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Oil Industry Urges Boost in U.S. Spending to Speed Drill Permits

Sept. 7 (Bloomberg) -- Lobbyists for oil producers Exxon Mobil Corp. and Chevron Corp. are pushing Congress to increase funding for the U.S. agency that reviews and issues drilling permits.

Approving more drilling or mining on public land would help boost domestic oil and gas production by more than 75 percent in the next two decades, boosting U.S. employment and the Treasury receipts, according to a report released today by the American Petroleum Institute in Washington.

“Ultimately we need that energy, so we need more capability in the permitting,” Jack Gerard, chief executive officer of the industry group, said in an interview. “We have advocated for them to have an increased budget.”

President Barack Obama, who will unveil his plan to boost job growth in the American economy tomorrow, has proposed ending $46.2 billion in oil and gas subsidies to lower the budget deficit, a step that Gerard says would be a mistake.

Instead, more staff at the Interior Department would help get permits approved through the Bureau of Ocean Energy Management, Regulation and Enforcement, which would lead to more royalties paid by oil and gas companies and more economic activity that would provide more tax revenues, Gerard said.

“We pay more than our fair share,” Gerard said. “We want to create jobs and generate even more revenue.”

Drilling Permits

The permit process tightened after a BP Plc well ruptured last year, spilling more than 4 million barrels of oil into the Gulf of Mexico. The industry says that drilling approval is too slow. The U.S. has issued an average of two deep-water permits a month since May, compared with an average of about seven deep-water permits a month in the previous three years, according to data released on July 28 by Greater New Orleans Inc., a business development group in Louisiana.

The Obama administration says that while there have been some delays in drilling approvals, its data show more approvals than the industry contends. For shallow-water wells, permits averaged seven per month since late last year, compared with eight a month in 2009, according to Melissa Schwartz, a spokeswoman for the bureau. Since February, 37 unique wells were approved in deep water, Schwartz said in an e-mail.

Obama has proposed cutting the budget of the offshore-drilling bureau in the fiscal year that begins Oct. 1, while the Republican-controlled House of Representatives was considering legislation that would have increased that funding before it took a break for August recess, according to API.

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

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

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