Sen Landrieu Yields To White House On Offshore Drilling
November 19 2010 - 12:41PM
Dow Jones News
Sen. Mary Landrieu (D., La.) has yielded in a high-stakes battle
with the Obama administration over offshore drilling, allowing the
White House's budget director to win confirmation in exchange for
what she called a commitment to provide certainty to the oil and
gas industry.
Late Thursday, Landrieu released her hold on Jacob Lew, allowing
him to be confirmed as the head of the Office of Management and
Budget. She had held up the nominee, demanding that the Obama
administration speed up the issuance of permits to drill in the
Gulf of Mexico. The U.S. Interior Department had banned deepwater
drilling in the aftermath of the BP PLC (BP, BP.LN) oil spill and
only recently resumed approving drilling permits under more
stringent safety regulations.
Some oil and gas drilling executives came away with an
impression that Landrieu had struck a deal with the White House and
that speedier permit approvals were in store, but the Interior
Department gave little indication that a deal had been reached. The
conflicting versions of events suggest continued negotiations on
drilling in the Gulf of Mexico, which currently accounts for 30% of
domestic oil production. U.S. Interior Secretary Ken Salazar
appears in Louisiana on Monday to address the industry.
"He will outline the path forward so that permits will be issued
and the people of Louisiana can get back to work in this vital
industry," Landrieu said in a statement.
Jim Noe, the general counsel of Hercules Offshore Inc. (HERO)
and the head of a coalition of shallow-water drillers, said he
understood that the Interior Department had agreed to issue five
shallow-water drilling permits this week and to approve a flurry of
new permits next week.
But Kendra Barkoff, an Interior spokeswoman, said that
Interior's offshore drilling agency continues to review permits
case-by-case on their merits. The Bureau of Ocean Energy
Management, Regulation and Enforcement has approved 15 permits to
drill new shallow-water wells in the Gulf of Mexico and had six
shallow-water permits pending as of Nov. 18. No permits to drill
exploratory and development wells in the deep waters have yet
received regulatory approval.
Noe also said that he expected the Interior Department to
indicate its commitment to offering new leases in 2011 to drill in
the Gulf of Mexico. The Interior Department has been expected by
the industry to cancel a March 2011 lease sale because it only
recently started to conduct an environmental review of the sale and
this kind of review can take about six months to complete. The
Interior Department has remained silent on its plans.
On Friday, the American Petroleum Institute, which represents
the oil and gas industry, urged the Obama administration to get
moving.
"It is up to the administration to end the de facto moratorium
by expeditiously approving pending plans and permits in the Gulf of
Mexico and Alaska," API President Jack Gerard said in a statement.
"It is also incumbent upon the administration to demonstrate a
commitment to promptly complete environmental analysis, commence
offshore leasing, and complete the offshore oil and gas program for
2012-2017."
--Siobhan Hughes, Dow Jones Newswires; (202) 862-6654;
siobhan.hughes@dowjones.com
--Tennille Tracy and Isabel Ordonez contributed to this
article.