Following the Deepwater Horizon explosion, the Obama Administration in May 2010 placed a moratorium on all shallow-water and deepwater drilling in the Gulf of Mexico. Despite officially lifting the moratorium in October 2010, the Obama Administration continues to slow-walk the permitting process.
The Putting the Gulf of Mexico Back to Work Act will end the Obama Administration’s de facto moratorium in a safe, responsible, transparent manner – putting thousands of Americans back to work and increasing American energy production to help address rising gasoline prices.
Specifically, the Putting the Gulf of Mexico Back to Work Act:
Reforms current law to require lease holders to receive an approved permit to drill before drilling an offshore well. This reform applies to the Gulf of Mexico and all offshore drilling in federal waters. Currently such a permit is not required by federal law, only by regulation.
Further reforms the law to specifically require the Secretary of the Interior to conduct a safety review to ensure that proposed drilling operations “meet all critical safety system requirements, including blowout prevention, and oil spill response and containment requirements.”
Ends the de facto moratorium in the Gulf of Mexico by requiring the Secretary to act on a permit to drill within 30 days of receiving an application. This simply requires the Secretary to act within the set period of time – it is not a requirement that permits be approved. This firm timeline will make certain that the Obama Administration cannot impose a moratorium through deliberate inaction. The government must provide an answer – it can’t stonewall and put thousands of Americans out of work.
Allows the Secretary, if necessary, to extend the decision-making time for up to two periods of 15 days each. However, it is required that written notice be given to the applicant with specific reasons for the delays or rejections of a permit.
Provides 30 days, with no extension, for the Secretary to restart Gulf permits that were approved before the Administration’s moratorium was imposed on May 27, 2010. If the Secretary fails to act, the leases will be put into suspension (the clock stops ticking on the time-limited lease) until a decision is made.
Establishes an expedited judicial review process for resolving lawsuits relating to Gulf permits. This reform ensures that ending the de facto moratorium imposed by the Obama Administration isn’t replaced by paralyzing, frivolous lawsuits that could take years to resolve.
Impacts of the Obama Administration’s De Facto Gulf Moratorium
The Obama Administration’s de facto drilling moratorium in the Gulf of Mexico is causing job losses, economic pain, a decline in energy production, and greater reliance on foreign energy.
According to the Obama Administration’s own estimates, the six-month “official moratorium” (May–October 2010) on drilling cost up to 12,000 jobs.
However, the long-term impacts of the de facto moratorium could be significantly higher. A study by Dr. Joseph Mason from Louisiana State University predicts that if the de facto ban on deepwater drilling were sustained for 18 months, there could be a loss of 36,137 jobs nationwide, with 24,532 jobs lost in the Gulf Coast region alone.
According to the Louisiana Mid-Continent Oil and Gas Association, each drilling platform averages 90 to 140 employees at any one time (two shifts per day), and 180-280 for two two-week shifts. Additionally, each exploration and production job supports four other positions; therefore, 800-1,400 jobs per idle rig platform are at risk if production does not resume as soon as possible. Wages for those jobs average $1,804 weekly; potential for lost wages is more than $5 to $10 million per month, per platform.
In February, Seahawk Drilling, which owned and operated 20 rigs in the Gulf, declared Chapter 11 bankruptcy due to the Obama Administration’s de facto moratorium. According to the company’s president, “The government’s drastic slowdown in the issuance of permits for shallow-water drilling operations – in which companies work in familiar geological formations, typically in less than 500 feet of water, mostly seeking to produce natural gas – has all but crippled the industry... Seahawk’s bankruptcy risks the jobs of more than 500 loyal employees, a number already diminished 50 percent from pre-spill levels because of attempts to save the company by cutting payrolls since last April.”
The Obama Administration’s de facto moratorium has seen 12 rigs (7 deepwater, 5 shallow) leave the Gulf for other regions of the world – with each rig departure potentially taking with it hundreds, and even thousands, of American jobs.
Deepwater Rigs that Have Left the Gulf of Mexico
Prior to the Administration’s moratorium issued on May 27, 2010, there were 52 permits to drill issued for projects in the Gulf of Mexico, 33 of which were actively conducting work. Despite the moratorium being officially lifted in October 2010, the Obama Administration has issued permits for only 11 of those projects to get back to work. The Administration has issued only 1 permit for a new deepwater drilling exploration plan. This means that 10 months later, over 40 projects remain stalled, and people are left without work, due to the Obama Administration’s de facto moratorium.
The Obama Administration is being held in contempt by a Federal Judge for slow-walking the issuances of permits and is currently trying to appeal the Judge’s ruling that ordered them to act on stalled deepwater permits.
The Obama Administration’s de facto moratorium in the Gulf is causing a significant decline in American energy production. According to the Energy Information Administration’s (EIA) March 2011 “Short-Term Energy Outlook,” production from the Gulf of Mexico is expected to fall by 240,000 barrels per day in 2011 and by a further 200,000 barrels per day in 2012.
Approximately 33 percent of total U.S. oil production and 10 percent of natural gas production comes from the Gulf of Mexico.
The Obama Administration has stated that declining energy production in the Gulf of Mexico due to the moratorium can be offset by OPEC. As part of the interim safety rule issued by the Bureau of Ocean Energy Management on October 14, 2010 the Interior Department stated that: “There is sufficient spare capacity in OPEC to offset a decrease in Gulf of Mexico deepwater production that could occur as a result of this rule.” Our national and economic security should not be left in the hands of OPEC.