Only one deep drill permitted since official lifting

NEW ORLEANS, La. – Despite one month with no official moratorium, permitting for both shallow and deep water drilling continues to lag. Greater New Orleans Inc. released its Gulf Permit Index on Wednesday and highlighted that the Bureau of Ocean Energy Management, Regulation, and Enforcement has approved only one deep water well in the past month. That compares to a monthly average of six for the previous year, an 83 percent decline.*

Deep Water Permits

At no time was there an official moratorium on shallow water drilling. However, permits for that classification too have lagged. In May BOEMRE approved no new shallow wells, and over the past three months they have approved shallow water wells at less than half of last year’s rate. While shallow water permitting did start to appear comparable to historical levels in October, thus far November has seen zero approvals.

Shallow Water Permits

GNO Inc. estimates that for every deep well rejected approximately 700 direct Louisiana jobs fall by the wayside, and 350 jobs in the case of shallow wells. So they are “tracking and reporting” the number of permits issued “versus historical rates.”

“The concern is that we still have a de facto moratorium… Up to 30,000 jobs will be at risk in Louisiana if permits are not issued at a reasonable rate,” says Michael Hecht, president of GNO Inc.

Thomas Clements of Broussard, Louisiana, is owner and operations manager of Oilfield CNC Machining and relies heavily on drilling activity for clients. He has seen no change since the official lifting of the moratorium, and his revenue is down 54 percent since last year. Yesterday he was in Washington, D.C., and testified before the National Oil Spill Commission.

“We just don’t see any end in sight here… The drilling rigs are not moving because [the federal government] keeps coming up with new rules and regulations every week, so nobody knows what to do… another way of holding the industry back.” (Watch his testimony here on C-SPAN, beginning at 3:26:08.)

According to Don Briggs, president of the Louisiana Oil and Gas Association, many of his members do not foresee regular permits until mid-way next year, perhaps not until 2012. “The permitting process has become so complex,” he says, and given prior comments from federal officials, he is not surprised by what has followed the public lifting of the moratorium. Interior Secretary Kenneth Salazar referred to a “higher bar” for approval, and Michael Bromwich, director of BOEMRE, would not commit to permitting before the end of the year.

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicanpolicy.org, and one can follow him on twitter.

* While BOEMRE has issued one permit this month, that does not appear on the diagram because a total for November will not be known until the end of the month.

Data sources: Greater New Orleans Incorporated and the Bureau of Ocean Energy Management, Regulation, and Enforcement.