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July 26, 2010

"Unofficial moratorium" costs Hercules Offshore $150,000 a day

Only one permit for shallow offshore drilling has been issued since June 18, effectively leading to an "unofficial moratorium," Hercules Offshore CEO John Rynd said on CNBC Monday morning.

As a result, Hercules has about 250 employees idle on idle rigs, costing the company $150,000 a day, Mr. Rynd said.

Hercules hasn't yet laid off any employees, but if the situation doesn't change by September, layoffs may be inevitable for the "survivability of the whole corporation," he said.

Mr. Rynd told CNBC that the Bureau of Ocean Energy Management, Regulation and Enforcement, the former Minerals Management Service, has been slow to issue permits, even after new safety regulations were issued for shallow-water drilling. From January to April 2010, MMS issued 87 permits; since May, that figure dropped to 18, he said.

He warned that, by September, 70 percent of the Gulf of Mexico shallow-water jack-up fleet could be idle because of the lack of permits


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