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Offshore drilling to undergo tighter review

US halts waivers based on old data; Well development expected to slow

Workers sorted shrimp at the frozen seafood plant in Lafitte, La., yesterday. US officials say Gulf Coast shrimp is safe to eat. Workers sorted shrimp at the frozen seafood plant in Lafitte, La., yesterday. US officials say Gulf Coast shrimp is safe to eat. (Win Mcnamee/ Getty Images)
By John M. Broder
New York Times / August 17, 2010

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WASHINGTON — The Obama administration said yesterday that it would require significantly more environmental review before approving new offshore drilling permits, ending a practice in which government regulators essentially rubber-stamped potentially hazardous deepwater projects like BP’s blown-out well.

The administration has come under sharp criticism for granting BP an exemption from environmental oversight for the Macondo well, which blew out April 20, killing 11 workers and spewing nearly 206 million gallons of oil into the Gulf of Mexico.

The more stringent environmental reviews are part of a wave of new regulation and legislation that promises to fundamentally remake an industry that has operated hand-in-glove with its government overseers for decades.

Many oil industry officials worry that the new environmental, safety, technical, and financial requirements will drive some companies out of business, discourage future exploration, and worsen the nation’s dependence on imported oil. The highly competitive oil industry has always operated under tremendous cost and time pressures; the new rules will probably slow down the development of new wells while raising costs.

Bruce H. Vincent, chairman of the Independent Petroleum Association of America, said the industry fears that the BP accident will be a turning point for oil exploration the way the Three Mile Island accident in 1979 contributed to a virtual 30-year moratorium on nuclear plant construction.

“Let’s hope it’s not our Three Mile Island,’’ said Vincent, who is also president of Swift Energy, a midsized oil company based in Houston. “It all depends on whether government adopts the wrong policies in response. The country can’t afford that.’’

Drillers are already chafing under a moratorium on deepwater drilling in the Gulf of Mexico and strict new rules on shallow water wells.

The House and Senate are moving legislation to tighten regulatory standards for offshore drilling and impose a multibillion-dollar limit on liability for damages from future spills.

The administration is moving on a parallel track. After three months of review of federal environmental law, the White House Council on Environmental Quality yesterday directed the Interior Department to suspend use of so-called categorical exclusions, which allow oil companies to sink offshore wells based on environmental impact statements for supposedly similar areas.

Permits for BP’s Macondo well were based on exemptions written in 1981 and 1986.

The Interior Department’s Minerals Management Service, recently renamed the Bureau of Ocean Energy Management, issued hundreds of these exemptions in recent years to reduce the paperwork burden for oil companies seeking new wells and government bureaucrats. As a result, there was no meaningful plan in place to cope with the BP oil spill and its impact on aquatic life and Gulf Coast shorelines.

The White House and Interior Department announced in mid-May that it would review all actions taken by the minerals agency under the National Environmental Policy Act.

The law requires federal agencies to complete a detailed environmental assessment before approving any potentially damaging project such as an offshore oil well.

Interior Secretary Ken Salazar and Michael R. Bromwich, director of the offshore energy service, said yesterday that they would conduct a thorough environmental review of all future drilling in the Gulf of Mexico and elsewhere on the Outer Continental Shelf. The moratorium on most deepwater drilling in the gulf will continue as the environmental study proceeds, they said.

The new policy will require much more extensive environmental scrutiny once the moratorium is lifted and will lengthen the process of granting new drilling permits.

Under current policy, the agency has only 30 days to decide whether to approve a drilling application, and very few are denied.

Shrimpers returned to Louisiana waters yesterday for the first commercial season since the BP disaster, uncertain what oil may still be in the water and what price they might get for their catch if consumers worry about possible lingering effects from the spill.

Perhaps the biggest fear is that some fisherman might try to sell oil-contaminated shrimp and scare consumers away again after prices crashed once already this summer. Louisiana ranks first in the nation in producing shrimp, blue crab, crawfish, and oysters, a $318-million-a year business in the state.

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