Houston’s Noble Energy lands first post-ban offshore drilling permit

WASHINGTON — The federal government on Monday told Noble Energy it can resume a deep-water drilling project — the first work of its kind approved since the Obama administration lifted a moratorium prompted by last year’s Gulf of Mexico oil spill.

Until Monday, federal regulators had not allowed any offshore drilling that had been off limits under the five-month ban against some deep-water exploration, even though the ban ended in October.

Michael Bromwich, 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 offshore drilling advocates were doubtful the move would unleash a flood of permits because the project approved Monday was one of 16 under way when the ban was imposed – and therefore faced a clearer path to approval than proposals filed since last year’s oil spill.

“While one deep-water permit is a start, it is by no means reason to celebrate,” said Sen. David Vitter, R-La.

The American Petroleum Institute noted 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.

Noble Energy will be able to drill a bypass well in its Santiago prospect about 70 miles southeast of Venice, La., near work that was launched just four days before BP’s Macondo well blew out April 20, triggering the spill.

The company spent two months drilling to a depth of 13,585 feet before it was forced to plug the well under the moratorium. The bypass drilling in 6,500 feet of water is meant to get around the plugs in the original well.

Noble Energy, which has a 23.25 percent working interest in the Santiago prospect, is expected to begin the drilling in late March using a rig leased from Ensco. The target depth is 19,000 feet.

All new assessments

The ocean energy bureau announced in January that the 16 projects under way when the moratorium was imposed would not have to undergo new environmental assessments before restarting. But that environmental hurdle remains for newly proposed deep-water projects.

The Noble project also may have benefited from the two months of drilling, which gave the company and regulators more information about the geology at the site.

All deep-water drilling — including Noble Energy’s Santiago well — must comply with new safety and environmental mandates imposed since the spill. Companies also must prove they can swiftly contain a blowout in deep water.

Two companies — Houston-based Helix Energy Solutions Group and the Exxon Mobil-led Marine Well Containment Co. — have developed systems including vessels and other equipment to capture oil from runaway deep-water wells.

Noble Energy contracted with Helix to for its project. “Noble Energy is proud to help lead the industry back to drilling in the deep-water Gulf,” said David Stover, the company’s president and chief operating officer.

Prepared for the worst

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.

“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.

Bromwich said he hopes similar permits will follow soon and that Noble’s permit should help ease industry fears that deep-water drilling will be on hold indefinitely.

“Some of the uncertainty that industry said was still out there will be dispelled,” Bromwich said, “and may encourage operators who have been holding back to file additional permits.”

Industry leaders and Gulf Coast lawmakers say the administration has dragged its feet on allowing energy producers to get back to work since the oil spill.

Permit pace scrutinized

House committees are expected to grill Interior Secretary Ken Salazar about the pace of offshore permitting this week, when he testifies about the administration’s budget proposal. And the House Natural Resources Committee has scheduled 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 approve offshore drilling projects.

Bromwich said neither Salazar’s upcoming testimony nor other political considerations played a role in the permit approval.

“It has nothing to do with anything other than that it was ready to be approved,” Bromwich told reporters on a conference call.

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 200 permits to modify existing deep-water projects.

jennifer.dlouhy@chron.com

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