Blowout containment part of drilling permit snag

Deepwater permits in the Gulf of Mexico have been withheld largely because the industry is unable to prove it could contain another major blowout at the bottom of the sea, the head of the agency...

Deepwater permits in the Gulf of Mexico have been withheld largely because the industry is unable to prove it could contain another major blowout at the bottom of the sea, the head of the agency that oversees offshore drilling said Friday.

Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, made the disclosure in a letter he sent to executives at Exxon Mobil, Chevron and Helix Energy Solutions Group.

Bromwich asked the companies when the containment system they and others are working on will be ready. He also wanted to know how the companies will demonstrate that the equipment will be readily and immediately available to other firms in the event of a blowout.

"These systems are critical to moving forward with safe and responsible deepwater drilling activities," Bromwich wrote.

Drilling was suspended last year when the administration imposed a monthslong moratorium following the BP spill. The ban was lifted in October, but drilling has not yet resumed in waters deeper than 500 feet in the Gulf.

Exxon Mobil Corp. is leading a coalition of oil companies building a one-of-a-kind system designed to contain an oil leak in up to 10,000 feet of water — twice the depth of the BP blowout. BP has joined the project, and also agreed to allow the equipment it needed to eventually kill its runaway well to be used in the new system.

The senior manager of the containment project, Lloyd Guillory, told the AP in October that the cap-and-siphon contraption could be deployed and in use within weeks of a future well blowout. He said at the time that he was confident the never-before-attempted effort would be successful. He said the $1 billion system wasn't expected to be ready for use until early 2012.

Exxon Mobil said in a statement Friday on behalf of its group that it was working to finalize an interim response system that would be available while an expanded containment response system is being developed. It didn't give any timetables.

Helix, which has been working on a competing project, said last month it was moving forward with a plan to utilize vessels and equipment that were deployed during the effort to cap BP's runaway well and siphon oil that was spewing out.

Helix had no immediate comment on the letter it received from Bromwich.

The Obama administration has been under heavy pressure from the oil industry, state leaders and congressional Republicans to speed up drilling in the Gulf of Mexico, which has come to a near halt since the moratorium on deepwater drilling was imposed last spring.

The delay is hurting big oil companies such as Chevron Corp. and Royal Dutch Shell PLC, which have billions of dollars in investments tied up in Gulf projects. Smaller operators such as ATP Oil & Gas Corp., Murphy Exploration & Production Co.-USA, and Noble Energy Inc., also have been affected.

A federal report said the moratorium probably caused a temporary loss of 8,000 to 12,000 jobs in the Gulf region. Some critics have suggested that even though the moratorium was officially lifted, there is a de facto moratorium in place because permits for previously suspended activities aren't being approved quickly.

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