Shallow drillers: Feds drag feet on permits
TED GRIGGS
22 July, 2010
The Baton Rouge Advocate
Although there is no drilling ban in the shallow waters of the Gulf of Mexico, energy industry members say new, federal safety regulations amount to a de facto ban that is damaging the state's economy.
"The fact of the matter is that there is a moratorium via onerous regulations in the shallow water. That's obvious because they haven't granted any permits except one that I know of since April 20," said Chris John, president of the Louisiana Mid-Continent Oil & Gas Association.
In the previous 11 months, an average seven per month were permitted, based on figures from the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement.
The U.S. Department of the Interior issued new regulations in June in an effort to prevent a repeat of the BP well disaster. The new regulations require companies to certify that their blowout preventers work. The second required companies to estimate how much oil or natural gas could leak from a blowout and the time it would take to get spills under control.
There are now about 14 rigs working in federal waters less than 500 feet deep, John said. At the beginning of the year, there were around 50.
John said his association did not prepare an economic impact of the "de facto moratorium" because members mistakenly believed the deepwater moratorium would not affect shallow-water operations.
The shallow-water rigs employ 75 to 85 people apiece, John said. With three dozen rigs inactive, 2,700 to 3,000 direct jobs have been lost, not to mention those created to support the rigs and rig workers.
"You're talking about an economic loss in the millions of dollars that has been, in many people's words, kind of coincidentally lost because of this (deepwater) moratorium," John said. "Of course, those are real people and real numbers to us."
Last week, Michael Bromwich, director of the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement, met with representatives of shallow-water drilling companies and elected officials, including Sen. Mary Landrieu, D- La., and Lt. Gov. Scott Angelle.
After the meeting, Bromwich issued a statement saying shallow- water drilling could continue under the new safety rules, and that the bureau would provide clear and swift guidance on questions about the new regulations.
Randy Stilley, president and chief executive officer of Seahawk Drilling Inc., said Wednesday confusion remains about the new regulations at the bureau.
Regional offices refer all the questions to Washington, D.C., which further slows the process, he said.
Under the new regulations, some wells require putting together a new Environmental Assessment or Environmental Impact Statement, a lengthy and almost always unnecessary process, Stilley said. Almost all shallow-water wells are drilled in areas that have already been explored and whose reservoir characteristics are well known so the risk is very low.
The industry needs some relief from the burdensome and unnecessary regulations, Stilley said. Applying the same requirements to low-risk wells as higher-risk, deepwater wells or high-risk, ultra-deep wells is unreasonable and is killing the shallow-water drilling industry. |
