The federal government on Monday approved the first permit to drill the kind of deepwater oil well that was banned after last year’s BP disaster, but it’s yet to be seen whether the move will open the gates to the type of aggressive and lucrative exploration the industry has been clamoring for.
Eliot Kamenitz, The Times-Picayune archiveMichael Bromwich is director of the Interior Department’s new Bureau of Ocean Energy Management, Regulation and Enforcement.
Top offshore regulator Michael Bromwich, director of the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement, said the approval for Houston-based Noble Energy is a milestone, even though it’s to pick up work on a well southeast of Venice that Noble had already drilled to more than 13,000 feet.
The work at Noble’s Santiago well, less than 20 miles from where the Deepwater Horizon rig was drilling BP’s ill-fated Macondo project, stopped when President Barack Obama imposed a moratorium blocking most drilling in deepwater from May 30 through Oct. 12. Since then, the only permits approved have been for technical work, such as water-infusion wells that are not intended to tap into oil reservoirs.
Bromwich said he expects his agency to approve more deepwater wells in the coming weeks. He told Louisiana Energy and Natural Resources Secretary Scott Angelle on Monday that the agency has added 41 wells to a list of 16 that might soon be able to resume work that began before the Deepwater Horizon accident. Bromwich also said he expected more drilling applications to come in now that the ice has been broken.
Still, the permit is not as significant as the anticipated approval of the first new drilling plan since the Deepwater Horizon incident. That would be necessary before any new exploration can begin and would offer a true sign that the industry can make new investments in the Gulf of Mexico. The drilling plan that’s furthest along in the government review process is from Shell for two wells off the western Louisiana coast.
The Noble well is different because it doesn’t involve a new drilling plan.
But Bromwich said that it, too, “is a new well in the sense it is going into a reservoir and therefore was barred under the moratorium. So we treat an application for a bypass like this much as we do for new wells. I don’t think it’s right to say, ‘Oh, it’s just a bypass so it’s not as significant as a permit for a new well.’”
He said the approval is a sign that his agency is not stalling when it performs careful reviews of each proposed well, and that its process can be a constructive way to get the industry back in gear.
“Industry has been waiting for signals that deepwater drilling would be able to resume, and I think they’ll take this as that signal,” Bromwich said in a conference call with news media.
Hoping for more
Some industry leaders and their political advocates offered congratulations and hope for a real turning point in the permitting process.
Randall Luthi, the president of the National Ocean Industries Association and a loud critic of the government’s slow pace on permitting, praised Bromwich for working with industry.
“Taking the Department of Interior at its word that this is not a token permit and that many are lined up to be approved in the near future, today’s action sends a calming signal to operators, producers and service companies that the long drought is just about over,” Luthi said in a statement. “It is also a compliment to Director Bromwich and a testament to the efforts of many within industry, that the containment and safety issues can be resolved when industry and (the bureau) work together.”
Sen. Mary Landrieu, D-La., suggested the Interior Department was finally heeding pressure from the Gulf Coast.
“I hope that this permit is the first of many to come, and I will continue to use every lever at my disposal to ensure that it is,” she said in a statement. “While one permit is good, it’s long overdue.”
Louisiana Gov. Bobby Jindal also claimed some credit for the breakthrough, saying his administration had been working closely with Bromwich.
But others on the industry side offered skepticism. Jim Adams, head of the Offshore Marine Service Association, which represents the companies that supply and support deepwater rigs, said approving just one permit after months of no movement “only prolongs the suffering of thousands of workers and their families.”
Unrest in Libya and elsewhere in the Middle East is fostering uncertainty in the oil markets and driving up U.S. gas prices. Sen. David Vitter, R-La., made clear he was unsatisfied with the Noble permit, mentioning the specter of $4-per-gallon gas at the pumps and threatening to maintain his hold on Obama’s Fish and Wildlife Service nominee, Dan Ashe, until 15 deepwater drilling permits are approved. Rep. Steve Scalise, R-Jefferson, called the permit a “one-hit wonder just because (Interior Secretary Ken Salazar) is coming to testify before Congress this week.”
Bromwich said that politics and a recent ruling by a federal judge demanding action on pending permits played no role in the agency’s decision to approve the Noble permit.
Meanwhile, environmental groups praised the government for looking at each well as a separate entity, with its own set of risks, and took the approval as a sign that safety is finally getting its due.
“It’s good news for the industry and good news for America that the safety technology is accelerating,” said Elgie Holstein, the oil spill response coordinator for the Environmental Defense Fund and former chief of staff in Bill Clinton’s Energy Department. “And in the face of $100 (a barrel of crude) oil prices and the accelerated drilling that’s sure to follow, it’s definitely needed.”
Blowout plan in place
Bromwich said Noble got the first approval because it was further along in the process and because its plan for containing any possible well blowouts has received agency approval. Noble’s application says it will use the Ensco 8501 rig to do the drilling work and a well-capping device offered by the Gulf consortium Helix Well Containment Group. Bromwich said federal authorities will personally observe tests on the rig’s blowout preventer device, which sits on the seafloor, before it’s deployed.
Helix is one of two industry cooperatives to recently finish developing blowout response systems that aim to make sure the long, frustrating trial-and-error containment effort last year by BP and the federal government isn’t repeated. Noble’s Santiago well sits in 6,500 feet of water, about 70 miles southeast of Venice. Helix is still working to make its oil-collection system work in depths greater than 5,600 feet, but Bromwich said the conditions at Santiago are such that the Helix capping stack will be sufficient to close off the hole in case of a blowout and it won’t be necessary to bring any discharged oil and gas to the surface.