BP Gets First Drilling Permit

by Lou Dolinar

I’m not much for conspiracy theories, and Lord knows there were enough lurid ones surrounding the Deepwater Horizon oil spill. Still, if this story is true, then you have wonder a) Why did the administration penalize and systematically attack BP’s competitors by banning drilling in the Gulf while BP fought the blowout, and b) why is it now giving the first drilling permit to BP?

According to a report from Reuters, “BP Plc, whose Macondo well blowout in the Gulf of Mexico caused the worst offshore oil spill in U.S. history last year, co-owns the well that was granted the first deepwater drilling permit since the disaster. BP is Noble Energy Inc’s partner in the well, holding a 46.5 percent interest, BP said.”

I’ll note here that neither Bloomberg, the Times Picayune, the New York Times, nor the Wall St. Journal seems to have noticed this rather key aspect of the story.

As I wrote back in January:

Other companies drilling in deep water in the Gulf have not had well blow-outs. But in BP’s case, the [president’s oil spill] commission’s own studies show not just one mistake but a series of failed judgment calls by BP officials. Responsibility is specific, not collective. We don’t shut down the airline industry when a plane crashes, and we shouldn’t shut down the oil business.

From the beginning, BP’s peers in the majors — who were not represented in any way on the panel — have contended that BP’s horrendous long-term company-safety record makes it an outlier and a rogue, a view echoed by some independent journalists. Highlighting the “rogue” view, just three days ago a leak forced BP, the main stakeholder in Alaska’s Alyeska Pipeline consortium, to shut down the pipeline, which transports 15 percent of American oil production.

At least it appears that BP will be under adult supervision, with Noble Energy operating the well. Still, if the administration was deliberately trying to create controversy by expediting the most obnoxious permit imaginable, they couldn’t have made a better choice.

I don’t doubt that this move is going to reopen old wounds, namely the administration’s crony relationship with BP prior to the spill. The most important: Like GE, Goldman Sachs, and other companies angling for green subsidies, contracts, and other action, BP backed (and still backs) cap-and-trade and had even allied itself with some environmental groups. Energy Secretary Steven Chu, meanwhile, installed Steven E. Koonin, BP’s former chief scientist, as his deputy. Koonin had, some years earlier, expedited a $500 million grant for “green” research to a new “Earth Biosciences Institute” Chu set up. One of the great ironies of the Deepwater response was that Koonin, the only person in the administration who had a clue about the oil business, had to recuse himself, unfortunately in my view, because of his BP past. (The administration’s other ties to BP are fairly well known and probably small beer, including Rahm Emanuel’s housing arrangement with BP’s chief Washington lobbyist, and the campaign contributions and lobbying aimed at both parties.)

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