_

The infamous BP oil spill caused chaos in the US deepwater oil industry, but now drilling in the US Gulf of Mexico (GoM) is making a comeback, according to natural resources experts GlobalData.

New research released by GlobalData, a leading business intelligence provider for the energy sector, states that despite the increased US government restrictions that followed the Deepwater Horizon explosion – combined with the risks and high costs involved in deepwater drilling – climbing crude oil prices will see GoM oil production surpass its former records.

Matthew Jurecky, Global Director of Energy Research and Consulting for GlobalData, recently stated in a prior release that, “The rise in crude oil prices, and consequently retail gasoline prices, was and is inevitable. The global economy is at one of its lowest points in decades and crude oil prices are still set to average a record high for 2012.”

Now, GlobalData’s report, Deep Offshore Oil & Gas Exploration and Production (E&P) in West Africa – Market Analysis, Competitive Landscape and Forecasts to 2020, states that the increasing price of crude oil means that offshore Brazil, offshore West Africa and the US Gulf of Mexico are forming a “Golden Triangle” for deepwater oil exploration and production.

BP plc’s Macondo well experienced a blowout in April 2010, resulting in the destruction of the Deepwater Horizon drilling rig, a 5 million barrel (MMbbl) oil spill, and a six-month moratorium issued by the US government for certain areas of the GoM. However, a recent surge in issued permits indicates the return of large-scale deepwater drilling to the area.

The US government issued 44 deepwater drilling permits (including permits issued for new wells, bypass and sidetrack, excluding revised permits). This is a promising figure considering that throughout all of 2011 and 2010 the US government issued only 79 and 74 permits respectively. This growth suggests that deepwater drilling in the GoM will return to levels seen before April 2010 by the end of 2012.

One major attraction for deepwater oil exploration in the GoM is the stable political climate and clear regulations, while many other parts of the world see oil and gas investment opportunities marred by regime changes or nationalization. The US and Mexican governments entered into an agreement in February 2012, that set a framework to facilitate hydrocarbon exploration and production in the GoM. The agreement enables lease operators in the US GoM to coordinate with Petroleos Mexicanos (Pemex), the Mexican National Oil Company (NOC) for the joint exploration and production of hydrocarbons in the GoM in the Mexican maritime boundary of GoM. The agreement allows a greater level of freedom for US oil corporations, and is expected to increase investment and drilling in the GoM.

Major International Oil Companies (IOCs) such as BP and Chevron Corporation have always dominated deepwater drilling in the GoM, and are at the forefront of the drilling resurgence. Out of the 44 deepwater drilling permits issued in Q1 2012, BP (with 13) and Chevron (with 14) garnered the majority. IOCs hold the required technological expertise and the capacity to fund high capital expenditure and potential multi-billion-dollar liability risks in the event of another oil spill.

However, the dominance of IOCs in the GoM deepwater exploration is enhanced by an apparent lack of interest from some small independent US operators, as regions such as the Bakken and Eagle Ford shales offer attractive opportunities without the levels of risk involved in deepwater drilling.

original article

_

After a steep drop in oil production in the wake of the Deepwater Horizon disaster, the U.S. Gulf of Mexico is set for an energy boom.

Gulf oil flows will increase by nearly 28% by 2022 to 1.8 million barrels per day, according to consulting firm Bentek Energy. Output will be boosted by huge projects like Exxon Mobil Corp.’s XOM +1.05% Hadrian field 250 miles off the coast of Louisiana and Chevron Corp.’s CVX +1.07% nearby Jack and St. Malo projects.

The Gulf accounted for nearly a third of U.S. oil production as recently as 2009. But onshore oil production has surged as oil companies use new extraction techniques to tap dense shale formations in places like the Eagle Ford shale Texas and the Bakken shale North Dakota. The Gulf now accounts for just 20% of U.S. output, and that number is predicted to decline to 15% by 2022 despite the expected surge in Gulf production.

Oil found offshore generally sells for more than onshore crude. That is partly because Gulf oil is easier to transport to Europe and trades at the higher prices crude fetches there. The result is that oil companies are eager to gear up offshore production, despite the growing challenges of drilling in new areas and deeper water.

The resurgence in the Gulf belies warnings from the energy industry that tougher regulations would curtail exploration there following the 2010 explosion at BP BP.LN -0.34% PLC’s Macondo well. The blast killed 11 people on the Deepwater Horizon drilling rig and led to the worst offshore oil spill in U.S. history.

Today the industry says it is learning to live with stricter safety oversight and slower permit reviews. The tougher regulatory environment is palatable because of high global oil prices, which have remained above $90 a barrel for nearly two years.

“Bottom-line, the Gulf of Mexico is in considerably better shape than even the most ardent optimists envisioned following Macondo,” said Bill Herbert, a managing director with investment bank Simmons & Co.

Some major energy companies are increasing their commitments to the Gulf, including Royal Dutch Shell, RDSA -1.02% which earlier this year spent more than $403 million to lease several new areas there. “The importance of the Gulf continues to grow for Shell, with significant discoveries and major projects in the pipeline,” says Marvin Odom, president of Shell Oil Co.

BP, which is the area’s largest oil producer and is expected to remain so, agreed recently to sell $5.5 billion of assets to Plains Exploration & Production Co., PXP +1.88% while Brazilian oil giant Petroleo Brasileiro SA PBR +0.90% said this week that it may sell some of its Gulf projects.

But those moves reflect company-specific challenges rather than concerns over the Gulf, analysts say. Petrobras needs to focus on many projects back in Brazil.

BP, which will invest about $4 billion a year in the Gulf over the next decade, needs money to pay for the aftermath of the 2010 spill. It has six deep-water rigs at work in the Gulf and plans to add two more by year-end, a record for the company.

The Gulf benefits from the extensive infrastructure in place there, which makes development easier. It is the most developed offshore oil-and-gas region in the world, according to Tyler Priest, a University of Iowa history professor who focuses on the energy industry.

Beginning with just a handful of wells off the beaches and marshes of Texas and Louisiana in the 1950s, the Gulf now has more than 4,000 platforms pumping oil and gas from 35,000 wells through nearly 30,000 miles of pipelines.

Including natural gas as well as oil, production in federal waters reached a peak of almost 1.8 million barrels per day in 2009. But the 2010 Deepwater Horizon spill led to a six-month drilling moratorium as the government drafted new safety rules.

Oil and gas flows in 2010 were off just slightly from the 2009 peak, but dropped 18% in 2011 to 1.4 million barrels of oil equivalent. They are expected to bottom out this year at 1.3 million barrels.

Worst-case predictions for environmental damage didn’t materialize following the spill, though a number of continuing studies indicate there may be long-term impacts on the Gulf’s ecosystem. On Thursday, the National Oceanic and Atmospheric Administration reported that in 2011 the Gulf’s commercial seafood industry saw its highest volume of catches since 1999.

New regulations imposed after the oil spill spelled out specific standards for well design and construction, added new requirements for safety equipment and inspections, while requiring that drillers have quick access to a containment system similar to the one that ultimately stopped the Deepwater Horizon spill..

The new regulations also have slowed the pace at which energy companies receive federal permits. Exploration and development plans now take about 150 days compared with 54 days in the past, according to investment bank Tudor Pickering & Holt. Permits to drill specific wells now take about twice as long as before the disaster.

But the number of permits has risen sharply so far this year, to 105 as of August, versus 79 in all of 2011. “Today we see cooler heads and more pragmatic leadership with the regulators in Washington, and things are now working more smoothly in the Gulf, ” says James Noe, general counsel for drilling firm Hercules Offshore Inc. HERO -1.91%

The pipeline for future projects in the Gulf continues to grow. In June, 56 companies bid $1.7 billion for the rights to explore more than 2.4 million acres of the Gulf controlled by the federal government.

Success in these new areaswon’t come easily, according to Tudor Pickering. Much of the drilling will tap into a region called the Lower Tertiary, where completed projects so far have produced about one-third the daily rate of earlier deep-water fields and taken about 30% longer to drill.

Many energy experts predicted only the biggest companies could meet new regulatory and financial requirements to drill in the Gulf, but that hasn’t proved to be the case.

Houston Energy LP, a small independent firm, won five deep-water blocks in the most recent federal lease sale. “We went to the North Sea and other offshore areas to look into exploring, but when we came back we chose to dive right into the Gulf of Mexico,” said Ron Neal, Houston Energy’s CEO.

original article

_

The infamous BP oil spill caused chaos in the US deepwater oil industry, but now drilling in the US Gulf of Mexico (GoM) is making a comeback, according to natural resources experts GlobalData.

The states that despite increased US government restrictions which followed the Deepwater Horizon explosion – combined with the risks and high costs involved in deepwater drilling – climbing crude oil prices will see GoM oil production surpass its former records.

BP plc’s Macondo well experienced a blowout in April 2010, resulting in the destruction of the Deepwater Horizon drilling rig, a 5 million barrel (MMbbl) oil spill, and a six-month moratorium issued by the US government for certain areas of the GoM. However, a recent surge in issued permits indicates the return of large-scale deepwater drilling to the area.

The US government issued 44 drilling permits in Q1 (January to March) of 2012 -a promising figure considering that throughout all of 2011 and 2010 the US government issued only 79 and 74 permits respectively. This growth suggests that deepwater drilling in the GoM will return to levels seen before April 2010 by the end of 2012.

One major attraction for deepwater oil exploration in the GoM is the stable political climate and clear regulations, while many other parts of the world see oil and gas investment opportunities marred by regime changes or nationalization. The US and Mexican governments entered into an agreement in February 2012, which set a framework to facilitate hydrocarbon exploration and production in the GoM. The agreement enables lease operators in the US GoM to coordinate with Petroleos Mexicanos (Pemex), the Mexican National Oil Company (NOC) for joint exploration and production of hydrocarbons in the GoM in the Mexican maritime boundary of GoM. The agreement allows a greater level of freedom for US oil corporations, and is expected to increase investment and drilling in the GoM.

Major International Oil Companies (IOCs) such as BP and Chevron Corporation have always dominated the deepwater drilling in the GoM, and are at the forefront of the drilling resurgence. Out of the 44 deepwater drilling permits issued in Q1 2012, BP (with 13) and Chevron (with 14) garnered the majority. IOCs hold the required technological expertise, and the capacity to fund high capital expenditure and potential multi-billion-dollar liability risks in the event of another oil spill.

However, the dominance of IOCs in the GoM deepwater exploration is enhanced by an apparent lack of interest from some small independent US operators, as regions such as the Bakken and Eagle Ford shales offer attractive opportunities without the levels of risk involved in deepwater drilling.

original article

_

The U.S. Energy Information Administration on Thursday said Hurricane Isaac caused “considerable disruption” but little damage to natural gas processing plants along the U.S. Gulf of Mexico coast when the storm came ashore three weeks ago.

The EIA in its Today in Energy report said it invoked an emergency-activation survey to collect daily data on the status of plant operations in the affected area after Isaac came ashore on Aug. 28.

Despite the disruption as well as shut-in offshore gas production, there were few reports of damage to energy infrastructure from the low-level Category 1 hurricane.

There was also little effect on natural gas prices due to ample onshore production and surplus storage, the EIA said.

The last time the EIA invoked the activation survey, Form EIA-757B, was for Hurricane Ike in September and October 2008.

Isaac disrupted natural gas processing operations for more than 10 of the 13.5 billion cubic feet per day of total processing capacity in the area. On Sept. 7, a chart showed shut-in processing capacity was less than 4 bcf per day.

The survey captured plants with capacities greater than 100 million cubic feet per day.

Prior to Isaac making landfall, there were 25 natural gas processing plants in the affected area that were not undergoing maintenance, accounting for 12.6 bcf per day of available processing capacity.

Widespread power outages affecting nearly 1 million customers in Louisiana following the storm reduced the need for gas supplies, while the potential for flooding reduced or curtailed operations at many of the plants.

Plants most commonly attributed closures to a lack of upstream supply, although a few also cited damage to downstream infrastructure that would receive their dry gas or their natural gas liquids products, the EIA said.

Processing facilities purify and “dry out” raw natural gas from producing wells. This process results in pipeline-quality natural gas for delivery to end-users and a mix of natural gas liquids products to be separated by fractionators.

The Department of Interior’s Bureau of Safety and Environmental Enforcement’s final update on Isaac was released on Tuesday. The report showed that less than 5 percent, or 213 million cubic feet, of Gulf of Mexico gas production remained shut in.

At the height of the outages in late August, the storm had shut more than 70 percent, or more than 3.26 billion cubic feet, of daily offshore gas production.

The U.S. Gulf of Mexico has accounted for a progressively smaller share of U.S. gas production in recent years due to steadily declining offshore production volumes in the Gulf and the prolific growth of shale gas production in various onshore basins.

original article

_

Hurricane Isaac shuttered more than three-quarters of the natural gas production in the Gulf of Mexico as it spun toward the Louisiana coast late last month, closures that would have quickly prompted a spike in commodity prices just five years ago.

This time around, however, the natural gas market barely hiccupped as Isaac made landfall Aug. 28, underscoring the Gulf’s diminishing role as a major source of natural gas and likely anemic natural gas investment there for the foreseeable future.

Isaac forced the closure of 72.52 percent of total natural gas production at the height of the shut-ins Aug. 30, the equivalent of about 3.4 billion cubic feet of natural gas per day, according to U.S. government data.

Natural gas futures prices stayed fairly flat in the wake of the Category 1 storm, increasing 5.5 percent to $2.79 when markets closed Aug. 31. Prices made a 13 percent jump when Hurricane Katrina made landfall as a Category 3 storm in 2005.

Richard Hastings, a senior economist with New Orleans investment banking firm Global Hunter Securities, said the muted reaction highlights years of slowing production in the Gulf of Mexico as shale gas exploration onshore has rapidly expanded. The Gulf’s total natural gas withdrawal was down 48 percent to 4 billion cubic feet per day in June.

“The Gulf of Mexico is still very rich in natural gas but not as material in terms of production now,” Hastings said. “If you take a look onshore at production in nearby Texas, you’ve got 22 billion cubic feet per day in production. That absolutely overwhelms, by a matter of magnitude, what is cranking out of the Gulf,” Hastings said.

The decline in Gulf production has long been linked to the rise of diverse shale gas formations across the U.S., particularly in areas of Texas and Pennsylvania.

The federal offshore Gulf of Mexico accounted for 6 percent of the U.S. natural gas produced in June, down from about 20 percent in June 2005, according to the U.S. Energy Information Administration.

In comparison, shale gas accounts for nearly a third of the natural gas produced, and the EIA predicts its portion will grow to nearly half of U.S. production by 2035.

Steve Piper, a senior energy analyst with SNL Financial in Arlington, Va., said Hurricane Isaac hit at time when natural gas prices were weighed down by overwhelming supply and slackening demand for the energy source in light of the recession and, more recently, warmer winter weather.

Though natural gas prices have climbed back from $1.90 low in April, the U.S. has more than 3.4 trillion cubic feet of natural gas in underground storage waiting to be used. That’s up from 1.7 trillion in late April.

“We have this big mismatch now, and it’s an ongoing mismatch between supply and demand,” Piper said, adding that the natural gas market will likely be insulated from climbing prices for months, if not years, to come.

That forecast has prompted oil and gas companies to scale back investment in Gulf natural gas exploration and production.

The bulk of New Orleans-based EPL Oil & Gas Inc. exploration and production activity was in natural gas plays in the western Gulf when it emerged from Chapter 11 bankruptcy in 2009.

“While that can hit some home runs in terms of massive gas finds, it’s a riskier business and unfortunately it did not work,” chief financial officer T.J. Thom said.

EPL shifted investment to a number of oil-rich properties it owned in the central Gulf it. Now about 80 percent of the company’s production portfolio is oil. Thom said the company has a good inventory of offshore natural gas projects on the sidelines, but the company needs to see at least a $2 increase in the commodity price to consider moving forward.

“We have plenty of gas we can drill,” she said. “We just choose not to drill it now.”

Hastings said the Gulf’s importance will face increased pressure as production pipelines and other natural gas infrastructure connect newer shale plays to heavy users in metro areas along the East Coast.

Piper said the Gulf’s years of declining production could turn around with higher prices, though he expects niche independent oil and gas companies will lead investment rather than major oil and gas companies, most of which are pouring resources into shale plays.

“Ultimately these things are going to come back,” Piper said. “Cash is king. They just need to see their cash registers ticking again.”

original article

_

The offshore industry definitely is coming back, which is evident from the number of rigs under contract in the Gulf of Mexico. Recently, there were 73 rigs working, which is 13 more than last year, and that does not include the 30-32 deepwater rigs working, with three or four more arriving next year.

“Rigs are returning to the Gulf of Mexico, yet there are more regulations and more requirements. This does not decrease the number of rigs. It might, however, limit the number of companies. The regulations and requirements, though, are creating more office jobs, which is the good news,” said Claude W. Thorp Sr., vice president, Hamilton Group Engineering in Houston.

Thorp also said some companies might wait to move rigs out until hurricane season is over, so the number is expected to rise this fall. Some companies are not waiting.

Exmar Offshore Co. noted its client LLOG successfully has deployed the FPS OPTI-EX in Mississippi Canyon on the Who Dat development and is making preparations to start production operations.

“2012 is shaping up to be an exciting year for LLOG. The company is in excellent financial condition, and our operational plan includes a full year of production from Who Dat, the startup of two new deepwater development projects, and the resumption of our deepwater exploration program. We expect to more than double production volumes from these developed properties and add significant reserves from our 2012 exploration program,” said Scott Gutterman, president and CEO, LLOG, an exploration company operating in the Gulf of Mexico.

“We are very pleased with the way things are moving forward. Maybe the offshore work is not back fully, but we are getting there quickly. When you go from one project to the next, that is a very good sign. There is a lot happening off shore – much more than last year- all of which is translating into real work. For example, just a few years ago we had less than 20 people in the office. Today, we have over 100,” said David M. Lim, managing director, Exmar Offshore Co. It provides a range of services through the life of projects in engineering, construction and operations of offshore facilities such as drilling rigs, floating production facilities, floating storage operations, and offshore accommodations and service vessels.

With the lull that happened in the industry a few years ago, companies spent time at their drawing boards. Compared to the past five to 10 years, today’s rigs have more technology, are safer, are designed at higher levels in case of hurricanes, and priorities are different. Moreover, the technology, as in some other fields, is not decreasing the number of jobs needed to operate a rig, all of which is regulated.

“We are not focusing on decreasing the number of people who work on the rigs. Instead we are focusing on safety, going deeper, more efficiency and environmental concerns,” Lim said.

The number of people it takes to run a rig may differ with the size of a rig, but the types of positions remain the same, including tool pushers, drillers, roughnecks, mud engineer, derrick hands, geologists, welders, well services, wireline techs, pump operators, pump hangers, offshore engineers, project managers and owner representatives.

There also are many jobs off shore similar to those seen in hotels, such as cooks, laundry and housekeeping personnel.

“Offshore rigs run 24 hours a day, so there usually are two or three shifts each day. Also, because shifts are usually seven days on and seven days off, there are extra shifts to cover for those on leave,” Thorp said.

original article

_

Energy companies in the U.S. Gulf of Mexico have brought back nearly all of the region’s offshore oil and gas production capacity in the wake of Hurricane Isaac.

Some 4% of the Gulf’s oil production and 5% of the region’s natural gas output remained offline, according to U.S. regulators, which noted that shut-in production has been somewhat slow to return because of damage to onshore processing facilities.

But economists and analysts said that Isaac’s impact on the economy is expected to be little more than a blip, especially compared with the havoc wrought by big hurricanes like Katrina and Rita in the last decade.

Analysts say oil companies usually take several days to ramp up energy production after evacuations because they need to restaff far-off facilities and check the integrity of well bores, pipeline connections and the safety of the platforms to make sure the storm didn’t cause any hidden damage.

Kyle Cooper, managing partner at Houston’s IAF Energy Advisors, said companies are being more cautious about their U.S. Gulf facilities in the wake of the 2010 Deepwater Horizon disaster. “I’ve been told the inspection process is much more rigorous and much longer,” he said.

The methodical process of bringing production back online hasn’t had much impact on energy markets. At the height of the storm, Isaac pushed gasoline prices up between 10 and 15 cents, with the bulk of the impact felt in the U.S. Gulf region, said Chris Lafakis, senior economist at Moody’s Analytics.

But the storm is likely no longer a factor in markets for refined products like gasoline and heating oil, he said.

Gene McGillian, an analyst and broker at Tradition Energy, said refineries were slower to restart than some might have expected. But markets are more concerned now with whether the Federal Reserve will decide to pour more money into the economy through a fresh round of bond-buying, or quantitative easing, than with Isaac’s lingering impact.

Mr. Lafakis said Isaac didn’t cause the same kind of infrastructure damage that cut into economic growth as storms such as Hurricanes Katrina and Rita in 2005, or Hurricane Gustav in 2008.

“I think all those storms were more damaging from an economic perspective. Those storms also produced more lasting damage in terms of energy prices and energy production,” he said.

In all, IHS Global Insight estimates that Isaac is responsible for an estimated 13 million barrels of lost oil production and 28 billion cubic feet of lost gas production—together worth about $1.57 billion.

“In terms of real GDP growth this production loss would knock at most 0.16 percentage point off annualized real GDP growth,” said IHS economist Gregory Draco. “It’s a relatively small impact,” he said.

Dozens of platforms and processing facilities were damaged by Hurricanes Katrina and Rita and remained evacuated for months after the storm. For example, in December of 2005, three months after Rita made landfall, 26.2% of oil production and 19.4% of natural gas production remained shut in.

By comparison, all but two of the 596 production platforms operating in the U.S. Gulf and all but one of the 76 rigs there have been restaffed since evacuating before Isaac.

While Katrina left an estimated $120 billion in infrastructure damage in its wake, Isaac is so far estimated to have caused about $1.5 to $3 billion in insured losses, with total losses likely about three or four times that amount, Mr. Draco said.

One reason for that is that Isaac, which made landfall as a Category 1 Hurricane and quickly weakened into a tropical storm, lacked the high wind speeds that caused damage in the past.

“It was a fairly large storm in terms of expanse but didn’t pack a ton of power like previous hurricanes,” RBC Capital Markets analyst Leo Mariani said.

The BSEE said shut-in production comes to about 57,439 barrels of oil a day and 213 million cubic feet a day of natural gas.

original article

_

In an ironic twist, scientists, fishermen and conservationists are urging that hundreds of dormant oil rigs be left standing in the Gulf of Mexico, arguing that a federal plan to remove them will endanger coral reefs and fish.

While environmentalists might more typically be expected to oppose artificial intrusions in the marine habitat, those seeking a halt to the removal want time to study the impact of rig destruction on the Gulf Coast’s economy and to catalog the species, some rare and endangered, that are clinging to the sunken metal.

“I am not supporting oil rigs. I am supporting fish habitat that just happens to on petroleum platforms,” said Bob Shipp, chairman of the Department of Marine Sciences at the University of South Alabama.

U.S. Department of Interior officials say the federal “idle iron” policy, updated in 2010, makes good sense after storms during the 2005 hurricane season toppled 150 defunct oil rigs, causing considerable damage.

If defunct rigs are toppled by storms, they can break loose and hit other rigs – potentially causing an oil spill – be swept to land and destroy a dock or a bridge, knock into and damage natural reefs and cause problems with ship navigation.

“Cleaning up afterwards is a lot more expensive and inefficient,” said David Smith, spokesman for the department’s Bureau of Safety and Environmental Enforcement.

Federal law has long required the removal of drilling infrastructure no longer in use, but a 2010 agency notice asked operators to detail plans for 650 dormant oil and gas production platforms in the Gulf of Mexico and 3,500 inactive wells.

Companies have to demonstrate the infrastructure will be put to use eventually or offer a plan to move ahead with decommissioning, the agency said.

The structures have attracted as many as 3 acres of coral habitat per rig, and some 30,000 fish live off of each reef, according to Shipp.

“They developed into an oasis for reef fishes,” said Shipp, a member of the Gulf of Mexico Fishery Management Council.

FASTER REMOVAL?

Shipp said the updated “idle iron” policy is driving the destruction of old rigs at the rate of three per week, prompting new concerns about the fate of the wildlife and the thousands of jobs that depend on the reef fish.

Diving, sports fishing, restaurants, charter boats and hotels all thrive on the Gulf of Mexico’s $1 billion fishing industry, according to U.S. Representative Steven Palazzo of Mississippi.

If the rig dismantling continues, Shipp fears as much as a 50 percent decline in fishery production, which he worries would further devastate an area still recovering from the BP oil spill in 2010. “I have never seen rigs come down this fast in 30 years of study,” he said.

The Interior Department disputed claims that there has been a rapid rise in rig removals since 2010, though the department could not provide historical data.

As of late August, some 227 platforms were scheduled to be taken down in the Gulf of Mexico through the end of 2013, with 116 slated for disposal, 35 for reef conversion and 76 still awaiting decommissioning plans, the department said. About 3,000 platforms were in the Gulf as of July.

Still, members of the Coastal Conservation Association have described sailing out to favorite fishing holes only to find dead zones after rig removal, according to Ted Venker, the group’s conservation director.

Trade groups representing oil rig operators have not taken an active stance on the issue. The Independent Petroleum Association of America said it understands environmental concerns but the potential liabilities posed by idle rigs must also be considered.

Republican congressman Palazzo has sponsored a “Rigs to Reefs” bill in the House of Representatives that calls for a moratorium on rig destruction until studies can show the impact on fishing and the economy.

Under the legislation, 50 percent of the removal cost would be put back into maintenance of the structures, such as keeping foghorns and night lights working.

“People come from all over the world to fish our waters, and they spend a lot of money while they are here,” Palazzo said. “We want to protect the oil industry, the ecosystem and our way of life.”

original article