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White House lifts ban on deepwater drilling

By Juliet Eilperin and Steven Mufson
Tuesday, October 12, 2010; 11:01 PM

Under pressure from gulf coast lawmakers warning of job losses, the Obama administration Tuesday lifted the moratorium on deepwater drilling for oil and gas in the Gulf of Mexico weeks ahead of schedule, pledging closer oversight in the wake of the worst spill in U.S. history.

"We are open for business," Interior Secretary Ken Salazar told reporters in a phone call Tuesday afternoon, adding, "We have made, and continue to make, significant progress in reducing the risks associated with deepwater drilling."

Salazar's announcement - which could blunt a campaign issue in states where pro-drilling sentiments runs strong - met with a mixture of praise, skepticism and outright condemnation.

The oil industry welcomed the move, but cautioned that a de facto moratorium could remain in effect if the Interior Department doesn't issue permits in a timely fashion.

Most environmental groups lamented the early end to the ban, citing continued risks. "Today's actions are premature," said Peter Lehner, executive director of the Natural Resources Defense Council. "To ensure a disaster like this never happens again, we must know what caused it in the first place. We're still waiting for that answer."

The Interior Department recently issued a slew of new operating and safety rules for deepwater drilling; Salazar said it will issue permits "for those operators that are able to clear the higher bar that we have set."

He said that lifting the temporary drilling ban before the Nov. 30 expiration date was possible because the petroleum industry now has more robust plans for responding to any future spill and because BP had finally capped its gushing Macondo well in mid-July.

33 rigs idled

The administration had imposed a six-month ban in late May; the ban idled 33 rigs working in the Gulf of Mexico, which provides more than a quarter of U.S. oil production. Five rigs have since left to drill in Egypt and other parts of Africa.

Political and business leaders in the gulf have pressed the administration to lift the moratorium, which they say has caused the temporary loss of 8,000 to 12,000 jobs in the region. Sen. Mary Landrieu (D-La.) has blocked a Senate vote to confirm Jacob Lew, President Obama's nominee to head the Office of Management and Budget, until the moratorium is lifted or significantly eased.

Still, the lifting of the moratorium does not mean that deepwater operations will resume immediately. Interior officials warned that could take weeks, if not months.

"It will clearly not going to be tomorrow and it will not be next week," said Michael R. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement. "How far it will be in the future, I don't think anybody can say."

He said that he thought his bureau would issue new permits by year's end, but added, "How much before the end of the year? I can't say. And how many permits it will be? I can't say."

Jack Gerard, president of the American Petroleum Institute, said the administration had taken "a step in the right direction, but lifting the moratorium will only be symbolic unless the department moves expeditiously to issue permits." He said that would result in "a de facto moratorium, which will continue to cripple the already hard-hit Gulf region." Counting long-term and indirect losses, he estimated it could cost more than 175,000 jobs.

Third-party inspections

Bromwich said his agency had assigned 20 additional employees to oversee permitting, though it was still recruiting inspectors to examine whether rigs met the new requirements. These new rules include third-party inspections of plans for well design, casing and cementing, as well as blowout preventers.

"We'll be inspecting in a very careful and comprehensive way those rigs to make sure they're compliant with the new rules," Bromwich said, adding that while the deepwater rigs in the gulf underwent an inspection in the immediate aftermath of the Macondo spill, none of them have yet been inspected in light of the tougher regulations.

"We won't know [if they're compliant] until we begin to do those inspections," he said.

Shell Oil spokeswoman Kelly op de Weegh said that three of the six drilling rigs Shell has under contract in the gulf were certified by third parties and "ready to go." She said they were only awaiting drilling permits.

Gerard pointed to shallow water permit delays as an example of what worries deepwater drillers. Shallow-water operators complain that the bureau has issued only a dozen permits for new wells in the Gulf of Mexico the past five months. Jim Noe, general counsel for Hercules Offshore, said this has forced "a quarter of shallow rigs to remain idle."

Chris Moran, who runs a motel, restaurant and convenience store in Port Fourchon, La., said that the news had prompted happy rumors about which companies would start work first, and how many people they might hire.

"We basically invented ... drilling, Moran said. "And now we're going to continue to be able to do it."

Moran has watched his regular customers vanish after their rigs were idled, though cleanup workers tackling the spill offset part of the loss in business.

Now, he said, "I'll be able to live my life without (having) to think about a career change."

In nearby Plaquemines Parish, where the town of Venice was the closest settlement to the Deepwater Horizon site, Parish President Billy Nungesser issued a statement saying: "The timing is right. As the oil spill cleanup slows down, all the businesses that support the industry need to return to work. Lifting the moratorium could be the catalyst we need to get all the oil industry businesses kick-started, putting people back to work and seeing this industry come back alive."

Environmentalists, for their part, lambasted the administration's decision to even entertain new drilling in the gulf.

"This is an incredibly disconcerting and unjustified move, that could open the door for the next great oil disaster," said Jacqueline Savitz of Oceana, an advocacy group. "Oil spills are common. The question is not whether there will be another spill but when."

"Drilling off the coast of Alaska and in the Gulf of Mexico is just as unsafe as it was before," said Kierán Suckling, executive director of the Center for Biological Diversity. "Every offshore oil rig is a ticking time bomb waiting to go off" and that "more than anything, the lifting of the moratorium is a display of the oil industry's power over the White House."

"This is pure politics of the most cynical kind," Greenpeace said. "It is all about the election season, not safety and environmental concerns."

Even Salazar acknowledged that oil and gas drilling in the gulf could lead to future spills, but he said that was a risk the government was willing to take.

"The truth is there will always be risks associated with deepwater drilling," Salazar said. "But we have now reached a point, in my view, where we have significantly reduced those risks."

Staff writer David Fahrenthold contributed to this report from Venice, La.

eilperinj@washpost.com mufsons@washpost.com

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