U.S. to issue more flexible oil drilling moratorium

WASHINGTON Wed Jun 23, 2010 4:10pm EDT

An oil sheen covers the surface of Bay Jimmy near Port Sulpher, Louisiana June 20, 2010. REUTERS/Sean Gardner

An oil sheen covers the surface of Bay Jimmy near Port Sulpher, Louisiana June 20, 2010.

Credit: Reuters/Sean Gardner

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WASHINGTON (Reuters) - The U.S. government will revise its restrictions on offshore drilling, which could allow some deepwater oil projects to go forward after a court threw out the Obama administration's blanket drilling ban, a senior official said on Wednesday.

U.S. Interior Secretary Ken Salazar told a congressional panel the new moratorium would be adjusted and would include criteria for ending the ban. He did not provide more details on how the new moratorium would get around the judge's ruling or when it would be released.

He suggested some drilling in proven oil fields might move forward. That would be good news for companies like Petrobras and Royal Dutch Shell, which were set to delay major projects on fields that offer the best new source of domestic crude.

"It might be that there are demarcations that can be made based on reservoirs where we actually do know the pressures and the risks associated with that versus those reservoirs which are exploratory in nature," Salazar said.

"We will in the weeks and months ahead take a look at how it is that the moratorium in place might be refined," he said.

President Barack Obama's administration imposed a six-month moratorium on deepwater drilling after BP Plc's massive spill, which has devastated wetlands and communities along the U.S. Gulf coast.

Limiting the moratorium based on the risks associated with certain reservoirs may not be easy, said Ken Medlock, an energy fellow at the Baker Institute at Rice University.

"I think it's going to be difficult for them to actually implement this kind of plan. The geology with regard to fields out there is actually quite complicated," Medlock said.

Fields can have different pressures in different areas, so it may be hard to determine risks, he added.

The ban was placed on all exploratory and development wells in waters more than 500 feet deep while a special presidential commission investigated the cause of the spill and what changes need to be made to offshore drilling.

Thousands of high-paying oil workers and the related service jobs that supported them have been sidelined, adding to the economic woes of the Gulf Coast states that have had their fishing and tourism industries hurt by the oil spill.

But on Tuesday, a U.S. judge ruled against the government, calling the ban "a blanket, generic, indeed punitive moratorium."

The Obama Administration also said it would appeal the federal court ruling.

Salazar would not say how the new moratorium would get around the judge's ruling against a blanket ban, but Salazar's move to include criteria for lifting the ban and possibly allowing drilling for certain fields may be the answer.

The secretary would not commit to issuing the new drilling moratorium this week.

"We're working out the specifics. I have a meeting this afternoon on when we'll do it," he told reporters after the hearing.

Meanwhile, the new head of the renamed agency that regulates offshore drilling made his first appearance before lawmakers and pledged to end the cozy relationships some federal inspectors have had with the oil companies they are supposed to oversee.

Michael Bromwich, who heads the Bureau of Ocean Energy that replaced the troubled Minerals Management Service, said he will establish an internal investigation team to battle misconduct by government employees and regulated energy companies.

Plagued by numerous scandals, the agency is being broken up into three divisions overseeing royalty collection, energy leasing and safety enforcement.

(Editing by Kristin Roberts, Lisa Shumaker and Jim Marshall)

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Comments (3)
ostrom808 wrote:
(Secretary Salazar) He suggested some drilling in proven oil fields might move forward.

So now not only do we NOT have a moratorium, the seemingly only criterion for drilling is that there is a PROVEN oil filed?

One step forward, a hundred steps back. As a liberal, I am SO disappointed in this president.

Jun 23, 2010 7:00pm EDT  --  Report as abuse
vfr wrote:
Backing down on the moratorium may satisfy big money but I believe this is yet another miscalculation of the administration’s gauge of public awareness and concerns. In a sense this could be a doubling down of risk associated with poorly understood operational drilling processes.

Jun 23, 2010 7:30pm EDT  --  Report as abuse
bobcat4evah wrote:
PATHETIC — Done with these fools.

Jun 24, 2010 1:09am EDT  --  Report as abuse
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