(03/24/2011)

Phil Taylor, E&E reporter

The Interior Department today announced it has issued a fifth permit
for deepwater drilling previously banned under last year’s moratorium
and the first such permit for an unexplored oil and gas deposit.

The approval allows Chevron USA Inc. to drill a “wildcat” well in 6,750
feet of water more than 200 miles off the coast of Louisiana.

The well is the first to be approved since the BP PLC oil spill last
April that targets a reservoir or field that is yet to be explored,
Interior said. The revised permit allows Chevron to resume work on a
well it began drilling a year ago but stopped during a mandatory
suspension in June 2010 following the Deepwater Horizon spill.

“Today’s permit approval further demonstrates industry’s ability to
meet and satisfy the enhanced safety requirements associated with
deepwater drilling, including the capability to contain a deepwater
loss of well control and blowout,” said Michael Bromwich, director of
Interior’s Bureau of Ocean Energy Management, Regulation and
Enforcement, in a statement. “We will continue to review and approve
those applications that demonstrate the ability to operate safely in
deep water.”

Chevron said it will use a capping mechanism developed by the Marine
Well Containment Co. to stop the flow of oil in the case of a runaway
well.

The approval was deemed a “milestone” by the National Ocean Industries
Association, a trade group.

“We are, of course, pleased with the previous four permits, but today’s
approval of a permit for truly new deepwater exploration in the Gulf of
Mexico is particularly noteworthy,” NOIA President Randall Luthi said
in a statement. “We are encouraged that the backlog of permit
applications is slowly growing smaller, and that some of our member
companies who were sidelined for the past year will soon get back to
work in the Gulf.”

The permit marks the third deepwater permit issued in the last week by
Interior. The agency at the start of the week had approved 26
additional deepwater permits for activities including water injection
wells to boost existing production and for other drilling activities
that involve fixed rigs or surface blowout preventers.

On Monday, the agency approved the first deepwater exploration plan
since the BP spill, a proposal by Shell Offshore Inc. to drill three
new wells more than 100 miles off Louisiana

(E&ENews PM, March 21).

Special thanks to Richard Charter