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Author: TMFDoodleBugger Big red star, 1000 posts Top Recommended Fools Old School Fool Coverage Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5166  
Subject: Re: Moratorium-does it matter? Date: 9/30/2010 3:38 PM
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Funny you should ask. I just posted this on the ESV board. Enjoy!

From my perspective the permitting process is still just as log jammed as it was all summer. We've been waiting for a permit to drill a twin to a well we were drilling when the spill occurred. That's over 120 days and during a period of almost no activity. The regulators have admitted that they are not making the decisions just reviewing the documents. A team of attorneys in Washington are making the final decisions. They have 180 days to grant or deny a permit and we've discovered that every time they request more data they reset the clock when they receive it. There are only 12 drilling permits in front of them and they can't approve any of them. It used to take 7 days to get approval and now its a minimum of 90 days for the simplest of gas wells with almost no volume in the pipeline. When the moratorium is lifted they will be hit with a flood of permit requests that are many times more complex than the shallow water permits that they've struggled with for 4 months now.

Today, the BOEMRE released a new set of rules that will require more details about well design, cementing practices and much more. These new requirements will add a whole lot more work to the permitting process. The BOEMRE indicated that another set of rules regulating new equipment requirements (additional shear rams on BOPs and more) will be forthcoming. These requirments will hit the drillers like ESV since they will have to come up with new equipment that does not yet exist. The hurdles to drilling a well are just growing larger and more plentiful every month. The BOEMRE will be able to lift the moratorium when ever they want because no drilling will begin for many months afterward. Right now there is a giant loophole for sidetracks so maybe we'll see some activity from existing wellbores but new drilling will be delayed probably through 1Q of next year.

If the administration wanted to keep the rigs and jobs in the Gulf they could have allowed drilling to a casing point above the targeted reservoirs but not actually through any hydrocarbon bearing reservoirs. The industry could have "pre-drilled" dozens of deepwater wells during the moratorium and thousands of people would still be working. The administration has been hostile towards the oil industry and has a complete mistrust for any profit making venture. They will need to hire hundreds of new regulators and their new rules exclude anyone who has worked in the industry for the last 2 years. They issued a new notice-to-leasees a couple weeks ago that will require us to plug over 3500 wells and remove 650 platforms in the next few years. The district I deal with the most has only two regulators for abandonment permits and only one of them actually works. We actually have to submit our permit applications on the Fridays when the worthless one if off to have any chance of getting the permit approved in a timely manner. Now every company will have to submit a plan to plug and abandon all their idle wells by the end of the year. This agency is totally ill equipped to handle the volume of work they are demanding from the industry and it's going to take at least a year for them to staff up to the levels that they need. I have little faith that they will have competent people working as regulators and we'll be stuck with them for another decade or more.

That's my rant of the day!


Here's a relavent link.

http://fuelfix.com/txpotomac/2010/09/30/salazar-imposes-new-...

TMFDoodlebugger
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