Obama Administration Lifts Gulf Drilling Ban

(Oct. 12) -- The Obama administration today announced an early end to the moratorium on deepwater oil drilling off American shores, but it has added tough safety rules for the drilling companies and a regime of government tests that could delay the start of new operations for weeks or months.

The drilling ban had been put in place following the April 20 explosion at a BP well in the Gulf of Mexico and was set to end Nov. 30. But Interior Secretary Ken Salazar said the moratorium would end sooner because the government was satisfied with its new oil and gas safety reforms, the improved state of spill-response resources and better capabilities for containing well blowouts like the explosion at the Macondo well that sent oil spewing across the gulf region.

The changes "have reduced risks to a point where operators who play by the rules and clear the higher bar can be allowed to resume," Salazar said. "The oil and gas industry will be operating under tighter rules, stronger oversight and in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented."

But another factor at play could be the the growing political pressure on the administration to end the moratorium. It comes not just from the oil and gas industry and Republicans, but also from Gulf Coast Democrats distressed by the loss of an estimated 8,000 to 12,000 jobs from the moratorium and the ramifications for midterm congressional elections.

"For months now, I have been working to end the job-killing moratorium on offshore drilling," Rep. Charlie Melancon, D-La., said in a statement welcoming the announcement. "Our workers need to get back to work on those rigs to provide the jobs and energy security we need. If rigs comply with the regulations that are necessary to keep another BP disaster from ever happening again, they should be allowed to resume work immediately."

The Interior Department said Salazar has directed the Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEM, to require new permit applications from prospective deepwater drillers whose operations were suspended by the six-month moratorium.

Among other new requirements, drilling platform operators will have to demonstrate that they have the equipment and resources available to contain potential spills. And the chief executive of each operator will have to personally certify to the agency that the company has complied with new safety rules and other regulations. That requirement -- akin to the post-Enron Sarbanes-Oxley rule making CEOs sign off on financial filings -- is aimed at holding executives responsible for any safety lapses allowed under their watch.

Michael Bromwich, head of the BOEM, said the agency will inspect each deepwater drilling operation and test its blowout-prevention equipment before approving new permits -- a process that could take "at least a couple of weeks."

Interior officials and the BOEM also plan to issue additional safety rules, including requirements for newly developed blowout-prevention equipment as it becomes available.

"More needs to be done, and more will be done to continuously improve the safety of deepwater drilling and to bolster the ability of the government and industry to respond in the case of a major blowout," Bromwich said. "But we believe the risks of deepwater drilling have been reduced sufficiently to allow drilling under existing and new regulations."

Following the April 20 explosion, which killed 11 people, some 200 million gallons of oil surged into the gulf before the leak was contained on July 15 and the well finally declared killed just last month.

The drawn-out, halting government and industry efforts to contain the leak produced a political and economic trauma, from which the Obama administration and -- according to some economists and pollsters -- the national economy are still suffering.

Salazar, noting that some Gulf Coast residents and businesses consider the new rules too tough, said "others will say that we are lifting the deepwater drilling suspension too soon" and that "there are still risks involved with deepwater drilling."

But ending the moratorium seemed to offer more political gain than loss for the Obama administration, even if that, too, was delayed.

Sen. Mary Landrieu, a Louisiana Democrat, has been blocking confirmation of Jacob Lew to serve as President Barack Obama's new chief of the Office of Management and Budget until the moratorium was lifted.

And though she applauded today's decision and called it "a step in the right direction," Landrieu said she won't release her hold on the Lew nomination.

"Instead, I will take this time to look closely at how BOEM is handling the issuing of permits and whether or not drilling activity in both shallow and deep water is resuming," Landrieu said in a statement. "When Congress reconvenes for the lame duck session next month, I will have had several weeks to evaluate if today's lifting of the moratorium is actually putting people back to work."