My first conclusion from the issuance of the first permit for deepwater drilling in the Gulf of Mexico since BP's (NYSE: BP) tragedy nearly a year ago is that Interior Secretary Ken Salazar must have enjoyed his weekend.
The Gulf has been shut down to work in depths greater than 500 feet -- despite the October removal of the Obama administration's 5-month deepwater moratorium -- but Salazar said Friday that he wouldn't respond to mounting political pressure to issue new permits. On Monday, however, Houston-based Noble Energy (NYSE: NBL) was granted permission to restart a well in 6,500 feet of water, about 70 miles from Venice, La.
The political pressure on Salazar had clearly escalated in recent weeks. Indeed, the leaders of the energy industry, along with those whose jobs had been put on hold by the halt -- had become progressively more vocal regarding the de facto shutdown. Chevron (NYSE: CVX) CEO John Watson, for instance, displayed obvious frustration on his company's quarterly call with analysts in January.
"Time's about up," he said referring to the likelihood of more and more rigs departing the Gulf, perhaps never to return. He also noted that, "There is activity in the Gulf," but he was skeptical about the drilling of exploration wells. His company announced last year that it will spend $7.5 billion to develop a pair of lower tertiary Gulf prospects that may hold 500 million barrels of oil-equivalent reserves.
House Republicans also had planned hearings on the subject. And last month, U.S. District Judge Martin Feldman expressed frustration at the moribund situation in the deepwater Gulf. In giving the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement 30 days to act on five pending deepwater permits, the judge said the "government's continuous delays are intentional."
Following the BP accident, several members of Big Oil, led by ExxonMobil (NYSE: XOM), formed a venture called Marine Well Containment Co. In doing so, they created a system designed to deal with major Gulf spills. Noble, however, with its new permit in hand, has contracted with Helix Energy Solutions (NYSE: HLX) and its competing system.
The administration likely decided to grant Noble's permit based in part on the pressure exerted on it to do so. At the same time, the steady increase in crude prices resulting from the chaos in the Middle East and North Africa probably were keys to the process as well.
I'd be surprised if deepwater Gulf permits are going to be handed out like slushies on a summer day. Nor do I expect, given current events, that crude prices will decline over night, if at all. Given all that, it's impossible for me to point to a sector that should be more important to Foolish investors these days than the world of energy.
