President Obama has hit the “pause button” on deepwater drilling in the Gulf of Mexico (GOM), but it’s “not the stop button,” Interior Secretary Ken Salazar told a Senate committee Wednesday. No matter what it’s called — a pause or temporary moratorium — some senators believe that it will badly hurt deepwater drilling and the Gulf Coast economy.
“It was the president’s directive that we press the pause button…it’s not the stop button,” Salazar said during the fourth hearing of the Senate Energy and Natural Resources Committee on the GOM oil spill, which entered its 51st day Wednesday.
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 in the wake of the explosion aboard the BP plc-leased Deepwater Horizon rig (see Daily GPI, May 28). 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.
The disruption is expected to cause some drilling rigs to exit the GOM and head to foreign waters, especially if the moratorium is extended beyond the six months that Interior set after conducting a 30-day review of the safety and environmental regulations for offshore drilling rigs. A bipartisan presidential commission has been tasked with completing recommendations during the six-month drilling timeout to avoid another Gulf disaster. Democrats have introduced a bill in Congress to give the presidential commission subpoena power.
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 the 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.
“We want to see…more than a pause button” on offshore drilling, said Sen. Robert Menendez (D-NJ), an avid opponent. He also urged Salazar to provide information on oil leaking from Diamond Offshore’s Ocean Saratoga rig in the Gulf. It reportedly is leaking considerably less oil than the Deepwater Horizon well — one-third of a barrel per day. Salazar referred to it as a “remnant left over from Hurricane Ivan.”
The administration’s drilling moratorium covers the “33 deepwater drilling operations that were under way” at the time of the April 20 rig explosion, Salazar said. They have been ordered by Interior to drill to a safe stage, secure their wells and then stop.
The freeze on deepwater drilling has had little impact on production in the GOM so far, according to Salazar. “Production continues in the Gulf of Mexico. There has been very little interruption because [of] the Deepwater Horizon on production from the Gulf of Mexico,” he noted.
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.
Interior Tuesday issued a directive to oil and gas lessees and operators on the Outer Continental Shelf — both in the deepwater and shallow water — to implement stronger safety requirements. 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 (see Daily GPI, June 9).
The burden of complying with these new safety requirements could amount to a “de facto moratorium” in the shallow waters of the Gulf, according to some producers and service operators (see Daily GPI, June 7).
BP has estimated that it is capturing about 15,000 b/d of oil escaping oil from a riser located one mile below the GOM’s surface. As to how much oil still is not being captured, “I hope that in the next several days…we will have a number that is based on science,” Salazar said.
Before the riser was cut last week, the oil gushing from the riser was estimated to range from 12,000 b/d to 19,000 b/d. Some estimate that cutting the riser increased the flow of escaping oil by 6-20%, but Salazar indicated that the number was lower, somewhere in the range of 4-5%.
Sen. Jeanne Shaheen (D-NH) expressed concern that the reorganization of the Minerals Management Service (MMS) — which she said amounted to a “reshuffling of the deck” — would not address the “culture of corruption” at the agency.
“Our reorganization is not cosmetic,” Salazar said, adding that it was “essentially blowing up” MMS. In May Interior announced it would break the agency into three separate bureaus: one to handle leasing activities; one to focus on enforcement; and the third to be responsible for royalty and revenue management functions (see Daily GPI, May 21).
MMS, which is charged with inspecting rigs, enforcing offshore violations and collecting royalties, has been accused of having a “cozy relationship” with the oil and gas industry over the years.
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