Moratorium Will Hurt Independent Producers

This past week, the U.S. Senate Small Business Committee held a hearing on the economic disaster that has been created by the deepwater drilling moratorium in the Gulf of Mexico.

Specifically, the intent of the hearing was to address the impact that the moratorium is having on our small businesses. Many who testified spoke about the indirect impact that the moratorium has had thus far on all aspects of our state’s economy.

Although countless businesses will be affected by this egregious policy, those who stand to suffer the most are our independent oil and gas producers.

There remains a public sentiment and misconception that companies operating the Gulf of Mexico are comprised of large transnational conglomerates, or “Big Oil” companies. This could not be further from the truth.

The president, media and policy makers in Washington all overlook the most important aspect of oil and gas operations in the deepwaters of the Gulf. Those most threatened by this moratorium are the independent oil and gas operators. Independents produce and drill nearly 50 percent of all wells and represent 70 percent of all lease activity in the Gulf of Mexico.

In the shallow waters of the Gulf, independents drill and produce 85 percent of the wells. In addition, independents are less flexible, rely on significant capital investment, and lack the ability to pick up their operations and move across the globe in search of better opportunity.

A recent study conducted by IHS Global Insight notes that independent oil and gas companies currently account for about half of the nearly 400,000 jobs, $70 billion in economic values and $20 billion in federal, state and local revenue generated by the industry in 2009.

Without independent oil and gas companies drilling in the Gulf of Mexico, we will certainly see a negative impact on every sector of the United States — manufacturing, agriculture, service, medical and many other industries.

As it is always the case, consumers will bear the brunt of this moratorium, paying more everywhere from the gas pump to the grocery store. Whether we like it or not, our nation is dependent on fossil fuels, and here’s why:

  • At the close of the day today, we will have consumed nearly 20 million barrels of oil to run our nation’s economy. Today, we will consume 65 billion cubic feet of natural gas.
  • In addition, we will consume 1,200 carloads of coal. On a daily basis, there are about 250 million vehicles driving the roads in this country. Around 96 percent of the fuel that runs those vehicles comes from oil.
  • In the U.S., we produce 5 million barrels of oil a day. Of those 5 million barrels of oil production, 1.8 million come from operations in the Gulf of Mexico. Nearly 70 percent of those 1.8 million barrels comes from deepwater operations.

The drilling ban in the Gulf of Mexico not only threatens the economic wellbeing of our state, but it will also have a significant negative impact on our entire nation. In Louisiana alone, the deepwater drilling moratorium could eliminate more than 17,500 jobs in the coming six months.

Overall, this detrimental policy will threaten the jobs of more than 200,000 hardworking Americans in Texas, Louisiana, Mississippi and Alabama.

It’s time the president put an end to this job-killing policy and let Louisianans get back to what we do best, and that’s fueling our nation.

Don Briggs is president of the Louisiana Oil & Gas Association.

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