For many, the image of oil billowing into the Gulf of Mexico is enough to justify halting drilling. But businesses say it’s not so simple. Thousands of jobs could be lost as a result of deepwater drilling moratorium.

One of the world’s largest companies and small businesses in Louisiana have something in common—both say a ban on deepwater oil drilling in the Gulf of Mexico is bad for business.

Royal Dutch Shell, the Anglo-Dutch oil giant, reported today a profit jump of 15 percent, to $4.39, billion in the second quarter.

Royal Dutch Shell’s earnings are a marked contrast to fellow titan BP, which is replacing CEO Tony Hayward with American Robert Dudley and reported a loss after setting aside $32 billion to cover the cost of the Deepwater Horizon disaster in the Gulf of Mexico. Further, BP is facing dozens of lawsuits, and a special judicial panel in Boise, Idaho, is hearing arguments today as to how the lawsuits should be consolidated and moved forward.

But despite its earnings and lack of BP-like nightmares, Shell has some worries related to that BP disaster, and in them, it’s like many small Gulf Coast businesses. The oil titan wants deepwater drilling to continue, in the Gulf of Mexico and around the world, said CEO Peter Voser.

For a look at a Shell project in the Gulf that can drill deeper than anything ever has, click here.

“Worldwide deepwater production has an important role to play in the global energy-supply equation, with potential for production growth with supply diversity and sustained investment in technology, jobs, and services. The recent announcement of Shell’s participation in a new, billion-dollar Gulf of Mexico oil-spill containment system is an example of where we are working with governments and partners to improve the industry’s capabilities,” Voser said.

In that feeling, he was joined by a group of mostly small-business people and consultants from the Gulf of Mexico who say shutting down deepwater drilling in the Gulf following the Deepwater Horizon disaster may hurt small business in the region more than the gusher already has. The Obama administration has put a halt to deepwater drilling to review safety procedures, arguing that the Gulf can’t afford another disaster on the scale of BP’s disaster.

So a group of consultants and businesspeople told the Senate Committee on Small Business and Entrepreneurship headed by Louisiana Democrat Mary Landrieu, The Street reports.

Louisiana Oil and Gas Association president Don Briggs said the drilling ban, due to end November 30, could wind up killing 17,500 jobs on offshore rigs, while Joseph Mason of Louisiana State University’s E.J. Ourso School of Business said the moratorium could cost $2.1 billion in lost productivity.

Independent drillers and the small businesses that ferry supplies to and from the rigs in the Gulf, for instance, may not be able to recover from the losses caused by the moratorium.

Landrieu, as have other politicians from her state including Republican Governor Bobby Jindal, said the damage from the moratorium to such small businesses is cause to oppose the moratorium.

Their state’s fishing industry, the second-largest in the United States, has been hammered by bans on fishing in waters polluted by the Deepwater Horizon gusher. One of the other major industries in Louisiana, the oil and gas industry, is taking a hammer blow from the moratorium.

And all of it comes just as the region was beginning to recover from the havoc wrought by Hurricane Katrina on tourism, fishing, and oil production.

Read more: http://www.portfolio.com/views/blogs/daily-brief/2010/07/29/small-businesses-join-royal-dutch-shell-in-call-to-allow-deep-gulf-of-mexico-drilling#ixzz0vAWk2ZDH

Original Article

Accountability is in short supply in Washington these days. Fingers are pointed in every direction for our nation’s economic woes. President Obama’s favorite target of choice is the past administration for nearly every problem he faces. Yet, the oil spill has only two central characters: BP and the Obama administration. BP is (very) slowly taking accountability for its creation of this crisis. Tony Hayward was finally dismissed as CEO, and they have promised full financial restitution for direct and indirect victims. On Day 100 of the spill, it’s time the Obama administration followed suit.

And what exactly does the administration have to be held accountable for? An environmental disaster made worse by federal incompetence. An unnecessary drilling moratorium that has pulled the plug on a Gulf economy already on life support. A claims process that was negotiated in secret, leaving few answers to why claims aren’t being processed and transparency is lost. A slow response that wasted clear weather days as hurricane season fast approaches, and a decision-making structure led by politics rather than duty.

Environmentally, the President and his eco-left echo chamber consciously chose to ignore the damage caused by the oil in favor of focusing on future tax increases that would expand government largesse. The President’s initial push for cap-and-trade taxes as a response to an oil spill was so disconnected and oblivious that it was quickly brushed off by the Democrat-controlled Senate. Even so, White House Press Secretary Robert Gibbs said yesterday cap-and-trade taxes were still possible this year if any energy legislation passes the Senate and the bill goes to conference.

Details of the Reid-Boxer bill the Senate will market as a response to the oil spill released last night confirm that increased taxes are the Majority Leader’s first priority regardless, with a “drastic increase” in the price of oil per barrel that will be paid at your local gas pump, breaking the President’s promise that taxpayers would not foot the bill for the oil spill. Senator James Inhofe (R-OK) also said the bill would create a permanent “jobs moratorium” in the Gulf.

And while focus in Washington has remained on legislative matters, the President’s administration failed to issue emergency permits to protect Louisiana’s fragile coastline. Paid-for barriers were delivered, only to sit on the sidelines, as federal bureaucrats spent months debating three-year old emergency operations plans, only to decide not to implement protective measures.

Efforts were stopped to divert oil into more easily skimmed areas. The problem of skimming the oil was made even more increasingly difficult by the questionable dispersants, authorized by the EPA, which either drove the oil under water or diluted it into impossible-to-clean droplets. And even if the oil could’ve been easily skimmed, the skimmers simply weren’t deployed, whether by ignorance of the Jones Act or an unbelievable rigidity to emergency placement. Skimmers sat in ports across America waiting for another disaster while this one went ignored.

The drilling moratorium takes what is a terrible situation for Gulf residents and turns it into a long-term economic catastrophe. President Obama is not listening to any oil and gas experts as he implements a moratorium that could affect our energy production for a decade. Two federal courts have blocked the moratorium, yet the President ignores the rule of law and proceeds with a de facto moratorium regardless. Ports are cutting rental rates, jobs are being lost, rigs are leaving the Gulf in droves and confidence in American energy contracts is being shattered. Meanwhile, this doesn’t affect rising demand, meaning an increasing dependence on foreign oil.

Jim Funk of the Louisiana Restaurant Association told New Orleans Fox 8: “You’re looking at figures as high as 30,000 high paying jobs are gonna be lost as a result of this moratorium.” And that’s just the restaurant and catering business. Layoffs in the offshore transport business have already begun. John Henry, who runs a cement company that services offshore rigs, told Forbes they’re already slowing down operations. And CNN reports, companies as far away as Ohio, Tennessee and elsewhere may also lose work as a result of Obama’s jobs moratorium. These reports are all in addition to the jobs already lost on the fleeing rigs.

The complicit media chose the President’s negotiation of a secret liability deal with BP as proof he was in charge. But while his strong-arming produced a supposed $20 billion payout, it was settled behind closed doors. Americans never saw any contract that was agreed to between our government and BP, yet that didn’t stop the media from celebrating it.

Now we learn that BP is claiming a tax deduction worth roughly $9.9 billion. This means that American taxpayers are either now on the hook for part of the costs of cleanup, if costs truly reach $20 billion, or that another negotiation is necessary. Congressman James Oberstar (D-MN) called the development “reprehensible.” David Desser, managing director of Juris Capital said: “You would have thought in advance of that meeting, [the White House] would’ve thought of all those issues…” Yes, you would think. If the $20 billion number was anything more than a guess, than the White House should have grossed it up to account for the value of the deduction. Additionally, the claims process itself is operating in the dark, with state and local officials unable to track individual claims.

As Tropical Storm Bonnie approached last week, emergency and elected officials in Louisiana mobilized. The federal government did not. The clean-up operations halted, yes, and plans were in place for re-deployment. But Americans along the Gulf coast did not hear from the Secretary of Homeland Security what the government’s response would be to a potential storm that would be made only worse by their own delays in the clean-up. Leadership was obvious at the state and local level. It was absent in Washington.

President Obama has made it clear he couldn’t care less about the oil spill or Gulf residents. He has barely mentioned the crisis since he gave a forced Oval Office address over a month ago. Amid complaints surrounding his three vacations this month, most recently to Maine, he reluctantly is taking his family to Florida in two weeks for a photo-op.

Florida is hospitable to this visit, since Governor Charlie Crist–formerly a Republican, now an Independent due to the pressure of primary politics–has been proven a better ally than Louisiana’s Governor Bobby Jindal. Louisiana residents deserve better than to have politics come between them and a responsive White House. Their share of this disaster is overwhelming, and to be so ignored is unacceptable. Yet, even leading Florida Democrats, like gubernatorial candidate Alex Sink, charge the administration with being “out of touch with reality” when the White House does visit.

Two weeks after Hurricane Katrina made landfall, FEMA Director Michael Brown resigned due to public pressure over the federal response to the crisis. It has now been 100 days since the deadly Deepwater Horizon accident. The clean-up efforts have failed. The moratorium is simply kicking a dying man while he is down. Who is accountable in President Obama’s administration? Apparently, nobody.

Original Article

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By Michelle Malkin:

We need to see Obama’s job-killing victims in the streets every day.

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LOGA Member Steve Maley – Imagine if the government required automobile drivers to purchase liability insurance against the Worst Case Accident: totalling a 2010 Maybach Laundalet with four newly-minted orthopedic surgeons aboard. Worst case liability: $50 million or so.

With a $50 million liability insurance requirement, who would drive? Only the wealthy.

The Deepwater Horizon incident pointed up the inadequacy of the Oil Pollution Act of 1990’s $75 million economic liability limit for operations involving high pressure, high-volume deepwater oil.

Some Congressional Democrats would like the liability cap to be set at $20 billion; some want no cap at all. They don’t even acknowledge the fact that shallow water operations are orders of magnitude less risky than deepwater oil; to them, an offshore well is an offshore well.

Independents, small to large, will have no way to insure against a liability of this magnitude. Without insurance, they will cease operations, leaving the Gulf to the only companies with sufficient assets to self-insure. That group would include Exxon, Shell, Chevron and BP among the private companies, plus the National Oil Companies of Brazil, China, Spain and others.

Study outlines economic impact of independents in gulf

WASHINGTON, DC, July 23 — Excluding independent producers from the deepwater Gulf of Mexico would eliminate 265,000 jobs and $106 billion in federal, state, and local tax revenue by 2020, a new study by IHS Global Insight in Lexington, Mass., concluded. If independents left the gulf completely, 300,000 jobs and $147 billion in taxes in the region would be lost over 10 years, it added.

According to the IHS study, in 2009, independent companies drilled 122 wells on the “Shelf” (shallow water); the majors drilled only 8, as they are no longer interested in the Shelf. The average cost of a Shelf well was $6.5 million in 2009. In deepwater, independents drilled 62 of 143 wells that cost on average $77 million. Right now, remember, we have an open-ended deepwater drilling moratorium in place, so who knows when Obama and Salazar will let the deepwater boys start drilling again.

If the Dems get their way, Gulf of Mexico drilling will cease.

The Gulf supplies 30% of domestic oil and 11% of natural gas. The only way to sustain that supply is to continue to drill new wells.

If we don’t drill new wells, the Gulf will dry up and become a boneyard. Of course this affects me, my community, and my state.

It affects every one of you, too.

The Democratic strategy will cripple the domestic industry and its reserve and production base. That necessarily means higher prices for the consumer, and increased imports. Permanently. Think $8 per gallon gasoline.

Some might think rising energy prices are fine, in that they will stimulate the demand for alternatives. If that’s the plan, I will flatly predict that there are no alternative technologies that have the capacity or the ability to take up the slack for oil and gas.

You can’t suck this much industrial activity out of the economy without a cascade of unanticipated effects. We’ve heard that Red Wing Shoes, a Minnesota-based company, has already felt the impact of the moratorium in declining demand for its steel-toed work boots, the offshore workers’ preferred brand. And that’s just one example among thousands.

The next two weeks are critical, not just to the future of the offshore oil and gas industry and to Louisiana, but to the future of the American economy. Your future prosperity. And you can do something about it.

The House breaks for August recess this Friday, the Senate a week later. Before breaking for recess, both chambers plan energy bills that will address spill liability, among other things. Call your Senator and your Congressman — this week! — to let them know that offshore oil and gas matter to you.

Original Article

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By: Neil Hrab – Washington Examiner

“President Barack Obama has placed economic sanctions on Louisiana, and eventually the United States, beyond those imposed on Iran!”

Rob Guidry, President & CEO of the Greater Lafayette, LA Chamber of Commerce wrote these words about a week ago. His comments were part of the run-up to the recent Rally for Economic Survival.

By “economic sanctions,” Guidry is referring to the federally-imposed off-shore drilling moratorium that some observers believe will cost his home state 17,500 jobs just in its first six months.

To say President Obama’s policies towards a US state are harsher than his policies towards the Islamic Republic of Iran – those are, at a minimum, fightin’ words. I’m going to give Guidry the benefit of the doubt, and assume he was taking some poetic license in drawing a comparison like this. Others may feel less charitable.

You would figure the mainstream media’s correspondents in Washington would have tripped over themselves to ask Obama Administration spinners to comment on Guidry’s statement, just to be able to play footage of steam escaping from Robert Gibbs’ ears.  No one got around to asking Gibbs for his reaction, unfortunately.

Similarly, you would have thought the mainstream media might have asked the Obama Administration to comment on the pro-drilling Rally for Economic Survival, which drew 11,000 participants to the Cajundome in Lafayette on July 21st. But that also went ignored.

If you didn’t make it to the rally, or you would like to watch some footage of it and listen to the speakers who addressed the crowd and discussed the economic damage that the offshore drilling ban will inflict on the state’s economy, you can visit www.rallyforeconomicsurvival.com.

I can understand the mainstream media declining to highlight Guidry’s line in its reporting from Louisiana, and dismiss it as a clever bit of rhetorical bluster. To ignore the 11,000 people who gathered at the Cajundome is a serious oversight, however, and I have a harder time understanding the rationale for that decision.

It was likely very easy for skeptical reporters and assignment editors to dismiss the Rally for Economic Survival. Yes, many companies linked to the oil industry supported the event. Yes, there was a heavy state Republican presence among the speakers. Yes, many of the people in the rally had a direct economic interest in seeing the moratorium lifted.

In this case, the skepticism went too far. It seems reporters are always ready to let us know when a handful of activists chain themselves to an old tree to protest logging activity, for example. If the media will give so much attention to such tiny protests, why the silence when 11,000 people come together to make a collective statement about a serious issue affecting their lives?

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The president of the Louisiana Oil and Gas Association (LOGA) testified against the moratorium on deepwater drilling Tuesday.

“It’s time that we get back to doing what we do best in Louisiana, and that’s fueling our nation,” said Don Briggs as he testified before the Senate Committee for Small Business and Entrepreneurship.

During the hearing, Briggs said some 17,500 jobs could be eliminated in the next few months if the moratorium stands.  He also spoke about damage that’s been done in the past few months since the moratorium was put in place.

“This moratorium has created a stifling effect on all operations in the Gulf, including the shallow water,” Briggs said.

Though on paper, drilling in shallow water should not have been impacted by the moratorium, that hasn’t been the case out on the water.  According to the Department of Natural Resources, the number of permits issued for shallow water wells in the past three months are down 93% relative to the three months before the disaster.

“In my opinion this detrimental policy does not represent our American way of life,” said Briggs.

Meantime as Briggs tried to spread his message in Washington D.C., LOGA unveiled a billboard in Lafayette Tuesday that will one day be sent to President Obama.

The billboard, located along I-10 East in Lafayette features thousands of signatures and reads ‘Lift the Moratorium!’

Click here for the video report

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The federal government enacted a six-month moratorium on offshore drilling in deep waters in the wake of the Gulf oil spill. Depending on who you ask, it is either an environmental necessity or an economic disaster.

Oil workers protest the drilling ban in Houma, La. Louisiana Gov. Bobby Jindal says the moratorium could kill thousands of state jobs.
(Gregory Bull/AP/File)

By Mark Clayton, Staff writer
posted July 27, 2010 at 2:03 pm EDT

More than three months after the Deepwater Horizon oil spill began, Gulf Coast states and the oil industry are still howling over what they say is unnecessary economic harm from the Obama administration’s six-month moratorium on deep-water offshore drilling.

Congressional opponents argue it “is causing a second economic crisis in the Gulf” and that “thousands of jobs have already been lost and thousands of additional jobs are at risk of being sent overseas.” The Senate Small Business and Entrepreneurship Committee heard testimony Tuesday predicting losses of $2.8 billion and over 10,000 jobs from a moratorium.

But new deep-water drilling would still be dangerous and irresponsible, the administration says. Not enough is known about what caused the spill and several panels are investigating.

IN PICTURES: Destructive Oil Spills

Amid a whirlwind of charges, countercharges, and legal hardball, numerous questions linger. Among them:

Is a drilling moratorium now in effect? Where?

Yes. On May 28, Secretary of the Interior Ken Salazar announced a “six-month suspension of all pending, current, or approved offshore drilling operations of new deep-water wells – those more than 500 feet deep – in the Gulf of Mexico and the Pacific regions.” That first nationwide moratorium was, on July 12, superseded by a second order (see following question) that blocks offshore deep-water drilling in the same areas. That second order remains in force until Nov. 30 – unless it is successfully challenged in court or until Mr. Salazar lifts it. The moratorium has halted drilling at 33 deep-water sites in the Gulf of Mexico.

Didn’t a federal judge stop the moratorium?

Yes, but only temporarily. On June 22, US District Court Judge Martin Feldman, responding to an industry lawsuit claiming economic harm, issued a preliminary injunction blocking the first six-month moratorium. He ruled that the moratorium was overbroad as well as “arbitrary and capricious.” On July 8, a government motion to suspend the judge’s injunction failed in the US Court of Appeals for the Fifth Circuit, based in New Orleans.

In response, Salazar four days later issued a new order in which the government did not cite water depth to define the type of drilling to be banned but instead banned drilling by certain floating deep-water drill rigs. That new suspension has the same effect as the old moratorium, but may be harder for the oil industry to reverse in court, experts say.

“Judge Feldman essentially provided a road map for the Department of the Interior, and Secretary Salazar’s memorandum follows that road map,” writes Jeffrey Rachlinski, a professor of environmental law at Cornell University Law School in Ithaca, N.Y., in an e-mail interview. “The memo demonstrates that the problems that caused the Deepwater Horizon event are endemic to the industry as a whole, and not specific to BP.”

Why does the Obama administration say a moratorium is needed?

The moratorium is needed because additional deep-water drilling poses “serious, irreparable, or immediate harm to life, to property, or to the marine, coastal, or human environment,” Salazar argued in his July 12 order. This “temporary pause,” he writes, will give investigators and the industry time to address this threat. The new order also cited fresh concerns about drill rig safety equipment. New problems appeared in blowout-preventer safety devices on the two rigs drilling relief wells to stop the leak, the order said.

How has the moratorium affected the economies of Gulf Coast states?

Over the six months of the deep-water drilling moratorium, Gulf states will lose an estimated $2.1 billion in economic productivity, 8,169 jobs, $487 million in wages, and $98 million in state tax revenues, according to Joseph Mason, a Louisiana State University professor of finance and a private business consultant. “Spillover effects” will cost other states $600 million, 3,877 jobs, and $219 million in wages, his study says. The US government could lose $219 million in tax revenue. “These losses are dramatic in both the context of local economies … and on a national scale,” Professor Mason writes.

Still, he notes that his numbers are more conservative than others, including those used by the state of Louisiana. The state assumes a stoppage lasting 12 to 18 months. The Obama administration insists BP will pay and has forced the company to set aside $20 billion.

Has the moratorium cut domestic oil production?

The Louisiana Mid-Continent Oil and Gas Association reports that the equivalent of 80,000 barrels of oil a day will not go to market due to the moratorium – a shortfall that will be picked up by increasing imports. But 80,000 barrels a day represents less than 1 percent of the 11.7 million barrels of oil the United States already imports daily, according to the Energy Information Administration’s website. The EIA reported in mid-June that “to date, energy production and shipments in the Gulf have not been significantly affected by the spill.”

What will happen between now and the lifting of the moratorium?

In the run-up to lifting the moratorium in November, the Interior Department is reorganizing the functions of the former Minerals Management Service into three new agencies – including one that will focus only on enforcing safety rules. During that period, a presidential commission is also looking into causes of the spill, along with another federal inquiry led by the US Coast Guard. Congress is pursuing its own investigation. Out of all this, should come a resetting of the regulatory relationship between the government and oil industry in deep-water drilling – and greater safety, experts agree.

Original Article

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AFP – Business-owners and lawmakers Tuesday urged US President Barack Obama to lift a “reckless” moratorium on deepwater drilling in the Gulf of Mexico, saying it was suffocating the local economy.

“The decision to stop energy exploration in the Gulf of Mexico appears to have been made in an uninformed manner that borders recklessness,” Democratic Senator Mary Landrieu told the small business committee, which she chairs.

“It has increased our risk to the environment, it has increased our national security risk, it has increased the risks to job security. It must be reversed now,” Landrieu said.

A study by Louisiana State University finance professor Joseph Mason estimates the six-month moratorium until the end of November would cost more than 8,000 jobs in Gulf states of Florida, Alabama, Mississippi, Louisiana and Texas.

Nearly 500 million dollars in wages will be wiped out by the deepwater drilling ban, as will be 2.1 billion dollars in economic activity and some 100 million dollars in state and local tax revenues.

But the impact of the moratorium would not stop there, the study warned.

At least 12,000 jobs could be lost nationwide, and with them would go around 200 million dollars in federal tax revenues.

The moratorium was spurred by a rare but tragic accident on the BP-leased Deepwater Horizon rig, which blew up 99 days ago, killing 11 workers and sparking a massive oil spill, said Landrieu.

But it was an over-reaction, she added.

“From 1947 until 2009, there were 42,000 wells drilled in state and federal waters in the Gulf of Mexico and 99 days ago one of them blew up,” Landrieu said.

“Eleven men lost their lives but an entire industry has virtually been shut down” by the moratorium, which has been in place for around two months.

Obama imposed the six-month moratorium on deepwater drilling in the Gulf to allow a federal commission to determine what caused the deadly blast, and to ensure oil workers are safe and the environment unharmed by energy exploration.

But retired oil worker Troy Lillie, a native of Louisiana, called on Obama to admit the moratorium was a mistake and lift it.

“The moratorium has and will continue to destroy tens of thousands of lives,” Lillie said.

She voiced fears the ban could “be the final straw” after four hurricanes, including Katrina in 2005, “in destroying our lives and our way of life.”

Original Article