A Year After the Moratorium, Deepwater Drilling Permits Remain Scarce

One of the biggest issues of concern for Houston's oil and gas industry is the slow pace of permitting for drilling in the Gulf of Mexico. The industry wants to turn that situation around.

It’s been nearly a year since the Obama administration lifted the moratorium on deepwater oil and gas drilling it imposed in the wake of the BP Macondo well blowout. For many in the industry, though, it feels as if little has changed.  

“We still have permit pace at about half of what we’re used to seeing. And without permits, we can’t drill oil and gas wells. And if we’re not drilling oil and gas wells, it’s hard to hire people to drill those wells.”

Jim Noe is senior vice president of Houston-based drilling firm Hercules Offshore. He’s also one of the leaders of a lobbying effort aimed at speeding up the pace of permitting.

“What we’re trying to make very clear to the president is that if he’s looking for jobs, he need not look toward California solar companies or green energy jobs or new stimulus programs. He needs to just look here in the Gulf of Mexico.”

Noe recently put that message in an open letter to the White House, signed by representatives of seventeen other trade groups. The letter argues that wrangling within the administration over just how much the pace of permitting has slowed is itself is making the problem worse.

The administration is hitting back. Michael Bromwich is director of the Bureau of Ocean Energy Management, Regulation and Enforcement, the agency responsible for issuing those permits. He spoke recently at the Center for Strategic and International Studies in Washington.

“I continue to be disappointed to see politically motivated erroneous reports and commentaries, sponsored by various industry associations and groups, criticizing the bureau for allegedly slow walking permits and plans. That is a phrase we see over and over again, and it is simply not true.”

Bromwich said that much of the delay stems from drilling companies sending in flawed applications. He also noted the bureau remains underfunded and understaffed.

James Coan is an energy policy researcher at Rice University’s Baker Institute.

“Probably what the administration is saying, what Bromwich is saying, is closer to the truth. Considering that there are many more stringent requirements and there hasn’t been a huge influx of money or new people going into the agency, it seems fairly inevitable that it’s going to take a little bit longer for this permitting to happen.”

As of this weekend, that agency is set to split in two. One will handle offshore energy leasing. The other will oversee inspections, enforcement and safety. Michael Bromwich will head the latter until a permanent director is named.

Jim Noe of Hercules Offshore fears the division will only make the application process less efficient.

“We’re not optimistic that this reorganization of the regulating group will be good news for getting permits.”

For now, he says, the industry will just have to wait and see.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...