US energy, Congress officials dismiss Obama moratorium end

12 October 2010 23:11  [Source: ICIS news]

WASHINGTON (ICIS)--US energy industry officials and bipartisan members of Congress on Tuesday dismissed the Obama administration’s lifting of its five-month moratorium on deepwater drilling in the Gulf of Mexico, charging that the administration is maintaining a de facto drilling ban with unworkable new regulations.

The American Petroleum Institute (API) said that while it welcomed an end to formal drilling moratorium, an informal but in fact ban on offshore drilling is being maintained by the Department of the Interior (DOI) through a maze of new regulations and go-slow processing of drilling applications.

Earlier on Tuesday, the department announced that it was lifting the deepwater drilling ban imposed in the wake of the 20 April explosion and fire that sank the BP Deepwater Horizon drilling rig and triggered the worst oil spill in US history.

But DOI Secretary Ken Salazar cautioned that the deepwater drilling ban was being lifted only for those operators who could meet and certify their compliance with the new safety and environmental rules the department announced last month for offshore development.

API President Jack Gerard said that “without a serious commitment by the government to process and approve permits and other requirements expeditiously, the moratorium will give way to a de facto moratorium, which will continue to cripple the already hard-hit Gulf region and cost more than 175,000 jobs a year”.

The Independent Petroleum Association of America (IPAA) said that an end to the formal moratorium was overshadowed by Salazar’s indication of still more regulatory uncertainty to come.

“We remain concerned that Secretary Salazar announced ‘a regulatory environment that will remain dynamic’,” said Bruce Vincent, IPAA chairman.

 “Offshore operators need regulatory certainty so that we can plan long-term projects,” Vincent said. “Rules and regulations that are in a constant state of alteration will do nothing to help create a stable business environment.”

The 5,000 member companies of IPAA hold the majority of oil and gas leases in US waters of the Gulf and account for 90% of the oil and gas wells drilled onshore and offshore in the US.

“The massive amounts of new, unworkable regulations and layers of burdensome red-tape laid out by the Interior Department, which will add no environmental benefits, will make certain that a de facto moratorium on offshore energy development remains intact,” Vincent added.

Representative Doc Hastings of Washington, the ranking Republican on the House Natural Resources Committee, said the moratorium lifting announcement was “just pre-election rhetoric” meant to curry favour with Gulf Coast voters as the 2 November US national elections draw near.

“They claim their arbitrary, job-killing deepwater ban is being lifted,” Hastings said, “yet they promise only to ‘look’ at new drilling applications and vaguely threaten unknown new regulations in the future.”

Senator Mary Landrieu (Democrat-Louisiana) said the administration did not go far enough.

“The administration must continue to accelerate the granting of permits in shallow and deep water and provide greater certainty about the rules and regulations industry must meet,” she said.

Landrieu, who sits on the Senate Energy and Natural Resources Committee and whose home state is heavily dependent on offshore energy business, said she will continue to block Senate confirmation of a top White House budget official until drilling activity in both shallow and deep waters of the Gulf has resumed.

The Institute for Energy Research, an energy industry think-tank, dismissed the Salazar announcement as “all about politics and headlines, not about getting folks back to work and increasing domestic energy exploration and production”.

Institute President Thomas Pyle charged that the moratorium has instead become “a permitorium”.

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By: Joe Kamalick
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