March 1, 2011 / 12:34 AM / 9 years ago

UPDATE 4-US OKs first deepwater drilling permit after spill

 * Regulator says politics didn’t influence permit decision
 * US lawmakers likely to grill Interior Secy later in week
 * More deepwater drilling permit approvals expected
 * Noble shares up 4 pct, Ensco shares up 1.2 pct  (Adds Ensco details paragraph 3, Chevron executive’s comment paragraphs 11-12)
 By Erwin Seba
 HOUSTON, Feb 28 (Reuters) - U.S. regulators on Monday granted the first deepwater drilling permit since the massive U.S. Gulf of Mexico oil spill last April that prompted the Obama Administration to impose a drilling moratorium.
 The U.S. Bureau of Ocean Energy Management approved a permit for Noble Energy Inc (NBL.N) to drill in the Mississippi Canyon area of the Gulf, about 70 miles (110 km) south of the Louisiana coast.
 Shares of Noble rose nearly 4 percent to $92.66 on the New York Stock Exchange on the news of the permit. Shares of Ensco Plc ESV.N, whose rig will drill the well, rose 1.2 percent.
 Initial drilling had started on April 16, four days before the Deepwater Horizon exploded, killing 11 workers and eventually releasing more than 4 million barrels of oil from a well owned by BP Plc (BP.L)(BP.N).
 The Obama administration imposed a temporary ban on drilling at depths greater than 500 feet shortly after the BP disaster. The moratorium was officially lifted last October, but until now no new deepwater permits had been approved.
 Michael Bromwich, who heads the offshore drilling regulating agency, downplayed suggestions the permit was issued to ease Interior Secretary Ken Salazar’s appearance before two congressional hearings later this week.
 Lawmakers were expected to grill Salazar, and still may, over the department’s slow decision making on deepwater drilling permits. Drilling advocates say the United States needs to produce more of its own oil as crude prices top $100 a barrel amid unrest in Libya.
 “There is no politics associated with the approval of this application,” Bromwich said. “This permit was issued for one simple reason: the operator successfully demonstrated that it can drill its deepwater well safely and that it is capable of containing a subsea blowout if it were to occur.”
 Gulf Coast officials applauded the Noble permit approval, but continued to express impatience with drilling delays.
 “We’ve already watched seven deepwater rigs leave the Gulf of Mexico for other countries because of the moratorium,” said Louisiana Governor Bobby Jindal. “It’s time to reverse that trend and get the Gulf back to work.”
 Leading Gulf of Mexico driller Chevron called the permit for Noble Energy a “step in the right direction.”
 “I hope it is the first of many, and that other permits currently caught up in the backlog of regulatory uncertainty will be approved quickly,” said Gary Luquette, president of Chevron’s North America exploration and production arm.
 Houston-based Noble plans to use a new underwater containment system developed by Helix Energy Solutions Group Inc (HLX.N) to help capture any oil from a potential spill.
 “Noble Energy is proud to help lead the industry back to drilling in the deepwater Gulf,” David Stover, Noble Energy’s president, said in a statement.
 Noble plans to resume its drilling project, which is located in 6,500 feet of water, in late March. That is in deeper water than the Deepwater Horizon rig was operating in before it exploded and sank. Ultimately, Noble plans to drill to a depth of about 19,000 feet.
 Bromwich said the agency would approve other deepwater drilling permits in the weeks and months ahead and he expected the Noble decision to send a signal to other oil companies to file for their drilling permits.
 However, he warned the agency still needs extra funds from Congress to hire the staff needed to approve and monitor new drilling projects. The delay in money will slow the agency’s review process for applications, he said.
 Royal Dutch Shell Plc (RDSa.L), which also had projects put on hold due to the drilling ban, said it was pleased Interior was allowing some activity to resume.
 “While it is encouraging that the industry now has a green light to resume previously approved drilling operations in the deep water Gulf of Mexico, we are hopeful that this positive momentum will also drive forward much-needed, new exploratory drilling in a timely manner,” the company said in a statement.
 A federal judge earlier in the month had ordered the Interior Department to decide on five pending applications by London-based rig contractor Ensco. [ID:nN17641341]  (Additional reporting by Tom Doggett and Ayesha Rascoe in Washington, and Braden Reddall in San Francisco; Editing by David Gregorio and Sofina Mirza-Reid)       

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