Monday, March 7, 2011

FBR Capital: “No cookie-cutter process” for offshore drilling permits

Analysts are cautious about the pace that the US government might take in issuing deepwater drilling permits.

The Bureau of Ocean Energy Management, Regulation, and Enforcement approved the first Application for Permit to Drill (APD) for the deepwater Gulf of Mexico since the Macondo well blowout in April 2010 and the resulting oil spill.

“BOEMRE’s case-by-case evaluation of spill containment resources will not produce a cookie-cutter process for APD approvals, which are site specific and may require additional resources from operators,” FBR Capital Markets analyst Benjamin Salisbury said in a recent research note.

He believes the resumption of deepwater permitting “marks the beginning of a long period of slow approvals.” This is because BOEMRE significantly increased the volume of work involved in its review, verification, and approval of each permit application.

BOEMRE Director Michael Bromwich wrote an opinion article for the Houston Chronicle in which he said: “We need to ensure that our new drilling safety rules are fully complied with; we need to review certifications by professional engineers of every stage of the drilling process; and in many cases, we need to conduct more detailed environmental reviews. All of these steps are necessary and appropriate, but they extend the time needed to approve permits.”

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