Cassidy Demands Hearing Into De-Facto Shallow-Water Moratorium

Human Events today has a story on Rep. Bill Cassidy’s efforts to shed some light on the Obama administration’s unspoken halt to Gulf oil exploration in shallow water…

Rep. Bill Cassidy (R-La.), a member of the House Natural Resources Committee, is demanding answers, seeking hearings on the Bureau of Ocean Energy Management’s (BOEM) permitting process for shallow water drilling when Congress returns for a lame duck session beginning November 15.

Cassidy says local energy companies report BOEM has issued only seven permits for their shallow water drilling since the administration claims to have resumed the permitting process on May 28. 

While a quarter of the shallow water exploration fleet sits idle in Louisiana and Texas ports and the crews of those vessels draw unemployment checks, the administration denies they’re stopping drilling.

Meanwhile, the feds estimate that new rules promulgated by the Department of the Interior will cost some $184 million per year to implement, a figure which is sure to be contested by independent analysis based on the government’s questionable number-crunching to date. In that estimate is a projection of $90,000 in increased costs for shallow-water drilling – a number no one believes.

“All of this is going to put the producers in a situation where they are going to have to take a hard look at operating in the Gulf,” said Dan Naatz, a vice president with the Independent Petroleum Association of America. “It’s certainly going to make it harder, in this uncertain environment,” for companies to make decisions about investments in offshore drilling projects. “You could have a very serious impact on small producers.”

The oil and gas industry is committed to safety, Naatz added, but “the agency itself acknowledges they’re not sure what the actual benefits of this will be.”

Cassidy’s request for House Natural Resources committee hearings reads as follows:

Dear Chairman Rahall and Ranking Member Hastings:

I write to request that the Natural Resources Committee hold hearings to examine the Bureau of Ocean Energy Management’s (BOEM) permitting process for offshore oil and gas drilling when the House reconvenes in November. 

Following the Deepwater Horizon oil spill, shallow water permitting resumed on May 28, 2010.  Since then, I have heard conflicting accounts from offshore drilling operators and the Obama Administration about the progress – or lack thereof – of shallow water permitting and approval. 

Drilling operators report that since the moratorium on shallow water drilling was lifted, BOEM has only issued 7 permits for new shallow water wells.  Dozens of exploration and development plans, each covering multiple potential wells, are also awaiting approval from the agency.  As a result of this slowdown, 11 jackup rigs have been idled in the Gulf of Mexico, representing one quarter of the shallow water fleet.  Absent immediate action, the lack of permits for new wells could put 30 or more of the total 45 available rigs idle by the end of November.  The oil and gas industry is concerned that a de facto moratorium on shallow water permitting is in effect.

BOEM Director Michael Bromwich has defended the work of the agency, maintaining that no moratorium exists on shallow water activity, while noting that “we are not able to review and approve applications as expeditiously as we have in the past.”  He has stated that the lengthier permitting process of recent months reflects a necessary effort to require rig operators to prove that they are meeting improved safety procedures to prevent another major spill.

An independent analysis by the Associated Press found that “energy exploration in the Gulf’s shallow waters has come to a virtual standstill as drillers grapple with tougher federal rules since the spill. … The pace at which regulators grant drilling permits in water less than 500 feet deep has slowed sharply this summer… Just four out of 10 shallow-water drilling applications have been approved from June through August; 15 applications were sought and approved in the same period last year.”

These conflicting accounts merit consideration by the Natural Resources Committee, which can and should ensure that BOEM has the resources, focus, and sense of urgency to return to an active permitting process for Gulf energy production.  America’s energy security and tens of thousands of Gulf Coast jobs depend on it.

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