• 22
  • June
    2010

Today, New Orleans federal judge Martin Feldman blocked enforcement of a sixth month moratorium placed on deep water drilling, meaning drilling in waters deeper than 500 feet. Following the Deepwater Horizon explosion that resulted to one of the worst oil spill in US history, President Barack Obama banned any deepwater drilling activity in the Gulf of Mexico for a period of six (6) months. The White House has said it will appeal the decision.

The objective was to give government time to review the rules and lapses of such wells. Mr. Obama said during a nationwide address that he wants to hear a national panel's recommendations to improve worker safety and environmental protections before the moratorium is lifted. He also wants to understand the circumstances that led to the sinking of the Deepwater Horizon oil rig.

However, securities firm Raymond James & Associates issued a bold forecast that the moratorium could last into 2011. If this scenario happens, around 50,000 rig and associated jobs will be in great peril. Entire communities that depend on deepwater drilling could likewise be devastated. Aside from that, many of the oil rigs affected by the moratorium could go elsewhere to drill oil endangering 800 to 1,400 jobs per rig. There were 33 permitted deepwater drilling rigs in the Gulf of Mexico region prior to the moratorium.

Governor Jindal says that Mr. Obama doesn't understand the "economic pain the forced stoppage is causing to Louisiana workers." Louisiana is one of the gulf states seriously affected by the Deepwater Horizon oil spill. Now, it is facing imminent unemployment of an estimated 330,000 people in said state alone if the moratorium continues.

In addition, oil industry executives during the recent World National Oil Companies Congress in London showed harsh disapproval of the Obama imposed six-month moratorium in the Gulf of Mexico because according to them, "the world did not have enough other sources of oil to eliminate using deepsea rigs."

It must be noted that 33 percent of the US nation's domestic oil comes from the Gulf of Mexico. Eighty percent of the Gulf's oil and 45 percent of its natural gas comes from operations in more than 1,000 feet of water or deepwater.

Instead of the mandatory ban of deepwater drilling in the Gulf of Mexico, leading industry experts proposed the following alternatives that federal regulators could undertake, including:

· Re-certifying all BOP equipment used in floating drilling operations and ensure their suitability for the rig and well design.

· Ensuring rig personnel are trained to industry- and government-accepted standards for well-control procedures;

· Reviewing operator well plans, with particular emphasis on casing and cementing designs to ensure sufficient pressure barriers and that designs are fit for their purpose.

The move to put in place a moratorium underscores the frustration across the Gulf Coast and the nation with the conduct of BP and of the entire oil exploration and production industry. BP and its industry colleagues have been operating without a safety net, with little to no ability to address any type of deep water well disaster. They have put the Gulf Coast in the untenable position President Obama was trying to address with the moratorium: if drilling stops until the drilling industry can demonstrate it can operate in deep water safely, the Gulf economy would take an enormous hit in already challenging economic times; but if drilling continues, we remain at risk for another deep water disaster. The costs of the deep water moratorium are high - likely too high for our community right now. But make no mistake, the fault and responsibility for this dilemma doesn't rest with the White House, but with BP and the entire oil exploration and production industry for creating these enormous risks and devastating consequences.