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Last updated: July 13, 2010 7:19 pm
Seeking an “ass to kick” over the Gulf oil spill other than BP’s, the Obama administration has had to lace up its boots again. Its original six-month deepwater drilling moratorium was rejected by a federal judge as arbitrary and unscientific. The latest iteration cites “new evidence” and refers not to specific depths but rather the presence of safety equipment typically accompanying only deepwater rigs. Whether or not the courts receive the latest ban more favourably may have limited bearing – drillers are at the mercy of the government to receive permits and precious few are being issued. These days, lease sales are suspended too.
Companies operating some 55 hugely expensive drilling and platform rigs in deep Gulf waters have taken the hint and have begun cutting their losses. Diamond Offshore, the largest offshore driller, recently sent a rig to Africa, the second that it has moved out of US waters. An estimated 1,400 jobs may sail away with each mothballed or departed rig. So will plenty of future energy production and tax revenue. Six in 10 of the 7,300 federal leases in the Gulf of Mexico are defined as deepwater and they produce 80 per cent of its oil. Production impact today is minuscule, but various estimates put it at 80,000-130,000 barrels a day in a year and a worst-case scenario of 500,000 b/d later this decade.
It is unlikely to come to that, but lost jobs and tax revenue alone will rival the spill’s tourism and fishing impact. Then there is the damage to one of the few industries American companies still dominate. If the extra time and money are justified by new safety measures rather than political pique, then that is fine. But wth both the old and new bans set to expire just after midterm elections, suspicions that the White House is trying to stave off an ass-kicking at the polls at public expense are gaining credibility.
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