July 13, 2010 / 7:55 PM / 7 years ago

US official defends new deepwater oil drilling ban

* U.S. not able to handle another spill now

* White House panel questions need for lengthy ban

By Ayesha Rascoe

NEW ORLEANS, Louisiana, July 13 (Reuters) - The head of the U.S. agency charged with regulating offshore oil drilling on Tuesday defended the new deepwater drilling moratorium, saying the risk of another disaster remains too high as the government battles to deal with the BP oil spill in the Gulf of Mexico.

Michael Bromwich, appointed last month to head the Interior Department's Bureau of Ocean Energy Management, told a White House panel tasked with offering recommendations on the future of offshore drilling that the nation does not have the resources to handle another spill.

"So long as the spill is out there and it is not being contained and the oil spill response capabilities are all being consumed by the current oil spill ... it is simply too risky to allow deepwater drilling to continue," Bromwich said.

The agency needs time to consider implementing new safety rules and requiring site specific response plans before exploratory drilling goes ahead, he said.

The Interior Department will host about a dozen public meetings over the next 60 days in the Gulf coast, California, and Alaska to gather input on its plans, Bromwich added.

The April 20 Deepwater Horizon rig explosion and subsequent spill spurred the government's original six-month moratorium on exploratory drilling in waters at depths more that 500 feet.

A federal court struck down the initial ban, calling it too broad, but the government issued a new moratorium on Monday blocking deepwater drilling through Nov. 30. [ID:nN12269656]

The oil and gas industry is Louisiana's biggest economic engine and accounts for about 16 percent of its gross domestic product, vastly overshadowing fishing (1 percent) and tourism (4 percent), according to Tulane University Energy Institute.

DEPENDENT ON OIL JOBS

The drilling ban has led to an outcry from Louisiana residents, many of whom are dependent on oil industry jobs.

At Goody's Cafe in Gretna, Louisiana customers offered few charitable words for the Interior Department, holding it responsible for economic hardships brought by the moratorium.

"We got a failed government agency," said Jonathan Dinet, 59, who operates an oil field service boat. "Like any government agency, they don't do their jobs."

The moratorium could result in the loss of 20,000 jobs a month in Louisiana and lost wages of up to $135 million, according to Louisiana Governor Bobby Jindal.

Bromwich's testimony came on the final day of the first meeting of the seven-member commission set up by President Barack Obama to look into the response to the BP oil spill.

The presidential panel is modeled on commissions that looked into the 1986 space shuttle Challenger explosion and the Three Mile Island nuclear accident in 1979.

Bill Reilly, former Environmental Protection Agency head and co-chair of the commission, questioned the need for a lengthy ban on drilling that critics argue will devastate Gulf coast economies.

"How hard can it be to put inspectors on each of these rigs ... and simply draw some conclusions about safety sufficient to allow some resumption of activity?" Reilly asked.

The panel's other co-chair, Bob Graham, a former Democratic senator from Florida, said he did not understand why the Interior Department could not determine the safety of the rigs on a case by case basis.

"We're going to look over their shoulder ... and have some comments on whether we think the judgments they made were appropriate," Graham said. (Additional reporting by Alexandria Sage in Gretna, Louisiana; editing by Chris Wilson)

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