On Sept. 30, the Department of the Interior announced two new rules that will help improve drilling safety by strengthening requirements for safety equipment, well control systems, and blowout prevention practices on offshore oil and gas operations.
Additionally, the new regulations address workplace safety concerns by mandating companies follow the American Petroleum Institute (API) Recommended Practice 75. This was previously a voluntary program to identify, address and manage safety hazards and environmental impacts in offshore oil & gas operations.
Last week, Secretary of the Interior Ken Salazar noted, “These new rules and the aggressive reform agenda we have undertaken are raising the bar for the oil and gas industry’s safety and environmental practices on the Outer Continental Shelf.”
The offshore industry welcomes these new rules to raise security standards and improve workplace safety in the Gulf of Mexico.
Companies stand ready to meet the requirements of these new rules, but BOEM must provide an adequate process for industry to attain permits necessary to restart their drilling operations. Compliance with these rules, coupled with decades of safe drilling practices in the Gulf, clearly show it is time that the President and Interior Secretary lift the moratorium on deepwater drilling.
While the Administration prolongs the moratorium and works to enact adequate rules and regulations concerning offshore drilling practices, there still exists a substantial problem. There is a silent moratorium affecting independent oil and gas operators who develop and explore the shallow waters of 500 feet or less, a de facto moratorium on shallow water drilling permits. In the five months since the April 20 Deepwater Horizon accident, BOEM has issued only six permits for new shallow-water wells.
This is unacceptable, considering that these operations were not to be affected by the deepwater moratorium.
In a report from the SMU Cox School of Business’ Maguire Energy Institute released on Oct. 4, statistics show the marked slowdown in the issuance of permits to drill new shallow-water wells in the Gulf of Mexico will have serious implications for the Gulf states’ economies. According to the Maguire Energy Institute associate director Dr. Bernard L. (Bud) Weinstein, “Studies have found that over the course of one year, should 75 percent of the rigs become stacked as a result of BOEM inaction on issuing permits, the direct economic losses to the nation’s businesses and workers would exceed $4.3 billion, with Louisiana taking the biggest hit and Mississippi second. Adding in the ripple effects of lower indirect and induced spending, the nation’s income losses could exceed $12.5 billion.”
The Administration must act now to lift the moratorium in the Gulf of Mexico. Safety regulations have been put in place. It’s time to move forward and allow companies to invest, explore, and develop our vital energy resources in the Gulf of Mexico.
At a time of economic uncertainty, limited job growth, and rising unemployment, it would be in the President’s best interest to let a true job-creating industry get back to work.
Don Briggs is President of the Louisiana Oil & Gas Association.