Feds' Labor Day Deal for Drillers; Two Moratoriums for the Price of One

Article excerpt


Now that the Gulf oil spill has come under control, the spotlight is bound soon to shift away from the Gulf of Mexico. Yet one unsolved problem related to the spill continues to haunt residents dependent on the region's energy-driven economy: The government has failed to resume timely approval of permits for extracting natural gas from the Gulf's shallow waters.

Unlike for deep-water activity in the Gulf, there is no actual moratorium on the Gulf's shallow-water operations. Nevertheless, the permit-approval process for drilling these mature and reliable reservoirs has ground to a virtual halt in the months since the Macondo blowout occurred.

Out of the 48 shallow-water drilling rigs available in the Gulf as of Aug. 14, 14 were sitting idle - nearly one-third of available capacity. At the current permit-approval rate, more than 50 percent of available shallow-water rigs stand to be idled in September. While there may be no moratorium per se, the snail's pace at which permits are being issued is devastating an industry that has worked the Gulf's shallow waters for more than 60 years without major incident.

There is no apparent reason for the government to bench our industry. Shallow-water drillers work in less than 500 feet of water, mainly extracting gas. Drillers work on well-charted fields of known pressure and geography, using simple and straightforward technology.

Since 1949, more than 46,000 wells have been drilled in the Gulf's shallow waters; in the past 15 years alone, we have drilled more than 11,000 shallow-water wells with a total of 15 barrels of oil spilled in that time. We use only traditional, proven well-control methods. Our workers have immediate access to the wellhead that permits rapid response when necessary. And we use blowout preventers (BOPs) located on the surface of our rigs to facilitate easy, ongoing inspections, maintenance and repair.

In addition, shallow-water drilling has a tremendous impact on our nation's energy needs. Shallow-water drilling is dominated by natural gas, which many consider a key component in our nation's eventual transition to a clean-energy economy. In fact, the U.S. Gulf has produced approximately 22 percent of the country's total natural gas supplies over the past 30 years.

While the administration claims to appreciate the many distinctions between shallow- and deep-water drilling, permits for only four new wells have been issued since the Deepwater Horizon accident, a marked departure from a standard rate of five to 10 per week. …