Drillers are up in arms about the July 12 suspension of drilling in the US Gulf of Mexico. The International Association of Drilling Contractors “unequivocally opposes” the decision, saying the “blanket, industry-wide edict is contrary to precedent and abrogates lawful offshore leases”.
In a strongly worded statement, IADC president Dr Lee Hunt warns: “In issuing this new moratorium, the Department of the Interior has chosen to ignore volumes of evidence regarding the industry’s safe operating practices, as well as industry’s exhaustively produced recommendations – made at DOI’s request – for moving forward even more safely.”
The IADC says it endorses the comments of Senator Mary Landrieu on June 12 on the dangers of overreaction.
“Congress cannot afford to react to this disaster as we did following the meltdown at Three Mile Island, when the government unwisely halted all nuclear power plant construction for 30 years,” she wrote (
http://landrieu.senate.gov/mediacenter/inthenews/06-04-2010-1.cfm
).
The July 12 drilling suspension bars all drilling operations using subsea blowout preventers (BOP), as well as those using surface BOPs from floating facilities.
Unlike the original moratorium, water depth is not referenced. A June 22 court ruling lifted the earlier moratorium. The current suspension will extend through to November 30, although the US Department of the Interior (DOI) has indicated that it could be lifted sooner.
The IADC says that Secretary of the Interior Ken Salazar does not dispute that wells can be drilled safely using accepted industry practices augmented with strengthened requirements.
The association notes that the DOI’s concerns in the July 12 notice centre on “blowout containment shortcomings” and “spill response capabilities that are strained by the BP oil spill”.
“Prevention is the key to safety in drilling, whether offshore or land,” Dr Hunt said.
“The industry’s history of drilling 42,000 Gulf of Mexico wells over more than six decades proves that, when accepted practices are followed, the threat of spillage is minimal.”
He added that drilling could safely resume through non-hydrocarbon-bearing strata with virtually no risk.
The IADC warns that the continued moratorium threatens to “ship overseas a hi-tech industry providing well-paying jobs to people residing across the US”.
An IADC study of 11,875 offshore workers placed these people in 296 congressional districts – 68% of total districts nationwide.
The association further warns: “The continued moratorium will threaten the nation’s energy security by increasing imports. The US consumes more than 20million barrels of oil each day yet produces less than half of that.
“Roughly half of US oil production comes from the Gulf of Mexico, 80% of that from deep water. While production is allowed to continue under the new moratorium, the cutback in drilling and the exodus of quality rigs portend falling production in the future.
“Once rigs are working outside the US on long-term contracts, as is common practice, their return will be years away, if at all.”
That migration appears to have started as Diamond Offshore has suspended a US Gulf contract and has signed up to a new multi-well international commitment with Murphy Oil that will see the deepwater semi-submersible, Ocean Confidence, working offshore West Africa – Republic of Congo.
Larry Dickerson, Diamond’s president and CEO, said, “As the uncertainty about continued deepwater drilling in the Gulf of Mexico persists, we must consider alternatives that allow our deepwater assets to remain employed.
“The contract we suspended with Murphy has been restructured into a one-year commitment in the Gulf of Mexico that is expected to recommence when our customer is satisfied that it can obtain the necessary permits and can meet any new regulatory requirements.”
As for the US government’s position, Salazar has directed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) to issue new suspensions of deepwater drilling on the US Outer Continental Shelf (OCS), saying a pause is needed to ensure that oil&gas companies first implement adequate safety measures to reduce the risks associated with deepwater drilling operations and are prepared for blowouts and oil spills.
However, Salazar said that shallow-water drilling activities that use different technologies do not present the same type or level of risks as deepwater drilling operations and can continue to move forward if operators are in compliance with all safety and environmental requirements, including new requirements issues through recent Notices to Lessees.
Production activities in federal waters of the US Gulf of Mexico are not affected by the deepwater drilling suspensions.
“More than 80 days into the BP oil spill, a pause on deepwater drilling is essential, and appropriate, to protect communities, coasts, and wildlife from the risks that deepwater drilling currently poses,” said Salazar.
“I am basing my decision on evidence that grows every day of the industry’s inability, in the deep water, to contain a catastrophic blowout, respond to an oil spill and to operate safely.”