Changes to drilling could impact industry globally

He characterized it as a deadly pirouette of oil and politics, and compared it to the “danse macabre” – a late-medieval allegory on the universality of death and the fragility of life.

Dr. Lee Hunt, president of the International Association of Drilling Contractors (IDAC), visited the Quality Hotel in Houma last week to speak about the far-reaching effects of the moratorium not just for the present, but also for the future of drilling along the entire Gulf.

Hunt didn’t mince words, either, when addressing how delicate the oil industry has become in recent months, and how quickly it might plummet.

“You’ve probably seen the President’s council on economic dreamers, I mean, economic advisors,” he joked. “Which are assumptions based on assumptions of assumptions that only 12,000 people have been hurt or impacted and that’s not too bad. Maybe laying off 12,000 people in D.C. might be a better idea.”

According to the executive summary of the inter-agency economic report from the federal government, it is estimated that 8,000 to 12,000 jobs would be “temporarily” lost as a result of the moratorium and would return following the resumption of deepwater drilling in the Gulf of Mexico.

“We expect this impact to be more heavily concentrated in smaller businesses than in the larger companies operating in the Gulf Coast,” the report stated. “These estimates are lower than estimates from earlier studies. There are several reasons for the difference, but a primary reason is that many deepwater drilling operators and contractors have retained most of their employees. Earlier studies assumed that all employees would be let go.”

But according to Hunt, many businesses have had employees take hour cuts and pay cuts in order to keep those employees on staff.

“For those lucky enough to be kept on, overtime was slashed, business enterprises stalled and growth and hiring abruptly halted. The political stability for investment, a major drawing card for the U.S. Gulf, plunged from the best in the world to the level of banana republic.”

Some local officials are unsure about what happens next.

“I’ve talked to some of the business people here that say they are still working,” Lafourche Parish President Charlotte Randolph said. “So we’re concerned about long term effects, but what we’re seeing right now in the short term is that people are holding on.”

After the government’s economic report was released, Sen. David Vitter (R-La.) stated in a press release he was frustrated because the report admitted to not doing an economic analysis of the moratorium’s effects prior to its issuance.

“I’m astounded that the Obama administration conducted no economic analysis before making the decision to issue the moratorium. This reckless disregard for the economic well-being of the Gulf region is frankly inexcusable,” Vitter said in the release.

He report also stated 41 out of the 46 rigs that were in the Gulf region as of April 20 still remain.

“Four rigs that have physically left the Gulf,” Hunt said. “Two more are under negotiation with their operators to move, and what goes uncounted were three deepwater rigs that were headed for the Gulf of Mexico or had actually arrived [prior to April 20]. These [rigs] are being turned around.”

The biggest concern Hunt has for the future of deepwater drilling is the disjointed communication between the government and the industry, and said communication between nations needs to be more transparent.

“The Bureau of Ocean Energy Management, Regulation and Response (BOEM) [wants to] distance itself from influence of industry in developing rules and regulations for drilling,” Hunt said.

“For me, this is suggesting the best cure for a migraine headache is to remove the brain. Without the knowledge of the industry being communicated to regulators, with transparency candor and clarity, there will not be a sufficiently and well-informed enforcement mechanism for safe environmentally sound operations,” he continued.

With that, Hunt added in 2011, Cuba will begin to drill its first of seven exploratory wells in the Gulf of Mexico, just 40 miles outside of Key West, Fla. The drilling company is based out of Spain, the rig crew out of Italy and the rig itself out of China.

The blowout preventor (BOP), however, is U.S. made – the very same type BOP that failed the Deepwater Horizon rig, and an oil spill within Cuba’s drilling zone would reach the Florida Keys in three days.

“That same BOP is the last line of defense between [that rig] and the coast of Florida is just three days away on Gulf stream,” Hunt said.

Hunt isn’t the only one concerned with the drilling to commence in Cuba.

“[Cuba has] no environmental law. They are going to use an American BOP but they are using foreign everything else 40 miles from Key West,” Representative Gordon Dove said. “It’s a setback for environmental standards. They are not going to spend the money to ensure environmental and human safety.”

But Hunt continues to push for safety, and envisions a united future for deepwater drilling in order for the industry to survive.

“IDAC recognizes the deepwater oil industry operating in all three enterprise zones (U.S., Mexico and Cuba), and the government’s need to agree on standards to protect citizens of all three Gulf nations,” Hunt said. “One Gulf is our vision for responsible, safe deepwater drilling. A priority for us is alignment within the industry to create a culture of safety in one Gulf.”