Feds Give BP Approval for Deepwater Exploration Drilling in the Gulf of Mexico

By Tennille Tracy, Wall Street Journal

BP PLC won approval from U.S. officials Friday to look for oil at new sites in the Gulf of Mexico, the firms’s first exploration plan in U.S. waters to get the go-ahead since the April 2010 Deepwater Horizon oil spill.

The decision represents an important step in the U.K. oil giant’s efforts to return to the good graces of federal regulators. The Bureau of Ocean Energy Management said it approved a plan in which the company proposes to drill up to four wells in a part of the Gulf known as Keathley Canyon.

Bureau Director Tommy Beaudreau said BP had demonstrated its ability to comply with new drilling standards adopted after the spill. “Our review of BP’s plan included verification of BP’s compliance with the heightened standards that all deep-water activities must meet,” he said.

Before conducting any drilling, however, BP must receive permits from another federal agency, the Bureau of Safety and Environmental Enforcement.

BP said it was working to secure the drilling permits, but declined to comment on the significance of Friday’s approval.

The Obama administration has recently handed the oil and gas industry other high-profile victories as energy companies seek to push their ability to create jobs in a difficult economy. Earlier this month, the administration said it was moving forward with nearly 500 oil-drilling leases issued by the previous administration off the coast of Alaska, prompting criticism from environmental groups.

Under the plan approved on Friday, BP seeks to drill in about 6,000 feet of water about 190 miles from the Louisiana shore.

BP has sought to burnish its reputation among lawmakers and regulators in the wake of the spill. In July, the company said it would voluntarily meet more stringent safety standards than required by the U.S. government.

Those efforts paid off. Earlier this month, the top offshore-drilling safety chief said the U.S. had decided to let BP bid for new oil leases coming up for sale in the Gulf in December.

Rep. Edward Markey (D., Mass.), the top Democrat on the House Natural Resources Committee, said the approval for new exploration by BP was premature.

“Comprehensive safety legislation hasn’t passed Congress, and BP hasn’t paid the fines they owe for their spill, yet BP is being given back the keys to drill in the Gulf,” he said.

On Oct. 12, the Bureau of Safety and Environmental Enforcement issued its first citations to BP for its role in the spill, and to contractors Transocean Ltd. and Halliburton Co. The violations are likely to carry multimillion-dollar fines.

U.S. officials have already approved more than 40 exploration plans for other companies since putting stronger regulations in place in June 2010.