Senators press Salazar to issue more offshore drilling permits

Nine US senators from coastal producing states, led by Kay Bailey Hutchison (R-Tex.) and Mary L. Landrieu (D-La.), filed a resolution urging US Interior Secretary Ken Salazar to help get offshore oil and gas exploration workers back on the job by streamlining the federal government’s review process for deepwater and shallow water drilling permits.

Mark Begich (D-Alas.), Thad Cochran (R-Miss.), John Cornyn (R-Texas), Lisa Murkowski (R-Alas.), Jeff Sessions (R-Ala.), Richard C. Shelby (R-Ala.), and Roger F. Wicker (R-Miss.) co-sponsored the Feb. 16 resolution, which also asked that Salazar provide both groups of offshore drilling contractors with a sample application to be used as a template.

Salazar imposed an overall offshore drilling moratorium on May 6 following the Apr. 20 Macondo well blew out, causing the Deepwater Horizon semisubmersible rig to explode and kill 11 workers before sinking and releasing a massive amount of crude oil into the Gulf of Mexico. The US Department of the Interior has issued fewer than 35 shallow water permits since that moratorium was lifted on May 28 and no new deepwater permits since that ban was lifted on Oct. 12, the resolution said.

It charged that DOI has not clearly outlined requirements for either shallow water or deepwater drilling contractors to get new permits, resulting in 12 rigs leaving the gulf. "In spite of the offshore drilling moratoriums being lifted, permit delays are causing rigs to sit idle and threatening to send American jobs and tax revenue overseas,” Hutchison said in a statement. “Energy producers must have adequate guidance on new safety and environmental regulations so they can put Americans back to work and continue to strengthen our domestic energy supply to keep fuel costs low.”

"It has been nearly 10 months since the Deepwater Horizon disaster and the Interior Department still has not streamlined the shallow water permitting process," added Landrieu. "This de facto shallow water drilling moratorium is having a painful impact on the Gulf Coast's economy. Just last week, Seahawk Drilling announced that it will file for bankruptcy primarily because of a lack of permits being issued. I don't know how much more it will take before this administration understands the harsh consequences of its intransigence.”

A DOI spokeswoman responded that production and exploration in the gulf are ongoing, and that offshore producers, drilling contractors, and service and supply companies continue to make progress toward developing the capability to contain blowouts in deep water, which the Macondo blowout made clear is critical to safe deepwater exploration.

“Permits to drill are issued solely based on whether a company’s application meets rigorous safety and environmental standards, including demonstrating containment capabilities,” she told OGJ by e-mail. The US Bureau of Ocean Energy Management, Regulation, and Enforcement continues to issue permits, and is working as expeditiously as is safely possible to review drilling applications as they are submitted and ensure they meet safety standards put in place in the wake of the accident and spill, she continued.

A 10th US senator, David Vitter (R-La.), met with BOEMRE Director Michael R. Bromwich after the lawmaker placed holds on the nominations of Scott Dooney to become chief scientist at the National Oceanic and Atmospheric Administration and Dan Ashe to lead the US Fish and Wildlife Service.

“I wish my meeting with Director Bromwich was more fruitful,” Vitter said following the Feb. 16 meeting. “Unfortunately, pretty much all he did was repeat the administration’s talking point that there is no de facto drilling moratorium in the gulf.”

Senate Democratic leaders echo Obama’s oil tax call

As US House Republicans tried to find $32 billion in spending cuts, Senate Majority Leader Harry M. Reid (D-Nev.) and nine other Democrats from that side of the Capitol suggested ending what they called “giveaways to oil companies” to save at least $20 billion over 10 years.

Majority Whip Richard J. Durbin (Ill.), Policy Committee Chairman Charles E. Schumer (NY), Democratic Conference Secretary Patty Murray (Wash.) and Sens. Bill Nelson (Fla.), Robert Menendez (NJ), Benjamin L. Cardin (Md.), Sherrod Brown (Ohio), Sheldon Whitehouse (RI), and Kirsten Gillibrand joined Reid in making the suggestion to House Speaker John A. Boehner (R-Ohio) in a Feb. 8 letter. President Barack Obama is expected to call for elimination of the percentage depletion allowance, drilling cost expensing, and other oil and gas production incentives, along with the manufacturers’ tax exemption for the oil and gas industry, when he submits his fiscal 2012 budget request to Congress on Feb. 14.

“There is broad, bipartisan agreement on the need to rein in spending, make government more efficient and bring down the deficit,” the senators wrote. “We believe that the question before us is not whether we should do any cutting, but what exactly should be cut. So, as you consider spending-cut ideas for the remainder of this fiscal year, we ask that you focus on cutting programs that are wasteful and inefficient, as opposed to those that help create jobs and spur economic growth.

“We are concerned that some of the cuts you may propose could undermine future growth just as our economy is beginning to recover. Instead, we urge you to consider ending a number of tax loopholes and other subsidies that benefit big oil and gas companies,” they told Boehner. “Closing these loopholes would save the federal government more than $20 billion over 10 years. This is just one example of a wasteful item in the budget that could be cut in order to make a down payment toward reducing the nation’s deficit. If the House chooses to adopt this suggestion, it would represent a good first step towards cutting spending in a bipartisan way.”

The 10 Senate Democrats, who did not include Energy and Natural Resources Committee Chairman Jeff Bingaman (NM), said that ExxonMobil Corp.’s 53% higher fourth quarter earnings and Chevron Corp.’s 72% year-to-year improvement for the period show that “oil and gas companies are doing just fine while many Americans are still struggling to find work and support their families.

“The days of big oil companies making billions in record breaking profits while receiving billions in taxpayer-financed subsidies must end. It defies common sense to cut programs that are creating jobs, helping jumpstart our manufacturing sector and strengthening the middle class while protecting taxpayer-funded handouts to big oil companies that add little to our economic or energy security,” they maintained. “During these tough economic times, closing more than $20 billion in loopholes for big oil and gas companies would send a clear message that we can cut spending while protecting the middle class.”

Boehner did not formally respond, but he apparently does not plan to take the suggestion seriously. Independent producers, stripper well owners, refiners and others do because they would suffer significantly if the repeals find their way into the final fiscal 2012 federal budget.