Guest Commentary: Was the Drilling Moratorium Necessary?
Government action at odds with drilling safety record
Over a year has passed since the blowout of the Macando well and oil spill that followed in the Gulf of Mexico. As we look back on that tragic event, we first and foremost remember the lives of those eleven men who were lost. Another memory is of course the federal government’s decision to shut down all offshore oil & gas operations in the Gulf region.
The imposition of the deepwater drilling moratorium has done little to increase offshore operational safety procedures, and it has done more to cripple the U.S. oil & gas industry and jeopardize our national security. Now that we are approaching almost a year since the drilling ban was ordered, we should ask ourselves some very important questions. What was the purpose of the moratorium and was it necessary?
Throughout its long history, Louisiana’s offshore industry has maintained an impeccable drilling safety record. Thousands of wells have been drilled in all depths of the Gulf of Mexico without the occurrence of a Macando-like incident. Instead of arbitrarily shutting down all business in the Gulf, could the government have allowed those who were operating safely to continue to do so while it worked towards new safety rules and regulations? Would we not be exactly where we are today without the negative repercussions of the moratorium?
First, as a result of the drilling ban, we are losing approximately 500,000 barrels of oil production per day. Secondly, the U.S. has seen the exodus of ten rigs to other parts of the globe. According to documentation compiled by Senator David Vitter’s office, ten rigs that were scheduled to drill in the Gulf have relocated to Brazil, Nigeria, Egypt, Congo, French Guiana, and Liberia. Along with each rig went over 500 direct and indirect American jobs.
According to its recent July 12th Gulf Permit Index, Greater New Orleans Inc. reports that over the past several months, deepwater drilling permits are down 71 percent from their historical monthly average of 5.8 permits per month. Shallow-water permits have plummeted by 34 percent from the historical monthly average of 7.1 permits.
Earlier this week, IHS-CERA released a report claiming that faster permitting of offshore oil & gas projects in the Gulf could create almost 230,000 new jobs in 2012 alone. The study estimated that the increase in permitting could result in $44 billion injected into the national economy, including a significant increase in federal and state tax revenues.
In a recent op-ed, Senator David Vitter noted, “Restoring these energy jobs and creating capital is not a complex budgetary equation; it’s simple economics. We have abundant resources, and allowing access to them will create jobs and generate revenue.”
So was the drilling moratorium necessary? No it was not.
The fact is the oil and gas industry would have developed the proper responses and containment systems and would have worked closely with BOEMRE to develop the regulations that are currently in place today. It was industry’s ingenuity and expertise that designed the containment systems and provided the guidelines to prevent a similar catastrophe, not the government. It’s safe to assume that without the moratorium there could potentially be over sixty rigs operating in the Gulf, instead of the thirty-four currently in operation today.
Don Briggs is president of the Louisiana Oil and Gas Association.