President Obama Thursday said he is halting or suspending drilling or planned drilling in the Gulf of Mexico (GOM) and offshore Alaska and Virginia in response to the explosion on the Deepwater Horizon rig and mammoth oil spill.

In a mid-day conference, the president said the government is suspending planned exploration of two locations in the Arctic Ocean; canceling a pending lease sale in the GOM and off the coast of Virginia; extending the existing moratorium and suspending issuance of new permits to drill for new deepwater wells for six months; and suspending action on 33 deepwater exploratory wells currently being drilled in the GOM.

The U.S. arm of Royal Dutch Shell, which has plans to explore for natural gas and oil offshore Alaska, attempted to assuage concerns as recently as last week. The company commented on Obama’s actions Thursday (see Daily GPI, May 20). Shell said that following the Deepwater Horizon incident it undertook a number of steps to reinforce safety by reviewing operating practices, testing frequencies and training protocols.

“We respect and understand today’s decision in the context of the tragic spill in the Gulf of Mexico, but we remain confident in our drilling expertise, which is built upon a foundation of redundant safety systems and company global standards,” Shell said. “In Alaska our drilling plans have undergone an unprecedented level of review, including scrutiny from the courts, regulators and stakeholders. We welcome this scrutiny and will work closely with the government and other experts during this suspension in drilling activities.”

Obama, who is scheduled to visit the Gulf Friday, placed the restrictions on new drilling 38 days after the BP plc-leased Deepwater Horizon rig exploded and sank off the southern coast of Louisiana. Obama’s announcement came as reports indicated that the latest procedure — “top kill” — to cap the damaged riser 5,000 feet below the surface appeared to be going well, and that BP’s initial estimate of 5,000 b/d gushing from the riser was woefully conservative.

The well could be spewing as much as 25,000 b/d, making it potentially the worst oil spill disaster in U.S. history, according to the U.S. Geological Survey.

Liz Birnbaum, director of the Minerals Management Service (MMS), which is responsible for the safety inspections of offshore rigs and platform, resigned “effective immediately” Thursday. The president denied that she was forced out. “I found out about her resignation today. I don’t know the circumstances.”

Birnbaum was appointed MMS director in June 2009, succeeding Randall Luthi who served under the Bush administration.

Her announced departure comes a week after Interior Secretary Ken Salazar signed a secretarial order that will lead to splitting the beleaguered MMS into three separate entities to avoid future conflicts of interest between the agency and oil and gas producers (see Daily GPI, May 21).

Obama agreed that MMS was a troubled agency, having a “cozy and sometimes corrupt relationship” with the oil and gas industry that led to “little or no regulation at all.” This was underscored in a recent Interior Department inspector general’s report, which suggested that MMS employees accepted gifts, including hunting and fishing trips, from an oil and gas production company working on oil platforms regulated by the agency (see Daily GPI, May 26).

Despite the number of reforms that Salazar has made at MMS, the “culture had not fully changed [at] MMS,” and the president said he took “full responsibility” for that.

Obama said he still believes oil production will be an “important part of the overall energy mix,” and he supported his recent decision to expand drilling in the federal Outer Continental Shelf (OCS). But he said he was “wrong” in assuming that “oil companies had their act together when it came to worse-case scenarios” for spills and cleanups (see Daily GPI, April 1).

He defended the federal government’s response to the GOM disaster. “Those who [say] we were slow in our response…don’t know the facts,” Obama said. From day one, he said the White House and federal government have been “singularly focused on how do we stop the leak and mitigate the damage to our coastline.”

The “notion that the federal government has been sitting on the sidelines” and letting BP make the decisions about capping the well “is simply not true,” Obama said. The federal teams are authorized to direct BP.

“I take responsibility. It is my job to make sure that everything is done to shut this down. That doesn’t mean it’s going to be easy. It doesn’t mean it’s going to happen right away or the way I’d like it to happen. It doesn’t mean that we’re not going to make mistakes. But there shouldn’t be any confusion here, the federal government is fully engaged,” Obama said.

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