The People of America's Oil and Natural Gas Indusry

Moratorium Melancholy

Jane Van Ryan

Jane Van Ryan
Posted August 10, 2010

BP got the green light over the weekend to proceed with drilling the relief well that is expected to put the final nail in Macondo's coffin. As of Monday, August 9, the well had reached a depth of 17,909 feet. BP says it is likely to intersect Macondo's wellbore on August 15.

At present, the relief well is one of only 11 rigs operating in Gulf waters deeper than 500 feet, under exemptions to the administration's the deepwater drilling moratorium. Each of these rigs is working in proven reserves, and none is actively searching for new oil and natural gas discoveries.

Elsewhere, the race of new sources for oil and natural gas is accelerating. As The Wall Street Journal reports, Norway plans to open 94 new offshore areas to drilling; Brazil plans to spend about $200 billion in the next five years to begin producing reserves as deep as 23,000 feet; Australia has offered new leases for offshore areas twice as deep as Macondo; and Canada is moving forward with exploration licenses in the Arctic.

But here in the United States, offshore drilling is nearing a standstill, even in shallow-water areas. John Rynd, CEO and president of Hercules Offshore, says three-quarters of his company's shallow-water jackup rigs will be idle by the end of August (Times-Picayune), and many firms are looking for work overseas.

Harvey Gulf International Marine's CEO Shane Guidry told USA Today that three of its 17 vessels are going to Mexico and Nigeria soon, and its 350 employees have taken a 10 percent pay cut to avoid layoffs.

Hercules and Harvey are just two examples of the widespread impact of the moratorium. According to Dun & Bradstreet, 16,580 businesses in five Gulf states could be affected, and the majority are small businesses. These companies account for tens of thousands of well-paying U.S. jobs, each of which plays an essential role in finding and producing energy for American consumers.

The Gulf of Mexico accounts for about 30 percent of U.S. oil production and 13 percent of U.S. natural gas production. Further, the U.S. Department of Energy projects the United States will need more oil and natural gas well into the future. Actions that hamper energy production constitute a threat to job retention and job creation, as well as jeopardize economic growth and U.S. energy security.

Under the administration's order, the moratorium is slated to continue until at least November 30, but one official has indicated that it might be lifted earlier. Time is of the essence. As the Times-Picayune says in an editorial, "The longer the administration takes, the worse the economic damage will be...."

ABOUT THE AUTHOR

Jane Van Ryan was formerly senior communications manager and new media advisor at the American Petroleum Institute (API), where she wrote blog posts and produced podcasts and videos. Before coming to API, Jane managed communications for a large science and engineering corporation, and for a top-tier research and engineering university. A few years ago, you might have seen her in your living room when she delivered the news on television. Jane officially retired from API in 2011 and now freelances as an independent communications consultant when not gardening at her farm in Virginia.