OFFSHORE DRILLING:
Few shallow-water lessees have asked for extensions
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Fewer than a dozen shallow-water oil and gas operators in the Gulf of Mexico have cited permitting delays in asking the Obama administration to extend their leases since the BP PLC oil spill, according to Interior Department data.
The relatively small number of applications comes as Louisiana lawmakers continue to attack the department for its refusal to issue a blanket extension of both deepwater and shallow-water leases that are due to expire at the end of the year.
Interior in mid-fall announced that it had extended virtually every application for deepwater lease extensions that it received under a special notice for those operators that were affected by last year's drilling moratorium following the Deepwater Horizon incident.
Sen. David Vitter (R-La.) in August announced he would place a hold on the confirmation of a top Interior nominee until the agency extended more than 300 leases due to expire at the end of next month.
Sen. Mary Landrieu (D-La.) backed Vitter's move, and the issue came up again this morning at a House Natural Resources Committee hearing on Interior's oil and gas programs.
But Interior since June 2010 has received 10 requests for shallow-water lease extensions that cited "delays in permitting" or anything related to the deepwater moratorium.
Nine of the requests were filed pursuant to a secretarial order that only applied to deepwater leases, and they were denied. The 10th request is still pending, the agency said.
A Landrieu aide said it is possible shallow-water lease holders have decided against filling out the paperwork necessary to obtain extensions and that many may have assumed the requests would be denied anyway.
Landrieu last month said she was frustrated that Interior continued to make exceptions for deepwater drillers but not for those in shallow waters.
"It's very unfortunate because the actions of the moratorium shut down all drilling in the Gulf, even shallow-water drilling," she said in an interview. "In fact, you could almost argue that it impacted shallow-water drilling even more than deepwater. Although it wasn't intended, it was the absolute clear consequence of that overreach."
While some had speculated that Landrieu's criticism was a reason the Senate Energy and Natural Resources Committee last week decided against holding a vote on Rebecca Wodder, Interior's nominee for assistant secretary for fish, wildlife and parks, Landrieu's aide said the senator probably would not have opposed the nomination if it came up for a vote.
"There remains much work to be done to rev up the Gulf Coast energy sector and its economy," Landrieu spokesman Matthew Lehner said in an email. "Increasing clarity in the permitting process, an acceleration of permits and the passage of Sen. Landrieu's 'LEASE Act' are good places to start for the administration."
Landrieu's bill, which she introduced in March with Sen. Kay Bailey Hutchison (R-Texas), would extend Gulf leases for an additional 12 months (E&ENews PM, May 17).
Luke Bolar, a spokesman for Vitter, said other lessees may be seeking extensions for reasons other than permitting that are not reflected in the Interior data.
Jim Noe, senior vice president and general counsel of Hercules Offshore Inc., said putting shallow-water leases back on the auction block means new bidders will be forced to start from scratch with their development plans, potentially pushing back the date when the government begins to receive production royalties.
"From an economic standpoint, once these leases expire, they go straight back to federal government," he said late last month. "All economic activity on those leases will stop."
Interior has said shallow-water drillers were not affected by last year's deepwater moratorium and has ruled out a blanket extension.