The Obama administration has halted all deepwater drilling activities in US waters, effectively shutting down operations at 33 locations in the US Gulf of Mexico.
The US president has also suspending all planned exploratory drilling in the Arctic Ocean, offshore Alaska, until 2011, or longer, as a consequence of the Deepwater Horizon disaster and oil spill in the US Gulf of Mexico.
Besides implementing a temporary halt to deepwater drilling activities in the US GoM, Obama has also ordered the postponement of lease sales in the region for at least six months, as well as cancellation of the pending sale offshore Virginia and the withdrawal of permission to drill offshore Alaska.
US Interior Secretary Ken Salazar said: “These actions are all guided by the need to take a cautious approach to offshore oil and gas development as we strengthen safety and oversight of offshore oil and gas operations.”
However, there are warnings of thousands of oil jobs being lost as a result of the freeze. There has been talk of almost 32,000 American jobs being hit and that as many as 6,000-8,000 offshore workers could be laid off.
How this might knock on to European and, especially, UK companies actively supporting US deepwater GoM operations is not known.
And analysts have claimed that the six-month moratorium on new drilling in US waters will delay about 80,000 barrels of oil equivalent a day that were set to come online next year.
Wood Mackenzie has indicated that this equates to about 4% of its total deepwater production estimate for region next year. Output is currently about 1.875million barrels oil equivalent a day.
The American Petroleum Institute warned that such actions could threaten US energy security.
Bernstein Research has suggested that tighter future regulation could push up the marginal cost of new deepwater production by about 10%.
Bernstein said, too, that deepwater operators were likely to have to fund the research into how wells can be drilled safely in 3,000m (10,000ft nominal) of water – twice the depth of the current leak – which is where the industry had been moving for some years.
However, the drilling pause – in waters deeper than 500m (1,640ft) – will apparently not impact US deepwater wells that are already in production.
The 33 rigs that have been ordered to suspend operations are being instructed to stop at the first safe opportunity and to put into effect the new safety measures outlined by Washington before they will be permitted to resume operations.
Among those measures is the certification of blowout preventers (BOPs) as operating properly – said to be one of the causes of the Deepwater Horizon disaster and the resultant massive spill that now covers an area larger than Wales.
Turning to the Arctic ban, directly affected already is Shell’s planned five-well exploration campaign in the Chukchi and Beaufort Seas offshore Alaska.
That had been expected to get under way this month or in July.
Shell had already promised to employ a number of new measures designed to prevent such an occurrence in its Arctic operations as happened in the Gulf, but the precautions were considered insufficient to guarantee that it would not happen, even in the shallow waters where Shell would have been drilling.
Finally, the Canadians are querying the safety regime that would apply to exploration offshore Greenland, including by Scottish company Cairn Energy.