The End of the Drilling Permitorium? Guess Again

Supporters of a sane, productive national energy policy must surely be popping champagne corks and blasting their vuvuzelas all across the land this week.  After 314 days of the United States government holding the nation’s oil industry hostage in a fashion which hearkened back to the Carter administration, the first deep water drilling permit in the Gulf of Mexico has been issued.

Or has it?

As The Hayride points out, this wasn’t actually a new permit. It was awarded to Noble Energy for a well at the Santiago project, located off the coast of Louisiana, not far from the scene of the Deepwater Horizon blowout. Last summer the operators had already drilled more than 13,500 feet down, well on their way to the estimated 19,000 feet required to reach the oil when they encountered an obstruction. The permit in question was actually permission to bypass that obstruction and complete the original job.

None of that stopped Michael Bromwich, head of the Obama administration’s Bureau of Ocean Energy Management, Regulation and Enforcement, (BOEMRE) from proclaiming it a glorious benchmark in the efforts of the oil industry to work with the federal government.

"This is a new well in the sense it is going into a reservoir and therefore was barred under the moratorium,” Bromwich said. ”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 its not as significant as a permit for a new well.’"

The truth is that there is a significant difference which the administration is attempting to downplay. This was a well which was nearly completed at the time of the BP accident and it could have been online and producing long ago. But even though there were no serious concerns raised about this rig, they have been forced to jump through one hoop after another, installing new equipment and documenting modified protocols for months on end.

None of that is a bad thing in and of itself. While human error and a cascading series of mechanical failures were to blame for Deepwater Horizon, a potential weakness in standard systems was identified and energy developers needed to respond. And they have.

The problem is that BOEMRE isn’t going to accept -- at least at this point -- a new safety system being put in place for the industry or each individual company. They currently want a discrete review conducted for each and every individual drill site permit, no matter how repetitive, with the same level of reporting and review required before the necessary paper is issued. Industry insiders have already expressed private concerns that such a system will continue a de facto permitorium indefinitely.