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Gulf oil spill aftermath: 'Drill, baby, drill' era may be gone forever

The Gulf oil spill was capped a year ago Friday, but offshore drilling is still far off its pre-spill pace. With a new regulatory agency putting a greater emphasis on safety, the industry might have to adjust to a new normal.

By Staff writer / July 15, 2011

ExxonMobil used a semisubmersible drilling rig for its first post-moratorium deepwater exploration well in the Gulf of Mexico, which yielded the largest Gulf oil and gas discovery in a decade.

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Morgan City, La.

One year after the Gulf oil spill was first contained, the offshore oil industry is struggling to adjust to a new normal that could affect the Gulf Coast for years to come.

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With federal government watchdogs policing offshore oil operations more diligently, the pace of oil exploration and drilling has dropped as the permit process slows.

The result is that the deepwater drilling moratorium – lifted last October – is essentially still in effect, say frustrated oil industry officials. The only companies seeing robust growth are those dealing with safety.

Over time, as the federal government streamlines its new safety protocols, the pace of approvals could quicken, allowing companies to find and produce more oil, experts say. But the heady days of the prespill regime, when offshore oil projects were often approved with rubber-stamp speed, could be gone forever, meaning the industry and the Gulf Coast economy will need to find a new balance point, they add.

"It's inevitable that any review that is going to be real is definitely going to slow down the process," says Albert Lin, who teaches environmental law at the University of California, Davis. "These are complicated operations, and I don't think they were looked at adequately before."

The Gulf oil spill, which began with the explosion of the Deepwater Horizon oil rig on April 20, 2010, ended with the cementing of the Macondo well on Sept. 18. On July 15, however, BP fit a cap over the leaking wellhead. Before that point, 4.9 million barrels (205 million gallons) of oil had vented into the Gulf of Mexico.

In the aftermath of the accident, the federal government undertook "the most aggressive and comprehensive reform of offshore oil and gas regulation and oversight in US history," said Michael Bromwich, director of the Interior Department's Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE).

The centerpiece of those reforms was abolishing the federal agency that previously oversaw offshore drilling and replacing it with a new one, BOEMRE. And to those in the oil industry, BOEMRE's regulations – seen as too cumbersome and lined with uncertainty – are the problem.

"I really don't think [the moratorium's] been lifted," says Patrick Harington, a sales manager at Rio Fuel and Supply, which operates a fuel dock on the Atchafalaya River.

Mr. Harington says profits for his company are down about 40 percent since the moratorium was issued. "When [BOEMRE] put down the new rules and wants the environmental impact surveys, rig companies are going to look at it and say, 'Is it worth it profit-wise or should we move to another area?' "

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