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The Daily Wildcat

The Daily Wildcat


    U.S. ends drilling ban in Gulf of Mexico

    NEW YORK — Oil-service shares rose Tuesday as the United States formally ended the drilling moratorium in the Gulf of Mexico and laid out a new regulatory process that will affect roughly 36 rigs.

    Among the requirements, chief executives of rig operators must certify that they comply with all safety requirements.

    The drilling ban end comes more than a month before the moratorium’s proposed deadline of Nov. 30, in the wake of complaints from states in the Gulf of Mexico about the impact the move is having on jobs.

    The rigs in question must apply for new drilling permits and face inspections before getting government approval in coming months.

    “”We are open for business,”” Interior Secretary Ken Salazar said at a news conference. “”We will be taking applications for deepwater drilling. We will see a resumption of deepwater drilling very soon.””

    Salazar and Michael Bromwich of the Bureau of Ocean Management said some rigs may be able to resume drilling by the end of the year.

    The ban was put into place after BP PLC’s Deepwater Horizon disaster on April 20 killed 11 workers and caused the largest oil spill in U.S. history.

    The Philadelphia Oil Service Index rose 1.7 percent to 204 points. Transocean Ltd.,  owner of the Deepwater Horizon rig leased by oil giant BP, rose 4.7 percent. BP shares rose fractionally.

    Nevertheless, S&P Equity Research reiterated its negative fundamental outlook on the oil- and gas-drilling sector. “”We would caution investors that the lifting of the ban … is in our view a necessary but not sufficient condition to revitalizing U.S. Gulf offshore-rig demand,”” S&P analyst Stewart Glickman wrote in a note.

    “”We note that the permitting process for offshore rigs, both shallow and deepwater, has been and is likely to remain sluggish for some time,”” he said.

    In his prepared remarks, Salazar said that the U.S. government has strengthened safety measures and overseen improved spill response and blowout-containment capabilities in the industry. “”(We) have reduced risks to a point where operators who play by the rules and clear the higher bar can be allowed to resume,”” he added.

    Of the 36 affected rigs in the gulf, Salazar and the Bureau of Ocean Management’s Bromwich said 10 of them have been allowed to operate to perform maintenance work, and that others were working the relief wells that BP drilled to kill the leaky Macondo well — the source of the Deepwater Horizon accident.

    An additional eight rigs are operating under development plans, and 18 are exploratory rigs that will be able to submit applications.

    “”My sense is we will have permits approved before the end of the year, but when I cannot say and how many permits I cannot say,”” Bromwich commented.

    Sen. Mary Landrieu, D-La., said lifting the ban is a “”good start,”” but that it must be accompanied by an “”action plan to get the entire industry in the Gulf of Mexico back to work.””

    The administration must accelerate the granting of shallow-water and deepwater permits, she added.

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