The U.S. government on Monday released environmental guidelines that subject all new deepwater oil and natural gas drilling to full environment reviews, while shallow-water drilling will also be subjected to tougher environmental scrutiny.
The cost of drilling in the deep waters of the Gulf of Mexico, currently under a temporary moratorium following BP’s disastrous oil spill, is expected to rise significantly upon the implementation the new federal guidelines.
The Interior Department said that the ban on so-called “categorical exclusions” for deepwater drilling, such as the blanket exemption granted to BP plc (BP: News ,BP.L: News ) for drilling in the Gulf of Mexico prior to the devastating oil spill, would be in place while the government conducts a review on how exemptions to oil and gas companies are granted.
“Our decision-making must be fully informed by an understanding of the potential environmental consequences of federal actions permitting offshore oil and gas development,” Interior Secretary Ken Salazar said in a statement.
The new environmental guidelines follows a report by the Council on Environmental Quality, which found that BP won a categorical exclusion to drill the Gulf of Mexico oil well in 2009 based on environmental exemptions granted way back in 1981 and 1986.
The report also notes that the Minerals Management Service or MMS identified significant catastrophes such as the 1979 Ixtoc well blowout in Mexican waters, but did not include that disaster in its 2009 assessment of BP plans for the Macondo well because the spill occurred outside U.S. waters.
MMS’ successor agency, the Bureau of Ocean Energy Management, Enforcement and Regulation or BOEM, will issue a Federal Register notice announcing a formal process for the comprehensive review and evaluation of its use of categorical exclusions. BOEM Director Michael Bromwich said that the agency will be using categorical exclusions on a more limited basis.
The six-month moratorium on deepwater drilling was imposed in late May by the Obama administration following the explosion and sinking of the BP-leased Deepwater Horizon oil rig on April 20. BP capped the well in mid-July, choking off the flow of oil for the first time since the explosion.
The broken well spewed an estimated 4.9 million barrels of oil into the Gulf after the explosion, according to U.S. government scientists.
Shallow-water drilling will also be subjected to tougher environmental scrutiny under the new policy, the Interior Department said.
Meanwhile, an industry group said that more extensive environmental reviews for deepwater projects could delay development and job creation.
Erik Milito, upstream director for the Washington-based American Petroleum Institute, said in a statement, said, “We’re concerned the change could add significantly to the department’s workload, stretching the timeline for approval of important energy development projects with no clear return in environmental protection.”
