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The Obamoratorium Has Now Cost Us 10 Gulf Rigs


At the Pelican Post this morning, Kevin Mooney has a terrific piece on the ongoing Obama-made economic disaster in the Gulf of Mexico…

Ten oil rigs have left the Gulf of Mexico since the Obama Administration imposed a moratorium on deepwater oil and gas drilling in May 2010, according to documentation obtained from Sen. David Vitter’s (R-La.) office.

The ten rigs named in the document are: Marinas, Discover Americas, Ocean Endeavor, Ocean Confidence, Stena Forth, Clyde Boudreaux, Ensco 8503, Deep Ocean Clarion, Discover Spirit, and Amirante. The rigs have left the Gulf for locations in Egypt, Congo, French Guiana, Liberia, Nigeria and Brazil.

The fact is, despite the screaming denials from folks on the Left about the supposedly minimal impact of the moratorium on employment and the state’s economy – denials coming from the same people who are trotting out a doubling of the state’s unemployment rate since Bobby Jindal was inaugurated as governor while ignoring that half of the increase has come since the moratorium was commenced – the loss of those rigs is a major blow to Louisiana. As a rule, each drilling rig represents somewhere between 1,000 and 1,500 jobs. Lose 10, and it’s 10,000 to 15,000 jobs we won’t get back for 3-5 years in all likelihood.

That doesn’t count the indirect jobs those rigs affect.

“I don’t think the people in Washington D.C. who implement these policies have an understanding of how much this has impacted our economy, especially in Louisiana,” Renee Baker, the state director for the National Federation of Independent Business (NFIB), said. “We can’t just look at the large businesses to understand what’s happening, there are small businesses that do a lot of services for the rigs and they have been set back. We just want to see people get back to work.”

It’s even worse than that when you count what could have been. After all, when the price of crude oil takes off like it has over the past year Louisiana’s economy should boom as the high prices incentivize oil exploration in the Gulf – where the costs are high but the oil is unquestionably abundant. The moratorium and the subsequent slowdown in permitting for both deepwater and shallow-water drilling has prevented that natural growth.

Unfortunately, the “political uncertainty” surrounding the Gulf region has discouraged companies from making investments that could help spur economic growth, Don Briggs, president of the Louisiana Oil and Gas Association (LOGA), laments. Even before the 10 rigs cited in the document from Vitter’s office pulled out, eight other rigs that were planned for the Gulf were detoured away, Briggs said.

“When you have companies that would be spending hundreds of millions of dollars, or some cases, billions of dollars, they need certainty,” Briggs explained. “We don’t have that now and I don’t expect that we will anytime soon. We will be in a deteriorating position until this changes.”

And rather than take responsibility for the slowdown and excuse it as a necessary evil arising from a newer, stronger regulatory regime – which would be a mendacious statement in its own right – the administration has engaged in bald-faced lies as part of an effort to convince the public that they’re putting the domestic oil industry back to work.

Meanwhile, Sen. David Vitter has called out top Obama administration officials for issuing what he views as conflicting and misleading statements on the correct number offshore drilling permits. A U.S. Justice Department motion filed in March stated there are 270 shallow water permit applications pending and 52 deepwater permit applications pending.

But in testimony before the Senate Energy and Natural Resources Committee this past March, Interior Secretary Ken Salazar said the Interior Department had received only 47 shallow water permit applications over the previous nine months and that only seven deepwater permit applications were pending. Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation, and Enforcement, told Vitter personally that only six deepwater permits were pending, and he publicly stated that deepwater permits would be limited because “only a handful of completed applications have been received.”

Over the past three months, deepwater permits are down 71 percent from their historical monthly average of 5.8 permits per month, Robert Bluey, a blogger and journalist with the Heritage Foundation, has reported on The Scribe. Shallow-water permitting have also fallen in past few weeks by 34 percent from the historical monthly average of 7.1 permits, Bluey reported.

The question is whether the 10 rigs already lost is the extent of the damage. And that’s a question for which there are few good answers. There is little indication the administration is going to back off on the policies which have kneecapped the Gulf oil industry; in fact, they’re doubling down – and publicly.

This doesn’t just affect Louisiana. It affects the national economy – and profoundly.

“This highlights the problem we have with losing domestic energy production as a result of the drilling moratorium and the slow permitting,” David Kreutzer, a research fellow in Energy Economics and Climate Change at the Heritage Foundation, said. “We must also keep in mind that the impacts are not instantaneous, the rigs may be idle for a while, but once they move it’s going to be difficult to move them back once they are drilling in say Nigeria or Brazil.  The oil companies must have confidence they can move forward with their drilling plans and to know these plans won’t be revoked. Only certainty will bring them back.”

Right now the only thing which appears certain is that we’re going to have to have a new president if we don’t want to be exporting jobs and capital elsewhere as we import oil we could be finding right here off our shores.


3 Comments

  1. The Hayride New Post – The Obamoratorium Has Now Cost Us 10 Gulf Rigs. Read it now at http://tinyurl.com/43x8evt

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  3. Jjm says:

    My company supports down-hole VSP surveys. My projection for 2010 was 1 job per month after a very slow 2009. We were well on our way to meeting or exceeding that projection until BP – then nothing until a shallow water job in June, a deep water job in July and a shallow water job now starting. With no serious inquiries for the remainder of the year, I still project 2 more for the remainder of 2011. Not to be boastful, but without significant expenditure cuts, we would have closed our doors, leaving our industry with lack of highly specialized experience and proprietary technology in a main component of offshore drilling.
    Losing 1/3 of our deep water drilling capacity is an unacceptable surrender of our potential and worse our national defense is threatened with continued significant dependence on foreign oil. New regulations on offshore drilling certainly could have been phased in WITHOUT the pain and loss we’ve experienced under moratorium and permitorium!!! So what were/are the true intentions???

    Please advise – What are today’s true counts of completed permits to the point where drilling can actually start? I don’t even bother with the BOEMRE site as it routinely misleads with numbers much larger than reality. According to today’s report, everyone’s work schedule should be overfilled:

    Shallow water:  To date, 67 new shallow water well permits have been issued since the implementation of new safety and environmental standards on June 8, 2010.   Permits have averaged more than 6 per month over the past 8 months,
    compared to an average of 8 permits per month in 2009.  Just 7 of these
    permits are currently pending; with 8 having been returned to the
    operator for more information.
    Deepwater permits requiring subsea containment: Since
    an applicant first successfully demonstrated containment capabilities in
    mid-February, we have approved 90 of these permits for 27 unique wells,
    with 15 permits pending, and 28 permits returned to the operator with
    requests for additional information, particularly information regarding
    containment.
    Deepwater activities not requiring subsea containment: Since
    the implementation of new safety and environmental standards, 45 of
    these permits have been approved, with 1 permit returned to the
    operator with requests for additional information. These activities
    include water injection wells and procedures using surface blowout
    preventers.

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