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Gulf Oil Drilling Ban Draws New Scrutiny

Today the Obama administration brags about its "all of the above" energy policy, but two years ago it temporarily banned oil drilling in the Gulf of Mexico after the BP oil spill, a move that cut oil output and cost thousands of jobs.

At the time, the Interior Department report called its recommendations "peer-reviewed by seven experts identified by the National Academy of Engineering." But that was not true. None of the seven advised a drilling ban then.

Interior continues to fight GOP efforts to tell how and why the costly moratorium came about.

A month after the BP (BP - News) spill the agency debuted new safety rules, under pressure by green groups. The May 2010 announcement included a six-month gulf drilling ban, which shut 33 deep wells.

The decision arguably hurt the region worse than the spill itself, says Joe Mason, a senior fellow at the Wharton School. "Job losses were not too bad until the moratorium," he told IBD.

Interior's estimate was that well closures temporarily cost 8,000-12,000 jobs and $1.2 billion in economic activity. Mason put job losses at 13,000-19,000, lost wages at $800 million and lost tax revenue at $200 million.

When Interior said the engineers backed the ban, the engineers were shocked. The idea of a moratorium never came up in their sessions and was not recommended, five of the seven told IBD. There was no need to stop other wells, they said.

The panel members' colleagues thought they had lost their minds when the news broke, one said. "My phones started melting," recalled Robert Bea, a retired University of California at Berkeley professor.

They issued a joint letter to the administration and gulf-area politicians. "A moratorium was added after the final review and was never agreed to by the contributors," it said. "It will not measurably reduce risk further, and it will have a lasting impact on the nation's economy, which may be greater than that of the oil spill.

The administration said then, and continues to say now, that safety was paramount. Interior Secretary Ken Salazar recognized that the U.S. "could neither afford the risk nor respond to a second catastrophic spill in the gulf," department spokesman Adam Fletcher said. The oil and gas industry "needed to make immediate safety upgrades before resuming deep-water drilling.

But two of the seven engineers told IBD that the moratorium was actually the more dangerous option. "Starting and stopping operations is unsafe in itself," said Ford Brett, a drilling consultant.

"There are always risks when you stop and then go back again," said Hans Juvkam-Wold, retired Texas A&M professor. "What you have to do is plug the well with a temporary cement, and it was in the process of a cementing that the BP blowout occurred.

A miscommunication seems unlikely. The engineers' talks mostly took place via conference call, with Interior officials listening. Salazar himself took part in some.

A December 2010 Interior Department Inspector General report stated that the moratorium was put in the final draft "at the behest of Salazar." It said he wanted a claim that recommendations were peer-reviewed "stressed in the Executive Summary.

The administration claimed in the report that a mistake was due to "rushed editing" and they did not expect an "objective reader" would think the report said engineers supported the moratorium.

But several of the engineers told IBD that they could not understand how anyone could read the Interior report's plain language as saying anything other than that they endorsed a shutdown.

At least four engineers met privately with Salazar later in 2010. He apologized to them, but didn't say why he called for the moratorium. "There was no explanation," said Arnold Stancell, one of the seven engineers.

Republicans want to find out. The House Natural Resources Committee has subpoenaed internal Interior documents, including 13 that officials had prevented the department's inspector general from giving the committee. Interior has resisted the subpoena.

"They didn't expressly claim executive privilege, but it was implied," committee spokesman Spencer Pederson said. "The committee is exploring its options.

Interior spokesman Fletcher, in an email, cited concerns. We "have expressed serious and longstanding institutional concerns about the Committee's efforts to compromise Executive Branch deliberations, particularly regarding pending Executive Branch decision-making."