No big backlog on deepwater drilling permits: government

HOUSTON Fri Feb 11, 2011 6:42pm EST

HOUSTON (Reuters) - The offshore drilling regulator said on Friday that five deepwater drilling permit applications are awaiting government approval and he still expects at least one to be approved before the third quarter this year.

"There's a misperception out there that there's a huge number of permit applications that are lying there unacted on. That has actually never been the case," Michael Bromwich, head of the Interior Department's Bureau of Ocean Energy Management, said after giving a speech at Rice University in Houston on Friday.

However, top executives for offshore producers said the lack of permit applications on the shelf stems from the agency's failure to clearly outline new standards and requirements.

"I think he's being a little coy on that issue," Gary Luquette, president of Chevron Corp's North American exploration and production division, said later during the university's day-long program on future of U.S. offshore operations.

Bromwich spoke at a program about the future of the U.S. offshore drilling industry after last year's blowout of BP Plc's Macondo well that gushed more than 4 million barrels of oil into the Gulf of Mexico.

The U.S. government shut down new drilling for several months. It has imposed more stringent requirements for permits, including a requirement for detailed plans of how to contain an oil spill if a blowout occurs.

Bromwich said industry perceptions of a huge backlog of unapproved deepwater drilling permits is false.

He said operators could be holding back on filing permit applications until they're sure drilling plans will satisfy all the new requirements.

"There's no significant backlog and there really hasn't been a significant backlog in the last eight months," Bromwich said.

Luquette said that once operators are sure they know what is required, permit applications will boom.

"If we can ever get the framework agreed and locked down, then there's going to e a lot of stuff that hits the system," he said.

Chuck Davidson, CEO of Noble Energy, said during the same session that his company also has felt that frustration. Once requirements are clear, "I think there will be a very big backlog because this industry is ready to go back to work," he said.

After the Macondo disaster, Exxon Mobil Corp and other oil majors operating in the Gulf formed a consortium, the Marine Well Containment Company, to build spill containment and prevention systems. The consortium expects to have its first phase of equipment ready this month, and an expanded system ready next year.

Bromwich said a key piece of that equipment will be tested next week.

"There's going to be a testing of the capping stack next week," he said of a giant stack of valves and pipes that would be placed atop a blown-out well to cap and contain it. (Reporting by Kristen Hays; Editing by Lisa Shumaker and David Gregorio)

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