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Next for the Gulf: More Drilling

U.S. Issues First Shallow-Water Drilling Permit

WASHINGTON - The U.S. Interior Department issued its first shallow-water drilling permit since offshore exploration companies were required to meet two sets of new safety regulations in response to the BP oil spill, a department official said on Monday.

Greenpeace activists paint over a banner with the British Petroleum (BP) logo in a protest against the BP oil spill in the Gulf of Mexico at St. Stephen's square in Vienna July 7, 2010. (REUTERS/Lisi Niesner) Apache Corp, which is seeking to purchase billions of dollars in BP assets, was approved to drill in Gulf of Mexico waters that are less than 500 feet deep.

Companies have not been allowed to get new shallow water drilling permits until they abide by new government safety requirements. Apache was the first to meet them all, the department said.

The U.S. Interior Department issued its new offshore drilling moratorium for deepwater drilling last week that will last until November 30.

The moratorium is being challenged by the industry in the courts. The ban and safety requirements for shallow-water drilling are also being criticized for costing jobs and creating more economic hardship for Louisiana.

In a notice to offshore companies issued on June 8, the department said that, before beginning any new drilling, companies must certify that their blowout preventers work, be ready to conduct at least two tests of cement barriers in underwater wells and follow new casing installation procedures on wells.

In a second notice, issued on June 18, the department said companies seeking offshore drilling permits would have to provide information on how much oil or natural gas might leak from a blowout and how quickly the companies could act to control any spills.

This included estimating the time it would take to contract for a new rig, move it on site and drill a relief well to plug the blowout well.

Many Gulf Coast officials and lawmakers have urged the Interior Department to move faster on approving shallow-water drilling permits, so the region can salvage its high-paying oil jobs to help offset some of the losses in its fishing and tourism industries caused by the oil spill.

(Reporting by Tom Doggett; Editing by Walter Bagley)

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