U.S. NEWS

MARCH 22, 2011

U.S. Backs Shell Plan to Drill 3 Gulf Wells

By RYAN TRACY

The Interior Department said it approved Shell's environmental assessment of the specific site, clearing an important regulatory hurdle.

In the past, Interior had granted drilling permits in the Gulf without requiring environmental studies for the specific projects. The department discontinued issuing these "categorical exclusions" in August 2010 as part of a broader overhaul of offshore-drilling regulation in the aftermath of the worst offshore oil spill in U.S. history.

Shell still needs a separate permit to start drilling.

Michael Bromwich, director of Interior's Bureau of Ocean Energy Management, Regulation, and Enforcement, said Monday Shell's environmental assessment should provide a template for other companies. The administration has been under attack from congressional Republicans, Gulf State Democrats, the industry and courts for delaying new deep-water permits in the region.

"Shell's submission has satisfied the heightened environmental standards that we are now applying, and I am confident that other operators can satisfy the same standards," Mr. Bromwich said.The Shell plan incorporated new data gleaned from measuring the environmental impact of last year's spill, Mr. Bromwich said. Shell plans to drill wells in about 2,950 feet of water 130 miles off the Louisiana coast.

Currently, 13 similar exploration plans are pending and "we're well aware that with the approval of this one, many more may be filed in the near term," Mr. Bromwich said.

After the explosion at the BP PLC-leased Deepwater Horizon, Interior imposed a moratorium on deep-water drilling in the Gulf and required operators to meet more stringent safety standards. It lifted the moratorium in October, but the department has faced criticism for limiting deep-water permit approvals to three sites where operators had already been drilling before the moratorium. By contrast, the Shell plan approved Monday would tap new wells.

The National Ocean Industries Association, a trade group representing companies involved in offshore oil drilling, called the approval "a huge first step" toward "new operations and a rapid return to work for the thousands of people employed by our member companies."

"However, it remains to be seen if the road is now clear for actual exploratory drilling, which will be the real test," NOIA spokesman Nicolette Nye said.