Is the permit approval process for offshore development in the Gulf of Mexico transparent enough? During today's OnPoint, Michael Bromwich, former director of the Bureau of Ocean Energy Management, Regulation and Enforcement and now the founder and managing principal of the Bromwich Group, discusses the state of play for business in the Gulf and explains what the government can do to improve its dialogue with industry.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Michael Bromwich, former director of the Bureau of Ocean Energy Management, Regulation and Enforcement and now the founder and managing principal of the Bromwich Group. Mr. Bromwich, it's great to have you on the show.
Mike Bromwich: Thank you, it's great to be here.
Monica Trauzzi: Mr. Bromwich, last week on our show we covered some new research coming out of Southern Methodist University pointing to a lack of transparency in new regulations and the permit approval process for offshore drilling in the Gulf of Mexico. As the top offshore drilling official at Interior during the time when these regulations were put into place, what's your view of the state of play in the Gulf as it stands right now and what's your view of these accusations of a lack of transparency?
Mike Bromwich: Well, I think we did everything possible and I think the current leadership is doing everything possible to make the regulatory process as transparent as possible. Clearly, when new rules came out in September and October of 2010, there was a lot of education to be done, both with respect to educating the industry and with respect internally to educating our own people in terms of how to apply the new regulations. And so that was an ongoing process and there were certainly some hiccups at the beginning. But I think things have progressed enormously since then. Permitting is proceeding at a good clip, about eight deepwater permits per month in terms of deepwater wells that require containment, shallow-water wells continuing to be - permit applications continuing to be granted. And so I think there is both transparency to the process and an increase at the rate at which permit applications are being granted in a way that should make the industry feel pretty good.
Monica Trauzzi: So, when industry says that things are moving too slow, your response is what? Are they just grandstanding?
Mike Bromwich: My response is that as a number of senior company officials told me, it's never fast enough for us. It always seems too slow. And I certainly understand it. It's a very expensive and a very risky process from their perspective. And so there is some understandable impatience from them that the process is taking too long. But objectively, I don't think that's the case.
Monica Trauzzi: Are there things that the agency can be doing now to sort of improve the dialogue with industry and make the process run a little smoother so the permit process can accelerate?
Mike Bromwich: Yes, I think there's always room for improvement. There was a lot of communication between the agency and industry as we were putting out the new rules and thereafter when there was some confusion and a lot of questions that industry had about how some of the new rules were being applied. Now, that has to be an ongoing process and I'm confident it is an ongoing process. But we specifically looked at the permitting process and took the complaints that we were getting from industry that the process was not sufficiently transparent very seriously. We had permitting workshops where industry came in, voiced their confusion, voiced their concerns and the agency did its very best to address those. And so I think that is an ongoing project. There is always room for improvement. I think I certainly valued input from industry and I'm certain that the current leadership does as well.
Monica Trauzzi: What's your take on Gulf output and the prospects for future development in the Gulf?
Mike Bromwich: I think the prospects for future development are very bright. As you know, there was a major lease sale at the end of 2011. There's a major consolidated lease sale that's scheduled for later this month. There was a tremendous amount of interest in the December lease sale by industry. I'm sure the same will be true of the lease sale that's scheduled for later this month. So I think prospects are bright. That's certainly what I hear from people in the industry, that they're bringing resources back, they're bringing rigs back because they are so optimistic about the future of offshore development, particularly in the Gulf.
Monica Trauzzi: And do you believe that the Obama administration wants to see expanded offshore development in the Gulf?
Mike Bromwich: I think that's clear. I think that's clear from rescheduling the lease sales, both in December and the one in June. I think there is a recognition that offshore oil and gas are a central part of our energy present and our energy future and the administration is determined to make that happen.
Monica Trauzzi: House Republicans are pushing legislation that would limit the amount of time that the agency has to approve permits and exploration plans. How could that impact the process in the Gulf and also some of the safety issues that you tried to address with these regulations?
Mike Bromwich: Sure, I've been very concerned about that, because putting artificial time constraints on people who are trying to do their jobs in the most responsible way possible puts them in a bind. Either they will too rapidly approve plans or permits before they've done all the checks that are necessary or they will violate, under this proposal, the law that's enacted. Regulators who are trying to preserve safety and protect the environment shouldn't be put to that choice. I think the process is moving at an appropriate clip at the moment. Things would be helped no doubt if additional people were hired, both to review plans and to review permits and that's an ongoing process. But to put artificial time limits on the plan or permit approval process is a very bad idea.
Monica Trauzzi: But with the economy the way it is right now, are things moving at a fast enough pace with economic improvement in mind?
Mike Bromwich: My sense is that it is. Again, obviously companies are going to think that things are not moving as quickly as they might like, but I've seen no evidence to suggest that things aren't moving ahead at an appropriate clip.
Monica Trauzzi: Looking back, this was uncharted territory. Do you feel that there were missteps?
Mike Bromwich: You know, there were no big missteps. I think that when we found out later in the process that some of the oil companies were confused about the process, it would have been nice to know that earlier on and maybe we could have jumped on it a little earlier than we did. But I think we were very responsive and attentive to legitimate industry concerns. Sometimes those were drowned out by noise. For example, industry groups and politicians saying why aren't you beginning to permit Deepwater drilling now, even when they knew full well that there was no containment capability that yet existed. And so there was a lot of noise in the process and sometimes separating the noise from the legitimate concerns was a challenge. But we think in the end we got it pretty much right.
Monica Trauzzi: When you consider the highly politicized nature of energy policy right now, how might the outcome of the November elections sort of shift the discussion and dialogue?
Mike Bromwich: Well, I don't know how much it would shift things. I hope that some of the more aggressive proposals about opening up new areas for exploration and development or accelerating the permitting and plans process, I hope that on reflection, even if there were to be a change in the administration, that people would examine what the proposals were and say, you know what, now that we know more of the details, we agreed that what was done before made a lot of sense. I think that new safety and environmental regulations that were put in place were long overdue. They're extremely sound and any effort to roll those back would be against the national interest.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show.
Mike Bromwich: My pleasure, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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