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Gulf drilling stalled New drilling in U.S. Gulf of Mexico stalled as EPA considers rule change Ray Tyson Petroleum News Houston Correspondent
Drilling on both new and existing leases in the Gulf of Mexico could be severely curtailed because the U.S. Environmental Protection Agency has been slow to issue water discharge permits to offshore operators while it considers changing the rules.
In fact, companies awarded tracts in March’s Central Gulf of Mexico lease sale can’t drill them at all because the EPA is not currently issuing discharge permits on new leases in the U.S. Gulf, said Chris Oynes, Gulf regional director for the U.S. Minerals Management Service.
“EPA is going through a dance on whether to put some additional requirements in a new discharge permit,” Oynes said May 4 on the sidelines of the Offshore Technology Conference in Houston, Texas.
He said MMS is vigorously “resisting” EPA’s decision to hold up permits necessary for offshore operators to discharge water produced from drilling activities, adding that “it’s 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.
Leases from the late Central Gulf sale remain in limbo simply because they were acquired after EPA’s November deadline. “All the new leases, as they are being awarded, cannot be drilled,” Oynes said.
Moreover, companies that failed to place existing leases they wanted to drill on an EPA “protection list” prior to the Gulf-wide expiration of water discharge permits also are being hurt, Oynes said.
“If they are on the list, they are okay,” he said. “But that word apparently was not transmitted (by EPA) with great fervor to industry, and therefore a lot of companies got caught flat footed. They didn’t send in their lists.”
Oynes said that because many companies are not getting their water discharge permits from EPA, they see no reason to apply to MMS for drilling permits, another requirement. Legal cloud also surrounds lease transfers “I don’t know how many permits this is holding up,” he said. “But the number of shallow water wells being drilled has been declining the last several weeks.”
He said a legal cloud also surrounds the transfer of leases from one owner to another. “Some of those are being processed and others are being held up,” he said. “All these things are starting to bubble.”
In effect, only companies with current drilling operations from offshore platforms are covered by discharge permits, or those that happened to submit their list before the EPA deadline, Oynes said.
Oynes said the discharge of produced water from drilling operations in the U.S. Gulf contributes “a very small percentage” to the so-called dead zone, or area of the discharge where oxygen is depleted in the water. He said runoff of discharge from farms along the Mississippi River accounts for most of the problem in the Gulf.
He noted that EPA has considerable control over the oil and gas industry, but little or none over farmers.
“So they are turning their attention to what they can regulate,” Oynes said. “We’re trying to work with EPA to get this resolved in some way, scope or form.”
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