Almost 70 do not expect activity to return to 2009 levels until 2012 or beyond.
By George Scaggs
Texas Insider Report: AUSTIN Texas Three months after the Obama Administration lifted their deepwater drilling moratorium in the Gulf of Mexico effectively nothing has changed and drilling has yet to resume. The on-going ban on deepwater drilling is only the beginning of the federal governments over-reach into this vital regional Texas-based industry.
The official drilling moratorium has merely been replaced with a de facto ban.
As tragic & unfortunately as they are the harmful implications for our nation extend beyond the loss of jobs investment and government revenues. Ultimately we all pay. Americans are once again reeling from skyrocketing gasoline prices and many experts are predicting gas will hit $4 a gallon this summer.
Prices could go even higher
in a recent CBS News report former Shell Oil President John Hofmeister predicted Americans will be paying $5 a gallon for gas in 2012.
Due to new regulations and what industry insiders have described as ever evolving permit processes" by the
Bureau of Ocean Energy Management Regulation & Enforcement (BOEMRE) many shallow-water oil and gas drilling operations have been shut-down as well.
BOEMRE is the Interior Departments new division created in the wake of the BP-Horizon spill. Replacing the oft criticized Minerals Management Service the new agency is intended to provide additional focus on drilling safety.
In an exclusive interview Texas Railroad Commissioner Elizabeth Ames Jones observed that The agency (BOEMRE) has not been equipped with the
resources and knowledge to build an infrastructure that is healthy."
She added that the new rule book is complex and vague" and that it had been so poorly written that the practical effect is each district of BOEMRE is interpreting new regulations differently."
Lee Hunt President of the Houston based
International Association of Drilling Contractors seemed to concur with Jones assessment noting inconsistencies between districts". He added that the resulting confusion has created an atmosphere of uncertainty" for an industry that is eager to comply so that rigs may return to work."
Jones went further expressing that there seems to be an antagonistic relationship" between the federal agency and the industry it serves to regulate.
Though the Interior Department has repeatedly offered assurances that the industry will be allowed to get back to work releasing various reports and even announcing the issuance of permits such actions have proven to be nothing more than political diversions. Nicolette Nye spokesperson for the National Oceanic Industries Association confirms that none of the permits issued were for work that was prohibited by the moratorium."
With oil and gas drilling being virtually halted so too are many of the hundreds of production platforms in the Gulf of Mexico. The practical result has been a wide-ranging economic impact on the region as supporting businesses such as fueling barges equipment supply food caterers
transportation and others suffer from the lack of oil and gas work that typically takes place.
While it has been estimated that the region has lost some 20000 jobs due to the moratorium even workers who are fortunate enough to be kept on rigs to perform maintenance and other non-drilling tasks are suffering as well. Many rig workers routinely depend upon overtime as part of their overall income.
Now unavailable Hunt projects the result is a 20-25 gross income loss for many families in the industry."
In the face of our nations weak economy the economic impact on the gulf region due to the administrations actions has become all the more magnified.
The massive deepwater rigs that operate in the gulf generate around $500000 per day in revenue. To keep companies in place while the shut-down continues many rig owners have reduced their daily rates by as much as $200000. Additionally Hunt estimates that companies spend approximately another half million a day for consumables transportation and other costs."
All told Hunt estimates that there is a direct $30 million a day negative impact to the economy" due to the deepwater shut-down alone. However he added that factoring in lower dividends stock prices and investment dollars the total enterprise loss is incalculable."
According to a recent BDO survey of 100 chief financial officers at oil & gas companies almost 70 do not expect activity in the region to return to 2009 levels until 2012 or beyond.
Hunt agrees predicting that by the end of the year only four to ten of the thirty-three deepwater rigs previously operating in the gulf will be back to work. Not surprisingly official projections anticipate a 13 decrease in domestic oil production for 2011.
Ironically Washingtons egregious actions in the gulf are not limited only to another assault on the private-sector. There is also a self-destructive component at play. In addition to government losing tax revenue due to the substantial loss of wages it is losing much more in the royalties and excise
fees reaped from the oil and gas industry effectively killing a golden goose in a time of record deficits.
With oil prices heading for $100 a barrel and no real economic recovery in sight the Obama Administrations continued assault on the oil industry could not be more ill-conceived.
As Commissioner Jones summed up the situation it is a travesty".
George Scaggs is a writer commentator voice actor & audio-video producer. You can find more of his work at American Thinker Ramparts360.com TheGraph.com and Bargain Citizen Media.
