The People of America's Oil and Natural Gas Indusry

What's the Future of Offshore Drilling?

Jane Van Ryan

Jane Van Ryan
Posted June 8, 2010

The offshore oil and natural gas industry is in a holding pattern of sorts today, waiting for the Minerals Management Service (MMS) to issue Notices to Lessees (NTL) that will provide information about offshore energy development. Announcements from MMS offices last week caused concern when at least two drilling permits were rescinded in shallow water after the president announced a six-month moratorium on deepwater drilling.

According to information received by API, MMS could issue an NTL today specifying changes to equipment requirements in shallow water followed by additional NTLs on other aspects of offshore energy development. In the meantime, the industry is holding its breath and wondering about the impact on jobs.

The oil and natural gas industry supports 9.2 million U.S. jobs, and about 200,000 are centered in the Gulf Coast area. Any action that delays or stops offshore drilling could undermine the economic recovery and badly hurt the Gulf Coast states. As Randall Luthi, president of the National Ocean Industries Association (NOIA), stated in a letter yesterday, "a lengthy shutdown of drilling will only multiply the economic and emotional stress and loss of jobs that has already devastated the region." Initial estimates of the moratorium's job and U.S. energy production impacts are available here.

In the Gulf this morning, Coast Guard Adm. Thad Allen and Dr. Jane Lubchenco reported:

  • Approximately 14,800 barrels of oil were collected yesterday. In the past four days, a total of 42,500 barrels have been siphoned from the well by the containment cap and sent to the drillship Discoverer Enterprise for processing. (Wall Street Journal)
  • An eddy is keeping spilled oil from the Loop Current at present.
  • The Coast Guard, BP and its contractors will meet this week to discuss the claims process. As BP has stated, it will pay all legitimate claims stemming from the spill. American taxpayers will not be expected to pay for plugging the well, the spill cleanup, or any of the damages resulting from the spill.

Recently, Adm. Allen explained that supertankers would not be a good option for vacuuming oil from the water. He explained that supertankers would have to be modified to skim oil, and they could disrupt the work of other vessels that are operating ROVs over the wellhead. Plus, Adm. Allen explained that the oil isn't pooling neatly on the water's surface. Rather it is spread out like spokes in a wheel. Approximately 3,600 vessels are involved in the cleanup effort.