Interior Secretary: Oil Industry Strike Force 'A Beginning'

22nd Jul 2010 17:25

By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--U.S. Interior Secretary Ken Salazar on Thursday said that a new plan by oil companies to address oil spills in the deep waters of the Gulf of Mexico represented "a beginning point" in talks to restart deepwater drilling following a moratorium imposed after the BP PLC (BP, BP.LN) oil spill. Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), Royal Dutch Shell PLC (RDSA, RDSA.LN) and ConocoPhillips (COP) said Wednesday that they will form a joint venture to design, build and operate a rapid-response system to capture and contain up to 100,000 barrels of oil a day flowing from as far as 10,000 feet below the surface of the sea. The effort is intended to respond to the Obama administration, which said that a resumption of drilling depends on dealing with drilling safety, the capacity of the industry to respond to oil spills, and the capacity to contain oil when it does spill. "The effort which Exxon and Shell and Chevron and ConocoPhillips came up with yesterday is a beginning point of that conversation relative to how we address one of those three fundamental issues," Salazar told the House Oversight and Government Reform Committee. He also said that the plan "will need significant additional work before we can be satisfied with at least one of those particular prongs." Michael Bromwich, the new head of Interior's Bureau of Ocean Energy Management, said that the companies' proposal was "an intriguing one, but we're going to want to review and study it carefully." The comments suggest that the oil industry faces a long road in persuading the Obama administration to lift a moratorium on drilling new deepwater wells before its scheduled Nov. 30 expiration date. Though Salazar said he is concerned about the effect on the economy and is "willing to revisit" the drilling ban, he defended the moratorium as "the right way to move forward" until "we can answer three fundamental questions--drilling safety, blowout containment capability, as well as oil-spill response capability." The Interior officials were testifying at a hearing marketed as looking into whether a recent regulatory overhaul would change the department's "history of failed oversight." Rep. Darrell Issa (R., Calif.) had considered calling for a vote on subpoenaing documents from the Interior Department, and had prepared to say that Salazar "ignored problems" at the agency that oversees offshore drilling "until it was too late." By the time the hearing started, the Interior Department had sent over thousands of pages of documents. Issa wound up focusing on another issue involving collection of royalties for drilling on federal territory. He cited evidence that the agency, previously known as the Minerals Management Service, "completely relied on the energy companies" to determine how much was owed. "There was no independent accounting" and "no audit basically ever found a different number," Issa said. Salazar said that a new office within the BOEM would allow for independent verification, so that the government could be certain that oil royalty payments are accurate. In the meantime, lawmakers couldn't agree on a central point of focus. Rep. Dennis Kucinich (D., Ohio) said the entire system of basing an economy around oil was fundamentally flawed. "There seems to be some feeling in this country that we can endlessly invade the natural world without any consequences," he said. "We've built a whole economy around this and so, Mr. Secretary, you're being asked to defend a system which truly is basically collapsing." -By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; [email protected] (END) Dow Jones Newswires July 22, 2010 12:25 ET (16:25 GMT)