US Interior Secretary Salazar: ‘Not Done’ Responding To Deepwater Horizon

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April 12, 2011

WASHINGTON (Dow Jones)–After a year in which the Obama administration revamped rules for oil and gas drilling in U.S. waters, the administration is considering further regulations affecting the industry, U.S. Interior Department officials said Tuesday.

“We are not done,” U.S. Interior Secretary Ken Salazar told reporters, nearly a year after the Deepwater Horizon explosion, which killed 11 and led to the worst offshore spill in U.S. history. “There is still more to do,” he said.

The administration is considering rules that would affect subcontractors like Transocean Ltd. (RIG), owner of the Deepwater Horizon, and other firms that service oil and gas rigs, the U.S. officials said. Current federal rules typically apply to the operator of the rig, but not its subcontractors.

“I think it’s very important for us for our regulatory oversight to extend as broadly as possible to all the entities that are operating offshore,” said Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, which regulates drilling in U.S. waters.

Bromwich said he is “pushing people to examine closely” whether the agency could regulate entities other than operators like BP PLC (BP, BP.LN) under current law. If the agency can’t, “we may want to push for some reforms in that area,’ he said.

The administration also is considering new permitting rules that would take into account the safety records of operators and new standards for the design of blowout preventers, the stacks of valves that offshore rigs use as failsafe devices to prevent a spill.

The Interior Department has reorganized itself following the Deepwater Horizon disaster, separating staff who conduct safety evaluations from those who collect royalties and changing the criteria it uses to approve oil and gas exploration plans and to issue permits to drill.

“There’s no doubt that the time we went through in 2010 was a nightmare and a national crisis for our country,” Salazar said. “I’m confident that now, a year after the event, that we’ve gotten to a place where we are standing up offshore drilling in a way that can be done in a safe and responsible way.”

But some further changes that the administration hopes to implement require congressional approval. In Congress, Republicans are calling for expanded offshore production and Democrats are calling for stricter safety guidelines, and the sides haven’t been able to agree on a legislative proposal.

Salazar was critical of the current drilling-related legislation being developed by the Republicans who control the House, saying it appeared they had “amnesia” about last year’s oil spill.

The proposed legislation, which could make it to the House floor next month, would require safety reviews but also compel Interior to open up more resource-rich areas to lease and to act on drilling permits within a set time frame. The legislation’s supporters say the administration is taking too long to make decisions on pending applications, leading to uncertainty for oil and gas companies.

Bromwich said that the current 30-day time frame for reviewing offshore exploration plans, which companies must submit before they drill a well, may not be enough and that the law may need to be changed.

“We’re not telling our people to go slow. Quite the contrary, we’re telling them to go as quickly as they reasonably can,” Bromwich said. “I have a feeling that it’s going to take us longer.”

-By Ryan Tracy, Dow Jones Newswires

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