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Norway seeks lessons from BP spill, but won't halt drilling Add to ...

As Europe's largest producer of offshore oil, Norway is looking to absorb the lessons from BP PLC's blowout in the Gulf of Mexico, but its top regulator has seen no reason to halt exploratory drilling.

The Obama administration in the U.S. is battling the oil industry and Gulf Coast politicians over its decision to impose a six-month moratorium on virtually all deepwater drilling there, and now the European Union's top energy official is proposing a suspension in offshore drilling.

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But in Norway - which is not a member of the European Union - the Petroleum Safety Authority has allowed Royal Dutch Shell PLC to begin a drilling program that opens a new deep-water region about 33 kilometres offshore in 1,354 metres of water. The BP well was situated in water depth of 1,500 metres.

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PSA director Magne Ognedal said his agency has stepped up supervision of companies, and is considering whether it needs to impose new regulations, particularly on well design and construction, training procedures and the operation of the blowout preventer - the huge valve that is meant to be the last line of defence against an accident.

But he said the BP blowout has not prompted either the government or the regulator to demand a halt to activity, a decision that echoes one made by the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) to allow Chevron Corp. to drill a well in 2,600 metres of water, 250 km off its coast.

"We made the decision that we did not have any reasons to react" with a suspension, Mr. Ognedal said. "We have had discussions with our political lords and masters. They've asked the questions; we've answered the questions, and we have not reacted formally towards the industry."

European Union energy commissioner Guenther Oettinger repeated his call Wednesday for a drilling moratorium, but the British - who are the major offshore producers in the union - have rejected that suggestion.

In Newfoundland, critics have questioned the decision to allow Chevron to proceed, and worry that the federal-provincial regulatory agency has a conflict in its mandate between safety and development of the offshore industry.

Unlike the CNLOPB, Mr. Ognedal's agency has no ambiguity about its role.

The PSA - regarded as one of the leading regulators in the world - was formed in 2004, after the government decided to divide the economic and regulatory roles.

Mr. Ognedal said the single-minded focus on safety has served his board well, both in terms of its operations and how the public perceives it.

"It eliminates the political risk associated with having resource management and safety together in one organization," he said in a telephone interview from Oslo.

"For me, being the manager of PSA, it's much clearer what my mandate is, and how I go about doing my job. So it has been helpful seen from my personal point of view, that we got this split."

Like the Atlantic province, Norway is forecasting a sharp decline in production - and their government-sustaining revenues - if new discoveries are not made in the coming decade.

Still, Mr. Ognedal demonstrated just recently that he is prepared to block exploration activity.

The regulator last month rejected a drilling application from U.K.-based Premier Oil for a North Sea well, citing deficiencies in the company's well design and installation methods. Premier, meanwhile, is proceeding with its drilling program in the British North Sea, as well as off Indonesia and Vietnam.

The Norwegian government has said it will delay any plan to lease acreage in the Arctic waters of the Norwegian Sea or Barents Sea until there is better understanding of what caused the BP accident. Norway - which gets 34 per cent of its national income from oil - is considering requests from state-controlled Statoil ASA and others to move into Arctic waters to replenish depleting North Sea reserves.

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