The Obama administration ran afoul of environmentalists Wednesday by approving a new oil well in the Gulf of Mexico, even as millions of gallons of oil continue to gush from BP's Deepwater Horizon rig and the British oil giant struggled with its latest effort to cap the well.
The new drilling permit, awarded to Bandon Oil and Gas, is the first granted by the Minerals Management Service since the BP rig exploded April 20, killing 11 people. Interior Secretary Ken Salazar extended a moratorium recently on deepwater drilling, such as that of the Deepwater Horizon, which was drilling about a mile beneath the water's surface when the rig exploded.
At the same time, however, the administration quietly allowed a ban on drilling in shallow water to expire. The Bandon Oil permit is for a site about 50 miles off the coast of Louisiana and 115 feet below the surface, which qualifies as a shallow drilling site.
Peter Galvin, conservation director of the Center for Biological Diversity, said his organization was outraged by the decision to grant the permit.
"We're very upset by it," Mr. Galvin said. "There have been a lot of terrible, terrible disasters in shallow water. Shallow-water drilling has many of the same risks as deepwater drilling."
Mr. Galvin called on the administration to reinstate its moratorium on shallow-water drilling, and blamed political considerations for Wednesday's decision to grant the permit.
"It's obviously a political calculation, to be seen as responding to the disaster, but not upsetting the apple cart with industry," Mr. Galvin said. "We see it as a really disingenuous act."
Interior Department spokeswoman Kendra Barkoff released a statement Wednesday noting that the administration had increased safety standards for shallow-water drilling.
"All operators who are drilling or intend to drill in shallow water must first meet applicable interim safety standards announced last week by the president," Ms. Barkoff said. "Those operators who are already drilling must stop at a safe place and implement the safety requirements before continuing. A formal Notice to Lessees will be issued shortly that outlines the required actions."
Meanwhile Wednesday, BP ran into more trouble in its bid to contain the Deepwater Horizon leak as the diamond-tipped saw that was supposed to shear off the well pipe got stuck.
The company was able to free the blade late Wednesday afternoon and preparations were being made to resume cutting, but it was unclear when the effort might resume.
A successful clean cut would enable crews to then fit a cap snugly over the pipe that could contain much of the spewing oil.
"I don't think the issue is whether or not we can make the second cut. It's about how fine we can make it, how smooth we can make it," said Coast Guard Adm. Thad Allen told reporters.
The Deepwater Horizon site is pouring as much as 800,000 gallons of oil per day into the Gulf of Mexico. The disaster has polluted about 125 miles of Louisiana coastline, and is expected to reach the Florida Panhandle in "a day or two," said Florida Gov. Charlie Crist.
The governor confirmed Wednesday that a sheen of oil from the spill and tar balls were spotted 9.9 miles from the shores of Pensacola. More than 257,000 feet of boom have been laid on the Pensacola coastline, and Mr. Crist said he has requested an additional 66,000 feet for nearby coastlines.
Federal and state governments also closed more fishing grounds Wednesday; more than one-third of federal waters in the Gulf of Mexico are now off limits to fishing.
The spill is about a mile underwater, which has made all BP's efforts over the past several weeks extremely difficult. If this cap effort fails, the last hope is probably drilling a relief well to relieve the pressure on the leaking well. That will not be finished for another two months.
Mr. Salazar had announced a six-month moratorium on deepwater drilling May 27 and called for "aggressive new operating standards and requirements for offshore energy companies," according to an Interior Department press release.
He also canceled a pending lease sale in the Gulf of Mexico, a proposed lease sale off the coast of Virginia, and suspended proposed exploratory drilling in the Arctic.
"As we marshal every resource in support of the massive response effort for the BP oil spill, we must take appropriate action to prevent such a disaster in the future," Mr. Salazar said in a statement. "We are taking a cautious approach to offshore oil and gas development as we strengthen safety and oversight of offshore oil and gas operations."
The Bandon Oil drilling permit is located far to the west of the Deepwater Horizon rig, but the timing of the permit approval sends the wrong message, Mr. Galvin said.
"It's bad timing and just a bad policy move," he said. "We're in the middle of the worst industrial disaster in U.S. history. So why is the Obama administration persisting with this policy to allow offshore oil drilling?"
Also Wednesday, two U.S. senators wrote a letter to BP Chief Executive Officer Tony Hayward saying the company should not give its shareholders their share of the company's earnings.
"We find it unfathomable that BP would pay out a dividend to shareholders before the total cost of BP's oil spill cleanup is estimated," wrote Sens. Charles E. Schumer of New York and Ron Wyden of Oregon, both Democrats.
"We are concerned that such action to move money off of the company's books and into investors' pockets will make it much more difficult to repay the U.S. government and American communities that are working around the clock to stem the damage caused by this devastating oil spill," the two senators wrote.
BP is legally required to pay cleanup costs and has pledged to pay all legitimate claims of economic damages. The company already has lost about $1 billion and its stock values have taken a huge hit in the past few weeks. BP has told its shareholders that the spill could cost the company $37 billion.
Other Democrats in Washington continued their assault on BP on Wednesday, with Vice President Joseph R. Biden Jr. raising again the possibility of criminal charges against BP, a prospect the Justice Department already had said it is investigating.
"My guess is that there are all kinds of discussions about whether or not they pushed the envelope with the rig operator beyond what it should be pushed to safely pursue," he told Charlie Rose in an interview for Mr. Rose's PBS interview show.
In a speech in Pittsburgh, President Obama called for the repeal of oil company tax breaks and more spending on alternative forms of energy.
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