US issues new offshore rules, hints at longer drilling ban

30 September 2010 22:46  [Source: ICIS news]

WASHINGTON (ICIS)--The US government department with authority over offshore oil and gas development on Thursday issued new rules on drilling and worker safety, indicating that the federal ban on deepwater drilling could continue indefinitely.

The Department of the Interior (DOI) issued a new rule that will become effective immediately, requiring offshore drillers to enhance the durability of well structures and blow-out preventers and to improve their ability to respond quickly to leaks or other subsea incidents.

The “drilling safety rule” also requires DOI certification of equipment and permits to proceed or to make significant changes in well management.

The second directive, the “workplace safety rule”, also is effective immediately and requires drillers to implement various worker training and safety programmes and provides for DOI supervision and approval of those measures.

In announcing the new rules, Interior Department Secretary Ken Salazar said that “over the coming months you can expect a dynamic regulatory environment as we continue to raise the bar for offshore oil and gas development”.

He also indicated that the Obama administration’s suspension of offshore energy development in deep waters might be extended beyond its anticipated 30 November expiration.

Citing the risks associated with deepwater drilling, Salazar said that “we will only lift the suspensions when I am comfortable that we have significantly reduced those risks”.

The American Petroleum Institute (API) said it would review the two new rules and comment in detail later, but the institute’s director of upstream activities, Erik Milito, cautioned that “We cannot have an approval process that creates unpredictable delays that could place at risk the flow of domestic energy in our country”.

The Independent Petroleum Association of America (IPAA), which represents some 5,000 drilling firms and other production companies, said that Salazar should have announced an immediate end to the deepwater drilling moratorium.

The drillers group charged that the Obama administration “is fighting tirelessly” to impede domestic US energy development by maintaining the deepwater ban.

The US Chamber of Commerce, which represents a variety of US chemical manufacturers and plastics applications firms among its 3m members, charged that the new rules announced on Thursday would only serve to further restrict offshore energy.

US petrochemical producers and downstream chemical manufacturers are heavily dependent on natural gas as a feedstock and energy fuel. US territory in Gulf of Mexico waters ordinarily would produce about 10% of the nation's domestic gas supply.

“Today the administration not only continued its crippling moratorium on offshore exploration in the Gulf of Mexico, it also announced new regulations that will effectively keep it in place even when it expires,” said Karen Harbert, president of the chamber’s energy institute.

“We remain concerned that the administration has ‘no idea’ when drilling will resume in the Gulf,” Harbert said, quoting the department’s Michael Bromwich, who has direct responsibility over offshore energy development authorisations.

The Institute for Energy Research, an energy industry think-tank, also criticised Salazar for failing to address what it termed a de facto administration moratorium on drilling in shallow waters of the Gulf.

The institute charged that DOI had issued only 10% of the shallow water drilling permits that ordinarily would have been granted in the five months since the 20 April BP-operated Deepwater Horizon rig disaster.

Congressman Doc Hastings of Washington, the ranking Republican on the House Natural Resources Committee, said that the new drilling and safety rules could constitute “a de facto moratorium that could remain in place for years and will cause more American job losses and more companies moving operations overseas”.

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By: Joe Kamalick
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