U.S. to regulate contractors of offshore oil firms

Tue Oct 4, 2011 4:20pm BST

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* Says can keep current pace of issues of deepwater permits

* Cannot deliver drilling permits faster with current resources

By Gwladys Fouche

STAVANGER, Norway, Oct 4 (Reuters) - U.S. authorities are looking to regulate the contractors of oil companies that work offshore in the wake of the Gulf of Mexico oil spill, a senior federal official said on Tuesday.

"We will regulate contractors as well as operators. There is no compelling reason or logic not to do so," Michael Bromwich, director of the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement, told an oil conference.

The agency is responsible for overseeing the development of energy and mineral resources off the coast of the United States as the successor of the much criticised Minerals Management Service.

During last year's BP oil spill in the Gulf of Mexico, the role of contractors Halliburton , in charge of the cementing in the Macondo well, and Transocean , which operated the Deepwater Horizon rig, came into sharp focus in addition to the role the BP played as operator.

Under current practice U.S. regulators turn mainly to the operator as the company accountable for all offshore operations.

"There is a virtue in the administrative clarity in going only against the operators and not confusing the picture," Bromwich told reporters after his speech.

"But in those instances when the violations by contractors are bad enough ... we should go after them as well," he said, adding that this would affect only contractors that are involved in the development of offshore oil and gas leases.

Bromwich added that he had asked the bureau's lawyers to examine whether it had the legal authority to go after contractors.

"The lawyers said there was no doubt that we had the legal authority to do it. The question then became whether it was appropriate to do it, and I concluded that it certainly is."

CAN KEEP PACE ON DEEPWATER PERMITS

Since February the bureau has delivered some 143 permits for 41 deepwater wells requiring subsea containment after U.S. authorities introduced more safety requirements in the wake of the BP oil spill.

Several permits can be submitted for one well.

Many oil and gas companies have complained that drilling activities in the Gulf of Mexico are not picking up fast enough because permits are being delivered too slowly.

Bromwich said the Bureau of Ocean Energy Management could keep to its current pace but could not go faster due to limited resources.

Asked whether the current pace was sustainable, he said: "I think so ... I think we are on a pretty good path right now.

"People have complained that it is not consistent with the historical pace," he said. "We have a whole new set of regulations that the operators need to comply with before they submit their applications.

"Our personnel need to confirm that they are complying, and that process takes longer than it took in the past."

Asked whether he could accelerate the pace, Bromwich said: "Not without additional resources, we can't." (editing by Jane Baird)