Few rigs to restart quickly when ban ends: government

WASHINGTON (Reuters) - Few offshore oil projects will be able to resume quickly once the Obama administration lifts its deepwater-drilling moratorium, a top Interior Department official said on Monday.

White House oil spill commission co-chair Bill Reilly speaks at the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling hearing on "the response to the BP Deepwater Horizon oil spill, environmental impacts, and approaches to restoration" in Washington, September 27, 2010. REUTERS/Hyungwon Kang

Oil companies have to adhere to new requirements before drilling restarts and that will take time, said Michael Bromwich, head of the department’s Bureau of Ocean Energy Management.

“Even when the moratorium is lifted you’re not going to see drilling going on the next day or even the next week,” Bromwich told a White House oil spill commission meeting. “It’s going to take some time.”

The administration imposed a six-month ban on deepwater exploratory drilling after a ruptured BP well spewed millions of barrels of oil into the Gulf of Mexico over the summer.

The ban is set to be lifted on November 30, but Interior has said it hopes to end it sooner.

Delays could hurt U.S. oil production and corporate profits, with companies such as Chevron, Royal Dutch Shell and Noble Energy already forced to postpone projects in the Gulf.

Oil companies and Gulf state lawmakers have complained that the blanket ban will severely damage the region’s economy as idled rigs head to foreign waters.

The department has issued two new sets of drilling requirements since the Gulf spill and is to announce more rules soon.

BP executive Doug Suttles said earlier at the commission meeting that some projects would be better positioned than others to meet new government rules on the resumption of drilling.

“What is clear is that certain equipment, certain wells, certain rigs will find it easier to meet those requirements more quickly than others,” said Suttles, BP chief operating officer for exploration and production.

“I would expect the net effect to be ... a phased restart.”

Bill Reilly, co-chair of the commission tasked with guiding the future of offshore drilling in the wake of the Gulf spill, said companies should be required to prove they can respond to major spills before they acquire drilling leases.

“The way to approach this is to make a condition of a grant of a lease adequate response capability, which is transferring some of the outlay in costs to the industry,” he told reporters at the third public meeting of the seven-member panel.

Separately, Reilly and fellow co-chair Bob Graham raised concern about the wide range of government estimates on the amount of oil flowing from BP’s undersea well.

“I think it was a very significant error in terms of what the reality of the flow rate was. I think it set the context for public skepticism about future information,” Graham told reporters.

The first estimates for the spill were 1,000 barrels per day, but eventually official government estimates placed the flow rate between 56,000 bpd and 68,000 bpd.

Graham also said the government had shown too much “deference” to the oil and gas industry in the past two decades.

“There’s a tendency to forget this property out in the Gulf of Mexico, where all this is happening, belongs to all of us,” Graham said.

“It doesn’t belong to BP or any of the other oil companies. It belongs to the people of the United States of America.”

Reporting by Ayesha Rascoe; Editing by Marguerita Choy and Dale Hudson