Offshore Drilling Can Resume for 13 Companies

Jane Van Ryan
Posted January 3, 2011

The administration announced today that 13 oil and natural gas companies can resume deepwater drilling activities in the Gulf of Mexico without submitting revised exploration or development plans for supplemental environmental reviews.

In a statement, Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), said he is "taking into account the special circumstances of those companies whose operations were interrupted by the moratorium and ensuring that they are able to resume previously-approved activities." The statement added that the companies will have to comply with new regulations and information requirements imposed after the Deepwater Horizon tragedy.

Although this is probably welcome news for the 13 companies, Bromwich's announcement does not address the ongoing difficulty of getting permits to drill new wells. As The Wall Street Journal reported today, not one new deepwater Gulf well has been approved since the moratorium was lifted in mid-October. According to the Energy Information Administration (EIA), U.S. offshore oil production will fall 13 percent this year due to the moratorium and drilling delays.

As older U.S. wells become depleted, it becomes critically important to find new sources of domestic oil and natural gas. With so many offshore areas off-limits, some energy companies are investing onshore where new technologies are making it possible to develop energy from shale. Here are just a few of the onshore areas where energy investments are being made:

• North Dakota - A new report says the state could hold twice as much oil as previously estimated in the Bakken and Three Forks formations. The state's crude oil production is expected to double this decade, supplanting Alaska as the nation's number two energy producer and trailing only Texas.
• South Texas - The Eagle Ford shale play in southern Texas contains crude oil and natural gas liquids. Through November 2010, 1,018 drilling permits had been issued, and one analyst says that the formation "will really hit its stride" in 2011. Several U.S. companies have made investments in the Eagle Ford formation, along with state-owned companies from India and China.
• Natural gas shale formations - The Haynesville, Marcellus and similar shale formations have been called a "game changer" for U.S. natural gas supplies. It's estimated that the United States now has about a 100-year supply of natural gas due to investments in shale gas.

As we've stated many times, investments in oil and natural gas development encourage economic growth and job creation. Taking steps to speed the offshore permitting process along the Gulf Coast and to open more offshore and onshore areas to energy development could help to put hundreds of thousands of Americans back to work.