Energy Wars | Salazar to Face Congress on Drilling Moratoriums, Don’t Expect Much Except Defiance

Industry still skeptical after first drilling permit since Macondo

Sam Fletcher|PennEnergy

All The King's Men: The defiant duo are intent on breaking the back of the US economy, and energy policy is just one the tools they are employing.

HOUSTON, Mar. 1 — Issuance this week of the first deepwater drilling permit since the Macondo blowout last year is “not a return to normalcy” but rather a show-and-tell exhibit for US Department of Interior Sec. Ken Salazar to display when he testifies before the Senate Energy and Natural Resources Committee on Mar. 2.

Prior to announcement of the permit, Frank Maisano, a Washington-based energy and political analyst, said, “Bookmakers are heavily favoring that Interior will issue a deepwater permit this week so Sec. Salazar won’t have to go to the Hill without a bird in hand, as a hostile Congress lies in wait.”

Analysts at FBR Capital Markets & Co., Arlington, Va., said, “Now when Sec. Salazar appears before Congress this week, he will have an [approved] application for permit to drill (APD) in hand to respond to allegations that the administration has imposed a de facto moratorium. We expect media attention on the permitting issue to dissipate significantly, even if few additional permits are forthcoming. Instability in the Middle East and high oil and gasoline prices will help keep the issue in the mainstream.”

Both Republicans and Democrats have cited the economy and rising oil prices to pressure the administration to issue permits for deepwater drilling in the Gulf of Mexico. However, FBR analysts predicted, “Political pressure is likely to abate somewhat.”

Salazar said Feb. 25 he would not bow to political pressures from Congress or Gulf Coast governors to speed up permits for offshore drilling in the gulf. In approving the permit Feb. 28, Michael Bromwich, director of the US Bureau of Ocean Energy Management, Regulation, and Enforcement also said the move was not motivated by politics nor related to Louisiana Federal Judge Martin Feldman’s recent order to expedite five drilling permits within 30 days for Ensco PLC.

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