Randall Stilley has witnessed firsthand the Obama administration’s job-killing agenda. As the president and chief executive of Seahawk Drilling, he had to lay off 632 employees before filing for bankruptcy — a direct result of President Barack Obama’s anti-energy policies.
Someday, you will be pumping gas, staring at the digital numbers racing by, and you’ll wonder: “How could I possibly be paying $6 a gallon for gasoline?”
You also will be wondering why so many of your friends and relatives are still looking for work. Or why America is more dependent on foreign oil than ever before.
If you look back to today, you’ll remember why: President Obama’s de facto moratorium on deepwater drilling in the Gulf of Mexico.
You’ll recall how Gulf workers had begged the White House to approve new permits for oil exploration. They were losing their jobs and gas prices were soaring. It made sense to get everyone back to work exploring for oil in the Gulf.
Obama responded from the Bizarro World. He said he wanted to cut America’s dependence on foreign oil. Then his administration effectively blocked U.S. offshore exploration, refusing to approve but a handful of deepwater permits in the Gulf. He said he wanted incentives for domestic drilling, then sought new limits on drilling leases.
Oh, yes, Obama did call for more drilling in 2011… in Brazil. He traveled there to tell Brazil’s leaders that he was looking forward to importing more of their oil. “We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers,” Obama said.
Interior Secretary Ken Salazar, meanwhile, told Congress that he was in favor of a “robust” oil and gas industry in this country – but then made it almost impossible to get a new drilling permit.
He told Congress that drilling rigs were not leaving the Gulf of Mexico – but rigs were leaving and drilling companies were going bankrupt. He said oil and gas production in the Gulf of Mexico was at an all-time high in March 2011 – but, in reality, production had fallen by over 30,000 barrels per day.
Not surprisingly, gas prices skyrocketing, hitting $4 a gallon in the spring of 2011 and then $5 a gallon in the summer. With transportation costs soaring, prices for everything from food at the grocery store to shirts at department store also increased.
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"We are on life support right now and there is not a lot of time left. We have had a number of drill ships that have left the Gulf and have gone to other parts of the world. They are likely not to return in the short term and maybe not return at all.
The expertise associated with these operations are also being lost. People are frustrated and giving up. Companies can no longer pay these people without income.
If we can't get relief in the very, very short term we are going to see a change where we start losing this capability. The ramifications on the U.S. in terms of lower production volumes will put more pressure on imports and expose us to a higher balance of payment issues, exposure to more OPEC issues, security and supply issues—it will just get worse." - Gary Luquette, President of Chevron's North America Exploration and Production
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Jan 27 (Reuters) - Some of the 30-plus deepwater rigs that were in the Gulf of Mexico have moved to other markets, first because of a U.S. halt called last May after BP Plc's (BP.L: Quote) well blowout, and then because of the lack of permits once the moratorium was lifted.
Below are rigs contracted to work in the Gulf of Mexico that have been or will be moved to other regions.
* Diamond Offshore Drilling Inc (DO.N) said on July 9 that the Ocean Endeavor, contracted to earn about $290,000 per day from Devon Energy Corp (DVN.N: Quote) in the Gulf of Mexico, would move to Egypt under a new deal with Burullus Gas Co. [ID:nN09154557]
* Diamond said on July 12 it would move the Ocean Confidence, under contract to Murphy Oil Corp (MUR.N), from the Gulf to the Republic of Congo. [ID:nN12212133] The rig is now drilling wells for Cobalt International Energy Inc (CIE.N: Quote) off Angola, but is due to return to U.S. waters in October.
* Transocean (RIGN.VX: Quote)(RIG.N:), the world's largest offshore drilling contractor, said on Sept. 1 that it had moved its Marianas rig, under contract to Italy's Eni (ENI.MI:), from the Gulf to work in Nigeria. [ID:nN01152276]
* Transocean said on Sept. 14 that its Discoverer Americas vessel, under contract to Norway's Statoil (STL.OL:), was leaving for Egypt and was due back in the Gulf in March. [ID:nN14103743]
* Ensco Plc (ESV.N: Quote) said on Dec. 1 that its newly built 8503 rig, under contracted with Cobalt, would work for Tullow Oil Plc (TLW.L:) off French Guiana for three months. [ID:nN01131883]
* Pride International Inc's (PDE.N:) newly built Deep Ocean Ascension, under contract with BP, is moving to the Mediterranean Sea from the Gulf of Mexico in the first quarter, according to the latest Pride fleet update.
* Noble Corp (NE.N:) said on Jan. 27 that the Clyde Boudreaux would move to Brazil for a year at a knock-down rate of $290,000 per day to work for Royal Dutch Shell Plc (RDSa.L:), starting mid-April, and that it expected more to follow.
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Faced with uncertainly and a clearly hostile Obama Administration, deep water oil drilling rigs are starting to pack up and move out of the Gulf of Mexico. On Friday, the CEO of Houston area Diamond Offshore, Larry Dickerson, announced, “As a result of the uncertainties surrounding the offshore drilling moratorium, we are actively seeking international opportunities to keep our rigs fully employed.”
Devon Energy Corporation, which had been leasing the Endeavor, paid Diamond a $31 million dollar early termination fee to get out of its commitment. There are currently 33 deep water project which are affected by the ban. It is difficult to determine exactly how many jobs will be lost and if the rigs will ever return to American waters. Each rig generally has over 100 jobs on the actual platform at any one time and a large number of support people on shore.
Estimates have run as high as 10,000 high paying jobs could be lost.
In all likelihood this rig moving to friendlier water is just the first of such announcements. With President Obama pushing hard for a six month moratorium of this type of drilling, many other deep water drilling platforms will likely follow. President Obama, despite having already lost twice in the courts to continue the ban, has said his administration needed more time to review and implement new safety standards. He also wants to form a commission to investigate the cause of the April 20th BP oil spill.
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