Government Gives “Green” Light to Gulf Oil Companies

March 15, 2011 – Ashley Featherman

The Department of the Interior approved on Friday a second permit to resume deepwater offshore drilling in the wake of the BP Deepwater Horizon oil spill last spring.  BHI Billiton, the world’s largest mining company, will recommence drilling operations at their 4,300-foot-deep Shenzi site, about 120 miles off the Louisiana coast, with official approval from the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

Less than two weeks prior, the Obama administration gave the initial green light to Noble Energy Inc. to resume operations, following the moratorium issued in May 2010 to temporarily suspend deepwater drilling.  Noble expects to start work again at their Santiago site by the end of the month.

While oil industry leaders and government officials have highlighted new safety regulations in efforts to assuage public concern over the safety of future drilling endeavors, a suffering Gulf economy and steadily rising gas prices have compounded pressure on the Obama administration to act quickly to approve several pending deepwater drilling permits.

Data compiled this month in the Gallup Poll’s annual environmental survey shows that 60% of Americans now support offshore drilling for oil and gas in U.S. coastal areas, up from 50% last May, a month after the BP spill.

Gallup reports that although 61% of Americans described themselves last year as, “active in or sympathetic to the environmental movement… the possible benefits of achieving greater oil independence may be gaining appeal.”

This new drilling permit comes a week after crude oil prices exceeded $100 per barrel, gas prices met their highest levels in over two years, and fiscal projections grew ever more grim for the American consumer in 2011.  Vocal pressure has mounted amongst Congressional Republicans, some Democrats, oil industry executives, and Gulf locals adversely affected by the drilling moratorium for swift action by the Obama administration.

The American Petroleum Institute commended the approval of BHI’s permit, but Erik Milito, Upstream Director at API, also stressed the necessity of accelerating permit approval to aid a weakening Gulf economy.

“The oil and natural gas industry can and will provide even more jobs, higher economic growth and increased revenues to the federal treasury when policymakers pursue options that make resources currently off-limits available and move forward on permitting and licenses at a pace necessary to support domestic production,” Milito said.

Obama, in a statement on Friday, refuted allegations that his administration was thwarting oil production or blocking access to vital natural resources with bureaucratic red tape.  He, instead, expressed a willingness to back drilling on new public lands, while also stressing an ethical responsibility to do so cautiously.

“I don’t think anybody’s forgotten that we’re only a few months removed from the worst oil spill in our history,” President Obama said. “We are encouraging offshore exploration and production. We’re just doing it responsibly.”

White House spokesman Clark Stevens assured: “Any offshore drilling taking place in the United States must meet the rigorous new safety standards put in place since the BP Deepwater Horizon oil spill.”

Permits are now being issued on a case-by-case basis, a far cry from the rapid approval system of old.  Outlined regulations stipulate furnished proof of ability to contain a spill, in addition to well integrity standards and worst-case spill estimates.  In order to obtain their permits, both BHP and Noble Energy agreed to adhere to these safety regulations and will be required to use a specific well cap at their drilling sites designed by Helix Well Containment Group.

BOEMRE’s director, Michael R. Bromwich, is scheduled to testify in front of the House Appropriations Committee this week in defense of the bureau’s 2012 budget proposal, which includes significant, newly allocated funding for the oversight of offshore drilling.  A $133 million increase is requested for spending to ensure oil companies meet the outlined regulations as the government moves to hasten its approval rate.

Yet, environmental advocates remain unsatisfied with a lack of green initiative on lawmakers’ part.  After nearly 500 million barrels of oil spewed into the Gulf over three months, calls for increased safety measures have failed to effectuate landmark legislation to protect oil spill victims or the environment.  New safety regulations are void of environmental reviews or stipulations.

Many Democrats pushed last year for a bill to eliminate the $75 million cap on an oil company’s liability in the event of a spill, citing the Exxon Valdez incident of 1989 and the BP oil spill to illustrate that future disasters would likely exceed $75 million in damages.

“When you consider the risk that offshore drilling poses to our coastal economies and environment, the current cap on oil-company liability is just a spit in the ocean that does nothing to hold them accountable,” said Sen. Frank Lautenberg (D-N.J.), a leading advocate against the liability cap.

The Obama administration aligned its sympathies with environmentalists and liberals by expressing support for the bill when initially proposed last year.  Other pressing issues, however, appear to have ousted this bill from the legislative agenda.  On Friday, Obama indicated a change of heart with mention of his willingness to tap into the U.S. Strategic Petroleum Reserve, should there be a lack of supply in coming months, according to Gallup Poll.

“President Obama seems intent on squandering his environmental 9/11,” writes New York Times columnist Thomas Friedman, citing the president’s failure to harness Americans’ collective sympathies in the aftermath of the BP spill into any productive green reform.

Instead, the White House now faces Gallup results indicating a six percent increase to a 49% approval rate amongst Americans who support the opening of Alaska’s Arctic National Wildlife Refuge for oil exploration.

Both the immediate and long-term future of domestic energy production, thus, remain irresolute as American citizens and lawmakers weigh their pressing economic interests against their waning environmental concerns.

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