Andy Radford, senior policy adviser for offshore issues at the American Petroleum Institute, says the Gulf of Mexico holds about 44.9 billion barrels of oil and 232.5 trillion cubic feet of natural gas, mostly in deep water. But how long can oil companies and drilling contractors wait out the federal moratorium on deepwater drilling — or will they abandon those fields and the oil in them?
There are 33 deepwater rigs in the Gulf (less than 100 in the world), and 24 are idled by the moratorium. Two have been removed from the Gulf. If rigs aren't producing oil from their wells, the leaseholder pays a yearly rental rather than offer a percentage of royalties from their produced oil. And if rigs are idle, the companies are liable for dismantling all of the invested equipment. The companies also provide about 400 jobs per platform.
Onshore, the numbers are greater. Radford suggests for every one job lost on a rig, between seven and nine are lost onshore — employees for suppliers, manufactures, shipping, food vendors, warehouses, among others, could be at risk for losing their jobs. If oil companies and drillers skip town, they'll most likely focus on deepwater wells in West Africa, Cuba and Brazil — and the jobs aren't going with them. Neither is the U.S. revenue. "If they don't see this moratorium being lifted, they're going to be looking for other opportunities," he says.
Deepwater production has tripled since 2000, and more than half the world's oil discoveries since 2006 have been in deep water. To meet the world's expected energy demand by 2035, Radford says rigs would need to tap 44 percent more than they did in 2006. Currently, the Gulf provides about 30 percent of U.S. oil production.
Bob Thomas, professor and director of the Center for Environmental Communication at Loyola University, says the potential job loss and economic fallout could result in job losses beyond the oil industry — and less tax revenue from fewer sales of goods and services in oil-industry communities.
Both agree it's too early to measure these sweeping economic effects. President Barack Obama initiated a six-month moratorium, but it remains to be seen if, at the end of those six, he'll add another. Obama also canceled drilling exploration in Alaska and the 2010 Western Gulf sale. Radford notes that this downtime gives the industry time to reflect on what to do right — and where it went wrong. — Alex Woodward