Sen. Vitter and Rep. Olson Introduce Legislation to Lift Offshore Drilling Moratorium

June 16, 2010

(Washington, D.C.) – Senator David Vitter (R-LA) and Rep. Pete Olson (R-TX) today both introduced legislation to lift the Obama Administration’s six month offshore drilling moratorium, put in place in the wake of the Deepwater Horizon oil spill. Offshore drilling provides 30% of US oil production, is the second largest source of revenue to the federal government at $6 billion annually and has a direct employment of 150,000 individuals. The six month moratorium will result in rigs moving overseas to continue operations and increasing US reliance on foreign sources of oil.

“This moratorium threatens to finish what the oil spill started. If it stays in place, even for six months, it will be a devastating blow to the economy of Louisiana and other Gulf states,” said Vitter. “My bill would simply nullify the president’s ill-advised moratorium. The best way to prevent future oil spills is not to stop drilling altogether, but to improve the inspection process to ensure that our rigs are safe.”

“This moratorium has impacted thousands of Houstonians in the offshore drilling industry including rig operators, equipment manufacturers, transportation and support staff,” Rep. Olson said. “The Gulf Coast economy is already suffering from the oil spill, and is being further crushed by this painful and unnecessary moratorium. Industry experts indicate losses of millions of dollars per day and have explored moving operations overseas. It would take a minimum of 5-10 years to get production back to normal operations should these rigs leave. We don’t shut down the entire airline industry while NTSB investigates a plane crash and we shouldn’t do the equivalent to the energy industry.”

Text of the legislation:

A BILL
To terminate the moratorium on deepwater drilling issued by the Secretary of the Interior;
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. TERMINATION OF MORATORIUM ON DEEP WATER DRILLING.
The moratorium set forth in the Minerals Management Service Notice to Lessees No. 2010–N04, dated May 30, 2010, and any suspension of operations issued in connection with the moratorium, shall have no force or effect.

Fast facts on offshore drilling:

Costs:
• This will shut down 33 rigs that will be idle for 6 months costing $250,000 to $500,000 per day/per rig.
• Direct wages lost, upwards of $330 million a month
• A 6 month halt in new drilling would defer 80,000 barrels/day, or 4% of 2011 deepwater Gulf of Mexico production (Wood McKenzie).
• Forecasted Production: 46,000 boe/d lower in 2010 due to the moratorium. In 2011 193,000 boe/d of production from deepwater Gulf of Mexico will be deferred.

Jobs:
• 800-1400 jobs per idle rig are at risk resulting in $165 to $330 million/month for all 33 platforms.
• The 33 rigs subject to the ban were successfully inspected in early May by order of Interior Secretary Ken Salazar. And the industry has willingly offered to undergo more inspections and a recertification of equipment in lieu of a moratorium.

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