The People of America's Oil and Natural Gas Indusry

Pressure Mounts Against Deepwater Drilling Ban

Jane Van Ryan

Jane Van Ryan
Posted June 9, 2010

The Department of the Interior (DOI) late yesterday sent out a list of new safety requirements to offshore drillers as pressure mounted against the drilling moratorium.

The requirements, issued as a Notice to Lessees (NTL), requires the CEOs of offshore companies to certify they are in compliance will all regulations. In addition, the operators must provide certification from a professional engineer of all well casing and cement design requirements as well as independent third-party verification that the blowout preventer will operate properly.

API supports the goal of making offshore energy production as safe and environmentally sensitive as possible, but it encouraged the administration to reconsider the deepwater drilling moratorium. "Independent analyses have indicated the six-month moratorium on new drilling in the deep waters of the Gulf could result in a production loss of between 80,000 and 130,000 barrels per day and idle nearly 50,000 workers in the already hard-hit Gulf states," API said in a statement.

Louisiana Gov. Bobby Jindal estimates the deepwater drilling freeze will cost 3,000 to 6,000 jobs in his state alone in the next two to three weeks and as many as 10,000 in coming months. As The Wall Street Journal observes, "To put that in context, the entire U.S. economy created only 41,000 new private jobs in May."

The Houston Chronicle reports one oil company has gone to court to reverse the moratorium. Hornbeck Offshore Services, Inc. is suing Interior Secretary Ken Salazar, Minerals Management Service (MMS) Acting Director Bob Abbey and their agencies, calling the decision to impose a moratorium "arbitrary, capricious" and "an abuse of discretion." The suit asks the U.S. District Court in the Eastern District of Louisiana to declare the moratorium "invalid and unenforceable" under existing regulations.

Further, seven experts who were involved in the Interior Department's report to the president on offshore safety say Interior Secretary Ken Salazar is falsely implying they supported the moratorium. In a joint letter, they say, "[We] do not agree with the six month blanket moratorium... A moratorium was added after the final review and was never agreed to by the contributors." Today's Times-Picayune contains an excerpt from the letter, saying:

"A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation's economy which may be greater than that of the oil spill...We do not believe punishing the innocent is the right thing to do."

Echoing their remarks, Kenneth H. Beer of Stone Energy Corp. sent an open letter to President Obama saying, "In South Louisiana, we have certainly had more than our fair share of catastrophes over the past five years. Do not add another one by implementing this moratorium."