Locals wonder, is this drilling assurance or crude appeasement

There was plenty of excitement in the Tri-parish region last Monday when the Bureau of Ocean Management, Regulation and Enforcement approved the first deepwater drilling permit since the BP Deepwater Horizon explosion and oil release more than 10 months ago resulted in a ban on oil exploration in the farthest reaches of the Gulf of Mexico.

Noble Energy Inc. was granted the permit to continue drilling on a well it had begun on April 16, 2010, about 70 miles southeast of Venice and approximately 20 miles from the BP disaster location. Site activity had been suspended on June 12, 2010 when the Obama Administration imposed a moratorium on offshore drilling.

Wall Street responded to the issued permit and Noble Energy stock rallied to $90.95 a share one day after they were given a green light to commence drilling. Shares of Ensco, which will do the actual drilling at the Noble site, rose to $57.11, Diamond Offshore Drilling rallied to $79.69, and Transocean Limited saw a gain to close at $85.14.

“It sure does put some faith in the people who grew up in this community,” Edward Jones financial advisor Lena Cortez said from her office in Houma.

It was also learned at that time that BP owns more than 46 percent of the well Noble was issued a permit to work, while Nobel itself carries approximately 23 percent ownership as operator of the project.

By the close of business Friday, the total number of rigs, both offshore an on land, that were actively exploring for oil and natural gas had increased by eight to 1,107 sites. One year ago at this time that number totaled 1,396.

BOEMRE Director Michael R. Bromwich said when Noble had been issued its permit that the move was made because the company had, “successfully demonstrated it can drill its deepwater well safely and that it is capable of containing a subsea blowout if it were to occur.”

Bromwich’s office said in a news release that the issuing of this deepwater permit came at the same time that 37 shallow water permits were being granted.

Interior Secretary Ken Salazar, who along with Bromwich, had become vilified by Louisiana oil producers during the past several months, told the Senate Energy and Natural Resources Committee last Wednesday that other deepwater permits are pending.

According to a report from the Louisiana Oil and Gas Association, Salazar also said that if his department does not receive federal funding it had requested, permitting might not advance as quickly as some might anticipate.

“We commend President Obama and officials at the BOEMRE for moving forward with the issuance of this permit,” LOGA President Don Briggs said. “However, much work must be done to insure that companies who have met all federal requirements receive permits.”

Political leaders were quick to issue statements of appreciation and support when the Noble permit was issued.

“I’m glad to see the administration is starting to come to its senses …,” Rep. Jeff Landry, R-New Iberia, said.

“With so much unrest in North Africa and the Middle East it is critical that American energy production gets up and running again,” Rep. Charles Boustany, R-Lafayette, said.

Sen. David Vitter, R-La., tempered the enthusiasm when he said that since the deepwater drilling moratorium, the Interior Department had destroyed jobs. “One deepwater permit is a start, but is by no means reason to celebrate,” he said.

Vitter had placed a hold on supporting an Interior Department nominee’s job in response to Salazar’s actions regarding offshore drilling and wants the issuance of at least 15 deepwater drilling permits before he will consider approving the nominee.

While there was appreciation for permit movement among industry insiders it was garnished with a heavy dose of cautious optimism and concern that the BOEMRE action could have been part of a larger political effort.

Several reports strongly suggested that unrest in the Middle East and North Africa, along with increased pressure to drill in the Gulf were behind a disguised effort by the Obama Administration to gain domestic favor where it has been lost.

“I don’t think we will see [permits being issued] as quickly as we used to but at least we are in the process,” Terrebonne Economic Development Authority Chairman Don Hingle said. “If they are just throwing us a bone – shame on them.

“I know the administration and environmentalists hate oil, but that’s all we have for now. Until we get some kind of alternative fuel that is affordable and we can retool the entire country, that’s just not going to be the case. We need a backup plan with oil until we get something else,” Hingle added.

“Without a streamlined process [in issuing drilling permits] established, we will continue to see job loss, a rig exodus, and curtailed domestic production,” Briggs said. “With rising energy prices and turmoil in the Middle East taking a turn for the worse, it is more important than ever that we get back to work in the Gulf of Mexico and ensure our nation’s energy future.”

According to Noble Energy, the company is to resume deepwater operations in late March. They will target a drilling depth of 19,000 feet, with results expected by the end of May.