After a report is issued to Salazar in a few days he may then lift the ban soon there-after causing extreme buying and covering pressure on shares of Offshore drilling companies. The old saying "What goes around comes around" makes perfect sense in this sector. The US government caused massive shorting in this sector by banning drilling in deep waters, now the opposite will hold true when they lift the ban.
* New rules encompass suggestions from May safety report * Companies will have to certify safety of drilling * Interior Dept gives no specifics on lifting drilling ban (Adds background, comments from Shell, White House) By Ayesha Rascoe WASHINGTON, Sept 30 (Reuters) - The Obama administrationunveiled regulations on Thursday aimed at permanently reshapingthe U.S. offshore drilling industry following the BP (BP.L) oilspill, but kept its deepwater drilling ban in place for now. The stringent regulations released by the InteriorDepartment establish new standards for cementing, blowoutpreventers and well design for offshore oil and gas projects. "These new rules and the aggressive reform agenda we haveundertaken are raising the bar for the oil and gas industry'ssafety and environmental practices on the Outer ContinentalShelf," Interior Secretary Ken Salazar said in a speech. In addition to requiring companies to certify independentlythe safety of their rig operations, oil firms will have todevelop plans for identifying potential hazards to help preventhuman errors on rigs. [ID:nN30288579] The rules should give offshore oil and gas producers suchas BP, Exxon Mobil (XOM.N) and Royal Dutch Shell (RDSa.L) asense of the regulatory landscape they will face, thoughSalazar said more would likely be announced in coming months. Drillers such as Transocean Ltd (RIG.N), Diamond OffshoreDrilling Inc (DO.N) and Noble Corp (NE.N) will also have toadjust to the new regulations. BP was leasing Transocean's Deepwater Horizon rig when anApril 20 explosion sank the platform and ruptured an underseawell. Millions of barrels of oil spewed into the Gulf of Mexicoover the summer as BP fought to plug the well. DRILLING BAN STAYS Despite the new guidelines, Salazar said he was not readyto lift his department's moratorium on drilling at depths morethan 500 feet (152 metres). "There will always be risks associated with deepwaterdrilling, but we will only lift the suspensions when I amcomfortable that we have significantly reduced those risks,"Salazar said. The ban, strongly opposed by Gulf Coast politicians and oilcompanies, is set to expire on Nov. 30. The department has saidit hopes to end the moratorium early. Michael Bromwich, head of Interior's Bureau of Ocean EnergyManagement, will deliver a report to Salazar in the next fewdays with guidance on whether the ban should be modified. White House spokesman Robert Gibbs said : "the report would likely lead the department to end the ban before its deadline".[ID:nN30286254] When the ban ends, the department has said drilling willnot resume right away because energy companies will first haveto meet new safety rules. [ID:nN27268362] Shell, which has postponed a number of projects due to theban, welcomed the safety rules but called for more clarity overthe process for issuing drilling permits. "We are encouraged with today's announcement and believethat the new rules closely match Shell's existing globalstandards for deepwater drilling," the company said in astatement. The American Petroleum Institute (NYSEMKT:API), an industry lobbygroup, said the government needed to ensure the new rulesprovided a framework for efficiently approving drillingpermits. "Operators want regulations that provide certainty," API'sErik Milito said in a statement. "Unpredictable, extended delays in permit review andapproval discourage investment in new projects, which hampersjob creation, reduces revenue to the government, and restrictsenergy production." (Additional reporting by Kristen Hays; Editing by MargueritaChoy and Dale Hudson)