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Oil groups press Congress for Interior funding

By Ayesha Rascoe

WASHINGTON (Reuters) - Oil industry groups on Wednesday urged U.S. lawmakers to allocate more money for the federal offshore drilling regulator to speed permitting and environmental reviews.

Regulations imposed by Interior Department's Bureau of Ocean Energy Management in the wake of the BP oil spill have slowed the process for greenlighting offshore oil and gas projects for development.

"It is imperative that BOEMRE is provided the necessary resources to review and process permits to drill in OCS waters, and to maintain a vibrant leasing program," said the letter endorsed by oil lobbying groups such as the American Petroleum Institute and the Independent Petroleum Association of America.

Oil companies have complained that the government is not adequately staffed to handle stringent new rules and that permitting delays have brought drilling to a virtual standstill in the Gulf of Mexico.

The Obama administration has asked Congress to add $100 million to the Interior Department's 2011 budget to support additional staffing and safety reforms.

But the bureau's head, Michael Bromwich, has warned that the agency will not become a "permitting mill" and that companies should not expect applications to be approved as fast as they had been in the past.

The oil groups did not specify an amount of funding for the agency and acknowledged lawmakers may be hesitant to provide more money due to concerns about the U.S. deficit.

They suggested Congress consider reallocating resources or directing a small percentage of the billions of dollars raised from federal oil and gas lease sales to the offshore drilling agency.

(Editing by David Gregorio)