Obama Administration Lifts Deep-Water Drilling Moratorium

By Jennifer Welsh | October 13, 2010 2:14 pm

deepwaterOn Tuesday the U.S. government repealed the six-month ban on deep-water drilling in the Gulf of Mexico, enacted in May in response to BP’s Deepwater Horizon oil spill.

“We are open for business,” Interior Secretary Ken Salazar told reporters in a phone call Tuesday afternoon, adding, “We have made, and continue to make, significant progress in reducing the risks associated with deep-water drilling.” [The Washington Post].

The ban was supposed to be lifted on November 30th, but the government lifted it a few weeks early under pressure from Gulf Coast lawmakers. The drilling halt was deeply unpopular in the Gulf states where up to 12,000 jobs were temporarily lost (though some experts number the jobs directly and indirectly lost by the moratorium at around 175,000).

Drilling won’t resume immediately. The Obama administration has issued strict new operating and safety rules, and each offshore rig will need to pass inspection before it can resume work. The first permits allowing drilling will likely be issued before the new year. Says Michael Bromwich, director of the new Bureau of Ocean Energy Management, Regulation and Enforcement:

“We’ll be inspecting in a very careful and comprehensive way those rigs to make sure they’re compliant with the new rules,” Bromwich said…. “We won’t know [if they're compliant] until we begin to do those inspections.” [The Washington Post].

Even with the moratorium lifted, the additional regulations will still have an impact on how oil companies do business in the Gulf. The Bureau of Ocean Energy Management has estimated that the new regulations will cost about $183 million a year. Bernard Duroc-Danner, an executive of Weatherford, which makes parts for offshore drilling, warned that the increased cost of the drilling operation could cause big changes.

“It is likely that there will be ownership shifts. A fair amount of properties over time will find themselves on the auction block in the Gulf of Mexico,” he said. “What will happen to deepwater in general is that it will take more time, it will be more expensive, and will yield less at a later time.” [The Telegraph].

During the time of the ban 33 deep-water rigs were sitting idle in the gulf, five of which eventually moved on to drill in Egypt and Africa. BP stated on Wednesday that it is not ready to discuss its future plans for drilling in the Gulf, but it is likely the company will restart operations and maintain a strong presence in the area.

The response to the Obama administration’s announcement has spanned the spectrum. Pro-oilers are excited by the move, but fear that delays in the permitting process will cause a de facto moratorium. Environmentalist groups are disappointed by the early return to deep-water drilling, and say we don’t yet fully understand what caused BP’s disastrous spill.

“Today’s actions are premature,” said Peter Lehner, executive director of the Natural Resources Defense Council. “To ensure a disaster like this never happens again, we must know what caused it in the first place. We’re still waiting for that answer.” [The Washington Post].

But many workers on the Gulf Coast are feeling relief at the news that work might pick up soon.

Chris Moran, who runs a motel, restaurant and convenience store in Port Fourchon, La., said that the news had prompted happy rumors about which companies would start work first, and how many people they might hire…. Now, he said, “I’ll be able to live my life without [having] to think about a career change.” [The Washington Post].

Related content:
Not Exactly Rocket Science: Oil-eating bacteria have started to clean the Deepwater Horizon spill
80beats: BP’s Oil Well of Doom Is Declared Officially, Permanently Dead
80beats: Obama Proposes Oil & Gas Drilling in Vast Swaths of U.S. Waters
80beats: 5 Offshore Oil Hotspots Beyond the Gulf That Could Boom–or Go Boom
80beats: House Passes Compromise Offshore Drilling Bill, Makes No One Happy

Image: Flickr/Deepwater Horizon Response

CATEGORIZED UNDER: Environment
  • Brian Too

    Regarding Bernard Duroc-Danner’s comments: Unimpressive.

    We can also anticipate “why should we have to suffer for BP’s mistakes”, “it’s not fair”, “it’s not competitive”, “it’s not efficient”, and possibly “the old system wasn’t so bad except for the giant oil spill”!

    The response to all this whining is WE ALREADY TRIED THAT. Minimal regulation and the cozy relationship with MMS led to a disaster. If the industry had working self-regulation then BP would have been reigned in and no spill would have taken place.

    In the real world one bad apple can spoil the barrel. Deal with it.

  • Rick

    I agree Brian. Suck it up is the answer to all those who are upset by the Moratorium. If the industry had have been responsible in its inspections and self policing then the disaster would not have happened and those worker’s lives would not have been lost. Other industries should take heed.

  • David H

    If these inspections are just going to start now, to be completed around the beginning of next year, what was the moratorium for? What was happening during the months-long ban on drilling if not inspecting the rigs? According to the article, the ban was expected to be lifted at the end of November, but even starting the inspections now, they won’t be done by November 30th, so it seems that the ban was to end without any rig safety inspections. I know the article says that “strict new operating and safety rules” have been developed, but couldn’t this have been done while drilling was being carried out? If not, then that means that no one is reviewing operating and safety rules on an ongoing basis, since drilling isn’t normally banned. So, again, what was the moratorium for? It sounds like it was either to punish all oil companies, even those that have good safety records and have had no accidents, or it was just political posturing: “Look how serious we are about this, we’ve banned all drilling for six months!”

    Rick, you say that an industry-wide ban after a single accident is good and that “other industries should take heed”. Does this mean you look forward to a six month ban on air travel after the next aircraft accident or a moratorium on coal mining after the next mine accident? Perhaps we will stop companies building and repairing the power grid after the next blackout. Maybe all accounting firms should have been temporarily closed down after the Enron collapse. The point is, this has never happened before—closing down an entire method of doing business because of one accident—because it is not necessary. The U.S. didn’t shut down all of its nuclear power plants during or after the Three Mile Island accident. It didn’t even shut down the other reactors at Three Mile Island. Those other plants have been safely operating for thirty five years now. Normally after an industrial accident the causes have been discovered and new regulations put in place and adopted by other companies while they stayed in operation.

  • David H

    I need to clarify my first statement. When I said that “closing down an entire method of doing business because of one accident…is not necessary”, I meant that closing down a line of business was not necessary. Of course industry-wide changes that have ended some particular practices have been instituted because of accidents. There are lots of examples. Single-hulled oil tankers are now no longer permitted in US waters since the Exxon Valdez wreck, for example. Airliners have been banned from carrying charged oxygen canisters as cargo after the Jetblue crash in the Everglades years ago. But these changes have not shut down entire lines of business. Oil tankers weren’t banned from the world’s oceans and passenger jets can still carry cargo. The way they do these things has changed; they have not been banned from doing them.

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