Confusion May Follow Drilling Ban’s End, Bromwich Says

The end of a U.S. moratorium on deep-water oil drilling is likely be followed by confusion as drillers adjust to new rules, the top offshore regulator said.

Some deep-water operators may already be prepared to comply with stricter safety and environmental rules, said Michael Bromwich, head of the Bureau of Ocean Energy Management, the office that oversees offshore drilling. Others may not have all the information required and will need some “back and forth,” he said on a conference call today with reporters.

The moratorium imposed after BP Plc’s spill idled 33 drilling rigs and may cost 23,247 jobs, by the administration’s own estimate. Government officials from Gulf Coast states say the ban is damaging a region of the country already suffering because of the BP disaster, the biggest U.S. oil spill.

“It will be up to industry to determine when deep-water drilling can resume,” Bromwich said. “We fully understand that with new rules coming down the pike, that there is the risk of confusion and uncertainty.”

Companies operating in shallow waters of less than 500 feet deep, which aren’t subject to the drilling ban, have said regulators are taking too long to act on permits under rules issued in June. Five permits for new shallow-water wells have been issued since then, and eight are pending, according to the bureau’s website.

The fewest shallow-water permits issued in one month last year was eight, Louisiana Lieutenant Governor Scott Angelle said at an Aug. 4 hearing held by Bromwich in New Orleans.

Safety Report

The bureau plans to issue additional requirements by the end of September that will be based on a May 27 report from Interior Secretary Ken Salazar to President Barack Obama.

“I’m certainly hopeful that companies have had the foresight to look at the safety report to the president and begin to make the enhancements and improvements,” Bromwich said.

Obama halted drilling in waters deeper than 500 feet after BP’s Macondo well, about 40 miles (64 kilometers) off the Louisiana coast, blew out April 20. The explosion killed 11 workers and set off an uncontrolled leak that spewed 4.9 million gallons.

Bromwich completed public hearings yesterday on the spill and said he hopes to deliver a report on his findings to Obama by the end of the month. U.S. Senator Mary Landrieu, a Louisiana Democrat, and Louisiana Governor Bobby Jindal, a Republican, have called on Obama to end the drilling ban before its scheduled expiration on Nov. 30.

“That will really be up to the secretary,” Bromwich said of Salazar. “It may well be that he wants to have discussions internally within the department, with me and my staff. I don’t know how quickly he’ll be prepared to make a decision. It may take him a few days. It may take him a couple of weeks.”

Bromwich said the ban is “highly unlikely” to be prolonged beyond Nov. 30.

“I haven’t seen the case made for extending the moratorium,” he said.

To contact the reporters on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net.

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