US Interior still slow to issue Gulf of Mexico drilling permits: Republicans

Washington (Platts)--12Oct2011/313 pm EDT/1913 GMT

Republicans on the US House of Representatives Committee on Natural Resources Wednesday used the first anniversary of the end of a permitting moratorium on deepwater oil and gas exploration in the Gulf of Mexico to heap criticism on the Obama administration for failing to speed up drilling approvals.

After the BP Macondo oil well blowout and spill in April 2010, US regulators imposed a temporary ban on deepwater drilling while it passed stricter new safety measures relating to equipment, well design and spill capture methods that aimed at preventing future disasters.

The moratorium ended October 12, 2010, but committee Chairman Doc Hastings, Republican-Washington, said President Barack Obama's regulators have continued to move too slowly to issue new permits.

"While I recognize that some permits indeed are being issued, there are facts and data that demonstrate recovery is moving at a pace that continues to hamper job creation and the economy," Hastings said.

Hastings cited data showing in the six months before the Macondo/Deepwater Horizon disaster, the Interior Department issued an average of 72 permits per month, compared to 52 per month over the past six months.

Al Reese, chief financial officer of ATP Oil & Gas, an independent that operates in the Gulf of Mexico, testified at the hearing that permit applications have become drastically more complicated since the spill, expanding from 30 or 40 pages to 3,600 pages for ATP's most recent permit application. That increased complexity seems directly tied to the longer approval times, Reese said.

"When you're dealing with 3,600 pages, you automatically have a lot more time constraints," Reese said.

The committee's top Democrat, Representative Ed Markey, of Massachusetts, said Republicans are hypocrites for opposing increased funding for offshore regulators, while complaining about long permitting times.

"You can't have it both ways, to kill the program the administration wants to expedite [permitting], and then complain it's not happening fast enough," Markey said.

The fiscal 2012 House Interior and Environment Appropriations bill (H.R. 2584) would provide $323.7 million to the Department of Interior's Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement, which is $34.7 million less than the Obama administration requested. That bill would represent a $42 million increase over the 2011 funding, according to the Department of Interior.

But Reese and other offshore industry representatives, including Chris Auer, principal at Crevalle Management Services, which provides platform abandonment services, said streamlining the permitting process is more important than adding staff.

"I think the focus has to be on the process, not the number of people," Reese said.

The complaints contrasted with comments by the leaders of two major oil companies in recent months, who said the reorganization of federal oversight agencies and staff turnover appear to be the main drivers of the slow pace of permitting.

ExxonMobil CEO Rex Tillerson said on October 6 that he would "give them the benefit of the doubt" that reorganization of Interior's BOEM and BSEE were the cause of the permitting slowdown. Last month, Chevron CEO John Watson said he did not believe regulators were "slow walking" permits.

--Keith Chu, keith_chu@platts.com
--Gary Gentile, gary_gentile@platts.com

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