Obama adviser on Platts Energy Week: Adjustment to new offshore rules may take 'months'

Washington - September 27, 2010

Also on Sunday’s program: Author of first book on Gulf Oil Spill; DOE official on clean energy investment

While the U.S. government may lift a moratorium on oil and gas drilling in deep waters of the Gulf of Mexico early, it will take "a period of months" for regulators and the industry to adjust to new regulations on exploration and production, an adviser to a White House commission said Sunday on Platts Energy Week, an all-energy television program.

"We're in kind of a getting-to-know-you period and probably will be for a period of months, where industry learns to comply with new regulations in deep water and shallow water, and the government feels its way toward a new relationship with the industry," Elgie Holstein, a vice president with the Environmental Defense Fund said on Platts Energy Week. "They're clearly under a lot of pressure to be a tough cop on the beat." To watch the full interview, click here.

Holstein was a co-author of a recent report on the moratorium prepared for President Barack Obama's commission on the explosion of BP's Macondo oil well and a subsequent massive oil spill. The report praised the U.S. Bureau of Ocean Energy Management (BOEM) for taking steps to tighten regulation of offshore drilling in response to the disaster, including the moratorium, but said the suspension could be lifted before its scheduled November 30 expiration.

BOEM Director Michael Bromwich has said he would issue a report soon addressing complaints about the deep-water moratorium and new safety regulations implemented in June. Bromwich and other government officials have indicated the suspension may be called off earlier than planned.

Drillers of oil and gas wells in shallow waters continue to press BOEM to quicken its review of permits for their operations, saying the agency has slowed to a crawl under the new rules.

"As an industry, we know we can't go back to business as it was before [the BP-well explosions]," Jim Noe, executive director of the Shallow Water Energy Security Coalition said on the program. "We've supported the new rules and regulations that [BOEM] put out. We're complying with those new rules and regulations for the most part.

"But our problem is everything is being viewed through a distorting prism of one operator on a single well," he added, referring to BP and the Macondo well. "In shallow waters, our wells are completely different. It's mostly natural gas, not oil."

BOEM has approved eight shallow-water drilling permits since June, a far lower rate than the agency, formerly known as the Minerals Management Service (MMS), maintained before the April well explosion. It approved 11 permits in March.

"The problem for us as an industry is we have thousands of workers on our payrolls, that we've kept on our payrolls for months, that we'll soon have to make some grisly decisions about," said Noe, a vice president with

Houston-based Hercules Drilling. "The industry will start dismantling itself, and it will be very difficult to put the industry back together once it's dismantled."

On Sunday’s program Bill also talked with Bob Deans, co-author of In Deep Water, the first book chronicling the BP Gulf oil spill disaster. Click here to watch the full interview.

Bill also spoke with Cathy Zoi, assistant secretary for the Department of Energy's (DOE) Office of Energy Efficiency and Renewable Energy about the clean energy projects the DOE invested $33 billion in stimulus funds. Click here to watch the full interview.

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