Moratorium over, but Drilling Has to Wait

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"Companies scramble to meet new requirements."

A day after the end of the federal moratorium on deepwater drilling, the Gulf oil industry was a mix of furious activity and tortured waiting around.

Companies that are helping the industry meet new regulations are scrambling to keep up with increased business while oil-rig workers must remain idle until the new requirements are met.

Industry officials fear that's the way things will be for months to come.

The Obama administration lifted its moratorium on deepwater drilling six weeks earlier than expected. But a combination of bureaucratic and technological hurdles means it will be months before most of the two dozen rigs idled by the moratorium resume drilling.

Analysts say the new rules could have a long-term effect on Gulf drilling activity. One analyst predicts they could lead to a 17% reduction in Gulf oil production by 2015.

Among the industry's biggest concerns include how regulators will conduct environmental reviews of projects and how they will require companies to plan for worst-case oil spill scenarios. Officials also are braced for new rules.

In the meantime, some companies that support the industry are racing to perform the extra work required to meet some of the new regulations enacted since June.

Part of the certification process, especially for older equipment, requires bringing the equipment back to shore, disassembling it and putting it back together. During that process, replacement parts have to be ordered and installed, and then the whole mechanism needs to be tested.

Bureau of Ocean Energy Management director Michael Bromwich said Tuesday that he could see some new deepwater drilling permits being approved by the end of the year. But he wouldn't say exactly when or how many permits he expects to issue.

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