EPA agrees to break logjam on Gulf of Mexico permits for oil and gas leases

Ray Tyson

Petroleum News Houston correspondent

The U.S. Environment Protection Agency apparently has decided to begin renewing water discharge permits for oil and gas leases in the Western and Central Gulf of Mexico, breaking a serious logjam that threatened drilling activities in the region.

Congressman Chris John of Louisiana said he urged Administrator Mike Leavitt last week to immediately renew permits necessary for offshore operators to discharge water produced from drilling activities.

“Energy prices are high, demand continues to grow, and jobs are being lost,” John said.

He said the EPA on July 1 posted a notice in the Federal Register related to discharge permits and assured “expedited consideration of these permits so companies may resume business immediately.” However, the notice requires a 30-day comment period.

Chris Oynes, Gulf regional director for the U.S. Minerals Management Service, told Petroleum News in early May that EPA’s decision to hold up permits while it considered a rule change could severely curtail drilling on both new and existing leases in the U.S. Gulf.

He said MMS vigorously resisted EPA on the issue, asserting that EPA delay in issuing water discharge permits to many operators was “creating a cascading effect” and “affecting more and more leases.”

The problem began last November when EPA’s general discharge permit for many operators in the U.S. Gulf expired. In addition to existing leases, companies awarded tracts in last March’s Central Gulf of Mexico lease sale were unable to drill them because EPA was not issuing discharge permits on new leases.

There are more than 7,000 active leases in the Gulf containing more than 4 billion barrels of proven oil reserves and 24 trillion cubic feet of natural gas.