Feds give first green light for deep-water project since drill ban

The federal government just gave the green light for Noble Energy to resume a deep-water drilling project that was halted by the Obama administration’s moratorium last year — the first of its kind to be approved since the ban was lifted in October.

Until today, federal regulators had yet to allow offshore drilling that was off limits under a five-month ban on some deep-water exploration.

Michael Bromwich, the head of the Bureau of Ocean Energy Management, Regulation and Enforcement, which issued the approval, said the permit “represents a significant milestone for us and for the offshore oil and gas industry, and is an important step towards safely developing deep-water energy supplies offshore.”

But Noble’s project isn’t a new one — signaling there still may be high hurdles ahead for other proposed offshore oil and gas projects.

Project launched days before Macondo

Noble will now be able to drill a bypass well about 70 miles southeast of Venice, La., near work that was launched on April 16 last year — just four days before the Deepwater Horizon explosion. The new bypass drilling is meant to get around plugs the company was forced to set in the original well under the moratorium. The project at issue was one of 16 under way when the administration imposed the ban.

In January, the Bureau of Ocean Energy Management, Regulation and Enforcement said it would not subject those projects (which are operated by 13 separate companies) to new environmental assessments before allowing work to resume.

However, the projects did have to comply with a requirement that companies be able to swiftly contain a blowout in deep water, like the one at BP’s Macondo well.

Two companies — Houston-based Helix Energy Solutions Group and the Exxon Mobil-led Marine Well Containment Company — have vessels and equipment that could capture oil from underwater wells. On Friday, Interior Secretary Ken Salazar and Michael Bromwich, the head of the ocean energy bureau, met with the two companies in Houston for briefings on their systems.

According to the government, Noble Energy contracted with Helix to respond in case of a disaster at its just-approved project.

“This permit was issued for one simple reason: the operator successfully demonstrated that it can drill its deep-water well safely and that it is capable of containing a sub-sea blowout if it were to occur,” Bromwich said. “We expect further deep-water permits to be approved in coming weeks and months based on the same process that led to the approval of this permit.”

Many critics

The ocean energy bureau has approved other offshore drilling that was never blocked by last year’s moratorium, including 37 new shallow-water wells, four wells in more than 500 feet of water and more than 220 other deep-water exploration projects.

But today’s move comes amid heavy criticism from industry leaders and Gulf Coast lawmakers in Congress who say the Obama administration has dragged its feet on allowing energy producers to get back to work since last year’s oil spill.

Sen. David Vitter, R-La., has vowed to block quick confirmation of an Interior Department nominee until the government issues at least 15 deep-water drilling permits. He refused to back down today. “While one deep-water permit is a start, it is by no means reason to celebrate,” Vitter said.

House committees are expected to grill Interior Secretary Ken Salazar about the pace of offshore permitting this week, when he testifies about the Obama administration’s budget proposal. The House Natural Resources Committee is holding two hearings later this month focusing on what panel chairman Doc Hastings, R-Wash., calls the “de facto moratorium” on offshore drilling.

Lawmakers also have seized on unrest in Libya to ramp up pressure on the administration to quickly approve offshore drilling projects.

Bromwich denied that “upcoming testimony” by Salazar or politics played a role in the permit approval.

“There is no politics associated with the approval of this application,” Bromwich told reporters on a conference call. “This application . . . became ripe to be acted on literally within the last few days. It has nothing to do with anything other than that it was ready to be approved.”

Fail-safe measures

Noble is expected to begin the bypass drilling in April using a rig leased from Ensco. Before the work begins, BOEMRE will witness function testing of the blowout preventer that will be used at the site, and which could be called into action in case of an unexpected surge of natural gas or oil.

The government accepted Noble’s estimate that under a worst-case disaster as much as 69,700 barrels of oil could flow from the site per day. That calculation was key to federal regulators’ determination that Helix’s containment system would be up to the task if the well blew out.

“We determined that the capping stack that Helix has would be sufficient to cap the well, and there would be no blowback to the surface of the water and therefore no need for surface capture,” Bromwich said. “It’s based on a well-by-well determination.”

Approval of this project may have been streamlined because drilling at the site had been under way for two months before the well was plugged under the moratorium. That meant regulators and Noble knew more about the geology of the project.

But Bromwich said he was hopeful that this would be the first approval of many to come — and said it should help ease industry fears that deep-water drilling would be on hold indefinitely.

“Once you do something as we’ve done here, that is a full detailed analysis . . . I think it does get easier” to do it again, he said. “I’m certainly hopeful it will be quicker for us to do the analysis going forward than it was with this first well. Some of the uncertainty that industry said was still out there will be dispelled … and may encourage operators who have been holding back to file additional permits.”

But oil and gas industry leaders had a muted reaction. The American Petroleum Institute issued a news release stressing that the government had approved just “one permit for one company.”

“While every permit is welcome news, tightening the screws on domestic oil and natural gas production during a time of increased demand and global uncertainty is a formula for disaster,” said API President Jack Gerard. “This slow-moving process continues to stifle domestic production and puts thousands of jobs at risk in the Gulf and around the country.”

Read more about the reactions from lawmakers and industry leaders here.

24 Comments

  1. Jackalope

    The headline is a bit misleading: the project was already underway when the moratorium was imposed.

    #1
  2. elchucoguy

    Excellent news!

    #2
  3. Peter

    Wow, one whole approval. You can see how concerned the government is with jobs and the economy, lol.

    #3
  4. pdh42

    1 whole approval???? Is that it???? And people are celebrating like we were given the keys to the city…. I will believe that they have woke up to the damage that they have done when I see many rigs heading back out into the gulf…. Problem is though that many of them have left the country and will not be back for many years…. Thanks Nobama for all of the damage you have done…….

    #4
  5. g-r

    They’ll never learn…..

    #5
  6. Bill in Houston

    The ban was lifted over FOUR MONTHS ago and this is the FIRST green light, and on a project that was already underway.

    For all you folks who voted for Barack Obama, I hope you’re happy with your choice.

    #6
  7. Rocknocker

    Well, it’s a start at last. But, they need to issue more permits and soon (like yesterday).

    #7
  8. Jerome

    Wow. Four months to approve one well. At this rate we should have 5 new offshore wells by the 2012 election.

    #8
  9. bsprop96

    Barack is very pleased that his policies are working:
    1. De facto moratorium on Gulf Drilling
    2. Onerous legislation or regulation to prevent any other domestic drilling
    3. People being forced to buy union made, overpriced, short range, subsidized, electric and hybrid cars
    4. Massive subsidies to light rail, heavy rail and Amtrack
    5. Onerous legislation or regulation to prevent banks from lending (even Bernie Madoff says it is a joke)
    6. Massive subsidies to Ethanol, wind, solar and other unproven high cost technologies

    #9
  10. bsprop96

    I hope all that all who voted for Obama and the Democrats and that our now unemployed, underemployed, in fear of layoff have connected the dots and will work to get them out of office.

    #10
  11. richard

    Bill, very happy thank you. Oil production in the US is at the highest level that it has been since 2003. President McCain would have us in a war with Libya and Iran right now.

    #11
  12. Newsworthy

    Before the BP spill it took 2 weeks to approve a permit. Now that Obama is in control of this it has taken only 9 months….anything wrong with this picture? We have a problem and we have a so called leader that is fiddling while America is getting burned at the pump. Let’s organize a group of people and demand that Obama step down….he’s doing such a good job….

    #12
  13. richard

    pdh2, by my count, less than 5 rigs have “left” the Gulf. Where are they going to go? Egypt? Nigeria?

    #13
  14. Big Pappy

    The ABSOLUTE only reason this permit is being issued is in reaction to the current oil prices. You can bet your last dollar that if oil and fuel had not made the drastic increases of the last MONTH…….nothing would have happened. When are you dimlibs going to admit that your “Guy” in the White House is the most incompetent, anti American, Socialist to EVER try to lead this Great Country.

    Pappy

    #14
  15. Hound

    wow….oil hits $100 and all of a sudden the permits start flowing…..Is this the official start of the re-election campaign?

    #15
  16. TXSFRED

    Keep a cool ANGER at President Obama and do not let it burn out, folks. The man needs to go in 2012 IF we even survive until then behind his ridiculous European/ Commie/ whatever it is …agenda.

    #16
  17. designer

    richard, you know more have left and you forgot about Brazil

    #17
  18. Robert

    Too Late Obama, you’ve single handidly ruined the lives of so many people on the Gulf Coast, and for those you didn’t ruin, you changed them forever and for the worse. And for those that support you, they’re too stupid to even be able to understand. Least we even start talking about those that are employed or have have businesses patronized by NASA.
    Too bad you’re not going to be on one of those One-Way trips to Mars.

    #18
  19. Yellow Dog Democrat

    Take your time, Pres Obama, and make sure those oil companies operate safely. Don’t hand out those drilling permits like the irresponsible Bush administration did.

    As for creating jobs, those unemployed (oil workers complaining)can go and apply at BP to clean the oily mess they left on the ocean floor. Or is that job too dirty for you.

    #19
  20. Deepwater Engineer

    The industry is in a much better position to repond to a blowout event than pre-Macondo. We have had to work with the government on fast response systems to cap and contain wells such as Macondo. I guess the government feels we can now deal with putting unqualified supervisors and contractors on our rigs and deal with a blowout if these unqualified people make the same mistakes that happened at Macondo (since it is a “systemic problem in the industry”). Whatever…..

    #20
  21. Frodie

    It’s incredible that the current administration get the blame for this. The oil spill is caused by BP, the cleanup is not anywhere done, BP has not paid the claims, and people are asking why the permits are not issued faster!!

    BP’s stock is back at $46/share so BP has money. BP should hire more people to do the cleanup (increase hiring) & pay the claims so the people can use the payments to restore their work, business, and lives.

    #21
  22. Art Vandeley

    This headline lies!!! A permit per month a drilling ban “lift” does not make. Obama hates the US oil and gas industry. If you believe anything else….naiveté is not just a river in Egypt.

    #22
  23. Don

    Why do you keep showing jack-ups when you’re writing about deep water projects?

    #23
  24. David Gower

    If our legislature can make national political comments on sonograms, immigrants, balanced budgets, concealed carry, etc, etc, etc Why can’t they make a comment on energy and specifically Gulf drilling? We can look forward to 2012 (if we are still here) but our legislature is in session now. Why can’t our representatives do something here and now? Where are their priorities and sense of urgency? Nationally, our leaders, the media and the general public does not understand that oil cannot be just turned on and off with no lead time considerations.

    #24