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Published: Wednesday, 10/13/2010

U.S. lifts ban on deep-water oil drilling, cites reduced risk

BLADE NEWS SERVICES

WASHINGTON - The United States is back in the deep-water oil-drilling business. The question is when work will resume.

The Obama Administration, under heavy pressure from the oil industry and Gulf Coast states and with elections nearing, lifted the moratorium that it imposed last April in the wake of the disastrous BP oil spill.

The ban had been scheduled to expire Nov. 30, but Interior Secretary Ken Salazar said Tuesday he was moving up the date because new rules imposed after the spill had reduced the risk of another catastrophic blowout.

Industry leaders warily waited for details of those rules, saying the moratorium wouldn't be truly lifted until then.

"The policy position that we are articulating today is that we are open for business," Mr. Salazar declared.

The reality is more complicated. While the temporary ban on exploratory oil and gas drilling is lifted immediately, drilling is unlikely to resume for at least several weeks as oil and gas companies struggle to meet a host of new safety regulations. For example, the CEO of a company responsible for a well would have to certify it had complied with all regulations. That could make the person at the top liable for any future accidents.

Louisiana Gov. Bobby Jindal, a Republican and fierce opponent of the drilling ban, called the announcement good news, but added: "The devil is always in the details."

The April 20 BP leak, which was triggered by an explosion that killed 11 people, gushed an estimated 200 million gallons of oil into the Gulf of Mexico, harming wildlife and severely cramping coastal businesses. BP sealed the well last month and expects to eventually pay at least $32 billion to handle the cleanup and damage claims.

Mr. Salazar suspended deep-water drilling in May, and after a federal court threw out the ban, reissued a moratorium in July. The moratorium affected about 36 rigs in the Gulf of Mexico that were exploring new reservoirs of oil and gas in water greater than 500 feet deep.

Many wells were not covered by the moratorium, so extraction of oil and gas in the Gulf continued largely unabated.

At the time, the industry and Gulf Coast politicians warned that the moratorium would lead to an exodus of jobs from the area to other oil-producing regions. Employment and rig losses turned out to be far less than predicted. A federal report said the moratorium probably caused a temporary loss of 8,000 to 12,000 jobs in the Gulf region.

Some environmentalists Tuesday criticized ending the drilling suspension while investigations and cleanup continued into the Deepwater Horizon disaster.

Oil industry representatives and their congressional allies raised fears that the new, more stringent regulations by the Interior Department could slow the issuing of permits and lead to a "de facto" moratorium.

Sen. Mary Landrieu (D., La.) and other oil industry supporters said they want swift approvals for new deep-water permits so companies do not leave for other parts of the world. In the six months since BP's well blowout, 12 permits for drilling in shallow waters have been issued; prior to the accident, the Interior Department issued 12 per month.

Critics of the Interior Department have asserted that it gave out permits far too easily before the disaster.

News that the moratorium - much-despised along the Gulf Coast - was being lifted came as a federal judge weighed a drilling company's bid to overturn it.

The action also came just weeks before midterm elections in which Democrats face widespread criticism for overextending government actions on the economy, including the drilling moratorium.

White House spokesman Robert Gibbs denied that pressure from the oil industry or anyone else played a role in the decision to lift the moratorium ahead of schedule. It was, he said, "part of a very deliberative policy process … that got done more quickly than the original timeline."

Mr. Salazar said he knew that some drilling supporters would say the new rules are too onerous, while critics would say risks remain in deep water drilling. The truth is, there will always be such risks, Mr. Salazar said, but "as we transition to a clean energy economy, we will still need oil and gas from the Gulf of Mexico to power our homes, our cars, our industry."

Clint Guidry, a shrimper in Lafitte, La., said getting the oil industry cranked up should be a top priority.

"This country runs on oil," he said. "People need to get back to work, the country needs oil. There are a lot of people who think we shouldn't be drilling. I agree if we had something to replace it, but we don't."



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