Obama to split up offshore drilling agency in response to Gulf spill

The Obama administration will propose that the troubled
Interior Department branch that oversees offshore oil-and-gas drilling
be split up into two separate agencies, according to an
administration official.

The proposal is an acknowledgement of the
new pressure on regulators as a result of the massive ongoing oil spill in
the Gulf of Mexico.

The Interior Department on Tuesday morning said
Interior Secretary Ken Salazar will hold an early afternoon press
conference to “announce reforms to toughen inspections and oversight of
offshore oil and gas operations.” The department did not provide further
details, but an administration official confirmed the plan to
divide the Minerals Management Service.

MMS currently oversees the safety of offshore drilling and production operations, and also collects billions of dollars in leasing bids and oil-and-gas royalties for federal coffers — roles that critics say create inherent conflicts.

The Associated Press reports that under the proposal, “One agency would be charged with inspecting oil rigs, investigating oil companies and enforcing safety regulations, while the other would oversee leases for drilling and collection of billions of dollars in royalties.”

The proposal comes after years of damning reports about the agency, which watchdog groups and Interior’s own inspector general have called too close to the industry and ill-equipped to ensure royalties are paid in full.

A 2008 report by Interior’s then-inspector general, Earl Devaney, found a “culture of substance abuse and promiscuity” at the agency’s Denver office. The report said that MMS officials did drugs and had sex with energy company representatives.

The report was about the royalty-in-kind program, in which companies provided oil and natural gas directly to Interior in lieu of cash royalties. Salazar announced the termination of the program last year.

Salazar has also vowed to implement other reforms at MMS, and the spill stemming from the April 20 explosion of an offshore rig leased by oil giant BP has heightened calls for changes.

BP officials will testify Tuesday before a Senate panel on their efforts to stop the three-week-old oil spill in the Gulf. BP so far has been unable to shut off the spill, and thousands of barrels of oil continue to leak into the sea each day.

David Nagel, executive vice president of BP
America, on Monday described several efforts his company is taking to stop the leak, including the drilling of two relief wells to intersect the drill hole so that mud and
concrete could be poured down to clog the leak, a process that could
take 90 days.

He also said the company was seeking permission from the Environmental
Protection Agency to pour chemical dispersants directly onto the leak
on the sea floor to contain the spill.

Executives are expected to receive a tough line of questioning from senators on Tuesday.

This story was posted at 8:31 a.m. and updated at 9:25 a.m.