Energy

Thursday, May 27, 2010 5:30 PM

Obama Suspends Deepwater Projects

By Darren Goode, NationalJournal.com

President Obama is suspending 33 offshore drilling projects involving wells deeper than 500 feet following the April 20 explosion of the BP Deepwater Horizon rig.

Interior Secretary Ken Salazar this afternoon clarified that of those 33 projects already under way, drilling would stop once companies are able to safely stop production and secure the wells.

While those wells passed initial safety inspections after the start of the Gulf of Mexico spill and only minor problems were evident, "there are additional safety measures that can be taken including dealing with cementing and casing of wells and significant enhancements with blowout preventers," Salazar said.

In addition, new deepwater drilling projects will not be approved during this six-month review, which will include oversight by a bipartisan independent commission set up by Obama, led by former Florida Sen. Bob Graham and former EPA Administrator William Reilly.

Salazar said this continuing freeze does not affect current oil and gas production, including 4,515 wells in waters shallower than 500 feet.

Salazar has given Obama a set of safety recommendations that he said would address the loss of well control and failure of the blowout preventer. These are the "two primary failures of the drilling process" that led to the BP rig disaster and subsequent spill, Salazar told reporters in a conference call this afternoon. The recommendations include certifying all blowout preventers, "tougher" inspections for deepwater drilling and expanded safety training for rig workers, Salazar said. Some of the recommendations can be implemented right away and others will take time, he added.

Obama announced today that a planned Shell Oil project this summer to drill five exploratory wells in the Arctic has been pushed back to next year, while he has cancelled a proposed lease sale off Virginia's coast and a gulf lease sale planned for August that was announced just this spring by Salazar. Salazar said he is also still determining how to move forward with lease sales in both 2011 and 2012. "We must proceed with the utmost caution," he said.

Obama's announcement coincided with the resignation of Minerals Management Service Director Elizabeth Birnbaum. Salazar noted, "We need to do significantly more work to create a much more robust agency."

Last week, Salazar recommended splitting MMS into three bureaus overseeing offshore energy development, safety and environmental enforcement and revenue collection from oil and natural gas development.

But some say that is not enough. Senate Environment and Public Works Chairwoman Barbara Boxer, D-Calif., wants an office outside of MMS to oversee offshore drilling safety. Sen. Jeanne Shaheen, D-N.H., has recommended abolishing the agency altogether.

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