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Shallow Water Drilling in Gulf of Mexico Sluggish Months After Lifting of Moratorium

Texas Insider Report: HOUSTON, Texas – Rep. Gene Green (D-TX) and Rep. Charles Boustany (R-LA) have again written Interior Secretary Salazar regarding the issuance of new permits for shallow water drilling in the Gulf of Mexico. The letter, co-signed by 37 Democrats & Republicans, is the 2nd letter Rep. Green & Boustany have sent to Salazar reminding him of the significance of the Gulf Coast economy and urging the immediate issuance of new permits.

In a letter to Secretary Salazar sent May 20, Reps. Green and Boustany with 54 of their colleagues warned of the potential impact of losing shallow water oil and natural gas production.

“Before the Deepwater Horizon disaster, new shallow water drilling permits were being issued at the rate of 10-15 per week,” Rep. Green stated. “Since the shallow water moratorium was lifted on May 28, a total of 4 new permits have been issued.”

Since then, 14 rigs have been idled in the Gulf which represents 30% of the shallow water fleet. If the pace of new permits does not accelerate by the end of September, over 70% of the shallow water rigs will be inactive.

“There are thousands of jobs directly connected to shallow water drilling,” said Green.

“At a time when the economy is still coming back from the worst recession in recent memory, we just can’t afford to lose more jobs. My colleagues and I continue to share concern over this de facto moratorium and the deepwater moratorium as domestic energy production is not only vital to energy independence, but to the Gulf Coast economy,” Green said.

The lawmakers wrote:

The Honorable Kenneth L. Salazar
Secretary
U.S. Department of the Interior
1849 C Street, NW
Washington, DC 20240

Dear Mr. Secretary:

We are writing to request your urgent attention to the Bureau of Ocean Energy Management, Regulation and Enforcement’s (BOEM) pace of issuance of permits for new shallow water wells in the Gulf of Mexico. While the moratorium on shallow water drilling was lifted on May 28, 2010, since that time, BOEM has only issued 4 permits for new shallow water wells. Additionally, we continue to hear from companies that the BOEM has not provided adequate guidance and information for the shallow water drilling industry to comply with new drilling application requirements imposed by NTL-06.

As a result of this pace of issuance, 14 jackup rigs have now been idled in the Gulf of Mexico, representing 30% of the shallow water fleet. Should this situation continue, we are advised that by August 30th, another 11 shallow water rigs will be taken out of service, meaning that over half of the shallow water rigs will be idle. And, even worse, absent immediate action by your Department, by the end of September, this number will grow to 32 idled rigs, or 70% of the shallow water fleet. Hundreds of jobs have already been lost. If this situation is not addressed soon, we estimate that approximately 40,000 jobs across the Gulf South are at risk.

We believe the BOEM must take immediate and effective action to provide clear guidance to its employees and the shallow water drilling industry concerning NTL-06 requirements, and it must further expedite the review and appropriate approval of applications for shallow water drilling permits in the Gulf of Mexico. Until the BOEM does so, offshore oil and gas exploration support companies throughout the Gulf Coast engaged in shallow water drilling activities will continue to be severely affected by the continuing de facto moratorium on the issuance of new offshore shallow water drilling permits. We appreciate your time and attention to this most urgent and dire situation and we look forward to working with you to resolve these issues.

Sincerely,

Gene Green                                                            Charles W. Boustany, Jr.
Charlie Melancon                                                Jo Bonner
Solomon Ortiz                                                       Anh “Joseph” Cao
Charlie Gonzalez                                                  Kevin Brady
Chet Edwards                                                       Steve Scalise
Mike Ross                                                               Bill Cassidy
Ciro Rodriguez                                                     Ron Paul
Ruben Hinojosa                                                   Rodney Alexander
Harry Teague                                                       Mike Rogers
Dan Boren                                                              Spencer Bachus
Pete Olson                                                              Ted Poe
Parker Griffith                                                      Doc Hastings
Howard Coble                                                       John Culberson
Ralph Hall                                                              John Fleming
Michael McCaul                                                   Gregg Harper
Al Green                                                                 Stephanie Herseth Sandlin
Henry Cuellar                                                      Sam Johnson
Mac Thornberry                                                 Michael Conaway
Kay Granger                                                         John Shimkus
Jeb Hensarling