January 4, 2011 1:52 am

US eases barriers to deepwater drilling


WASHINGTON, Jan 3 - The Obama administration on Monday eased new environmental barriers to some oil and gas deepwater projects, but companies will still have to meet stringent regulations before drilling resumes.

Oil companies and Republican lawmakers have complained that regulations imposed after the BP oil spill have brought Gulf of Mexico drilling to a standstill.

The decision to waive some environmental requirements comes as Noble Corp announced that Marathon Oil cancelled a four-year, $752m contract for a deepwater rig in the Gulf due to lack of drilling permits.

The policy will affect 13 companies with projects that were already under way when the department imposed its ban on deepwater drilling. Companies will be able to forego additional environmental reviews depending on new calculations of the worst-case flow rate estimates for their wells.

While removing one potential obstacle for these companies, it does not automatically mean drilling will begin immediately.

Affected companies such as Chevron and Royal Dutch Shell, which were drilling wells when the department imposed its moratorium, must still meet new offshore drilling regulations before restarting their projects.

“We are taking into account the special circumstances of those companies whose operations were interrupted by the moratorium and ensuring that they are able to resume previously approved activities,” said Michael Bromwich, head of the Bureau of Ocean Energy Management.

Since lifting its ban in October on drilling at depths more than 500ft, the department has yet to approve any new deepwater exploration drilling permits.

Shell characterised the government’s move as a good first step, but said more action was needed “to improve the timeliness and efficiency of the permitting process,” according to a statement from the oil company.

Republicans, who will control the House of Representatives in the new Congress, vow to press the Obama administration on the slow permitting process.

Although the agency said it was still working to enhance its environmental reviews in the future, Mr Bromwich called Monday’s announcement “a significant step” towards allowing the affected companies resuming their permitted activity.

The National Ocean Industries Association applauded the department’s decision, but said companies still need clarity on certain new drilling regulations.

“This is a positive development for an industry that has been anxiously waiting to get back to work,” Randall Luthi, NOIA president, said.

Other companies affected by the new drilling policy include: Marathon Oil, Murphy Oil, Noble Energy and Statoil.

© Reuters Limited. Click for restrictions


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