Obama Issues New Offshore Drilling Moratorium

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Frustrated twice by the federal courts—which had overturned his original temporary moratorium on deepwater drilling—President Obama Monday evening decided to do what most of us have probably wanted to do when denied by someone in a position of authority: he went ahead anyway. (Sometimes it’s good to be President.) Interior Secretary Ken Salazar directed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM)—the government agency formerly known as the Minerals Management Service (MMS)—to issue new suspensions of deepwater drilling on the Outer Continental Shelf, while investigators continue to look at the Deepwater Horizon catastrophe.

(By the way, I like MMS’s new name—apparently the White House decided that the quickest and cheapest way to add regulation and enforcement to offshore drilling, which had surely been lacking, was just to put it directly in the name.)

Here’s what Salazar had to say in the Interior announcement:

More than eighty days into the BP oil spill, a pause on deepwater drilling is essential and appropriate to protect communities, coasts, and wildlife from the risks that deepwater drilling currently pose. I am basing my decision on 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.

Unlike the original moratorium, these new orders don’t proscribe drilling based on the water depth in which the rigs are operating—rather, it’s on the “basis of the drilling configurations and technologies,” according to Interior. That could be key—when Judge Martin Feldman overturned the moratorium last month, he argued that the government had given no good reason why drilling beyond 500 ft. was particularly dangerous.

Instead the new moratorium—which the Interior Department said was based on new evidence regarding concerns over the effectiveness of blowout preventers and the worry that the BP oil spill has stretched industry’s ability to respond to any further accidents—will focus on specific safety questions. If drilling rig operators can prove that their blowout preventers can pass stringent tests, that they can quickly shut down an out-of-control well and that they have the ability to respond to a spill, then they can drill.

The problem is that—as BP is amply demonstrating and as other oil industry executives have said—the industry can’t really shut down an out-of-control well, so it’s unlikely that the 33 wells where drilling was halted under the original moratorium will suddenly come back to life. Unsurprisingly, then, the industry remains unhappy with the rule, as Jack Gerard, president of the American Petroleum Institute, said:

It is unnecessary and shortsighted to shut down a major part of the nation’s energy lifeline while working to enhance offshore safety.  The new moratorium threatens enormous harm to the nation and to the Gulf region.  It places the jobs of tens of thousands of workers in serious and immediate jeopardy and promises a substantial reduction in domestic energy production. No certain and expeditious path forward has been established for a resumption of drilling.

That’s not quite true—the order specifically says that the moratorium will last until Nov. 30 or earlier, if the White House decides it is no longer necessary. Of course, it’s far from clear just where the nation stands on the safety of offshore drilling—a fact that became obvious today in New Orleans at the first meeting of the presidential panel investigating the Deepwater Horizon accident. “Was the Deepwater Horizon an outlier, an oil rig operating outside the normal standards of safety, or was it representative of other rigs?” said Bob Graham, the former senator and co-chair of the commission with William K. Reilly, a former head of the Environmental Protection Agency.

At the same time the economic impact of the continued moratorium—especially in oil-dependent Louisiana—is far from small. Michael Hecht of Greater New Orleans Inc., an economic development agency, told the panel that the moratorium threatens 24,000 jobs in Louisiana and nearly $2 billion in wages. “Whether you call it a moratorium, a suspension, a pause, the result will still be substantial loss of jobs,” Louisiana Senator Mary Landrieu— who has received more cash from BP than any other member of Congress—told the panel. “Even the revised moratorium will force thousands of hardworking Louisianans and others in the Gulf coast to the unemployment line.”

But all you have to do to see the effects of deepwater drilling done unsafely is take a boat out to southeast Louisiana’s Barataria Bay, where oil still clings to the cane grass, turning it as brown as a rotten tooth. “Hubris and willingness to cut corners which appears to be the root cause of this disaster was common among numerous oil companies,” said Cynthia Sarthou, executive director of the Gulf Restoration Network, at the panel. “All of the oil companies have been gambling for a long time, and it just so happened BP lost and we’re paying the price.” We’ll pay a price regardless—part of the job of the presidential commission is figuring out what this price will be.