By January 31, 2011 0 Comments Read More →

Regulatory uncertainty plagues oil-and-gas industry

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By Jeremy Alford

BATON ROUGE — There’s a gulf between the oil-and-gas industry, as it attempts to recover from last year’s epic spill, and the federal regulatory agencies that seem to be holding all the cards.

Louisiana’s oil-and-gas industry is in a holding pattern as it waits on the feds to permit drilling in the Gulf of Mexico at previous levels.

Over the past week, roughly a half dozen deepwater rigs vacated the region due to last year’s temporary ban and the lack of activity after it was lifted by the White House.

“There’s so much uncertainty it’s difficult for a company to really make decisions on capital investments,” said Don Briggs, president of the Louisiana Oil and Gas Association. “That’s one of the concerns I have.”

While the temporary drilling ban only impacted deepwater exploration, Briggs and others say shallow-water permitting is running way below historic levels as well.

Industry leaders are concerned that investments in the Gulf of Mexico are drying up.

“I’ve never seen anything like this,” Briggs said. “When you stop and think about it, just in the stroke of a pen, the entire Gulf of Mexico was practically shut down. Literally billions and billions of dollars in investments came right to an end and could not move forward.”

If there’s a similar sense of urgency at the U.S. Department of Interior, it’s subdued, punctuated chiefly by organizational meetings and news conferences.

The department’s newly created Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEMRE, announced last week the structures and responsibilities of two independent agencies that will assume offshore-energy management and enforcement functions once assigned to the former Minerals Management Service, or MMS.

Last week, BOEMRE Director Michael R. Bromwich also made a public appeal for nominations for the Offshore Energy Safety Advisory Committee, which will become a permanent advisory body of scientific, engineering and technical experts providing input on offshore drilling safety, well containment and spill response.

While critics argue that the new bureau is already getting bogged down in bureaucracy as Gulf energy action plummets, federal officials insist they’re being careful and thorough.

“We are moving ahead quickly and responsibly to establish the strong, independent oversight of offshore oil-and-gas drilling that is needed to ensure companies are operating safely and in compliance with the law,” Interior Secretary Ken Salazar said.

Bromwich added that progress doesn’t come cheap or fast.

“The former MMS was saddled with the conflicting missions of promoting resource development, enforcing safety regulations and maximizing revenues from offshore operations,” Bromwich said. “Those conflicts, combined with a chronic lack of resources, prevented the agency from fully meeting the challenges of overseeing industry operating in U.S. waters.”

He said the reorganization is designed to remove such conflicts by clarifying and separating missions across the three agencies.

Louisiana Department of Natural Resources Secretary Scott Angelle had his own meeting with Bromwhich Friday to discuss the obstacles that keep new drilling permits from being issued for the Gulf of Mexico.

The meeting — the third in two weeks — covered a handful of regulatory rules that are being drafted for what will become the new permitting process.

“Director Bromwich also assured us that, despite the reorganization efforts taking place at the [bureau], our efforts to work through the permitting process will not lose momentum,” Angelle said.

For now, he said the game plan is to stay involved, continue to weigh in on the regulatory side and, basically, wait.

“We identified our list of actions that need to be taken. We were constructive and we worked to ask the appropriate, but tough questions that will hold [the bureau] accountable and will lead the industry to the first new permits issued in almost a year,” he said.

Original Article

Posted in: Gulf of Mexico

About the Author:

The Louisiana Oil & Gas Association (known before 2006 as LIOGA) was organized in 1992 to represent the Independent and service sectors of the oil and gas industry in Louisiana; this representation includes exploration, production and oilfield services. Our primary goal is to provide our industry with a working environment that will enhance the industry. LOGA services its membership by creating incentives for Louisiana’s oil & gas industry, warding off tax increases, changing existing burdensome regulations, and educating the public and government of the importance of the oil and gas industry in the state of Louisiana.

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