U.S. urged to ensure deepwater drilling safety

The Development Driller III, which is drilling the relief well, is seen at the site of the Deepwater Horizon oil spill in the Gulf of Mexico, off the coast of Louisiana, May 11, 2010.

WASHINGTON (Reuters) - The U.S. government should ensure deepwater drillers meet new safety rules before allowing operations to resume, despite the costs associated with delays, a report requested by the White House oil spill commission said on Thursday.

The Bipartisan Policy Center report said companies should be able to start drilling again once they meet the Interior Department's new guidelines, but it will take time for rigs to meet these standards.

"While we appreciate the costs of delay, we urge DOI to use all due caution to ensure effective compliance with this new regulatory regime," the report by the non-profit group said.

Jason Grumet, head of the policy center and one of the report's co-authors, said the government's ban on deepwater drilling should be lifted "soon," but that does not mean all operations should resume.

"There is a critical distinction between when the moratorium is lifted, and when companies have satisfied the new requirements and can get back to work," Grumet said in an interview.

Charged with guiding the future of offshore drilling in the wake of the BP oil spill, the oil spill commission asked the policy center last month to identify issues the government should consider once it lifts its moratorium.

After the Gulf spill, the Interior Department imposed a blanket ban on exploratory oil drilling at depths more than 500 feet. Oil companies and Gulf lawmakers have lobbied against the ban, claiming it will cost thousands of jobs.

After a federal court struck down the initial ban as too broad, Interior issued a new moratorium halting drilling through November 30.

Interior also imposed more stringent drilling rules after the Gulf accident, including a requirement that companies certify they have working blowout preventers.

Grumet warned that while some deepwater projects may meet Interior's new rules fairly soon, other rigs may take months to comply. The costs of the guidelines may discourage some companies from operating in the Gulf of Mexico.

"Although this outcome would be unfortunate, we believe it is imperative that all companies be held to a consistent and rigorous set of safety requirements," the report said.

Michael Bromwich, head of Interior's Bureau of Ocean Energy Management, said the department is looking into how deepwater drilling can safely resume.

"Before that, however, we need to ensure that workplace and drilling safety, spill response and containment issues are appropriately addressed by industry," Bromwich said in a statement.

The oil industry's main lobbying group, the American Petroleum Institute, said the policy center's report supports their push to lift the moratorium.

"We hope the Interior Department will move forward with lifting the moratorium because thousands upon thousands of jobs, billions of dollars in revenues and our energy security are at risk if the moratorium continues," said Erik Milito, head of API's upstream group.

(Editing by David Gregorio)