The chief regulator of the offshore oil industry said Thursday that he expects new permits for deepwater drilling to be issued by summer, but that the pace of permitting will likely never return to what it was before the Deepwater Horizon disaster on April 20 led to the suspension of drilling in the deep waters of the Gulf of Mexico.
Michael Bromwich said that he is asked, “when will the pace of permitting return to the pre-April 20 level, and the honest answer is, probably never.”
But Bromwich, who was named in June to head the new Bureau of Ocean Energy Management, Regulation and Enforcement and lead the reorganization of the regulatory regime at the Interior Department after the disaster, said that he did not think the current drought on new permitting will last past mid-year.
“I would be stunned if we waited until the third or fourth quarter,” said Bromwich, who was delivering remarks on his reform efforts at the Center for Strategic and International Studies. He was responding to a question from Frank Verrastro, director of the Energy and National Security Program at CSIS, who noted that while only a couple of operators had moved rigs out of the Gulf since the accident, the industry’s patience may eventually run out.
“It’s around the corner, just a longer block,” Bromwich said of the return to deepwater drilling.
Bromwich said the Department of Interior is doing all that it can to bring the regulatory regime for deepwater drilling into the 21st century without idling the industry for longer than necessary, pursuing an ambitious reform agenda very much in synch with the recommendations of the National Oil Spill Commission, which released its final report this week. But, he said, efforts have been “stymied” by the failure of Congress to provide, so far, additional resources.
The commission described increased financing for Interior regulators as one of its top three legislative priorities, along with increasing the Oil Pollution Act’s liability cap and directing 80 percent of fines assessed against BP for the accident to restoration of the Gulf Coast.
Mindful that Congress is loath to increase spending on anything right now, the commission recommended that “budgets for the regulatory agencies that oversee offshore drilling should come directly from fees paid by the companies that are being granted access to a publicly owned resource.”
“I care far less where the money comes from than we get what we need,” Bromwich said.
Bromwich noted that needed change often requires a catastrophe as a catalyst, and that the offshore industry in the Gulf was guilty of “hubris” before April 20.
He noted that after the Piper Alpha oil rig disaster in the North Sea in 1988 – the most deadly in history – “UK offshore production, which again is at a much smaller scale than in the Gulf, dropped off substantially for two years.”
“The major challenge facing us and the industry is to dramatically improve the safety of drilling in the Gulf of Mexico, particularly in deep water, while continuing with operations, keeping production flowing and keeping people working,” Bromwich said.
“Over the past few months, especially since our new rules were announced at the end of September, we have heard from countless companies, trade associations and members of Congress about the significant anxiety that currently exists in the industry that we will soon change the rules of the permitting process significantly, thereby creating further uncertainty about what is required to conduct business on the (Outer Continental Shelf.) The phrases we hear repeatedly are that we are ‘changing the rules’ and ‘moving the goalposts.’ The implication is that we have other regulatory requirements up our sleeve that we have not yet unveiled.
“This is not the case,” Bromwich said. “Barring significant, unanticipated revelations from investigations into the root causes of the Deepwater Horizon explosion that remain in process, I do not anticipate further emergency rule-makings. Period.
“But at the same time,” Bromwich said, “we can no longer accept the view that the appropriate response to a rapidly evolving, developing and changing industry, which employs increasingly sophisticated technologies, is for the regulatory framework and the applicable rules to remain frozen in time. Over time, the regulatory framework and the specific requirements must keep pace with advances in the industry — and with industry ambitions to drill in deeper water in geological formations that have greater pressures.”
Jonathan Tilove can be reached at email@example.com or 202.383.7827.