based in Switzerland, said it would appeal. Halliburton said the company “believes it is fully indemnified by BP against any loss resulting from the Macondo incident and any penalties arising from the violations alleged.”

Under provisions in the Outer Continental Shelf (OCS) Lands Act, the government may collect $45,000 a day per violation. The Macondo well leaked oil into the GOM for 87 days before it was closed and sealed in July 2010.

In addition to the OCS Lands Act, Environmental Protection Agency officials may seek spill-related penalties under several laws, including the Clean Water Act, which allows it to impose up to $4,300 in fines for every barrel of oil spilled. At a maximum fine, those responsible could face a penalty of $21 billion for the 4.9 million barrels spilled as a result of the Macondo blowout, which destroyed the Deepwater Horizon rig and killed 11 people.

In related news, the Department of Justice separately is suing Transocean, which owned the Deepwater Horizon drilling rig, to force compliance with subpoenas issued by Interior. The lawsuit faults Transocean’s noncompliance following subpoenas from the U.S. Chemical Safety and Hazard Investigation Board, an independent agency investigating the GOM accident.

According to the lawsuit, which was filed in U.S. District Court for the Southern District of Texas, Transocean failed to fully comply with five administrative subpoenas issued between Nov. 24, 2010 and April 7, 2011.

The noncompliance has “impeded and delayed” the investigation, according to the filing, which asks the court to compel Transocean to respond. “Transocean has provided no response or an insufficient response to a total of 38 specific demands for documents or answers to interrogatories,” the filing said.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.