June 30 - A group of offshore drilling company CEOs, who met privately with US Interior Department officials on June 28, have urged the government not to reimpose a deepwater drilling moratorium that was struck down last week by a federal court judge.
But the drillers left the hour-long meeting with Interior Secretary Ken Salazar feeling that government concerns over the possibility of a second oil spill would almost certainly result in a new moratorium.
The CEOs of Seahawk Drilling, Noble Corporation, Ensco, Pride International, Rowan Companies, Hercules Offshore, Diamond Offshore Drilling and Delta Towing sent a letter on June 29 to Salazar.
The drillers reiterated that recent government orders boosting safety requirements for blowout preventors and imposing new well construction requirements are reasonable and sufficient. New permits should be issued under the stricter guidelines, the drillers said.
The drillers also suggested that US Coast Guard or other government officials be present on the rigs during critical drilling phases to supervise the activity and reassure the public that every step was being taken to ensure safety.
Drillers, along with representatives of oil majors ExxonMobil, ConocoPhillips, BP and Chevron, met June 28 at Interior headquarters with Salazar, Deputy Secretary David Hayes, Wilma Lewis, assistant secretary for Land and Minerals Management, Michael Bromwich, the newly named head of the Bureau of Ocean Energy Management (formerly the Minerals Management Service) and Interior Chief of Staff Tom Strickland, according to a source who attended the meeting.
Representatives from two trade groups, the American Petroleum Institute and the National Ocean Industries Association, also attended.
Interior spokeswoman Kendra Barkoff confirmed that the meeting took place, but declined to comment on what was discussed.
The group met for a little more than an hour, after which drillers left feeling discouraged and convinced that Salazar intended to issue a new moratorium soon.
"Industry in general, we've been pushing for enhanced safety, which we've already implemented," Randy Stilley, CEO of shallow-water driller Seahawk Drilling, said in an interview. "We've said all along [we've wanted] enhanced well design and well construction where you don't cut any corners, and you end up with a well bore with multiple barriers. So even if you had a blowout, you have a well bore that allows you to re-enter the well and kill it very quickly. I don't think that's an answer that DOI really wants."
Cathy Landry, an API spokeswoman, said the group welcomed the discussion and said it looked forward to "working with Interior on a clear path forward to resuming drilling."
A six-month moratorium on new deepwater wells was issued in May by President Barack Obama after a 30-day safety review by Salazar. The moratorium affected 33 wells that were in various stages of development at the time.
US District Court Judge Martin Feldman on June 22 granted an industry motion for an injunction against the moratorium, calling it "arbitrary and capricious." The government has filed notice of an intent to appeal. Feldman has given the government 30 days to show how it is complying with his order.
In their meeting on June 28, drillers emphasized the economic impact of a moratorium, including the loss of hundreds of jobs as rigs move overseas.
But Interior officials were more concerned about what would happen in case of another spill.
Interior officials said they were committed to oil and gas exploration, according to Larry Dickerson, CEO of Diamond Offshore, which drills in both shallow and deep waters.
"But clearly they focused on two areas of greatest concern that was that obviously there's been no clear way to secure the well when you have a blowout situation at that water depth," Dickerson said in an interview. "They really want progress in that area. The second area of DOI concern was the industry's ability to remove oil from the water spill recovery efforts."
The two sides weren't able to reach a mutual agreement that balanced the potential loss of jobs with the desire to avoid another disaster like the Macondo blowout and spill in the Gulf of Mexico.
"I don't think we really communicated past that," Dickerson said. "They did listen, they never really came back to us anywhere on the jobs and employment issue."
Salazar has said in recent congressional testimony that he intends to reissue a moratorium that could contain specific situations where the ban could be lifted.
One example Salazar gave was differentiating between reservoirs where pressure data and other information and hence the risks involved are known versus "those reservoirs which are exploratory in nature where you don't know as a company what it is that you are drilling in," he said in testimony on June 23.
Despite appeals made during the closed-door meeting on June 28, drillers say Interior appears committed to a moratorium in some form.
"Quite frankly, they're concerned about cleanup and spill containment," Stilley said. "So, until we get the [Macondo] well killed, we may be in this same limbo period for deepwater drilling. There are no signals they'll loosen the moratorium and seem to be looking for ways to reimplement it to get around" the court ruling.
Still, Stilley and others made a final appeal in their June 29 letter to Interior.
"Any discussion of a moratorium is not justified on the record, is contrary to law, and simply would make matters worse for the energy and economic security of our nation," the companies wrote. "We believe that the loss of experienced personnel to non-US opportunities created by a moratorium will undermine safe operations and will be in direct contradiction of our shared goal for safe operations."
The companies said any further delays in issuing drilling permits in either shallow or deep water would cost hundreds of jobs.
"As we discussed in our meeting, we now stand at the point at which continued delay and uncertainty regarding federal policy toward offshore drilling is inflicting serious economic hardship and job loss to communities along the Gulf Coast," the companies wrote "Because drilling rigs are highly mobile, many will leave the Gulf of Mexico for distant parts of the world, taking thousands of jobs with them. Strategic energy infrastructure and experienced personnel will be lost for the foreseeable future."
But the drillers left the hour-long meeting with Interior Secretary Ken Salazar feeling that government concerns over the possibility of a second oil spill would almost certainly result in a new moratorium.
The CEOs of Seahawk Drilling, Noble Corporation, Ensco, Pride International, Rowan Companies, Hercules Offshore, Diamond Offshore Drilling and Delta Towing sent a letter on June 29 to Salazar.
The drillers reiterated that recent government orders boosting safety requirements for blowout preventors and imposing new well construction requirements are reasonable and sufficient. New permits should be issued under the stricter guidelines, the drillers said.
The drillers also suggested that US Coast Guard or other government officials be present on the rigs during critical drilling phases to supervise the activity and reassure the public that every step was being taken to ensure safety.
Drillers, along with representatives of oil majors ExxonMobil, ConocoPhillips, BP and Chevron, met June 28 at Interior headquarters with Salazar, Deputy Secretary David Hayes, Wilma Lewis, assistant secretary for Land and Minerals Management, Michael Bromwich, the newly named head of the Bureau of Ocean Energy Management (formerly the Minerals Management Service) and Interior Chief of Staff Tom Strickland, according to a source who attended the meeting.
Representatives from two trade groups, the American Petroleum Institute and the National Ocean Industries Association, also attended.
Interior spokeswoman Kendra Barkoff confirmed that the meeting took place, but declined to comment on what was discussed.
The group met for a little more than an hour, after which drillers left feeling discouraged and convinced that Salazar intended to issue a new moratorium soon.
"Industry in general, we've been pushing for enhanced safety, which we've already implemented," Randy Stilley, CEO of shallow-water driller Seahawk Drilling, said in an interview. "We've said all along [we've wanted] enhanced well design and well construction where you don't cut any corners, and you end up with a well bore with multiple barriers. So even if you had a blowout, you have a well bore that allows you to re-enter the well and kill it very quickly. I don't think that's an answer that DOI really wants."
Cathy Landry, an API spokeswoman, said the group welcomed the discussion and said it looked forward to "working with Interior on a clear path forward to resuming drilling."
A six-month moratorium on new deepwater wells was issued in May by President Barack Obama after a 30-day safety review by Salazar. The moratorium affected 33 wells that were in various stages of development at the time.
US District Court Judge Martin Feldman on June 22 granted an industry motion for an injunction against the moratorium, calling it "arbitrary and capricious." The government has filed notice of an intent to appeal. Feldman has given the government 30 days to show how it is complying with his order.
In their meeting on June 28, drillers emphasized the economic impact of a moratorium, including the loss of hundreds of jobs as rigs move overseas.
But Interior officials were more concerned about what would happen in case of another spill.
Interior officials said they were committed to oil and gas exploration, according to Larry Dickerson, CEO of Diamond Offshore, which drills in both shallow and deep waters.
"But clearly they focused on two areas of greatest concern that was that obviously there's been no clear way to secure the well when you have a blowout situation at that water depth," Dickerson said in an interview. "They really want progress in that area. The second area of DOI concern was the industry's ability to remove oil from the water spill recovery efforts."
The two sides weren't able to reach a mutual agreement that balanced the potential loss of jobs with the desire to avoid another disaster like the Macondo blowout and spill in the Gulf of Mexico.
"I don't think we really communicated past that," Dickerson said. "They did listen, they never really came back to us anywhere on the jobs and employment issue."
Salazar has said in recent congressional testimony that he intends to reissue a moratorium that could contain specific situations where the ban could be lifted.
One example Salazar gave was differentiating between reservoirs where pressure data and other information and hence the risks involved are known versus "those reservoirs which are exploratory in nature where you don't know as a company what it is that you are drilling in," he said in testimony on June 23.
Despite appeals made during the closed-door meeting on June 28, drillers say Interior appears committed to a moratorium in some form.
"Quite frankly, they're concerned about cleanup and spill containment," Stilley said. "So, until we get the [Macondo] well killed, we may be in this same limbo period for deepwater drilling. There are no signals they'll loosen the moratorium and seem to be looking for ways to reimplement it to get around" the court ruling.
Still, Stilley and others made a final appeal in their June 29 letter to Interior.
"Any discussion of a moratorium is not justified on the record, is contrary to law, and simply would make matters worse for the energy and economic security of our nation," the companies wrote. "We believe that the loss of experienced personnel to non-US opportunities created by a moratorium will undermine safe operations and will be in direct contradiction of our shared goal for safe operations."
The companies said any further delays in issuing drilling permits in either shallow or deep water would cost hundreds of jobs.
"As we discussed in our meeting, we now stand at the point at which continued delay and uncertainty regarding federal policy toward offshore drilling is inflicting serious economic hardship and job loss to communities along the Gulf Coast," the companies wrote "Because drilling rigs are highly mobile, many will leave the Gulf of Mexico for distant parts of the world, taking thousands of jobs with them. Strategic energy infrastructure and experienced personnel will be lost for the foreseeable future."
