Lifting on Gulf drilling ban, but uncertainties remain

Better be cleared up fast, for companies like ATPG have ambitious plans there..
Uncertainties Still Face Gulf After Drilling Ban Lifted

Wednesday, 13 Oct 2010 11:32 AM

Deep water oil drills quieted by a six-month moratorium will again hum off the Gulf Coast, helping an industry that, despite its dangers, puts needed money in the pockets of thousands along the Gulf Coast. What’s less certain is just how soon the jobs on hold because of the six-month ban will come back to a region trying to recover.

Thirty-three deep water operations were halted by the moratorium imposed as the BP oil disaster unfolded. Meeting new federal safety requirements imposed since then will take time for oil companies.

“Those big rigs that left the Gulf, it’s going to take them a while to come back,” said Ronnie Kennier, an Empire, La., fisherman working in BP’s vessel of opportunity oil clean-up program.

The Obama administration, under heavy pressure from the oil industry and Gulf states and with elections nearing, on Tuesday lifted the moratorium that it imposed in April. The ban had been scheduled to expire Nov. 30, but Interior Secretary Ken Salazar moved up the deadline, saying new rules have strengthened safety and reduced the risk of another catastrophic blowout that caused more than 200 million gallons of crude to spew from BP’s well a mile beneath the Gulf.

A federal report said the prohibition likely caused a temporary loss of 8,000 to 12,000 jobs in the Gulf region and drilling is unlikely to resume for at least a few weeks.

Todd Hornbeck, CEO of Covington, La.-based Hornbeck Offshore Services, said lifting the ban would still leave the industry in a “de facto moratorium stage” until the government fully explains how new drilling permits will be issued.

“We’re still in the dark,” said Hornbeck, who heads one of the companies that sued to block Interior’s initial moratorium. His company provides vessels and other services for the offshore industry.

“Right now, I’m skeptical that it will be anytime soon that permits will be issued even if the moratorium is lifted,” he said.

On the Gulf, oil stands with fishing and tourism as economic linchpins. All three were hit hard by the spill that began when the oil rig Deepwater Horizon exploded on April 20, killing 11 workers about 50 miles off the Gulf Coast. It took three months to cap the well that was finally killed last month. Fishing was severely curtailed, tourists stayed away and the safety of the oil industry was assailed.

“When you took oil away, you pretty much took all the jobs away, you slow down the whole place,” said Acy Cooper, a shrimper in Venice, La.

He said fishermen, too, often depend on oil-field jobs to make ends meet. “In the winter time, fishermen go into the oil field.”

With BP facing massive fines, he said he felt comfortable that other drillers will be more careful. BP killed the well last month and expects to eventually pay at least $32 billion to handle cleanup and damage claims.

“The rest of them don’t want to go through that,” he said. “They learned their lesson.”

Republican Louisiana Gov. Bobby Jindal said he was “glad they are beginning to reverse this job-killing policy.”

Though the administration’s policy only addressed deep water operations, “severe bottlenecks in the federal permit review process have resulted in a de facto moratorium for shallow water drilling,” he said.

Jindal said since early June, only 12 new permits have been issued for shallow water wells, compared to the pre-deepwater-moratorium average of 10 to 14 a month.

The administration’s decision comes just weeks before midterm elections in which Democrats face widespread criticism for overextending government actions on the economy, including the health care overhaul, the economic stimulus plan and the drilling moratorium.

Steve Ham, 60, a retiree who lives on Grand Isle, La., where beaches were covered by oil, opposed the stoppage.

“I never thought they should have had the moratorium in the first place. Everything would have been fine, we wouldn’t have had any oil spill if they had enforced the rules and regulations that were in place. Bush and Obama both failed to enforce the regulations,” he said.

Drillers aren’t the only companies affected. Caterers feed workers on drilling rigs, helicopters ferry them often hundreds of miles into the Gulf and shipping companies haul equipment and provisions to the rigs.

Salazar said he knows that some people will say the new rules are onerous. “Others will say that we are lifting the deep water drilling suspension too soon. They will say there are still risks involved with deep water drilling,” he said.

Salazar emphasized the move would include new requirements for those seeking to drill exploratory wells. Those entities and the companies they represent will have to prove they have the appropriate steps in place to contain a worst-case scenario spill.

But the truth is, there will always be risks, Salazar said. “As we transition to a clean energy economy,” he added, “we will still need oil and gas from the Gulf of Mexico to power our homes, our cars, our industry.”

Louisiana Sen. Mary Landrieu, a Democrat, has blocked a Senate vote to confirm President Barack Obama’s choice of Jacob Lew to head the Office of Management and Budget to protest the moratorium. She applauded the decision to lift the ban but said she would not release her hold on Lew.

The new rules include many recommendations made in a report Salazar released in May, including requirements that rigs certify they have working blowout preventers — the emergency cutoff equipment designed to contain a major spill — and standards for cementing wells. The cement process and blowout preventer both failed to work as expected in the BP spill.