The Obama administration can’t shake its anti-oil industry image. The latest blast from the industry and its allies accuses the administration of dragging its feet on regulatory approvals for exploration and drilling permits in the Gulf of Mexico. After the BP-Deepwater Horizon blowout, the Interior Department suspended the Gulf’s existing permits in May 2010. It then stiffened regulations and lifted the moratorium in October. But, say industry groups, the pace of approvals is so slow that it often verges on a moratorium.
How slow? A new analysis done by the consulting firm IHS Global Insight for a pro-oil group says that the average approval time for new exploration and development plans has lengthened to 131 days from 36 days, the 2005-2010 average before the BP spill. If Interior could match its former approval rate, estimates the study, U.S. production in the Gulf would rise about 400,000 barrels a day, to 1.9 million barrels daily in 2012. This would create more than 200,000 additional jobs, the study reckons.
Although it takes years from initial exploration to production, many proven wells are close to production. It’s these wells that would come online and boost output by the estimated 400,000 barrels a day.
The numbers are distorted, responds the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), the Interior Department agency charged with approving new wells. One new regulation required the industry to demonstrate that it could contain an oil spill comparable to the BP blowout. The industry didn’t meet that standard until mid-February, says BOEMRE. Because the Global Insight study had a cutoff date of April 10, this means that the study covered only about six weeks of approvals. Since April, the agency says, the approval rate has accelerated.
Who’s right? Is the Obama administration being prudent or bureaucratic? Almost certainly, the issue will figure in the 2012 presidential election.
But note: The study was paid for by the Gulf Economic Survival Team, a group based in southern Louisiana and founded in June 2010 to restore offshore drilling. Its supporters include local governments and businesses, but much of the funding comes from larger energy companies. Its monthly budget is about $25,000, says executive director Lori LeBlanc, although this doesn’t include the cost of the study.
LeBlanc says the group will update its findings based on data through October and hopes to see speedier permitting.