UPDATE 4-US Interior says more deepwater permits coming

Wed Mar 2, 2011 3:33pm EST

Related Topics

 * Salazar hopes to approve significant number of permits
 * Govt issued first new deepwater permit since BP spill
 * Govt will comply with court order to decide on 5 permits
 * Chu says U.S. economy vulnerable to high crude prices
 (Adds U.S. oil price, comments from U.S. energy secretary))
 By Ayesha Rascoe
 WASHINGTON, March 2 (Reuters) - The door could now be open
for a "significant" number of new offshore drilling permits,
U.S. Interior Secretary Ken Salazar said on Wednesday, as the
administration comes under increased pressure to tackle surging
world oil prices.
The U.S. Interior department on Monday issued a permit for a
deepwater well co-owned by Noble Energy Inc (NBL.N) and BP
(BP.L), the first such permit since a rig explosion unleashed
millions of barrels of oil from BP's Macondo well into the Gulf
of Mexico last year. [ID:nN28278795]
 "There are other deepwater permits that are pending and the
ones that will go out the door will hopefully be the templates
that will allow us to move forward with an additional,
significant number of deepwater permits," Salazar told a Senate
Energy and Natural Resources committee hearing.
 After the BP oil spill, the department imposed a temporary
ban on exploratory drilling at depths of more than 500 feet
(152 meters). While the moratorium was lifted last October, no
new deepwater permits were issued until this week.
 The department has faced intense criticism, as well as
legal action, over the slow pace of permitting.
 Still, Salazar warned that if his department does not
receive the funding it has requested permitting may not speed
up as much as industry would like.
 "If we don't get the horsepower to be able to process
permits under what is now a greater degree of scrutiny, we may
never return to the pre-Macondo rate of permitting," Salazar
said after the hearing.
 Last month, a federal judge gave the department 30 days to
decide whether to approve five other pending permits to drill
in the deep waters of the Gulf of Mexico. [ID:nN17641341]
 Although Salazar said he believes the ruling
inappropriately impedes on his administrative authority, the
department plans to comply with this order.
 Republican lawmakers have sharply criticized the slow
approvals, saying it will leave the country more vulnerable to
oil price shocks down the road. Lawmakers from both parties
have also been asking for a release of oil from the
727-million-barrel Strategic Petroleum Reserve.
 Democratic Senator Kirsten Gillibrand added to the pressure
on Wednesday by urging President Barack Obama in a letter to
immediately release oil from the reserve to help bring gasoline
prices under control.
 U.S. oil  prices on Wednesday settled at $102.23 a barrel,
rising above $100 a barrel for the first time since September
2008 over concerns that the strife in Libya could cut off that
country's oil exports and unrest was spreading to other
countries in the Middle East.
 U.S. retail gasoline prices soared nearly 20 cents a gallon
since last week, the second biggest weekly rise in pump prices
ever recorded by the government.
 (Graphic: r.reuters.com/xuv38r )
 U.S. Energy Secretary Steven Chu on Wednesday ruled out
tapping America's emergency stockpile to help bring down
prices, saying ramped up oil production in other nations, most
notably Saudi Arabia, should cool oil costs.
 "That's going to mitigate the price increase," he told
reporters on Capitol Hill. "We're hoping market forces will
take care of this."
 When asked how high prices would have to go before the
Strategic Petroleum Reserve is tapped, Chu indicated the Obama
administration does not have a predetermined price.
 "I think in the history of the United States' SPR there's
never been a predetermined amount," he said.
  Chu rejected the notion that expanding offshore
exploration would help bring down prices in the near term,
noting it would take five to 10 years to bring the oil to the
market.
 Secretary Salazar agreed. "We do not produce enough oil in
this country to influence price of oil because it's set in
world markets," he told the separate Senate hearing.
 (Additional reporting by Tom Doggett; Graphic by Emily
Stephenson; Editing by Dale Hudson, Russell Blinch, Sofina
Mirza-Reid and Jim Marshall)


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