Interior Secretary Ken Salazar today said his department needs more funding to resume the pace of offshore oil and gas permitting prior to the BP PLC oil spill last April in the Gulf of Mexico.

While the Bureau of Ocean Energy Management, Regulation and Enforcement's (BOEMRE) approval this week of the first deepwater drilling permit since the BP spill was a major milestone for the restructured agency, support from Congress and continued improvements in oil spill containment technologies will be crucial to resuming permitting levels before the Macondo well blowout, he said.

"So much of it depends on this budget," Salazar told reporters after defending the White House's fiscal 2012 request before the Senate Energy and Natural Resources Committee. "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 a pre-Macondo rate of permitting."

The rate of approval of both deepwater and shallow-water drilling permits was a key sticking point for Republicans and oil-state Democrats on the panel.

Sen. Mary Landrieu (D-La.), offered data to make her point: Industry saw 16 shallow-water permits issued in January 2009, but 12 such permits were approved in January 2010 and only two were issued two months ago.

"They were not the cause nor were they close to the accident in the deep water," Landrieu said of shallow-water drillers. "What are you specifically doing to get these permits increased so that these people can get back to work?"

But Interior came armed with data of its own.

According to Deputy Secretary David Hayes, 37 of 47 shallow-water permits requested since last April have been approved. Of 18 deepwater permits received, 12 have been returned by the agency in need of more information, with one approved Monday.

But those numbers can be misleading, said Jim Noe, executive director of the Shallow Water Energy Security Coalition, who questioned Interior's definition of "pending" applications.

"Today's testimony by Secretary Salazar potentially creates a misleading impression that sufficient progress is being made to approve permits for shallow-water drilling operations," Noe said in a statement. "In fact, the opposite is true. In reciting the numbers of permits that have been approved and remain in the approval backlog, the secretary appears to be counting only permits the Interior Department has deemed 'pending' -- a subjective standard that discards the scores of permits that have been submitted but have not met the Department's ever-changing criteria for consideration."

Noe praised lawmakers who requested that Interior provide a list of all applications submitted for Gulf operations in hopes that it would reveal the actual numbers of permit applications it has received, including ones it does not consider "pending."

Hayes told reporters that seven shallow-water permits were pending, with three sent back to operators for more information.

Regarding deepwater permits, Hayes explained that until last week, no operators had demonstrated the ability to respond and contain a potential oil spill (Greenwire, March 2).

Containment technologies

But while containment technologies are beginning to bear fruit -- systems are now offered by Helix Well Containment Group and Marine Well Containment Co. -- new technologies are needed in order for companies to tap unknown reserves at greater depths, Salazar said.

"Frankly, I was impressed at how much work has been done," Salazar said of a daylong trip he took to Houston last week to examine progress on the containment systems. "But I was also impressed by how much work still needs to be done."

Salazar and Hayes added that no subsea containment system was capable of operating at 10,000-foot depths or able to capture 100,000 barrels of oil a day, limiting the extent of responsible exploration in the Gulf.

In the meantime, new funding is needed to hire additional inspectors, accelerate permit reviews and implement new safety regulations including certifications, well cementing and casing and containment capacity, Salazar said.

The agency budget includes $358 million for BOEMRE, a $134 million bump over current funding levels, in order to strengthen oversight of offshore development in the wake of last year's Gulf spill. The proposal also requests $148 million to fund the new Office of Natural Resource Revenue, which is housed in the secretary's office.

Industry would be expected to shoulder a greater portion of the BOEMRE costs, Salazar said, with lease fees expected to generate $160 million and inspection fee hikes expected to generate $65 million. Direct appropriations would fund the remainder of the BOEMRE budget.