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Obama to reopen waters for shallow water drilling

By admin
Tuesday, June 8, 2010 8:51 EDT
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Facing an angry tsunami from oil companies, oil company employees and oil company servicers in the Gulf Coast, the Obama Administration is set to quickly reopen drilling sites in the Gulf.

The Administration will release new safety requirements in the wake of a massive BP oil spill. After a rig blew up and sank in April, a drillhole created by BP began leaking tens of thousands of barrels of oil into the sea off the coast of Louisiana.

The Wall Street Journal reported Tuesday that the oil industry claims “each deepwater rig employs 180 to 280 workers, with each of those jobs supporting another four industry workers, for a total potential loss of more than 40,000 jobs. The moratorium ‘will result in crippling job losses and significant economic impacts for the Gulf region.’”

The Journal adds:

The oil industry is awaiting new safety regulations from the Interior Department’s Minerals Management Service, which canceled some offshore drilling permits last week and has had others on hold since early May. Administration officials say new rules for shallow water oil and gas drilling could be released as soon as Tuesday.

The White House also said Monday that it supported lifting the cap on liability damages altogether for any oil companies drilling offshore. The cap is $75 million unless the government can show criminal negligence.

Some Republicans and industry groups have cautioned that putting the liability cap too high could make it tough for smaller companies to drill offshore.

President Barack Obama met with Cabinet officials on the spill Monday and expressed optimism that it would be contained, but he pointed to the potential for long-term economic damage. “What is clear is that the economic impact of this disaster is going to be substantial and it is going to be ongoing,” he said.

The new drilling regulations are expected to require drillers to have independent operators certify that the blowout preventers work as designed to shut off the flow of oil; that independent operators certify the well design plan is adequate, including proper casing, or cement lining; that the driller certifies it is in compliance with all regulations and have done all needed tests.

BP has begun to siphon oil from the leaking site using a cap placed over the spill. The company plans to “complete” the closure operation by drilling two relief wells near the existing site, which are slated to be completed in August.

 
 
 
 
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