Interior Denies It Has Extended Drilling Freeze To Shallow Gulf Waters

"The Interior Department denied Thursday that it has extended a drilling freeze to shallow waters of the Gulf of Mexico, contradicting an e-mail written earlier in the day by the Minerals Management Service's supervisor of field operations for the Gulf of Mexico.

The confusion started when MMS rescinded five shallow water permits, including two issued only the day before. Michael J. Saucier, regional supervisor of field operations for the MMS Gulf of Mexico region, sent identical emails to at least two companies whose drilling permits were rescinded, saying that "until further notice we have been informed not to approve or allow any drilling not [sic] matter the water depth." Earlier in the week, he had told one of the companies that drilling in water up to 500 feet deep would not be affected by the Obama moratorium.

Later, as hedge fund and investment bank trading desks scrambled to decipher the administration's intentions, an Interior Department spokesman said "shallow water drilling may continue as long as oil and gas operations satisfy the environmental and safety requirements Secretary [Ken] Salazar outlined in his report to the President and have exploration plans that meet those requirements. There is no moratorium on shallow water drilling."

Drilling rig operators said that new regulations -- which haven't been issued yet but which are now expected to be issued before President Obama arrives in the area Friday -- might still cause substantial delays in drilling plans even without a moratorium. One said that he had been told that some rig operators in the middle of drilling with valid permits might be asked to stop and refile permit applications."

Steven Mufson reports for the Washington Post June 3, 2010.

See Also:

"Oil Companies Weigh Strategies to Fend Off Tougher Regulations"

Friday, June 4, 2010