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The Bureau of Ocean Energy Management announced Monday that it has launched a new Web-based tool that provides oil and gas industry users with the ability to submit online requests for company, qualification, merger and bonding information for review and approval.

Before a company can bid on, hold, or operate an oil and gas lease, it must submit certain information and documents to BOEM to establish its qualifications. The Technical Information Management System Company and Bonding applications are Web-based programs that will help expedite the process.

The company processes within the system are comprised of qualification, qualification ipdate, change of name, business conversion and merger. Bonding processes including new surety bond, surety bond rider, surety bond replacement, surety bond termination request and surety bond cancellation request.

BOEM says the data management tool will reduce errors through data validation of submitted documents and improve operating efficiency with real–time access to industry information and data.

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In the wake of BP‘s (NYSE:BP) deadly Deepwater Horizon rig explosion and oil spill in the Gulf of Mexico, the Obama administration halted drilling activity and issuance of new permits. For roughly six months the Gulf lay fallow, and more than 33 deepwater wells were essentially shut off.

However, the Gulf is now experiencing a renaissance. The ban has been lifted, new permit issuance is rising and drilling activity is thriving again, thanks to high oil prices and growing global demand. Ultimately, that makes dealing with the various new government regulations and additional costs well worth it for many of the industry’s largest players.

It also creates a lucrative business opportunity for the companies that make advanced safety equipment — and an investing opportunity for investors.

The Goal: Preventing Blowouts

Before getting to those beneficiaries, let’s review the emerging regulatory landscape. In an effort to prevent another BP-style disaster, the newly reconfigured Bureau of Ocean Energy Management & Regulatory Enforcement (BOEMRE) and the U.S. Interior Department continue to add costly safety measures into new drilling permits. Stricter provisions for well blowouts and spill containments are now the norm for any exploration and production firms wanting to drill in the Gulf.

And it’s not just the U.S. that’s taking safety to heart. Regulators everywhere, from Europe’s North Sea to China’s coast, are considering more such provisions.

Key to those provisions are essential pieces of safety equipment: blowout preventers (BOP), which sit nearly five-stories tall and cost as much as $45 million each. A failed unit aboard BP’s Horizon rig was the main culprit for the disastrous fire and spill.

These devices are critical both onshore and off. At its core, a blowout preventer is a large, specialized valve used to monitor, control and seal oil and gas wells. BOPs are designed to regulate the pressures and uncontrolled fluid flows that occur during drilling. If the device fails to control the fluctuating pressure, a large blade, or ram, is designed to “cut” the pipe to choke the flow and prevent explosive gases from reaching the rig and crews on the surface. BOPs come in a variety of different styles, but they roughly function in the same way.

As Deepwater Horizon reminded everyone, blowouts can be particular hazardous events, despite the fact that “gushers” were an icon of oil exploration during the late 19th and early 20th centuries.

Following guidelines from a National Academy of Engineering report, the Interior Department has called for major changes to BOP design and testing to ensure they can work under a wide range of scenarios. BOPs will be beefed up with a second set of rams, which will increase the odds of it successfully slicing through the drill pipe to seal off an uncontrollable well. In addition, workers will need to be better trained to operate these devices in emergencies.

Already, many producers in the Gulf — including BP — have begun adopting two-ram systems in anticipation of the new regulations. Royal Dutch Shell (NYSE:RDS-A, RDS-B) has pledged to use two rams on its BOPs in exploratory drilling in the Arctic Chukchi and Beaufort Seas this summer.

Profiting From the New Rules

While some smaller shallow-water drillers, like Hercules Offshore (NASDAQ:HERO) have complained about the pending rules — an extra set of rams could make BOPs too tall for certain types of rigs — odds are the regulations will get enacted. Even the American Petroleum Institute (API), the largest oil-industry trade group, is considering adding a requirement for double-shear rams into its own BOP standards.

With the new requirements looming, it stands to reason that the companies making these advanced BOP systems should see increased business. Several oil service companies, like Cameron (NYSE:CAM) and Tesco (NASDAQ:TESO), produce BOPs, but the king of the group and perhaps the best choice for investors is National Oilwell Varco (NYSE:NOV).

It’s the leading maker of rigs, bits and other necessary drilling equipment, with its parts and components incorporated into nearly 90% of all drilling rigs on the planet. However, the coming BOP regulations could lift demand for National Oilwell’s products and increase its $10.3 billion rig technology backlog. The company’s Shaffer pressure control equipment and Koomey BOP systems are some of the most advanced and can be used in well depths up to 30,000 feet, temperatures of 650F and pressures of 15,000 psi. Likewise, Varco’s NXT BOP is double-ram compliant and should see increased demand as the regulations get enacted.

National Oilwell’s domination in “all things rig related” has allowed it to operate with very little debt and more than $8 of cash per share on its books. At the same time, the market’s recent fall has made NOV shares even juicier. At $65.69, they can be currently had for a P/E of just 12.7, at about $22 below the 52-week high in February.

That gives investors plenty of energy-value for not much price. Overall, the long-term trend of drilling deeper coupled with stricter safety mandates should help pad National Oilwell’s and investors’ pockets.

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The federal government is offering the central Gulf of Mexico for lease to oil and gas companies this month in the first lease sale of the area since before the BP oil spill.

It could spur drilling three miles from the barrier islands and has some environmentalists concerned about ramping up deepwater oil production in an area still reeling from the spill.

The central section makes up 60 percent of the Gulf and offers more blocks by far than the western area off of Texas or the eastern area, mostly off limits until 2022, off Florida’s coast.

Because the Department of Interior skipped a year, the central Gulf will have 914 newly available blocks that had been under lease before, which may generate a lot of interest.

The total of what’s being offered is 7,276 blocks or about 39 million acres — all of the central Gulf that’s not under lease off the shores of Louisiana, Mississippi and Alabama. There is a large section directly south of Baldwin County, Ala., that will be excluded because of prior negotiations by the state.

The sale will take place June 20 at the Mercedes-Benz Superdome in New Orleans. And the Bureau of Ocean Energy Management, which is in charge, says it could trigger the production of more than 1 billion barrels of oil and more than 4 trillion cubic feet of natural gas.

“Some of the area has never been leased before,” said John Filostrat, spokesman for BOEM. “They’re getting deeper into the area because companies are getting the technology to drill it.

“The deeper you get,” he said, “the riskier.”

But he also said that more stringent regulations have been put into place since the Deepwater Horizon spill.

The farther south the blocks go, the deeper the water, even though there are some deep pockets closer in.

It gets deep fast coming off the Mississippi River, where the Deepwater Horizon well stood. That well blew 52 miles off shore in 5,000 feet of water.

The southeastern area of the central Gulf is very deep. So just because a block is up for lease, doesn’t mean oil and gas companies will bid.

BOEM estimates the region contains close to 31 billion barrels of oil and 134 trillion cubic feet of natural gas undiscovered but technically recoverable.

The blocks begin three miles off the barrier islands, some of Alabama and most of Louisiana and go to about 230 miles offshore.

Oil production in water deeper than 1,000 feet now accounts for 79 percent of the Gulf production. In 2009, it was 72 percent. Deep water wells also account for 47 percent of the natural gas production, according to the DOI’s Bureau of Safety and Environmental Enforcement.

But bringing wells close to shore and drilling deeper are both a concern, said Raleigh Hoke of the Gulf Restoration Network.

“Some of these leases are three miles from the islands,” he said. “But at the same time they have to stay 100 miles from the Florida coast. That’s because of historic opposition.”

He said that years of opposition has given Florida and Alabama coastal tourism more consideration. His organization is part of a coalition opposing oil or gas wells within 12 miles of Mississippi’s barrier islands. It is also fighting the sale of leases in state water, which is even closer to the islands.

However, safety in deep water is also a concern.

“The industry has developed the ability to drill deeper,” Hoke said. “But has technology caught up with that to insure it’s done safely?”

The lease sale will primarily generate money for the U.S. general fund, but there is a revenue sharing system that has a complicated formula for distribution to the states.

What counties receive varies widely.

For example, Jackson County received more than $590,000 from the 2008 lease sale in the central Gulf in a year when the sale brought in $3.7 billion in high bids. But the same county received only $20,000 from the 2010 sale.

Jackson County Supervisor Mike Mangum said he’s looking forward to 2017, when the rules for distribution change and the states could receive up to $500 million.

“We don’t exactly know what that will be,” he said. “But the amount available to be distributed to the states will go up in Phase II, starting in 2017.”

Some of it depends on which blocks are leased and how close they are to Jackson County.

“But this is a big lease sale,” he said. “If there is some interest, we will certainly see more money than in 2010.”

He pointed out that the money must be spent on coastal conservation, restoration and hurricane protection. With this money added to what used to be the Coastal Impact Assistance Program, BP fine money from the spill and BP restoration money, he said, “the environment in South Mississippi will be the winner.”

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By Nick Snow

OGJ Washington Editor

The US Bureau of Ocean Energy Management completed a draft environmental impact statement regarding 10 oil and gas lease sales it has tentatively scheduled in the central and western Gulf of Mexico under the proposed 2012-17 US Outer Continental Shelf program. Five sales are planned for each of the two planning areas, BOEM indicated.

Comments will be accepted until Feb. 13, 2012, the US Department of the Interior agency said on Dec. 29. Public hearings on the draft EIS also will be held in Houston on Jan. 10, New Orleans on Jan. 11, and Mobile, Ala., on Jan. 12, it added.

BOEM said the draft multi-sale EIS provides information on baseline conditions and potential environmental effects of oil and gas leasing, exploration, development, and production in the central and western gulf.

The agency sought information pertinent to the lease sales, including consideration of the 2010 Macondo well accident and crude oil spill; surveys of scientific journals and credible scientific data from academic institutions and federal, state, and local government agencies; and interviews with personnel from those groups, it indicated.

It also examined potential impacts of routine activities and accidental events, including a possible low-probability, catastrophic event associated with the proposed lease sales, as well as the proposed sales’ incremental contributions to cumulative environmental and socioeconomic resource impacts, according to BOEM.

Oil and gas resource estimates and scenario information for this draft, multi-sale EIS are presented as a range encompassing resources and activities available for the 10 proposed lease sales in the two planning areas, it said.

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By Nick Snow

OGJ Washington Editor

Michael R. Bromwich prepares to finish 17 months at the US Department of the Interior satisfied that necessary reforms were beginning to be made at a troubled agency there, but concerned that their permanence may be threatened by funding cuts, he said 2 days before stepping down as head of what formerly was the US Minerals Management Service.

“I never thought I’d do anything like this. It’s been the biggest challenge of my career,” he told reporters during a Nov. 28 briefing at Interior’s headquarters. “It’s a huge accomplishment that’s a tribute to the hard-working and dedicated employees of an agency that was vilified as immoral and corrupt, particularly since we began reorganizing it in a crisis environment.”

But Bromwich also expressed deep concern that members of Congress and the White House might slash DOI’s offshore resources management budget to reduce the federal budget deficit. “People have short memories,” he observed. “We’ve tried to institutionalize these reforms, but there are people who believe that this spill was an anomaly and the changes are too onerous. This agency fought a losing battle for resources over 28 years, and I think these budget gains need to be sustained. I’m worried that the larger budget climate, particularly after the congressional super-committee failed to reach an agreement, may undermine the progress we’ve made.”

He said the change he made in MMS’s relationship with the industry it was supposed to regulate to one where “we are expecting more and yielding less” was necessary to implement badly needed safety and environmental reforms. “The amount I knew about offshore oil and gas issues you could fit in a thimble,” Bromwich said. Despite a steep learning curve, he said he quickly recognized that stronger safety rules would be needed. “These couldn’t just be paper standards,” he maintained. “Fairly quickly, we set the tone with industry that this was not the same agency it had been dealing with.”

Came at critical time

Bromwich became director of the US Bureau of Ocean Energy Management, Regulation, and Enforcement—the former MMS—on June 21, 2010, as federal, state, local and oil and gas industry responders tried to contain a massive oil spill from BP PLC’s deepwater Macondo well. He arrived after US Interior Sec. Ken Salazar announced he was moving MMS’s royalty and revenue responsibilities to a new Office of Natural Resources Revenue under Asst. Interior Sec. for Policy, Management, and Budget Rhea Suh.

The move ended one of MMS’s mission conflicts, but Salazar and Bromwich concluded that BOEMRE itself would need to be divided to separate leasing and resource management from enforcement of safety and environmental regulations. The separation occurred on Oct. 1 with the creation of the Bureau of Ocean Energy Management, with Tommy L. Beaudreau as director, and the Bureau of Safety and Environmental Enforcement, which Bromwich agreed to lead on an interim basis until a permanent director could take over.

US Coast Guard Rear Adm. James A. Watson IV, who coordinated the joint response to the spill, will take BSEE’s helm on Dec. 1, and Bromwich will stay on for 30 days as a counselor to Salazar, to assist in the transition, and to attend to other matters including continuing to build an international offshore regulatory alliance. “I can’t count the number of foreign regulators who have come to us asking what we have learned and how to implement it,” he said.

He said that the next critical phase for BSEE will be reviewing safety and environmental management systems in December which offshore operators and contractors are supposed to have developed and implemented. “We will initially put our composites of our most common findings,” he said. “Ultimately, we will want to specifically identify violators, but in the short term publicly identifying the most prevalent problems while providing immediate feedback to specific operators is the best approach.”

Shuns revolving door

After Dec. 31, Bromwich said he would like to continue working on offshore resource issues, but not as a representative of any group having dealings with BOEM or BSEE. “There’s been too much of a revolving door with former directors returning in new capacities with outside organizations. I refuse to do this,” he declared, adding that he might join a law firm or start one of his own.

Bromwich said that he thought his relationships with individual oil and gas producers were better than those he had with trade associations which represented them and some members of Congress. “The operators knew who they were dealing with from the beginning,” he said. “I wasn’t a member of their team…I didn’t have any conceptions, let alone preconceptions, of the issues. I made the industry and environmental groups unhappy, but I called matters as I saw them.”

He suggested that his lack of oil and gas experience may have worked to his advantage by making him question long-standing practices, such as MMS’s limiting its regulation and penalties to offshore well operators and letting producers sort out penalties with drilling contractors and service and supply companies. Referring to his effort to begin citing other well drilling participants, Bromwich said: “I didn’t believe we should give across-the-board immunity to a contractor who had committed a major violation.”

He said that he was more successful recruiting new inspectors and environmental engineers to come work at BOEM and BSEE than he was at hiring senior petroleum engineers. “We need to pay them more, and recruit them more,” he said. “I’ve heard from some industry executives that they’re having trouble too, and it’s more urgent for them because they need to design the kind of wells that meet our new requirements.”

Retraining engineers from other specialties may be one way to address this problem, and Bromwich noted that the Colorado School of Mines has such a program under way. “Every option needs to be explored so neither industry nor the agencies that regulate it experience a bottleneck,” he said.

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By Andrew Restuccia – 10/17/11 08:45 AM ET

Interior’s offshore drilling chief will testify Tuesday before the Senate Energy and Natural Resources Committee on whether the United States is capable of responding to another massive oil spill.

The hearing, called “Outer Continental Shelf Oil Spill Readiness,” comes more than a year after an explosion on the Deepwater Horizon oil rig killed 11 workers and dumped 4.9 million barrels of oil into the Gulf of Mexico.

In the aftermath of the oil spill, Michael Bromwich — director of Interior’s Bureau of Safety and Environmental Enforcement — imposed a series of enhanced offshore drilling safety and environmental standards.

Bromwich testified last week in front of the House Natural Resources Committee.

Coast Guard Vice Adm. Brian Salerno and others will testify at the hearing, which is scheduled for Tuesday morning.

Also on Tuesday, a panel of the Senate Commerce Committee will hold a hearing on pipeline safety. The Senate is trying to pass pipeline safety legislation that has won bipartisan support. But Sen. Rand Paul (R-Ky.) is blocking lawmakers from quickly approving the legislation.

While the House is on recess this week, a bevy of hearings in the Senate will be important for energy policy.

* A subcommittee of the Senate Environment and Public Works Committee will hold a hearing Wednesday on cleaning up brownfield communities.

* A Senate Energy and Natural Resources subcommittee will hold a hearing Thursday on “shale gas production and water resources in the Eastern United States.”

Off Capitol Hill, the Energy Department’s Blue Ribbon Commission on America’s Nuclear Future will meet in Washington on Thursday. The commission has been charged with developing a strategy to deal with nuclear spent fuel and waste.

Energy Secretary Steven Chu will give the keynote speech at a meeting of the National Coal Council on Friday.

Also on Friday, the Nuclear Regulatory Commission will hold a briefing on the North Anna Nuclear Power Plant, which was knocked offline when a magnitude-5.8 earthquake shook the East Coast in August.

Other events of note:

* The Johns Hopkins University Paul H. Nitze School of Advanced International Studies is holding a discussion Monday on the scientific lessons learned from last year’s oil spill.

* The New America Foundation is holding a discussion on the economic impacts of $4-per-gallon gas on Friday.

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WASHINGTON – Two Louisiana House members irritated a committee chair Thursday when they went off topic to ask the country’s oil drilling safety chief about his agency’s efficiency.

The hearing before the House Committee on Natural Resources was about the investigation report released by the Bureau of Ocean Energy Management, Regulation and Enforcement and the Coast Guard.

But Reps. Jeff Landry and John Fleming, both R-La., questioned Michael Bromwich, director of the Bureau of Safety and Environmental Enforcement, about how quickly the agency is completing its work and how it is spending money.

Each was called out once by Rep. Doc Hastings, R-Wash., the committee chair, for their off-topic questions.

“We’ve taken three hits,” Fleming said. “The first one was the deaths of 11 good people. The second has been the perception that our beaches have been harmed to the point that vacationers have stopped coming, which is not the case. Thirdly, and more importantly at this time, is the permit slow-down that Mr. Bromwich and I and Mr. Landry have had many discussions on.”

Fleming showed a graph that was used at another hearing on Wednesday illustrating wait times for offshore drilling plan reviews ranging from 50 to 300 days.

Fleming said the graph was created by the Gulf Economic Survival Team using data from the Bureau of Safety and Environmental Enforcement website. However, Bromwich called the graph, “badly flawed.”

“The facts are that, currently, it takes an average of 34 days from the time the plan is originally submitted until it is deemed submitted and complete. Pre-Macondo, it was 37 days,” Bromwich said.

Bromwich said his agency is operating the best it can with the resources it has, which he said are far from adequate.

“Over 28 years, this agency has been starved of resources,” Bromwich said. “When you compare it to the resources of inspectors compared to facilities in some other countries with substantial offshore activity, like the U.K., Norway, it’s laughable how inadequate our resources are. It would be laughable if it weren’t so serious.”

The agency’s 2011 budget was $225 million. The administration asked for $358 million for fiscal 2012, which began Oct. 1. Congress has yet to pass all the appropriations bills for this year, but the House has recommended a budget of $323 for BOEMRE.

Landry said that, in looking at the agency’s budget for the last few years, he has a problem with granting the additional $35 million.

“We’re concerned about where the money is going,” Landry said. “I bet that you could scrub your agency and see where that money is going and say, ‘That’s not quite as important as making sure that men and women who are drilling in the Gulf of Mexico do so safely.’ ”

Bromwich said the agency’s initial hiring goal when it got budget increases was inspectors, but the agency has since moved to a more balanced hiring plan. He said the agency still has nowhere near the number of engineers and inspectors it needs, and the budget increases – about 100 percent since 2008 – seem significant, but are actually nearing what the agency should have started with.

“When you start with close to nothing, the percentage increase can look quite huge on paper,” Bromwich said, “and still not get you to where you need to be.”

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A year after the Obama administration lifted the ban on issuing deepwater drilling permits, there are lots of ways to measure what’s happening or not happening with drilling in the Gulf of Mexico.

You can count the drilling platforms that have moved and are scheduled to move to Africa, South America and Vietnam; the number of platform workers who decide they cannot commute halfway around the world to a job even when they work 30 days on and 30 off; the drop in business along the Gulf Coast for all support businesses — from helicopter shuttles, geo-mapping services and seismic subsurface imaging, to specialty tool repair, cement work, diving, catering and serving po’boys.

And then there is this:

Where once the application for a drilling permit was 40 pages long, today it is routinely more than 3,000 pages.

The figure — which translates to more than a half-mile of letter-size paper laid end to end — tells two stories at once.

One, the former application was too short, and last year’s deadly Deepwater Horizon explosion proved it had been made worthless by industry lobbyists and regulators with no scruples.

And two, you need to have a special kind of zeal for regulating business to be able to multiply that paperwork by a factor of 75.

Speaking to the House Natural Resources Committee this week, the chief financial officer of ATP Oil & Gas Corp. in Houston, said that getting Interior Department approval for a permit to drill a new well or plug an old one is “unduly difficult, time consuming and, in our view, unnecessarily contentious.”

Reporting on the meeting with energy company officials, online industry publication Fuel Fix reported that one firm has found that the time it takes to get a permit to secure an abandoned well has grown from 42 days before the April 20, 2010, explosion to an average of 129 days a year and a half later.

An analyst with Quest Offshore Resources said there are “some signs of recovery,” Fuel Fix reported, but drilling activity remains below pre-spill levels. It could be mid-2012 before there are at least 35 floating rigs operating in the Gulf — one more than the number working before the explosion and spill.

We agree that tighter safety standards were needed, and we hope that enforcement is full and consistent. But imposing a process that chokes off this part of the energy sector is foolish and harmful. We need to be smarter.

In the meantime, consumers are near delirious with the comparatively good news that the price of gas has dipped below $3 a gallon in some places.

With that, any serious discussion about our national energy policy will have to wait for another day.

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