Source: National Ocean Industries Association
Preliminary estimates show crippling job loss and significant economic impacts will result from the President’s recent order to halt work on 33 exploratory wells in the deepwater Gulf of Mexico and institute a six-month moratorium on all drilling in water depths greater than 500 feet.
“The immediate impacts of the order will be felt by the families of tens of thousands of offshore workers who will be unemployed,” said Burt Adams, Chairman of the National Ocean Industries Association.
For each platform idled by the work stoppage, up to 1,400 jobs are at risk, and lost wages could reach $10 million per month per platform and up to $330 million per month for all 33 platforms, preliminary estimates from the Louisiana Mid-Continent Oil and Gas Association (LMOGA) show.
“At a time when the spill is already causing economic stress for key industries in the region, the president’s action will make things much worse by putting more Gulf citizens out of work,” said Adams.
The LMOGA estimates show the six-month halt would defer four percent of anticipated 2011 deepwater Gulf of Mexico production (80,000 barrels per day), and likely render seven current discoveries sub-economic, putting $7.6 billion in future government revenues at risk. Additionally, drilling rigs idled by the order will be contracted overseas, and will not be available to work in the Gulf once the halt is lifted, making the U.S. even more dependent on foreign oil.
“Other countries are apparently more confident in the overall safety of the oil and gas industry and will no doubt fill the potential void created by less domestic production,” said Adams.
“The need to act in the face of the ongoing crisis in the Gulf of Mexico is understandable, but the 33 rigs affected by the presidential order are the very ones successfully inspected in early May at the order of Interior Secretary Ken Salazar,” Adams said. “Nobody wants to just rush into deepwater drilling during this ongoing crisis, but it appears that less draconian and potentially less harmful solutions such as increased inspection and recertification of equipment would be an acceptable compromise.”
“Considering that the deepwater regions generate 80 percent of the Gulf’s oil production and 45 percent of its natural gas production, a six-month work stoppage will have severe and perhaps long lasting impacts on our domestic energy supply and economic security,” said Adams. “When you couple this ‘no less than six-month’ moratorium with the cancelled Western Gulf lease sale, the potential for long term job loss and economic hardship for the Gulf of Mexico looms even greater.”
The offshore industry is responsible for nearly 200,000 jobs in the Gulf of Mexico alone, and provides 30 percent of our nation’s domestic oil production and 11 percent of our domestic gas production. Offshore oil and gas production accounts for an average $13 billion a year in non-tax revenues to states and the Federal government and has made over $24 billion available to the Land and Water Conservation Fund over the last 28 years.
NOIA is the only national trade association representing all segments of the offshore industry with an interest in the exploration and production of both traditional and renewable energy resources on the nation’s outer continental shelf. The NOIA membership comprises more than 250 companies engaged in business activities ranging from producing to drilling, engineering to marine and air transport, offshore construction to equipment manufacture and supply, telecommunications to finance and insurance.