 |
| New GEST logo introduced last year reflects the now ongoing mission of the lobbying organization. |
|
While the pace of drilling authorizations is accelerating, all too often operators still find themselves sitting on the edge of their desks, awaiting the go-ahead before a contracted deepwater rig can begin paying for itself, according to the grassroots Gulf Economic Survival Team (GEST).
What it terms “just-in-time” permitting is one of the key regulatory issues the Thibodaux, La.-based GEST has in its crosshairs, as it continues to lobby federal agencies to infuse more “predictability and clarity” into the game plan they continue to develop for the deepwater Gulf of Mexico, says Executive Director Lori LeBlanc. On the flip side, the waiting time to get a plan approved, which is required before a drilling permit is issued, has been cut nearly in half over the past year, she said.
The GEST director said the federal policy of issuing drilling permits in the nick of time threatens to cause some serious problems with the additional rigs flooding in to join the already growing deep and ultra-deepwater fleet. LeBlanc said GEST continues to remind Bureau of Safety and Environmental Enforcement (BSEE) Director James Watson and his staff that this process could easily reach a breaking point in short order. She said GEST is also in constant contact with Watson’s counterpart at the companion Bureau of Ocean Energy Management (BOEM), Tommy P. Beaudreau.
“We have some 13 new deepwater rigs already scheduled to come into the Gulf, and we are concerned that the agency won’t be able to keep up. We could reach the point where we’ll have idle rigs sitting in the Gulf. We need plans approved and in the queue, ready to go, as opposed to having companies sitting on the edge, with a rig under contract,” she said.
This is but one of the still-lingering federal issues that apparently has cemented the future of the one-time “will it stay or will it go” alliance. Originally organized only to oppose the 2010 deepwater drilling moratorium, GEST remained in force after the ban was lifted, to lobby against the slow pace of plan and permit approvals. Now, owing to myriad regulatory concerns, it appears the GEST charter will remain in force for some time to come.
“We really thought this initiative would be over soon after the moratorium was lifted,” she said from her office on the campus of Nicholls State University in Thibodaux. “But, then we had a lot of regulatory issues to work out in order to get the permits and plans approved, and that’s what we’ve been doing for quite some time. We’re focusing on being more proactive rather than just reactive. Our primary objective is to get some predictability and clarity in the regulations.”
The progress in speeding up the approval process has improved dramatically over the past year, with GEST data showing BSEE taking an average of 157 days to approve a plan as opposed to 250 days in 2011. However, LeBlanc said that while the improvement is palpable, the approval time line is still a far cry of the 60-day average in the bygone days before the BP Macondo incident threw a blanket of uncertainty over the deepwater.
“We continue to track plans and how long it’s taking for approval, and while there has been improvement, it’s still taking significantly longer than the historical average,” she said. “While there has been significant progress in permit and plan approvals, there are other metrics we have to look at, other than just how long permits and plans are taking for approval.”
One of those is “just-in-time” permitting, which LeBlanc said is near the top of the burgeoning GEST hit list for this year. She said the coalition has gotten the attention of the BSEE director and his staff, and will continue to drive the issue throughout the year, until the situation is rectified.
“Operators are getting permits approved just in time, as a rig is moving to its destination, and there is serious concern that those approvals could slip to ‘not in time,’ resulting in idle rigs waiting for approved permits. While the number of permits being issued for Gulf operations has increased significantly over the past year, there are still insufficient approved permits in the queue to support robust rig activity,” she said.
Last July, GEST set its sights on the federal issuance of three back-to-back Notice-to-Leasees (NTL), which LeBlanc said was a back door attempt to change the rules in the middle of the game. “They attempted to change requirements through an NTL which is not its purpose,” she said. “Those NTLs represented substantive changes to the regulations and not simply interpretative changes. We became very involved in the NTL issue. We challenged them and they pulled back on one of them.”
With at least 36 new notices expected to be issued this year, LeBlanc said GEST is working to strengthen dialogue during the development phase of the NTLs, as well as the new BOP rules now being debated.
“The BOP rule is the next big issue, and we’ll be working closely with directors Watson and Beaudreau. We’re promoting more collaboration with the industry on the front end, as these are being developed,” she said.
Another possible threat looming out there is the expected creation of a National Ocean Policy that LeBlanc said could essentially create a zoning-type framework that could impact further deepwater development considerably. In a January OpEd piece in the Houston Chronicle, she described the proposal as “a somewhat murky new program being developed outside the scope of Congress that threatens to impose an entirely new regulatory overlay governing the offshore energy industry, among other activities.”
Like everyone else remotely connected to the industry, LeBlanc said the economic pie lying out in the deepwater Gulf of Mexico, during this time of fiscal austerity gripping Washington, should be ample incentive to spur development. She said $7.5 billion in production royalties flowed in the federal coffers in 2008, dropping to $3.5 billion during the turmoil of 2010, before rebounding somewhat to $5.5 billion last year. She also pointed to a recent U.S. Bureau of Land Management (BLM) fact sheet that described the Gulf of Mexico as “one of the richest oil and gas regions in the world, and the greatest undiscovered resource potential is forecast to be in the deep and ultra-deepwater.”
Regardless, she said one of the predominate challenges GEST faces is trying to convince reluctant regulators that industry should at least have a say in formulating the rules it has to play under. Reinforcing that contention, she said, is President Obama’s executive order of January 2011, urging an open exchange of ideas with industry, to develop regulations that are more predictable and less uncertain.
“The industry is spending billions of dollars on R&D and that’s where the experts are. The government isn’t spending billions on research. So, we say to them let’s do what the president told you to do.” 
|
