Shallow-water drillers claim ‘impasse’ with Interior on permits

Oil-and-gas companies that drill in shallow Gulf of Mexico waters on Monday said they’re at an “impasse” with the Interior Department over permitting policies they allege are bringing the industry to a standstill.

The Shallow Water Energy Security Coalition met Monday morning in Louisiana with Michael Bromwich, who directs Interior’s Bureau of Ocean Energy Management, but the meeting failed to produce reassurances about speeding up permits the group is seeking.

“With 15 of the total of 46 available shallow water rigs now idle without permits, and only five permits for new wells issued since April, we are clearly at an impasse with the regulators. While we share Director Bromwich's commitment to safety, BOEM must recognize that it cannot continue to shove a square peg into a round hole by treating all offshore drilling operations the same, disregarding history and geological facts,” said Jim Noe, the group’s executive director who is also a top executive with Houston-based Hercules Offshore Inc.

Bromwich, after the meeting, pledged to work with the industry. But Bromwich defended the continued slowdown in permitting that he said stems from new information the industry must provide under Interior safety mandates issued in June.

“[T]he central fact is that it has taken time to submit and verify the additional required information. We will not approve applications until and unless they fully comply with the new requirements. That will not make everyone happy, but it is the right way to proceed,” Bromwich said.

But the industry says Interior’s reaction to the BP oil spill, which stemmed from the blowout of a deepwater well, has created unfair burdens for projects that don’t present the same safety risks. Noe said that shallow water projects, which are mostly natural-gas projects, are “drilled into well-understood, predictable and mature reservoirs.”

“Shallow water rigs use simple, proven well control techniques with blowout prevention equipment located on the rig above the surface of the water,” Noe said in a statement.

“We urged Director Bromwich to respect the distinct differences between shallow water operations and deep water operations and requested that the agency establish a tiered review process for new wells that is properly calibrated to the actual risk the well presents,” he added.

Other companies in the coalition include Apache Corp., Phoenix Exploration, Rowan Companies and other energy and drilling services companies.