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An oil platform in the Gulf of MexicoHO

The Gulf of Mexico will soon reopen to deep-water drilling, but an overhauled regulatory regime promises to slow exploration and drive up costs in the industry's key oil-producing area.

The new rules may prevent the industry from ever returning to the level of activity that existed prior to BP PLC's massive and deadly oil spill, a period in which oil companies faced a toothless and understaffed regulator and a minimalist regulatory approach.

At a hearing in Washington on Monday, U.S. Interior Secretary Ken Salazar said his department will be adopting "the gold standard" of offshore drilling regulations, adding that the tough rules will serve to establish a new and higher bar for oil companies operating in the oceans around the globe.

"I believe that the gold standard that we all develop here in this country will be the guidance for what will happen around the world," Mr. Salazar said in a webcasted hearing of the presidential commission investigating the spill.

"As a result of this tragedy that no one asked for and no one wanted, it is my fervent hope that we can lead the way in developing the safest production of oil and gas in our ocean, that does in fact protect the environment and protects the workers who are out there on those rigs."

Following the blowout at BP's Macondo well on April 20, President Barack Obama slapped a six-month moratorium on deep-water exploration drilling in the Gulf of Mexico, a move that has angered Gulf Coast politicians and industry supporters, who say it is adding to the economic distress caused by the accident itself.

Mr. Salazar signaled on Monday that the formal moratorium may end sooner than its scheduled mid-November termination, but said any new drilling will have to meet stringent new regulations with which companies must comply before they resume operations.

Michael Bromwich, the new regulatory chief who is a former federal prosecutor, said few companies are going to be able to immediately meet the new standards. Companies will also require certification from the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

"Even when the moratorium is lifted, you're not going to see drilling going on the next day or even the next week," Mr. Bromwich said. "It's going to take some time."

Mr. Bromwich was scheduled to submit his recommendations on rule changes to Mr. Salazar at the end of October, but said Monday that he will conclude his report this week. The Interior Secretary said he will take some time to consider the recommendations, and then act. Mr. Salazar has said in the past that the formal moratorium could end sooner than six months, so long as the companies are able to meet the tougher rules.

Doug Suttles, BP chief operating officer for exploration and production, said some projects would be better positioned than others to meet new government requirements to resume drilling.

"What is clear is that certain equipment, certain wells, certain rigs will find it easier to meet those requirements more quickly than others," Mr. Suttles told the commission earlier in the day Monday.

"I would expect the net effect to be … a phased restart."

Companies still have a lot of questions that need answers before they can restart their drilling programs. Among those who are on hold is Calgary-based Nexen Inc., which is a 20-per-cent partner with Royal Dutch Shell PLC in the major Appomattox discovery in the deep water of the Gulf.

Mr. Bromwich said companies would have to submit more detailed spill-response plans, as well as regulations on the cementing of the well casing, and the specifications and testing of the crucial blow-out preventer - the valve-like device that is the last line of defence but failed to shut in the Macondo well.

The chief regulator acknowledged that few drilling permits have been issued in Gulf shallow water - which is not covered by the moratorium - because his bureau has required companies to provide worst-case oil spill response plans.

The industry lobbyist group, the American Petroleum Institute, has been urging the government to balance the requirement for safety and environmental protection with the country's need for domestic energy and jobs.

"For our part, we will work hard to make the rules work," association spokesman Bill Bush said. "We hope the government will equal that commitment by putting a high premium on advancing energy development even as it raises the bar on safety."

With files from Reuters