The Interior Department today announced it has approved the first new deepwater drilling permit since the Deepwater Horizon explosion last April spilled millions of barrels of oil into the Gulf of Mexico.
The permit for Noble Energy to drill about 70 miles southeast of Venice, La., comes more than four months after Interior lifted its deepwater drilling moratorium. It complies with new rules to strengthen drilling safety and ensure companies can respond and contain oil in the case of a blowout, the agency said.
"This permit represents a significant milestone for us and for the offshore oil and gas industry, and is an important step towards safely developing deepwater energy supplies offshore," said Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement. "This permit was issued for one simple reason: The operator successfully demonstrated that it can drill its deepwater well safely and that it is capable of containing a subsea blowout if it were to occur."
The permit comes days before Interior Secretary Ken Salazar is set to defend the agency's 2012 budget request on Capitol Hill, where Republican and oil-state lawmakers have been loudly critical of the agency's pace of permitting in the Gulf. Louisiana Sen. David Vitter (R) this month placed a hold on the agency's nominee to lead the Fish and Wildlife Service until Interior approves 15 new deepwater drilling permits.
Bromwich rejected suggestions that the Noble approval was issued to appease lawmakers or respond to a recent court ruling by U.S. District Judge Martin Feldman ordering the agency take action on deepwater permits.
"There are no politics associated with the approval of this application," Bromwich said. "It has nothing to do with anything other than the fact that it was ready to be approved."
Noble estimated a worst-case discharge of 69,700 barrels of oil per day if it loses control of its well. But the company has contracted with the Helix Well Containment Group to use its capping stack to stop the flow of oil in such a scenario, Bromwich said.
BOEMRE expects additional deepwater permits to be issued in the coming weeks and months based on a process similar to Noble's permit, but the approvals will be limited because only a handful of completed applications have been received, Bromwich said.
"Industry was waiting for signals that deepwater drilling would be allowed to resume," he said, adding that new proposals would each receive a "careful, rigorous, well-by-well analysis."
Initial drilling on the Noble well began April 16, 2010, in water 6,500 feet deep, but the activities were halted in June under Interior's drilling moratorium. In addition to today's permit, Interior said it has approved 37 permits for new shallow-water wells.
Randall Luthi, president of the National Ocean Industries Association, praised Bromwich and said he is taking the agency at its word that the Noble proposal is not a "token permit" and that more permits are in the offing.
"The actual issuance of a permit for new deepwater drilling is long awaited and an important step forward in the wise development of energy off our shores," Luthi said in a statement. "With all the world-complicating factors, including rising oil prices, political turmoil in the Middle East and the loss of jobs in the Gulf of Mexico, this decision offers hope that the United States is getting back in the energy and jobs market."
Vitter praised Interior's action on the permit but said he will maintain his hold on FWS nominee Dan Ashe until Interior issues 15 deepwater permits, a decision backed by Louisiana Democratic Sen. Mary Landrieu.
"While one deepwater permit is a start, it is by no means reason to celebrate," Vitter said in a statement. He claimed that Interior regulations in the Gulf have lost jobs, contributed to one company’s bankruptcy and breached contracts with other drilling firms.
Owen Kratz, CEO of Helix, said the company's spill containment technology will be expanded in the coming weeks and that he hopes to assist other drilling projects in moving forward.
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