06/02/2010 08:30 pm ET Updated May 25, 2011

BP Plans to Move Ahead with Offshore Oil Drilling in Arctic

This fall, BP hopes to pull off a record-setting feat: Using a high-tech drill from a gravel island in the Beaufort Sea, it plans to reach two miles deep, turn and bore another six to eight miles horizontally to tap an oil reservoir in federal waters.

The moratorium imposed on new deep-water drilling and drilling in Arctic waters, imposed in the aftermath of the Gulf spill and BP's inability to contain the leak, imploded Royal Dutch Shell's plans to begin exploratory drilling in Alaska this summer. But BP still has hope of seeing its latest Alaska venture succeed.

Wednesday, the U.S. government confirmed the drilling "pause" does not apply to BP's new project, called Liberty.

"The deep-water moratorium does not apply to this particular project, which is based from a man-made island and would potentially be drilling directionally into formations under shallow water. If drilling permit applications are submitted for the project, the Department of the Interior will review them at the appropriate time and determine, based on safety and other considerations, whether the project should move forward with drilling under federal waters," said Kendra Barkoff, a spokesperson for the U.S. Department of the Interior.

Before it drills, BP will need state and federal drilling permits -- permits for which it has not yet applied, according to the Alaska Oil and Gas Commission, the state permitting agency, and Barkoff, speaking on behalf of the U.S. Minerals Management Service, the federal permitting agency.

Operators typically apply for a permit about one month in advance of the intended drilling date, according to AOGCC commissioner Cathy Foerster, adding that Liberty, which launches from state waters to reach a federal reservoir, is an unusually complex project.

"If they want to start in September I'd hope they get us something pretty soon," she said.

Asked to clarify Liberty's development timeline, BP spokesman Steve Rinehart said the company, which plans to begin its first development well this fall, "will apply for permits in line with that schedule."

Guy Schwartz, a senior petroleum engineer with AOGCC who handles BP's permitting requests, said he hasn't seen anything yet from the company.

"It appears their timetable is slipping a bit for getting a well spudded with the new rig," Schwartz said.

In prior interviews BP has said it plans to start producing oil from Liberty next year.

Foerster expects AOGCC to take a hard look at the entire project, including segments of the drilling operation that travel outside the state's jurisdiction, because "if something goes wrong it's going to affect state land or state water."

"If we see something that they're doing outside of state waters that we don't think is safe, we're not going to approve the permit," she said.

While all permitting requests are thoroughly evaluated, with the shadow of the Gulf spill still looming, BP can expect heightened scrutiny with Liberty, according to AOGCC. Gone are the days when regulators, which send inspectors to the sites and check out the drill plans, assume everything has been done top notch, Foerster said. Questions will be asked twice, and reviews will be conducted with "a different mindset" -- looking for what might be wrong instead of expecting to find that an operator -- in this case BP -- has done everything right, she said.

"I think everybody trusts BP a little bit less than they did six weeks ago," Foerster said.

Contact Jill Burke at jill(at)