Louisiana Says Oil Moratorium Halting Nearly All Drilling

23rd Jul 2010 02:45

NEW ORLEANS (AFP)--The U.S. government's freeze on new deepwater oil drilling is halting nearly all exploration in the Gulf of Mexico, including shallow-water projects, local officials said. The Louisiana Department of Natural Resources said this week that approved shallow-water drilling permits in the Gulf have "dropped significantly since the federal moratorium on deepwater drilling earlier this year." It noted that only four shallow-water permits have been issued since U.S. President Barack Obama's administration issued an order to block deepwater drilling after a deadly explosion ripped through a BP PLC (BP)-leased drilling rig April 20. One was granted in May, two in June and only one so far this month for wells less than 500 feet (152 meters). In contrast, an average of 14 permits were issued per month in the 11 months that preceded the moratorium. After a court ruled against the six-month moratorium, the federal government issued a fresh ban on July 12 due to expire Nov. 30 to ensure oil companies implement safety measures in the wake of the worst environmental disaster in U.S. history. However, local officials, lawmakers and oil industry workers said the move would cost hundreds of thousands of jobs and add insult to injury for a regional economy already battered by the massive spill. Also, oil firms with extensive operations in the Gulf warned of an exodus if the drilling remains suspended. "New requirements for shallow-water drilling are causing permitting delays that could lead to significant additional economic impacts on top of those caused by the deepwater drilling moratorium," Louisiana Gov. Bobby Jindal said at an anti-moratorium rally Wednesday, according to local media. Jindal stressed that shallow-water oil drilling activities alone account for thousands of Louisiana jobs. Obama had acknowledged the moratorium would cause economic harm, but said such an order was necessary to give investigators adequate time to understand what caused the spill, and create new safety regulations. In announcing the new order, Interior Secretary Ken Salazar said his decision was necessary in light of "evidence that grows every day of the industry's inability in the deepwater to contain a catastrophic blowout, respond to an oil spill and to operate safely." The Interior Department said the new decision "does not suspend activities based on water depth, but on the basis of the drilling configurations and technologies." Some critics have argued the new moratorium could in effect act as a near-total ban on drilling because many shallow-water wells use floating drilling platforms and other equipment targeted by the order. (END) Dow Jones Newswires July 22, 2010 21:45 ET (01:45 GMT)