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Deep-Water Drilling in Gulf Won’t Resume Quickly, Bromwich Says

Sept. 27 (Bloomberg) -- Few companies will meet new environmental and safety rules in the month after President Barack Obama’s moratorium on deep-water drilling comes to an end, said Michael Bromwich, director of the U.S. office that oversees offshore oil exploration.

“Even when the moratorium is lifted, you’re not going to see drilling going on the next day or even the next week,” Bromwich, head of the Bureau of Ocean Energy Management, said at a hearing in Washington today. “It’s going to take some time.”

The Obama administration halted drilling in waters deeper than 500 feet (152 meters) after BP’s Macondo well off the Louisiana coast blew out April 20, killing 11 workers and setting off the biggest U.S. oil spill.

Drillers such as Apache Corp. and Exxon Mobil Corp. will face “significant” new requirements, Bromwich told the presidential commission investigating the disaster. It’s unclear how many drillers are prepared to meet the new rules on well design and safety equipment, he said.

The moratorium, which idled 33 rigs, is likely to end before it is set to expire Nov. 30, said William Reilly, co-chairman of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, the presidential panel. State officials from the Gulf Coast and industry groups say the ban is costing jobs in a region already suffering from the effects of the spill.

“I’ll be amazed if the moratorium is not lifted before Nov. 30,” Reilly said today in an interview on Bloomberg Television. It’s unclear “why it’s taking so long” to restart deep-water drilling, he said.

Report to Salazar

Bromwich has concluded a series of public meetings on the moratorium and said he will present his findings to Interior Secretary Ken Salazar this week. Also this week, the bureau expects to release two new rules, one of which will “impose a significant number of mostly technical requirements,” Bromwich said. Those are in addition to regulations issued in June.

Anticipating the end of the moratorium, which went into effect at the end of May, the bureau is also reassigning staff to deal with a spate of applications for drilling permits, Bromwich said.

“We are stretched, but we also need to adjust to the new realities,” Bromwich said. “We will have a significant number of additional people who will be dealing with both shallow-water permits that are pending and the deep-water drilling applications that we can fairly anticipate.”

Landrieu’s Demand

Louisiana officials such as U.S. Senator Mary Landrieu, a Democrat, and Republican Governor Bobby Jindal, have called for an end to the drilling ban. Last week, Landrieu said she will block Senate action on Obama’s nomination of Jack Lew to lead the White House budget office until the administration lifts or “significantly” modifies the moratorium.

The ban is having a “devastating impact on the economy of the Gulf Coast,” she wrote in a letter to Senate Majority Leader Harry Reid, a Nevada Democrat. “I have done everything within my power to get this administration’s attention. But the policy remains in effect and Louisiana’s economy continues to suffer.”

Landrieu is scheduled to appear before the spill commission tomorrow.

To contact the reporter on this story: Jim Efstathiou Jr. in Washington at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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