U.S. to Issue More Gulf Drilling Permits

Source: The Wall Street Journal, Ryan Dezember  (3/22/11)

"Some O&G companies have matched safety with increasing risks of deepwater operations."


Michael Bromwich, the top U.S. offshore-drilling regulator who heads the Bureau of Ocean Energy Management, Regulation and Enforcement, said more permits to drill for oil and gas in the Gulf of Mexico's deep water would be issued "within the next week."

In recent weeks, the agency has issued three deepwater drilling permits, the first since such operations were shut down in response to the Deepwater Horizon's explosion and subsequent oil spill. The agency on Monday also awarded Royal Dutch Shell Plc (NYSE:RDS.A; NYSE:RDS.B) the first deepwater exploration plan since the disaster.

Some oil and gas companies have "clearly recognized that Deepwater Horizon was the symptom of a broader failure in both industry and government" to match safety with the increasing risk of deepwater operations, Mr. Bromwich said in a speech during the agency's annual meeting.

"But there are other operators who, with surprising and disturbing speed, have seemed all-too-ready to shrug off Deepwater Horizon as a complete aberration, a perfect storm, one in a million," Mr. Bromwich said.

He also said a shallow-water natural gas well operated by Apache Corp. that leaked for several days this year shows that risks aren't confined to deep water.

Though he told regulators that more deepwater drilling permits will be approved "in the coming weeks and months," he said after the speech that some projects would be approved in the next week.

Mr. Bromwich said he couldn't predict the pace at which permits will come from the agency, because each project will be considered individually.

He also said there is a high probability some offshore leases will be extended to account for the five-month drilling ban that followed the Deepwater Horizon accident and subsequent delays in issuing permits.