Drillers enlist legions of lobbyists for battle over regulations

The Gulf of Mexico oil spill has sparked a lobbying rush as companies involved in drilling seek help navigating new policies and influencing ones under development.

Companies ranging from small businesses that make safety equipment to a coalition of drilling interests are asking lobbyists to bridge connections with the Obama administration and members of Congress. Drilling companies hope to push the Interior Department to issue more drilling leases. Manufacturers want to sway new regulations on parts that include blowout preventers, giant safety valves such as the one that appears to have failed in BP PLC's Deepwater Horizon rig.

They have recruited lobbyists with connections, including former Rep. Robert Livingston, (R-La.), who at one time was in line to become House speaker; Norma Jane Sabiston, former chief of staff to Sen. Mary Landrieu (D-La.); and Margo Klosterman, former legislative assistant to House Minority Leader John Boehner (R-Ohio).

"We're reaching out and talking to anyone that will listen," said Jim Noe, senior vice president and general counsel at Hercules Offshore Inc., a Houston-based company that operates rigs used in shallow-water oil and natural gas drilling. "We're talking both to the administration and to Congress."

The catastrophic spill that began April 20 triggered a number of Obama administration actions and pending actions that affect many companies. Those include changing policies on oil and natural gas leases in the Gulf of Mexico.


The Interior Department issued a six-month moratorium on new deepwater drilling leases, which a U.S. district court judge since has thrown out. The Obama administration is appealing that ruling. The administration has said there is no ban on new leases for oil and natural gas development in shallower water.

But companies involved in that business say there is a de facto moratorium because Interior's Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) is not issuing any new leases.

Four companies joined forces and hired a trio of lobbying firms to help arrange meetings with Interior officials and lawmakers. Since the spill, officials with Hercules, Seahawk Drilling Inc., Rowan Cos. and Ensco PLC have traveled to Washington, D.C., several times to tell lawmakers how their businesses are being affected by changes in drilling oversight policies.

"It's really semantics about whether there's a moratorium or not, because the Department of Interior holds all the cards," as it is the agency that issues permits for drilling, Noe said. "The Department of Interior is not issuing shallow-water drilling permits."

Interior disagreed.

"There is no moratorium on shallow-water drilling," spokeswoman Julie Rodriguez said. "Shallow-water drilling may continue as long as oil and gas operations satisfy new safety requirements that we are implementing."

The four drilling companies and two others, Delta Towing and Hornbeck Offshore Services, are part of the Shallow Water Energy Security Coalition. It came together not long after the Interior Department first issued the drilling moratorium. Members of the coalition spoke to many lawmakers and pushed for a change in the policy, which they saw as banning all new drilling, Noe said.

In late May, 18 House members signed a letter to Interior Secretary Ken Salazar, urging him to recommend that President Obama allow new permits for shallow-water drilling. Ten senators signed a similar letter.

Noe believes that helped lead to the administration's declaring that the moratorium only applied to new deepwater drilling leases. But since the original moratorium, he said, drilling leases are not being issued. Hercules and other companies, Noe said, are working with BOEMRE "to understand the new rules. There was a lot of confusion and uncertainty."

The companies have submitted new permit applications that "are in compliance with the new rules," Noe said. "Many of the shallow-water rigs are going idle without permits." About one-third of the 50 or so shallow-water rigs are idle, he said.

Interior said that leases have been issued since the oil spill. Between June 8 and 30, the department said, 11 permits have been approved. Of those, four are for new wells. The other seven affect existing operations.

All of the permits on new operations are for wells in water depths less than 500 feet. Those were issued between June 24 and June 30, Interior said. In half of those cases, rigs have moved on location.

The drilling companies that have hired lobbyists say they have not been able to get permits. As those companies meet with lawmakers, they talk about the effect on jobs.

"We've already seen shallow-water drilling companies have already started laying off workers," Noe said. "They take with them all of the indirect jobs," including cooks, workers on supply boats and support boats and helicopter pilots who take workers back and forth from rigs. Economists to the drilling companies estimate that 3.5 to 4.5 other jobs are connected to every drilling job, he said.

"So the trickle-down impact is huge," Noe said. Shallow-water operations employ about 7,000 people, according to the coalition.

The shallow-water drilling companies also warn lawmakers that the companies will move elsewhere in the world and would be likely to sign two- to three-year contracts. Once they leave, getting them back to U.S. waters, Noe said, "will take years."

Hercules is the largest shallow-water drilling company in the Gulf of Mexico, Noe said. It also has drilling operations around the world.

Hercules and three other members of the shallow-water drilling coalition hired lobbying firms: Jones, Walker, Waechter, Poitevent, Carrère & Denègre LLP; Sabiston Consultants LLC; and Livingston Group LLC. The three firms are working together, Noe said. Hercules also is paying Bracewell & Giuliani for strategic advice.

Lobbyists on the payroll at Livingston Group include Livingston, who retired from the House in 1999; J. Allen Martin, former chief of staff to Livingston; and Steven Kreseski, previously chief of staff to former Maryland Gov. Robert Ehrlich Jr. (R).

Sabiston is the main lobbyist at Sabiston Consultants. In addition to working for Landrieu, Sabiston previously was state director to former Sen. John Breaux (D-La.)

Lobbying on safety-equipment rules

A small Houston company that makes safety equipment also has hired a lobbying firm. T-3 Energy Services Inc. brought on Arent Fox LLP earlier this month. Blowout preventers and other safety equipment that T-3 Energy Services makes now are under scrutiny. (T-3 did not make the blowout preventer involved in the BP oil spill.)

When Interior in May and June issued new requirements on safety equipment, "there were some questions that were left open," said Keith Klopfenstein, senior vice president of T-3 Energy Services' Pressure Control Group. "We wanted to be sure that we understood exactly what they meant ... so we could offer our customers some guidance."

"We weren't alone in scratching our heads over some of the requirements they issued," Klopfenstein added.

The company hired lobbyists "to make sure that we could contact someone at MMS at the appropriate level," Klopfenstein said. MMS (or the Minerals Management Service) now is known as BOEMRE.

T-3 Energy Services also wanted lobbyists to help the company present its views on how BOEMRE should shape rules on the maintenance and service intervals of safety equipment.

"These standards should strike the appropriate balance so that we are certain the equipment performs as intended in an emergency but does not become so burdensome that drilling is not economical," Klopfenstein said in an e-mail. "All indications that we have received are that MMS is trying to achieve this."

T-3 Energy Services has about 15 percent of the blowout preventer market, Klopfenstein said. The company sells those and other safety items to large oil companies like BP or Exxon Mobil Corp., as well as drilling contractors like Transocean Ltd.

T-3 Energy Services belongs to the Offshore Equipment Task Force, which includes equipment makers, industry subsea equipment specialists and deepwater contractors.

Arent Fox lobbyists on the T-3 Energy Services account are Dan Renberg, former legislative director and deputy chief of staff to Sen. Arlen Specter (D-Pa.); Jon Bouker, past aide to Del. Eleanor Holmes Norton (D-D.C.) and minority counsel to the House Government Reform Committee; and Klosterman, who worked for Boehner.

BP lobbyists

BP PLC also has hired another lobbying firm. BP recently brought on Eris Group. BP already has a stable of lobbying groups and consultants on its payroll, including Tony Podesta, former Justice Department official Jamie Gorelick, former recording-industry lobbyist Hilary Rosen, and Michael Berman, a longtime aide to Vice President Walter Mondale. The oil company also has hired Anne Womack-Kolton, press secretary for Vice President Dick Cheney, to lead its U.S. public relations efforts.

At Eris, lobbyists working for BP are Jennifer Bendall, former policy adviser to Sen. Richard Shelby (R-Ala.), and Jesse McCollum, previously an aide to Rep. Ed Towns (D-N.Y.) and chief of staff to Rep. Ron Klein (D-Fla.).

"They hired us to work on energy issues," McCollum said, declining to say more "at the request of the client."

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