Lack of permits brings drilling to a halt

Tuesday, Aug. 24
August 24, 2010
Thursday, Aug. 26
August 26, 2010
Tuesday, Aug. 24
August 24, 2010
Thursday, Aug. 26
August 26, 2010

With south Louisiana’s drilling industry still touch and go as a result of the moratorium, Jon Jeppesen, executive vice president of the Apache Corporation, paid a visit to last week’s South Central Industrial Association (SCIA) luncheon to discuss the effect of the moratorium on his business, and other independent oil companies in the Gulf.

Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids, and was founded in 1954. Today, Apache Corporation is one of the world’s top independent oil and gas exploration and production companies, according to the company’s website.


Seventy-five percent of Apache’s revenue comes from oil production.


“The deepwater suspension is going to cause a lot of delays,” Jeppesen said. “They don’t have to have a moratorium, as long as they’re not granting permits it has the same effect, so it doesn’t matter whether a judge strikes it down or not. We’re not going to get permits until they’re ready to give them to us. This is going to cause a lot of consternation for the entire Gulf of Mexico.”

According to Jeppesen, Apache will have 71 wells in the Gulf this year, and 44 of those will be offshore.


“We will be drilling fewer wells than we normally do due to permits,” Jeppesen said, addressing the hard-felt impact of permit suspensions surrounding the moratorium. He noted 73 percent of total production in the Gulf is independent drilling companies, which constitutes more than 200,000 jobs and $38 billion in economic impact.


“Half of new oil discoveries in this country is in deep water, so don’t think for a minute that it isn’t important. We just need to be able to do it, and do it safely and with regulations that we can deal with,” he said.

But the regulations that stand right now aren’t ones that oil companies can deal with, including the latest Notice to Lessee (NTL) 06 suspension that calls for much more detailed paperwork on rigs.

“The NTLs, or notice to lessee, are a way of putting out rules,” Jeppesen said. “The problem is they come out and they’re effective immediately, they don’t say, ‘Effective 60 days from today, here’s how we’re going to do things.’ Everyone in this business is going to have to plan their business a lot better, with more details and longer wait time.”

Due to the suspensions issued by the federal government while the moratorium remains a district court battle, more and more rigs remain idle. Seven rigs were idle on May 8, affecting 784 jobs and 14 rigs were idle on July 31, affecting 1,600 jobs.

Jeppesen said by Aug 31, 25 rigs are projected to be without contract, and 31 by the end of September, affecting over 3,600 workers.

“If permits don’t speed up, it could destroy a lot of good paying American jobs,” Jeppesen said.

Concerned for the future of oil companies in the Gulf, SCIA Executive Director Jane Arnette asked Jeppesen what local organizations could do to help.

“Get the word out,” he said. “Continue to write people, because the rest of the country doesn’t seem to understand how significant this is. The rest of the country is going to get impacted eventually with higher gas prices … just keep beating the drum.”