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A popular Lafayette restaurant may have to freeze salaries and discontinue lunch service and a family owned Houma company may have to shut its doors in December if the drilling moratorium in the Gulf of Mexico continues.

U.S. Sen. Mary Landrieu, D-New Orleans, chaired the field hearing, and U.S. Sen. David Vitter, R-Metairie, also participated.

Mark Doms, chief economist at the Department of Commerce, attended. He will serve as a lead official preparing an economic analysis on the drilling moratorium requested by Landrieu, who called the moratorium “ill conceived and heavy handed.”

A six-month moratorium was implemented by President Barack Obama’s administration following the April 20 explosion of the Deepwater Horizon platform, which spewed thousands of barrels of oil in the Gulf. The moratorium, which halted drilling on 33 deepwater rigs, is set to expire in November.

Some business owners testified Tuesday that they may not be able to hang on that long without laying off employees.

Charles Goodson, owner of Charley G’s restaurant in Lafayette, said his family is preparing for a major slowdown in business if oil and gas jobs are lost because of the continuing moratorium. First they would freeze hiring and pay hikes and halt lease-hold improvements, he said. If needed, the restaurant would stop serving lunch, leading to a 25 percent reduction in his staff, a loss of 11 jobs.

The drilling moratorium will have a “tsunami-sized” impact, not just on the oil and gas industry in Louisiana, but on other businesses such as his restaurant, Goodson said.

The residential and commercial real estate industry in the Lafayette area already is feeling the effects, Dewitt David, a broker with Van Eaton and Romero, testified.

Buyers are holding off on purchasing homes out of fear they may lose their jobs, even though interest rates are low and home prices are competitive, David said. At least two real estate agents told him they lost pending sales because of the moratorium, he said.

Commercial real estate movement has slowed dramatically since the moratorium was implemented, nearly coming to a standstill, he said. One agent said he was working with someone on the purchase of an apartment complex, but the man put the deal on hold until the moratorium is lifted.

A study for the Louisiana Realtors Association projects that the Deepwater Horizon spill will cost Louisiana Realtors $6 million in commissions from May 2010 to April 2011, David said.

“The perception is that the worst is yet to come,” he said.

Lori Davis, whose family owns RIG-CHEM of Houma, testified Tuesday that she may be forced into unemployment because the federal government is punishing the entire industry for one company’s mistake.

The current year is shaping up to be the worst in the history of the company, founded in the 1980s, with a six-figure loss, Davis said. The company can only hold on until December, she said.

Lt. Gov. Scott Angelle said the moratorium won’t just cost oil and gas jobs but also those in the service industry, such as welders, boat captains, plumbers and electricians. He predicted it would extend to hotel workers, auto mechanics and caterers, then to school teachers and police officers.

Original Article

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Louisiana will soon form a committee of experts to help strengthen the state’s oil and gas drilling and safety regulations, the state conservation commissioner said Monday.

Commissioner Jim Welsh discussed the need to improve drilling rules within the state at the Second annual Oil and Gas Symposium at LSU that continues today. It is focusing on the BP oil disaster.

The theme, “BP Gulf Oil Spill: Long-term Impacts and Strategies,” is the impetus for Louisiana paying more attention to its internal regulations, Welsh said.

Looking nationally, Welsh said, “We have political pollution, we have regulatory pollution, and we certainly have environmental pollution.”

Welsh said seeing those problems and participating in the BP oil cleanup highlighted the need to beef up standards within the state. A committee, which will be formed shortly, is expected to complete a report of recommendations by year’s end, he said.

That includes requiring more documentation on environmental impacts, doing more tests of cement casing and equipment checks and collecting more activity logs, he said.

More than 30,000 wells have been drilled in Louisiana the past 23 years, Welsh said, with fewer than 200 blowout incidents.

Welsh also was among several participants to criticize President Barack Obama and the federal moratorium on Gulf drilling. Only “pure, agenda-driven politics” will get Obama to change his mind,” Welsh said.

Drilling within the state could be Louisiana’s savior to help offset the negative economic aspects of the BP disaster and the moratorium, he added.

Frequent Obama critic and U.S. Sen. David Vitter, R-La., also criticized the moratorium and its economic impact on the state.

Vitter acknowledged that many changes in regulating deepwater drilling are needed in the wake of BP’s “gross mismanagement.” But he said quick fixes prevent a need for a moratorium and that longer-term solutions can be implemented as they are developed.

One quick fix, Vitter said, could be putting a federal official on each rig with shutdown authority.

David Dismukes, LSU Center for Energy Studies associate executive director, said the moratorium could impact close to 350,000 jobs in the Gulf states. The short-term impact of the moratorium in southern Louisiana, he said, could eliminate 15,000 jobs and $1.2 billion in lost wages.

Calling deepwater drilling the “new frontier,” Dismukes said such efforts involve a “lot of risk and a lot of cost.” Now, he said, much of the Gulf industry is at risk.

Tad Patzek, chairman of the University of Texas department of petroleum and geosystems engineering, said there is a national dearth of top petroleum engineers capable of understanding the industry’s complex issues and of making quick decisions on rigs when something goes wrong.

The engineers always recognize greater risks of accidents than the corporate managers making the final decisions, Patzek said.

Because of such issues, Patzek said the BP oil disaster is rare, but not necessarily unexpected.

Many problems can be rectified when well operators make sure everyone knows safety is the No. 1 priority, he said, but that is not always the case.

Patzek also took a different slant on the moratorium. “We still will be able to produce it later,” he said, noting that the oil likely will be more valuable months from now.

Original Article

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WASHINGTON — The Obama administration announced Monday it is requiring environmental reviews for all new deepwater oil drilling.

That means an end, at least for now, to the kind of exemptions that allowed BP to drill its blown-out well in the Gulf with little scrutiny.

The announcement came in response to a report by the White House Council on Environmental Quality, which found BP got environmental exemptions based on decades-old data.
The Interior Department said the ban on so-called “categorical exclusions” for deepwater drilling would be in place pending full review of how such exemptions are granted.

“Our decision-making must be fully informed by an understanding of the potential environmental consequences of federal actions permitting offshore oil and gas development,” Interior Secretary Ken Salazar said in a statement.

For now, new deepwater drilling is under a temporary moratorium in the Gulf. Once that’s lifted, though, Interior’s new policy is likely to make it much more time-consuming for oil companies to move forward with new deepwater projects, since environmental assessments will be required along the way.

Shallow-water drilling will also be subjected to stricter environmental scrutiny under the new policy.

BP’s ability to get environmental exemptions from the Minerals Management Service led to some of the harshest criticism of the now-defunct agency in the wake of the April 20 explosion that killed 11 workers and led to the worst oil spill in U.S. history. Some 206 million gallons spilled into the Gulf before BP stopped the leaking.

The report by the Council on Environmental Quality sheds new light on the granting of those categorical exclusions. The report says that the exclusions BP operated under were written in 1981 and 1986. That was long before the boom in deepwater drilling that was propelled by the development of dramatic new technologies for reaching deep into the sea floor.

The report also finds other problems with how the Minerals Management Service applied environmental laws in reviewing the BP project. It notes, for example, that in assessing the likelihood of a major spill, MMS did not consider the example of the disastrous 1979 Ixtoc spill in the Gulf — simply because the spill was not in U.S. waters.

MMS’ successor agency, the Bureau of Ocean Energy Management, Enforcement and Regulation, is agreeing to recommendations to try to improve drilling regulation in future.