Still no sign of Gulf permits for oil companies

Ken Salazar, the US interior secretary, and Michael Bromwich, director of the US oceans regulator, held a press conference amid great fanfare on Monday to unveil that they had approved a plan by Shell for deepwater oil and gas exploration.

The approval was trumpeted as the first plan approved since the Macondo disaster last April, and one that provided a template for the industry to follow to get their own plans approved.

But the approval does not mean Shell can drill. Its plan calls for drilling three exploratory wells in about 3,000 feet of water, 130 miles offshore Louisiana. To actually drill, Shell must still get permits for each well. And, despite the fanfare, nobody has received a permit to drill a new deepwater well in the Gulf of Mexico since BP’s accident.

But while Bromwich is determined to resist pressure to once more become a “permitting mill”, the agency does seem to be under pressure to deliver – something. That must be why the bureau made such fuss over approving an incremental step in the process. From Bromwich:

The successful completion of this environmental assessment, and the resulting approval of Shell’s exploration plan, unmistakably demonstrates that oil and gas exploration can continue responsibly in deep water. Shell’s submission has satisfied the heightened environmental standards that we are now applying and I am confident that other operators can satisfy the same standards.

But when Shell will actually be given permission to drill remains to be seen. From Shell spokeswoman, Kelly op de Weegh:

We have submitted the first of three APDs (Application for Permit to Drill) for Cardamom, and we await its approval.  I have no indication on timing.

So, despite approval for Shell’s Cardamom exploration plan, the industry remains just as unsure about the timing of new drilling as it was when the bureau in late February approved the first deepwater drilling permit to restart a project in the Gulf since the disaster. That permission was for Noble Energy to restart a well that was halted after the Obama administration issued its moratorium on deepwater drilling.

And the timing of that announcement came just days before Salazar was to testify on Capitol Hill about progress in getting oil companies back to work in the Gulf. Bromwich insisted the announcement was not political, but the timing certainly made it look so.

Monday’s announcement also came across as political. It came as President Obama went down to Brazil and discussed buying Brazilian oil – something US oil and gas companies could not fathom. Here is what Jack Gerard, president and chief executive of the API – the oil industry’s lobby group – had to say:

It is beyond comprehension the administration would encourage trade for Brazilian oil while obstructing US oil and natural gas development, eliminating related jobs here at home, and decreasing oil and natural gas revenues to the US Treasury when the government is trillions of dollars in debt. The message from the White House to America’s oil and natural gas workers: We’re going to outsource your job.

The administration says it supports more oil and natural gas development here in the United States, then at every turn discourages it.  And today, the White House is making a deal with Brazil for the oil it is not allowing companies to produce here.  There’s nothing wrong with buying Brazilian oil, but there’s a big problem when we’re forced to because we’re held back from producing our own.

Reactions like that certainly could have been good motivation for the bureau to hold a news conference to say that it was making progress on deepwater drilling in the Gulf. But the bottom line is that no matter how bright a picture the bureau tries to paint, the industry will not be satisfied until it is out there drilling new wells in the deepwater Gulf. And it remains unclear when they will be permitted to do that.

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