Louisiana lawmakers see adverse impacts from deepwater moratorium

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, June 4 -- Several members of Louisiana’s congressional delegation expressed concern over potential economic impacts of a 6-month deepwater drilling moratorium on the state’s economy as President Barack Obama prepared to visit the Gulf Coast for a third time since the Apr. 20 well blowout and rig explosion and subsequent spill into the Gulf of Mexico.

US Sen. David Vitter (R) urged the president to replace his recently announced shutdown of deepwater rigs for a minimum of 6 months with immediate rig safety inspections instead. “Under this alternative, the approximately 33 affected deepwater rigs in the gulf would receive immediate rigorous safety inspections,” Vitter said in a June 3 letter to the White House. “They would be shut down if inspections identified safety problems, but not otherwise.”

Vitter said with Louisiana’s 6.2% unemployment rates, the federal government should focus on policies that will create jobs. “This moratorium is estimated to eliminate 3,000-4,000 Louisiana jobs in the short term. It could eliminate up to 10,000 jobs and possibly 20,000 jobs throughout the course of the year,” he told Obama. “This moratorium also obstructs Louisiana’s ability to collect revenue from offshore activity, which is used for coastal restoration to protect the state from hurricanes.”

Vitter said the state’s workforce and economy have felt significant impacts from the ongoing oil spill crisis in the gulf, and warned that a drilling moratorium could potentially be devastating for Louisiana. “The likely impact of this moratorium is long-term job destruction as these jobs leave the Gulf of Mexico region permanently and move to other regions of the world,” he warned.

Devastating effect
US Rep. Charlie Melancon (D), who is trying to unseat Vitter in November’s general election, said on June 3 that he hoped to meet with Obama during the president’s latest Gulf Coast visit. Melancon said that he would emphasize the devastating effect a moratorium would have on Louisiana’s economy and workers. He said he would ask Obama to revise the administration’s plan, while still taking necessary steps to improve safety standards and protect workers and the environment.

US Rep. Bill Cassidy (R) noted that when he held a June 3 town hall meeting in Ascension Parish, there were people who worked for environmental services companies as well as oil and gas producers and service and supply companies. “There was so much wisdom in there,” he said during a June 4 interview on WBRZ-TV in Baton Rouge. “I asked people to raise their hands if they were involved in petrochemical, oil, and gas, and 90% did. I asked them to raise their hands if they fish off the coast and know people in commercial fishing, and 90% did.”

Cassidy said he sensed frustration that there had not been a more proactive response from the government. “We should have been prepared to mitigate better; and we weren’t,” he said, adding that people at the meeting also seemed concerned that the federal government might overreact and shut down offshore oil and gas exploration, “which we know would be devastating to the south Louisiana job market.”

US Rep. Steve Scalise (R) said the spill and its impacts would be the subject of a town hall meeting he plans to host June 8 in Metairie, La. “I am disappointed that oil continues to leak from the well and that we're still not experiencing an adequate response to this disaster,” he said on June 3.

Initial bill
Meanwhile, the Obama administration released more details about the $69 million initial bill it sent BP PLC and others deemed responsible for the spill, its cleanup, and economic impacts.

The amount represents 75% of the obligations so far and BP has until July 1 to pay it, White House Press Secretary Robert Gibbs said on June 3. “Actual expenditures will likely vary from these projections but future invoices will recoup the full costs based on actual expenses incurred,” he said during his daily briefing with reporters.

Of the initial amont, Gibbs continued, $29 million will go to federal agencies to support operation of ships, aircraft, and boats; to support environmental assessments and monitoring; to support deployed personnel; and to pay other expenses.

Another $29 million will be used to support activation and deployment of Louisiana, Mississippi, Alabama, and Florida’s National Guards; to support deployed personnel; and to pay other expenses. States which are battling the spill will get $7 million to support removal operations, to support environmental assessment/monitoring, and to pay other expenses. And $4 million will go to the US Department of Defense to support salvage and removal efforts, and aircraft and ship operations, according to Gibbs.

The invoice was based on specific federal government expenses, including those associated with the response of over two dozen federal entities and agencies from three states in accordance with the federal on-scene coordinator’s request for assistance, according to the Deepwater Horizon Incident Joint Information Center. Federal response activities not subject to billing at this time, including future activities, will be billed to the responsible parties through subsequent invoices, it said on June 3.

Contact Nick Snow at nicks@pennwell.com.

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