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July 15, 2010

Another Rig Leaves the Gulf

July 15, 2010
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Obama’s Offshore Moratorium Continues Killing Jobs in the Gulf

Oil Platform

The Obama Administration’s offshore moratorium is already sending jobs overseas.

Last week, Diamond Offshore announced that it was sending the Ocean Endeavor rig from the Gulf of Mexico to Egypt. This week it announced that it was pulling the Ocean Confidence out of the Gulf of Mexico and sending it to the Congo.

Bloomberg reports that the Congo project is expected to generate $234 million in total revenue—revenue and jobs that should have been created in the Untied States.

Besides the actual production of oil, workers on the rigs and people that supply the rigs will be adversely affected. According to the Louisiana Mid-Continent Oil and Gas Association:

  • Each drilling platform averages 90 to 140 employees at any one time (2 shifts per day), and 180 to 280 for 2 2-week shifts
  • Each E&P  [exploration and production] job supports 4 other positions
  • Therefore, 800 to 1400 jobs per idle rig platform are at risk
  • Wages for those jobs average $1,804/weekly; potential for lost wages is huge, over $5 to $10 million for 1 month – per platform.
  • Wages lost could be over $165 to $330 million/month for all 33 platforms

There are also impacts to people who supply the rigs:

  • Supply boats – 2 boats per rig with day rates of $15,000/day per boat – $30,000/day
  • Impacts to other supplies and related support services (i.e., welders, divers, caterers, transportation, etc.)

This is the problem with the Administration’s overly restrictive moratorium. Rigs are portable and they will go where the work is. When a rig leaves the Gulf, not only the jobs on the rig are endangered, but also the jobs of those who supply the rig. As noted above, each job in oil and gas exploration and production supplies 4 other positions.

The Administration’s policies are forcing rig owners to move their rigs out of the country. This means fewer jobs for Americans, less domestic energy production, and greater oil imports.


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