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Wednesday, June 9, 2010

U.S. Deepwater Offshore Oil Biz Goes Bye-Bye

The Obama Administration is using the gulf oil spill as a excuse to administer the Coup de grĂ¢ce to the U.S. offshore deepwater oil drilling business. The end result will be lost jobs and income for American workers and lost oil royalties/taxes for the US gov't and gulf states. It's not a smart move. But, this policy fits in with the overall clueless response to the gulf oil spill by the Obama administration.

Items of interest:

Minyanville:
Why the US Still Needs Oil Drillers -- I've lived in Louisiana all of my life and worked as a lawyer for over 30 years. I have no particular love for the oil companies themselves, but their presence and employment is the economic backbone of my state as well as most of the Gulf Coast. Many, many families obtain their livelihood, directly or indirectly, from the oil industry...

Everyone wants to hate BP right now. That's understandable. But what people need to understand is that drilling for oil isn't the same as selling bottled water. Those companies are on the bleeding edge of technology and what they do. They have the best and the brightest working on it and believe me, no expense is too great, no corner is cut. There's simply too much at risk to do that. The best of everything is used in a drilling operation. But if you're on the bleeding edge of something, mistakes and mishaps occur...

related:
The Huffington Post:
Bobby Jindal Asks Obama To End Moratorium On Deepwater Drilling -- A White House official emails over a rather blunt response. The gist is simple: while Jindal and others may think dire economic consequences will result from the moratorium, it would be far more perilous and catastrophic if another spill took place...
Bayou Buzz News:
Lifting Obama BP Oil Spill Moratorium Courts Legal, Political Questions -- Louisiana is strongly in favor of putting the Gulf of Mexico back in drilling operations is probably an understatement.

Many of us who are advocating the lifting of the moratorium cite that if we do not remove that restriction, there will be much more “oil” and “brain drain” of businesses and jobs from within the Gulf of Mexico areas and in adjacent regions such as south Louisiana...

Wall Street Journal:
Deepwater Drillers: Analysts Cut Bait -- Goldman Sachs analysts led by Daniel Boyd say they’re now expecting the current six-month moratorium to stretch into 12 months. Things could be slow enough that drilling activity won’t be substantial again until 2012...

Over at FBR Capital, Robert MacKenzie isn’t expecting the moratorium to be formally extended, but he cut estimates to reflect the chances that drillers face delays as they get back to work in 2011. His own view is that there’s a countervailing force: federal oil & gas revenues. “Should operators begin to fear a longer hiatus, we believe that the vast majority of deepwater rigs would depart the U.S. [Gulf of Mexico], likely for at least several years on average,” he writes. “This would deal a severe blow to royalties on existing production as it declines, as well as dramatically reduce or eliminate federal lease sale revenue.”...

Before It's News:
Enviros Didn't Cause The Gulf Oil Spill ... Peak Oil Did
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Houston Chronicle:
Industry: Thousands of oil jobs at risk -- A recent analysis by the Louisiana Mid-Continent Oil and Gas Association, a trade group, said a moratorium would defer 80,000 barrels of daily production in 2011, or about 4 percent of projected deepwater production for the year...

The LMOGA analysis said each of the 33 deepwater drilling rigs idled by the president's order employs 180 to 280 workers with an average weekly wage of $1,804. State labor officials said the average weekly manufacturing wage in Louisiana was just under $1,000.

If the Gulf is off limits, rigs could be moved, perhaps to the rapidly expanding Brazil market. Long-term contracts would make them unavailable for years after the moratorium is lifted, Adams said...
Fox 8 / New Orleans:
Fear results from Gulf deepwater drilling moratorium -- "What I ask.. have immediate and have rigorous safety inspections within the next month. We're only talking about 33 (rigs). Do that, and if there's any issue that can't be fixed immediately then you stop that rig. You don't shut down every rig in sight," said Sen. David Vitter (R-Louisiana)...
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USA Today:
Future losses from BP oil spill worry Gulf Coast businesses -- The energy industry is bracing for the fallout from President Obama's six-month moratorium on deep-water oil drilling in the Gulf. Nearly 90% of the nation's offshore oil rigs are off the Louisiana coast, the state says. Louisiana Gov. Bobby Jindal says the moratorium could cost the state 20,000 jobs over the next 18 months...

Reuters:
Moratorium to cut 25 mln bbls of 2011 US crude -- The six-month U.S. moratorium on deep water oil drilling should cut 2011 crude output by about 25 million barrels, the top U.S. energy forecaster said on Tuesday...

Nola.com:
Regulatory delays could take heavy toll on shallow-water drilling

Hot Air:
Rangel on Obama WH response in Gulf: Clueless
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Matthew Lynn / Bloomberg:
BP Needs to Tell Whining Americans to Take a Hike -- So far, BP has been playing this right out of the chapter in the spin doctor’s manual headed, “What to do when your company is about as popular as the Third Reich in 1946.” ...

The trouble is, none of it is going to work. Iranian President Mahmoud Ahmadinejad has more chance of getting the Ford Motor Co. franchise for Lubbock, Texas, than BP does of staying in business in the U.S. So why not try a complete reversal of tactics instead? Tell everyone in the U.S. to go stuff it where the oil don’t leak...
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