If the pace of Gulf oil drilling permit awards does not increase, as many as 20 drilling rigs could soon leave the Gulf, a major investment bank announced. BER Capital Investments called the current rate of permitting unsustainable in a report released Wednesday.
BER’s report noted that the slow pace of permitting is not due to political factors, instead blaming policies put in place in after the spill. They have directly contributed to the current backlog of permits.
“Rather than being political, the [Gulf of Mexico] permitting drag is more reflective of the increased work required to issue each permit and the limited bureaucratic resources available,” the BER report stated. “As a result, we continue to expect continued slow recovery of the deepwater permitting rate.”
That rate is “unsustainable,” the report claimed, and will lead to the departure of between eight and 20 rigs from the Gulf. That is in addition to the 12 rigs that have left since June of last year. Once rigs leave the Gulf, they are not likely to return. “[I]t’s going to be difficult to move them back once they are drilling in say Nigeria or Brazil,” Heritage’s David Kreutzer noted in July.
Speaking yesterday on Capitol Hill, Chevron CEO John Watson said the stringent requirements for permit applications enacted after last year’s oil spill in the have significantly increased the time it takes to get permits approved.
Heritage’s Nick Loris wrote in a new research paper today that energy exploration would create jobs for Americans and raise revenue for the federal government. Loris suggested the federal government “work to return the permitting process to pre-moratorium levels. In some instances, oil and gas companies purchased leases on federal lands to explore and drill for oil and gas, but the Department of Interior (DOI) failed to issue the leases—despite the law stating it has 60 days to do so. DOI needs to act on these permits.”
A report released Wednesday by energy research firm Wood Mackenzie warned that “the current path of policies which slow down the issuance of leases and drilling permits…will have a detrimental effect on production, jobs, and government revenue.” Charting a new path – one that makes permits easier to attain – would likely advance job creation at a time when it is dominating the national political agenda.