OPINION:
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. That’s why so many of our rigs are stacked - and with 100 workers assigned to each rig and thousands of other jobs devoted to supporting the industry, the cumulative damage is proving enormous.
The shallow-water industry employs approximately 40,000 of the 150,000 or so workers whose livelihoods depend on offshore oil and gas development in the Gulf. This includes rig operators, workers on crewboats and cooks, as well as employees at the Gulf’s shipyards, trucking companies, welding and manufacturing shops and more. In short, the industry is the very lifeblood of our beleaguered region.
What’s more, the companies getting stung by the de facto shallow-water moratorium are mostly independent operators. The 284 independent companies working in the Gulf in 2009 accounted for 73 percent of total production, contributing to 203,000 related jobs and about $38 billion in total economic impact. These independents tend to have a large majority of assets in the United States, and a number of them have all of their assets in the Gulf.
Outsiders are taking note of the senseless slow-walking of shallow-water permits. In a report issued late last week analyzing the effectiveness of imposing a moratorium on drilling in the wake of a large spill, the independent Bipartisan Policy Center confirmed that “almost all shallow water permits for new wells are still pending.” The report’s authors acknowledged the “substantial differences between drilling operations in shallow and deep water” while recommending that the “safe resumption of drilling” should “not take an undue amount of time.”
The thousands of workers waiting for shallow-water permits to be approved could not agree more.
In short, our industry uses best practices honed over half a century of work in the Gulf. We have worked closely with the Interior Department to clarify and satisfy each additional precautionary measure the government has sought to include in the wake of the Macondo blowout. We strongly support initiatives to keep our industry and our precious resources as safe as can be.
The time has come for the government to resume issuing shallow-water permits in a timely manner and allow people in the Gulf region to return to work.
Randy Stilley is president and chief executive of Seahawk Drilling, an independent drilling company with approximately 600 employees in and around the Gulf of Mexico.
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