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Aug 18, 2010 4:31 PM by Melissa Canone

Moratorium in its 3rd Month

NEW ORLEANS (AP) - The ban on deepwater petroleum drilling in
the Gulf of Mexico is in its third month and the forecasts of
thousands of lost jobs in Louisiana just haven't materialized.
Why not? And could it still happen?
It's a worry for the state's economy, for sure, and shouldn't be
discounted, says David Dismukes, associate executive director for
the Louisiana State University Center for Energy Studies.
But for now, the unemployment lines aren't streaming around the
corner for reasons tied to the fact that petroleum drilling is an
enormously complicated business. According to figures from the
Louisiana Workforce Commission, there were 595 first-time claims in
June and July for jobless benefits from people who had just lost
jobs in the mining sector, which includes mostly petroleum.
There's more to that sector that deepwater drilling. It includes
onshore drilling, exploration and production - including the huge
Haynesville natural gas find in northwestern Louisiana - plus
natural gas exploration in state-owned waterbottoms and close to
the coast.
For June and July, Louisiana averaged 4,738 first-time
unemployment claims per week in the overall economy. That's far
below the weekly high this year of 6,033 for the week ending Jan.
9. A similar pattern is noted in Texas and Mississippi.
For now, Dismuskes said big job losses are being held off by
"mitigating circumstances."
First, no one knows how long the moratorium, ordered by Interior
Secretary Ken Salazar after the Deepwater Horizon disaster and the
BP oil spill in the Gulf, will last. Salazar ordered it through
Nov. 30 while new safety standards are developed. He wants rigs to
re-examine equipment and safety standards and plans to order new
blowout preventer safeguards.
But pressure is coming to lift the ban before widespread layoffs
hit the Gulf. The Bureau of Ocean Energy Management, Enforcement
and Regulation is now holding hearings on the issue, but agency
head Michael Bromwich has refused to pin down on a date for a
decision.
Dismukes says the industry is one of specialized skills and not
one where entire work forces are easily trained - or easily
expendable.
"The people who work in the deepwater environment are the
A-team. They are the best of the best," Dismukes said. "They're
dealing with millions of dollars in assets and equipment. They are
highly trained and an oil company has invested in them."
The Oil Patch learned more than 20 years ago how not to react to
crisis. In 1986, due to Iran flooding petroleum markets to pay for
a war against Iraq, oil prices crashed and thousands of industry
employees were laid off quickly. After prices rebounded, the
industry suffered a yearslong shortage of skilled workers after
many of those laid off never returned.
And the overall work force in drilling is growing older and
older, another disincentive for hasty layoffs.
"A six-month moratorium is not a real long period of time to
justify laying off a skilled work force," Dismukes said.
Although two deepwater rigs have been moved out of the Gulf by
Diamond Offshore for deepwater contracts in foreign markets and
another 30 in the Gulf are idle, Dismukes said it's not easy for
drilling companies to readily find other projects.
"In six months, it is difficult to replace a deepwater project
somewhere else in the world. These are projects that have gestation
periods of years, not months," he said.
And it's not as if the rigs would be readily accepted in all
quarters: BP's deepwater drilling plans of Britain's Shetland isles
and the Libyan coast are under scrutiny. Opponents want a
moratorium in those areas until the cause of the Gulf spill is
determined.
Drilling companies also are taking advantage of the pause in the
Gulf to work on the giant deepwater rigs that can command prices of
$750,000 per day.
"The industry has been working at breakneck speeds to meet
domestic energy requirements since Hurricane Katrina," Dismukes
said. "This is a great opportunity to go back and do maintenance
work, retrain, get people recertified and trained in new areas."
Still, Dismukes said its economically hazardous to ignore the
huge job loss forecasts, which he said are based on solid numbers.
"These are scenarios that could happen in the worst of
circumstances," he said. "We're just fortunate there are some
mitigating circumstances now."

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