Bromwich: More US Gulf Drilling Permits In Next Week [UPDATED]

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March 22, 2011

NEW ORLEANS (Dow Jones)–Michael Bromwich, the top U.S. offshore drilling regulator, said Tuesday that the speed with which some oil and gas companies are “shrugging off” last year’s deadly Deepwater Horizon disaster as an aberration is “disturbing.”

Nonetheless, Bromwich, who heads the Bureau of Ocean Energy Management, Regulation and Enforcement, said that more permits to drill for oil and gas in the Gulf of Mexico’s deep water would be issued “within the next week.”

In recent weeks, the agency has issued four deep-water drilling permits, including one Tuesday that allows Exxon Mobil Corp. (XOM) to drill a new well in 6,941 feet of water. Those permits are the first to be issued since such operations were shut down for deep-water drilling in response to the Deepwater Horizon’s explosion and subsequent oil spill. On Monday the agency also awarded Royal Dutch Shell PLC (RDSA.LN) the first deep-water exploration plan since the disaster.

Some oil and gas companies have “clearly recognized that Deepwater Horizon was the symptom of a broader failure in both industry and government” to match safety with the increasing risk of deep-water operations, Bromwich said in a speech during the agency’s annual meeting.

“But there are other operators who, with surprising and disturbing speed, have seemed all-too-ready to shrug off Deepwater Horizon as a complete aberration, a perfect storm, one in a million,” Bromwich said.

Bromwich also said that a shallow-water natural gas well, operated by Apache Corp. (APA), which leaked for several days earlier this year, show that blow-out risks are not confined to deep water. Deep water is typically that over 1,000 feet.

Apache spokesman Bill Mintz said the company worked closely with regulators to stop a bubbling natural gas well, which released no oil and caused no injuries. The Houston company was permanently plugging wells in a depleted gas field when the bubbling was noticed, he said.

“Apache knows very well that the risks of operating offshore are neither trivial nor non-existent,” Mintz said in an email.

Though he told regulators that more deep-water drilling permits will be approved “in the coming weeks and months,” he told reporters after the speech that some projects would be green-lighted in the next week.

Bromwich said he couldn’t predict the pace of which permits will come from the agency, though, because each project will be considered individually.

“I don’t know what the pace will be going forward,” he told reporters. “I don’t think anyone is in a position to say what that will be.”

The key for permits being issued was the development and readiness of a pair of spill containment systems, one built by a nonprofit consortium of large oil companies, the Marine Well Containment Co., and the other owned by Helix Energy Solutions Group Inc. (HLX), which helped staunch the flow from BP PLC’s (BP, BP.LN) runaway well after the Deepwater Horizon rig exploded.

“The tests that have been conducted so far, even though they’re not under spill conditions, give us the confidence that has been necessary for us to be comfortable in approving these permits,” Bromwich told reporters.

Bromwich also said there is a “high probability” some offshore leases will be extended to account for the five-month drilling ban that followed the Deepwater Horizon disaster and subsequent permitting delays. But he said he was “cool” to the idea of extending all leases by a certain amount of time.

-By Ryan Dezember, Dow Jones Newswires

-By Ryan Dezember, Dow Jones Newswires

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