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Oil and Gas

UPDATE 1-EIA says ending drill ban won't impact its forecast

* EIA head says early end to ban basically “a wash”

* New drilling rules will delay drilling until end of year

* May take two years for Gulf oil output to recover-EIA (Recasts, adds comments from EIA head)

WASHINGTON, Oct 13 (Reuters) - The Obama administration’s decision to end the deepwater drilling moratorium early will not have a major impact on U.S. oil production in the Gulf of Mexico, the head of the government’s energy forecasting arm said on Wednesday.

The drilling ban was ended by the Interior Department this week, but tough new safety rules will likely delay any new drilling permits from being issued until near the end of this year.

“At this point we’re expecting it’s kind of a wash,” Richard Newell, head of the Energy Information Administration, said at the agency’s winter fuel outlook forum.

The agency does not currently plan to make any major revisions to its previous forecast that the temporary drilling ban would cut Gulf oil output by an average of about 82,000 barrels per day next year.

Even though the ban was lifted early, “We think it’s still going to take some time for companies to get permits from the Department of the Interior,” Newell said.

The department's drilling freeze had been expected to end at the end of November, but Interior said new rules had significantly improved the safety of drilling since the BP BP.L oil spill ravaged the Gulf.

In its new monthly energy forecast, the EIA said U.S. oil production from the Gulf was expected to drop next year by 170,000 bpd, about 50,000 bpd more than the agency forecast last month.

Newell said the adjustment to the forecast was not based on any changes in the agency’s assumptions about the drilling ban.

Due to the lag in time between drilling for oil and oil production, Newell said, it could take two years for Gulf production to return to levels reached prior to the drilling ban. (additional reporting by Tom Doggett; Editing by Walter Bagley)

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