oil moratorium

Interior Secretary Ken Salazar traveled to Louisiana on Monday to meet with oil and gas executives whose industry has been suffering from a “de facto” drilling ban since the government’s moratorium was lifted. Both of the state’s senators said Salazar failed to adequately address the core issues causing the logjam.

Salazar’s trip to Houma to meet with industry leaders was made in exchange for Sen. Mary Landrieu’s (D-LA) lifting of her hold on Jack Lew, President Obama’s nominee to head the Office of Management and Budget. The state’s other senator, David Vitter (R-LA), told Salazar that the Obama administration needs to resolve at least a few big-picture issues to end the logjam on Gulf drilling permits.

Vitter spoke on the phone with Salazar Saturday and sent a letter Sunday to lay out specific regulatory issues that he said need to be resolved so permits can again be issued at their pre-moratorium levels. Among the unresolved regulatory issues Vitter mentioned: the staffing of the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement, the agency that issues drilling permits; developing regulatory certainty and defining rules; and shifting the focus from shallow water permits solely to both shallow and deepwater permits.

After meeting with Salazar, industry executives were not pleased by what they heard. James Noe, general counsel of Hercules Offshore Inc. and director of the Shallow Water Energy Security Coalition, told reporters, “The only commitment we received from the secretary is that he’s going to meet with us again in December.”

More than a month has passed since the Obama administration lifted the six-month deepwater drilling moratorium, but few permits have been issued since then, thanks to stringent permit requirements. The ban was imposed as a safety and environmental precaution after the Deepwater Horizon oil spill, but has come under growing skepticism after the Interior Department’s inspector general concluded that a drilling safety report made it falsely appear that the moratorium was supported and peer reviewed by scientists and other experts.

Vitter expressed frustration for the lack of progress from Salazar’s meeting:

All of us from Louisiana hoped to hear some new policy, some permitting breakthrough, maybe a handful of new permits approved. But we heard none of that – absolutely nothing.

I told the secretary that this permit logjam had to change – this vital industry is virtually shut down.

In a statement released after the meeting, Landrieu expressed “disappointment” that Salazar did not outline steps to lift the “de facto” moratorium.

Salazar said, “We will continue to work with the industry and stakeholders to provide certainty and ensure that everyone understands the rules of the road.” He also agreed to Vitter’s request to follow up on the discussions and suggestions made Monday and meet again in Washington, D.C., with industry leaders.

Unless Salazar addresses these regulatory issues, permit issuance will not reach its previous rates anytime soon and the Gulf Coast economy will continue to suffer.

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