Witnesses Say Gulf Drilling Ban Was A Harsh Blow

The Obama administration's reactions to last year's BP oil spill did more damage than the crude itself, Mississippi Gov. Haley Barbour and Gulf Coast employers told a House committee Thursday.

Barbour said little oil reached Mississippi's shores, but the administration's May 2010 decision to impose a five-month ban on most deep-water drilling has left a lasting impact.

The moratorium "not only cost jobs in all the Gulf states, it hurt the economy nationally by reducing domestic oil production," Barbour told the House Oversight and Government Reform Committee.

Barbour, a Republican who recently ruled out a presidential bid, added that the government is still moving too slowly in approving deep-water projects.

"This will have a lasting impact on an already out-of-balance oil trade deficit," Barbour said. "Great jobs are being lost."

But Obama's top offshore drilling regulator -- Michael Bromwich, head of the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement -- testified that the post-spill priority was boosting the safety of oil and gas operations near U.S. coasts.

The ocean energy bureau has approved 55 permits for shallow-water wells since new safety rules were imposed last June.

The agency also has permitted 15 deep-water drilling projects for which applicants were required to prove they could contain oil if an underwater well blew out as BP's Macondo well did.

After the resulting explosion on April 20, 2010, killed 11 Deepwater Horizon drilling rig workers and unleashed a 5-million-barrel oil spill, the administration overhauled the government's oversight of offshore drilling to eliminate possible conflicts of interest.

Rep. Darrell Issa, R-Calif., said those bureaucratic changes and a subsequent slowdown in the permitting of offshore drilling projects exacerbated economic damage from the spill.

"Much of the suffering and loss from the spill was made worse by poor decisions of administration officials," said Issa, the panel chairman. "When the administration did act, its major accomplishment was a hasty bureaucratic reorganization" and an offshore drilling shutdown that has caused "a paralyzing loss of jobs."

Cory Kief, president of Larose, La.-based Offshore Towing, said his tugboat company -- once hired to tow dozens of shallow-water rigs monthly -- has been hit hard by the drilling decline.

"We understand that precious lives were lost, and that an environmental disaster that was some 60 years in the making should not be ignored," Kief said. "However, there was a governmental agency that had a hand to play in this along with the others."

But Bromwich, the ocean energy bureau director, said that even if it takes more time for oil companies to satisfy new safety rules and for regulators to verify their compliance, that's better than the alternative.

"Our new regulations to strengthen drilling safety and protect the environment have required operators to work to make sure they drill safely, and our drilling engineers have to work to ensure compliance with the expanded set of requirements," Bromwich said. "That takes more time than the process that existed previously, when the rules were inadequate and some of our reviews were insufficiently exacting."

"This may be frustrating to some in the industry, but the additional rules and heightened scrutiny are completely appropriate and in the best interest of the nation."

The presidential commission that investigated the Deepwater Horizon disaster found that oil companies lost control of Gulf wells 79 times from 1996 to 2009, Bromwich noted.

"That's 79 near-misses -- 79 almost-Deepwater Horizons," Bromwich said.

It's impossible to reduce risk to zero, he said, "but we have to work constructively to try to manage those risks in a balanced way so we don't impose inappropriately high costs on industry and yet we do raise the bar on safety."

Bromwich added that he "would not have been comfortable" relaunching deep-water drilling after the spill without first strengthening offshore safety rules.

But Barbour argued that the government overreacted -- especially given a history of more than 31,000 oil wells drilled in the Gulf without devastating spills.

Barbour likened the deep-water drilling ban and subsequent safety regulations to outlawing left turns "because they're a little more dangerous."

U.S. economic needs and the urgency of domestic energy production outweigh the risk, Barbour said.

"The risk of one in 31,000 is worth taking when you're talking about something that is so important to the economy of the United States of America," he said.  

by  Jennifer A. Dlouhy

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Houston Chronicle

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Friday, June 03, 2011