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First deep-water well in Gulf OKd
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NEW YORK — The U.S. has approved the first deepwater drilling permit in the Gulf of Mexico since BP’s massive oil spill.

The Bureau of Ocean Energy Management, Regulation and Enforcement announced Monday that it issued a permit to Noble Energy Inc. to continue work on its Santiago well about 70 miles southeast of Venice, La. Drilling will resume nearly one year after BP’s blowout created the worst offshore spill in U.S. history.

Noble started drilling the well four days before the Deepwater Horizon oil rig exploded on April 20. The project was put on hold on June 12 after the U.S. placed a moratorium on exploration in waters deeper than 500 feet.

No new deepwater permits had been issued since the moratorium was lifted in October. Regulators have been under pressure from the oil industry and some lawmakers to get drilling projects started again in the Gulf while ensuring that new safeguards are in place. That pressure increased last week as the price of oil spiked above $100 per barrel and the price of gasoline hit its highest level in two and a half years.

Environmental groups want the government to hold off on permits and force oil companies to further study the effects of drilling on fragile marine habitats.

At 6,500 feet below the surface, Noble’s well is deeper than BP’s blown out Macondo well. In a worst-case scenario, the company told regulators its well could spill nearly 3 million gallons of oil per day into the Gulf. At its peak, the BP well spilled 2.6 million gallons per day.

Noble had drilled to a depth of 13,585 feet before the moratorium and has about 5,400 feet to go.

The permit is for a "bypass" well, which allows the driller to take a slightly different path than previously expected. Drilling is expected to recommence in April.

Director Michael Bromwich said that Noble demonstrated it is capable of containing a well blowout, a key requirement for permit approval. Noble contracted with the Helix Well Containment Group to use its emergency capping stack to stop the flow of oil in case it loses control of the well.

Another emergency containment solution, offered by a consortium led by Exxon Mobil Corp., was announced earlier this month.

"We expect further deepwater permits to be approved in coming weeks and months based on the same process that led to the approval of this permit," Bromwich said.

The U.S. has approved other permits for new wells, including 37 in shallow water, since the moratorium was lifted. It also has approved 22 other applications for activity on deepwater wells that were not suspended by the moratorium.

The approval comes as Interior Secretary Ken Salazar heads to the Capitol this week to defend his agency’s budget request. He is expected to be pressed by lawmakers concerned with rising gasoline prices about how slowly new permits have been issued.

Sen. David Vitter, R-La., a vocal critic of the slowdown in offshore drilling permits, said Monday that "while one deepwater permit is a start, it is by no means reason to celebrate." Vitter wants 15 deepwater permits issued before he releases a hold on the nomination of President Obama’s pick to head the Fish and Wildlife Service.

House Natural Resources Committee Chairman Doc Hastings, R-Wash., urged regulators to push other applications through quickly. Noble’s project alone "will not ease the economic pain being inflicted on Gulf families."

Bromwich denied that politics played a role in the timing of the announcement. He said there are eight applications currently pending for deepwater wells.

The Obama administration is seeking a $12 million increase in the former Minerals Management Service budget to hire hundreds of new oil and gas inspectors, engineers, scientists to oversee industry operations; conduct detailed engineering reviews; and more closely review oil spill response plans. Much of the money would come from higher fees and royalty rates on oil and gas companies.


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