Interior Department Releases Offshore Drilling Safety RequirementsLast update: 6/9/2010 7:37:10 AM(This article was originally published Tuesday.)
By Siobhan Hughes
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The Obama administration on Tuesday issued regulations that will allow new shallow-water drilling projects to proceed, responding to complaints from businesses that regulatory indecision following a Gulf of Mexico oil spill was hurting revenue and jobs. The new requirements, which include mandates for independent third-party recertification of safety devices known as blowout preventers, apply to both deepwater and shallow-water drilling operations. But with a deepwater drilling moratorium in place for six months, the regulations will effectively free up the Interior Department to resume approval of new shallow-water drilling permits, which have been on hold in the aftermath of an April 20 oil-rig explosion. "We are following an orderly, responsible process for implementing stronger safety and environmental requirements of offshore drilling," Bob Abbey, the acting director of Interior's Minerals Management Service, said in a statement. "We need to make sure that drilling is done right, that it is done safely, and that oil and gas operators are following the law." He also said that Interior plans to issue expanded requirements for exploration and development plans in U.S. coastal waters. It wasn't immediately clear whether Interior was considering relying less heavily on "categorical exclusions," a process that allows the government to forego some environmental reviews but which Interior has previously said was effectively mandated by a 30-day deadline set by Congress. Interior's announcement did little to defuse concern among environmentalists, who question the administration's assumption that deepwater drilling presents more safety issues than shallow water drilling. To bolster their case, environmentalists called attention to new reports, confirmed by an Interior Department spokeswoman, that a small amount of oil has been leaking into the U.S. Gulf of Mexico from shallow-water Taylor Energy-owned oil wells in the gulf since 2004. "Why do they think shallow-water drilling is safe?" said Kieran Suckling, a co-founder of the Center for Biological Diversity. The shallow waters of the Gulf of Mexico account for about 55% of all natural gas produced in the gulf and about 20% of all the oil. The deepwater region, where BP Plc (BP) was drilling an exploratory well that blew up, accounts for more than 80% of the oil produced in the gulf. The Obama administration has been caught between environmentalists who say offshore drilling is unsafe and oil-state lawmakers who say that new shallow-water drilling projects should proceed since the projects weren't implicated in the BP oil spill. The Interior Department has handled the situation with policies that have left the industry uncertain. On May 6, the Interior Department's Minerals Management Service suspended offshore drilling permits that had been issued after the April 20 explosion and announced a moratorium on approving permits for wells that were to be newly drilled, or "spudded." The halt applied during a 30-day safety review that was completed at the end of May. With the safety review concluded, the government last week resumed approving shallow-water drilling permits, only to halt the newly approved permits after environmental groups questioned why the Interior Department had failed to issue accompanying safety guidelines. Oil and gas companies were scrambling to determine the effect of the new regulations. While the guidance, in the form of a notice to lessees, "offers some clarity as to which operations can move forward and under which conditions," it "is too soon to say exactly how long it will take for companies to complete the required certifications," the National Ocean Industries Association said in a statement.
AI
