Monday, June 28, 2010

Secretariat Salazarovich: I will give you stealth ban, peasants!

Two items in the media stream today bear some attention and point to what is quickly becoming an economic disaster as bad or worse than the Deepwater Horizon spill currently spewing oil into the Gulf of Mexico.  Secretariat Salazarovich isn't granting permits to drill anywhere--shallow or deep water.

The first is an opinion piece in Roll Call from Louisiana Representative Bill Cassidy. Cassidy writes, in part:

An offshore moratorium is also a job killer, not for executives at multinational energy corporations but for welders, pipefitters, roustabouts and the range of service and support industries connected to them. And these blue-collar workers won’t be able to make their mortgage payments or buy groceries for their families with unemployment checks and food stamps.

Job losses spurred by ending offshore production would extend far beyond the industry itself. The average multiplier effect for a job in energy production is 5.5. In other words, every job created in energy production leads to the creation of almost six more. The reverse is also true. Job losses would be most acute in areas most affected by the Deepwater Horizon spill, such as coastal Louisiana.

Even a temporary moratorium has significant economic consequences. The deep-water drilling rigs, upon which many of these jobs depend, can rent for $500,000 per day. During a moratorium, these rigs will be towed to Africa or Brazil to begin multiyear projects. Jobs directly and indirectly associated with these rigs will go to Africa and Brazil with them. This isn’t hypothetical; it’s already happening. Anadarko Petroleum Corp. already announced that it is moving rigs from the Gulf to other countries, and officials at Port Fourchon, La., have said that some of their tenants are weighing layoffs.

Instead of a knee-jerk overreaction, the president and Congress should pursue rational policy. There is a middle ground. Do a real-time analysis of what went wrong and implement corrective measures successively based on what we have learned.

Cassidy is absolutely correct.  Any stoppage of drilling in the Gulf of Mexico causes significant economic harm, not just to Louisiana, but to the Gulf Coast communities from Houston to Mobile.  It also causes significant economic harm to the nation by restricting supply and driving up energy prices at a time when the economy badly needs high-paying blue collar jobs like those in and supporting the offshore oil and gas industry.

But a second item in today's news shows that the Obama regime isn't the least bit concerned about jobs, the Gulf, or the energy needs of our economy.  CNN.com has a story about a "stealth ban," imposed by regulatory officials who have stopped granting permits on already leased tracts:

But drillers in shallow water say they haven't been issued permits since the April 20 explosion. The delay has already forced hundreds of layoffs, and many more could be on the way.

"I'm almost out of business over here," said Paul Butler, president of Spartan Offshore, a small drilling company in Metairie, La.

Butler said that only one of his four drill rigs are operating; all four were drilling before the spill. Spartan has six contracts that would put his entire fleet back to work, but he can't get going until the permits come through, he added.

The week before last, Butler said he had to lay off 72 employees. Come Tuesday he'll have to let another 140 go.

"That's 140 families, is how I look at it," Butler said.

Same is true at Hercules Offshore, the largest shallow water driller in the Gulf.

"The Department of Interior isn't issuing permits," said Jim Noe, a Hercules executive. "By mid July all of our rigs will be on the beach, and the workers without a job."

That could be a lot of jobs.

  Judge Martin Feldman imposed an injunction on the deepwater drilling moratorium last week, and the ban on shallow water drilling was lifted June 8, a full three weeks ago. Could the regime be in contempt of court?  Or, could it be arbitrarily and capriciously exercising regulatory power, causing undue economic hardship?

Interior officials quoted in the CNN.com story told reporters that new safety requirements were issued along with the lifting of the shallow water moratorium, and that none of the permits have complied. Representatives from both Spartan Drilling and Hercules Offshore, along with representatives from a local oilfield services company, have told me that this is not true.  Revised permit requests meeting or exceeding the NTL linked above were submitted within a week of the June 8 issuance date, and pointed out to me that the NTL specifically requires all such paperwork to be submitted no later than June 17, and specifically outlines the additional data required:

Operators must submit the following information by 5:00 pm EDT June 17, 2010, to the address set forth below:

  1. BOP and well control system configuration. This includes the piping diagram of the stack and control system, including the BOP stations and accumulator system.
  2. BOP and well control system test results, including any anomalies in testing or operation of critical BOP components. Submit test results (charts, digital pressure data, forms, etc.) and information on any initial failed test attempts and remedy to obtain a successful test.
  3. BOP and loss of well control events. Document any loss of well control event, even if temporary, and the cause of the event. The operator does not have to include kicks that were controlled but should include the release of fluids through a diverter.
  4. BOP and well control system downtime. Submit downtime related to BOP and well control system failures (failure to test properly).

All of the paperwork is in, yet MMS hasn't granted a permit in more than two weeks. 


Furthermore, very few of the shallow water wells from Texas to the Alabama-Florida state line are producing oil.  The vast majority are producing natural gas, in very shallow water, in areas where the geology is much better known.  Since the MMS began managing offshore drilling in 1982, not a single spill of significance has occurred in the shallow water zone of the Gulf of Mexico.  Not one.

The refusal of the Obama regime to grant permits that meet the regulatory guidance constitutes a dereliction of duty.  There is no legitimate reason to deny these companies the ability to drill and produce in shallow water.  The safety record is flawless, and the new safety requirements have been met.  If the regime doesn't begin issuing permits within a reasonable time, these companies should haul Secretariat Salazarovich before a Judge in the Eastern District Federal Court, and force him to do his job.

Gimme some feedback in the comments.

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