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JONES ACT AND GULF SPILL
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July 14, 2010

IADC opposes new moratorium

The International Association of Drilling Contractors (IADC) says it "unequivocally opposes" the suspensions of deepwater drilling in the Gulf of Mexico announced July 12. It says the "blanket, industrywide edict is contrary to precedent and abrogates lawful offshore leases."

"In issuing this new moratorium, the Department of the Interior has chosen to ignore volumes of evidence regarding the industry's safe operating practices, as well as industry's exhaustively produced recommendations - made at DOI's request - for moving forward even more safely," said IADC President Dr. Lee Hunt.

IADC endorses the comments of Sen. Mary Landrieu, D-La., who wrote in a June 4 Op/Ed that: "Congress cannot afford to react to this disaster as we did following the meltdown at Three Mile Island, when the government unwisely halted all nuclear power plant construction for 30 years."

The July 12 drilling suspension bars all drilling operations using subsea blowout preventers (BOP), as well as those using surface BOPs from floating facilities, notes IADC. Unlike the original moratorium, water depth is not referenced. A June 22 court ruling lifted the earlier moratorium. The current suspension will extend through 30 Nov., although DOI indicates that it could be lifted sooner.

IADC says that Secretary of the Interior Ken Salazar does not dispute that wells can be drilled safely using accepted industry practices augmented with strengthened requirements. The DOI's concerns in the July 12 notice center on "blowout containment shortcomings" and "spill response capabilities that are strained by the BP oil spill."

"Prevention is the key to safety in drilling, whether offshore or land," Dr. Hunt said. "The industry's history of drilling 42,000 Gulf of Mexico wells over more than six decades prove that, when accepted practices are followed, the threat of spillage is minimal."

Drilling could safely resume, he added, through non-hydrocarbon-bearing strata with virtually no risk.

The continued moratorium threatens to ship overseas a high-tech industry providing well-paying jobs to people residing across the U.S.A. An IADC study of 11,875 offshore workers placed these people in 296 Congressional Districts - 68 percent of total districts nationwide.

Further, companies across the nation provide goods and services for the offshore industry, as previously reported by IADC.

The continued moratorium will threaten the nation's energy security by increasing imports. The USA consumes more than 20 million barrels of oil each day, yet produces less than half of that. Roughly half of USA oil production comes from the Gulf of Mexico, 80 percent of that from deep water. While production is allowed to continue under the new moratorium, the cutback in drilling and the exodus of quality rigs portend falling production in the future. Once rigs are working outside the USA on long-term contracts, as is common practice, their return will be years away, if at all.

IADC also encourages offshore producing companies to develop thorough plans for spill response and oil containment that will satisfy the Department of Interior and result in a rapid end to the moratorium.


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