Drilling advances

	Vol. 231 No. 7
JIM REDDEN, CONTRIBUTING EDITOR

A perfect storm for the anti-drilling crowd

While flipping through the channels the other night, I happened to catch a cable news reporter interviewing no less of an oil industry authority than American actor/comedian Ted Danson. He seemed ready to leap from the television, declaring breathlessly that the catastrophe in the Gulf of Mexico is proof positive that the world should ban all offshore drilling immediately and rely entirely on renewable energy sources.

I laughed it off, assuming he was promoting some futuristic sitcom where everyone flew happily and conscience clear on ethanol-powered airplanes and used little wind generators to propel their Lamborghinis. Unfortunately, the more I read and hear lately, the clearer it becomes that Ted may be singing to a choir that is growing exponentially. We should expect as much, considering you can’t turn on the television without seeing the continuing devastation in the Gulf, live and up close. As those of us who lived through the tragedy that was Vietnam can attest, when the sight of wildlife caked in crude and the laments of fishermen on the verge of ruin are brought into our homes every night, emotions naturally become inflamed.

Regrettably, as sickening as all this is for those of us who have an enduring kinship with the water in general and the Gulf Coast in particular, the talking heads and all the others doing the bellowing seem to have lost sight of the fact that 11 families and countless friends are without their loved ones, who, like them, were simply trying to make a living. In no way can we, or should we, even remotely attempt to downplay the environmental mess in the Gulf. It is tragic, yes, but it seems to have overshadowed the real tragedy. I covered the Piper Alpha explosion in the UK North Sea in 1988 that took the lives of 167 workers. Of course, there was an extensive investigation, the Cullen inquiry, which issued 106 safety recommendations that the industry then adopted. Yet, through it all, drilling and production continued. But, in the US, we chose to honor the memory of those 11 workers on the Deepwater Horizon by putting a six-month halt to all deepwater drilling in the Gulf and large parts of Alaska. In so doing, we have jeopardized the livelihoods of many of those men’s family, friends and colleagues. Goodness, even some of the survivors of the men who perished told Washington it was a wrong move.

Frankly, I’m surprised official Washington isn’t walking around with a collective limp, considering the knee jerking going on up there these days. Of course, the incident in the Gulf had the bad timing to occur smack in the middle of posturing for this year’s upcoming midterm congressional elections. That’s the time when grabbing sound bites for the voters back home takes precedent over actually legislating. And who better a target these days? Pulling away experts to hold grandstanding public thrashings while the situation in the Gulf remains fluid shows precisely where their priorities lie.

At least partisan politics did not sway a federal judge in New Orleans who on June 22 struck down the six-month ban, concluding quite sensibly that the government should not have immediately put thousands of jobs at risk because of one incident, as catastrophic as it may be. Of course, the administration is not giving up without a fight, promising the verdict will be appealed post haste and, in the meantime, preparing a new, “more flexible” moratorium.

The Gulf disaster also had the misfortune of preceding a couple of blowouts in the Marcellus Shale and a pipeline explosion. A filmmaker from upstate New York even produced a documentary that is getting positive reviews in some corners for its portrayal of shale gas operators as polluters. Of course, critics have pointed out the gross inaccuracies in Gasland, but, hey, why let the facts stand in the way of a good story. Unfortunately, all this has combined into a perfect storm for the anti-drilling crowd.

After nearly four decades of covering and following geopolitical affairs and looking on with mouth agape at the folly of political “leaders” worldwide, I should know better, but nevertheless, I still hold out hope that reality will set in and the moratorium will be lifted.

In an address to the nation, US President Barack Obama acknowledged that the ban “creates difficulty for the people who work on these rigs.” Someone needs to whisper in his ear that the people on the rigs represent a very small percentage of the people whose futures he has turned upside down. As the Louisiana Mid-Continent Oil and Gas Association stated in a letter to Congress, each position on a rig essentially supports four other jobs, be it the guys who mix the mud onshore or the deck hands on a supply vessel. Therefore, the moratorium, according to LMOGA, means 800–1,400 jobs are at risk for each of the 33 rigs shut down. Uh, Mr. President, may I remind you that most of those at-risk employees live in the same area that you have vowed to make whole? I’m not sure they need your brand of help.

And what about those 33 deepwater rigs, some of which are newbuilds of the very latest generation? It’s no secret that operators in West Africa, Brazil, Southeast Asia and elsewhere are salivating at the prospect of them joining their respective exploration programs. Once they leave, particularly if they sign multiyear contracts, it will be some time before they sail back into Gulf waters. When the all-clear is given, we’re going to be hard-pressed to drill deep and ultra-deepwater wells with jackups and inland barges.

Oh, something else, Mr. President. We all know that a six-month shutdown in deepwater drilling will not have any appreciable impact on oil supplies in the short term, but how long before the speculators start doing their thing? Wood MacKenzie estimated that a six-month drilling shutdown will keep 80,000 bpd, or 4% of previously projected 2011 deepwater GOM production, out of the market. The oil opportunists will jump on that, and before long many of those grandstanders in Washington may have to face the wrath of constituents who find themselves forced to spend a goodly chunk of their monthly Social Security checks to fill up their Hondas.