The People of America's Oil and Natural Gas Indusry

Energy Tomorrow Radio: Episode 109 - Burt Adams Discusses Economic Effects of Moratorium

Jane Van Ryan

Jane Van Ryan
Posted June 7, 2010

In today's episode, I interview Burt Adams, chairman of the National Ocean Industries Association (NOIA), about the potential economic effects of the president's six-month deepwater drilling moratorium on coastal communities.

Use the audio player below to listen to information about the article and follow along with the show notes. I hope you find the podcast informative.

00:17 We've all been watching the aftermath of the Deepwater Horizon in the Gulf for the last several days--the clean-up as well as the president's order to halt deepwater exploration wells and to delay drilling in the Gulf in areas where the water is more than 500 feet deep. But now questions are arising about the economic impact of the drilling delays and the cost to the energy workers and their families who live along the Gulf Coast. To answer these questions we have Burt Adams from Morgan City, La. on the phone. Burt is chairman of the National Ocean Industries Association (NOIA).

00:57 First, for our listeners, let's establish the importance of the offshore industry to the Gulf Coast economy. How many jobs in that region actually depend upon the oil and natural gas industry?

01:10 Burt Adams: The Gulf of Mexico is the heart of the American offshore energy industry. The energy industry is extremely important to the livelihoods of hundreds of thousands of Gulf coast residents and is a huge source of revenues for the Gulf state governments. The offshore industry is responsible for nearly 200,000 jobs in the Gulf of Mexico alone, of those 200,000 jobs that are related to all aspects of the industry, there are 35,000 people working offshore every day.

01:41 How important would you say the Gulf is to domestic oil and natural gas production?

01:46 Burt Adams: The Gulf of Mexico is an extremely important source of energy for America. It provides about one third of our nation's domestic oil and 11 percent or our domestic natural gas. The deepwater regions of the Gulf generate most of that domestic production--80 percent of the oil and 45 percent of the natural gas.

02:07 I know that you and NOIA have looked into the impact of the administration's stop-work order and the six-month moratorium on drilling. How do you think that could affect the Gulf coast economy?

02:22 Burt Adams: The president's institution of the moratorium before knowing the cause of this accident is like convicting someone before any evidence is presented. This is absolutely unacceptable to the American people. The most immediate impacts of the order will be felt by the families of tens of thousands of offshore workers who will be unemployed as a result of this moratorium. It will have severe and possibly long-lasting impacts on our nation's domestic energy supply, as well as on our economic security. For each rig idled by the work stoppage, up to 1,400 jobs are at risk. Lost wages alone could be $10 million per month per rig, or $330 million per month for all 33 rigs idled. In addition, we expect that the halt will render seven deepwater discoveries sub-economic, putting $7.6 billion in future government revenues at risk. At a time when the spill is already causing economic stress for key industries in the region, the president's action will make things much worse by putting thousands of more Gulf citizens out of work.

03:33 You've mentioned the 33 Gulf rigs that were covered under the president's order. Aren't those the very same rigs that recently passed the government's inspections?

03:42 Burt Adams: We do understand the need to act in the face of the ongoing crisis in the Gulf of Mexico; it is truly a terrible situation. However, the 33 rigs affected by the president's order are indeed the ones successfully inspected in early May at the order of Interior Secretary Ken Salazar. The industry neither wants nor expects to just rush into deepwater drilling during this ongoing crisis, but I do believe there are less harmful solutions than this moratorium. For instance, increased inspections and recertification of equipment would be an acceptable compromise.

04:18 In addition to serving as the chairman of NOIA, you are also CEO of a company that's in the oil and natural gas industry, correct?

04:28 Burt Adams: Yes, OGRS LLC is a private company with financial investments in both the service and the oil and natural gas exploration and production sectors of the energy industry.

04:39 Are you concerned about the impact of the drilling moratorium? What is it going to mean for you and your employees?

04:44 Burt Adams: Of the companies that we're associated with, there are more than 10,000 employees that would be directly affected. Additionally, the deepwater products and services serve as the crown jewel of many of these companies. Without deepwater, many of these companies will not survive.

05:01 What do you think that's going to mean for Gulf coast communities, the families, and all the others that are now reeling from the effects of the oil spill?

05:10 Burt Adams: This is a terrible tragedy all the way around. First, my heart goes out to the victims of the explosion and their families. I've been intimately involved in this industry for more than 30 years. In the wake of this devastating crisis, the industry welcomes a thoughtful discussion of our nation's energy needs and energy supply. But the discussion should not be a knee-jerk, emotional reaction. The American people understand that risk is involved in every aspect of life. It is impossible to eliminate all risk. The attention of the industry, the administration and Congress should be directed to the immediate need to stop the flow of oil and contain and cleanup the Gulf of Mexico. Next, we need to find out what caused the discharge and how to prevent the reoccurrence in the future. Once those facts are known, then policymakers will be in an informed position to discuss options for the future.

06:09 We really appreciate hearing your observations on this continuing tragedy.