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Louisiana Federal Judge Blocks Drilling Moratorium
eldavojohn writes "In the ongoing BP debacle, the Obama administration imposed a six-month moratorium on offshore drilling and a halt to 33 exploratory wells going into the Gulf of Mexico. Now a federal judge (in New Orleans, no less) is unsatisfied with the reasons for this and stated, 'An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country.' The state's governor agrees on the grounds that blocking drilling will cost the state thousands of lucrative jobs." The government quickly vowed to appeal, pointing out that a moratorium on 33 wells is unlikely to have a devastating impact in a region hosting 3,600 active wells. And reader thomst adds this insight on the judge involved in the case: "Yahoo's Newsroom is reporting that the judge who overturned the drilling moratorium holds stock in drilling companies. You can view his financial disclosure forms listing his stock holdings online at Judicial Watch (PDF)."
The above quote should read "a moratorium on 33 drilling wells". Drilling wells are a rate (ie 33 wells per month), active wells are a stock. The distinction is important. The vast majority of oil and gas jobs are involved in the drilling and completion process. Operating a well after it has been completed requires very little resources. For example, a typical onshore well may cost $2-3 million to drill and complete in a 14-30 day time period, but only cost around $2,000/month to operate after completion.
Please note that I'm not saying a drilling moratorium should not be passed. Just that the moratorium will likely have significant impact on the Gulf economy, and that the state of Louisiana's concerns are quite valid, and that the Federal government's dismissal of them here is misleading and likely inaccurate.
No mention in the link about the "experts" that the administration consulted coming out and saying they don't support the ban and that the administration misrepresented their position. http://www.washingtontimes.com/news/2010/jun/22/judge-halts-obamas-oil-drilling-ban/
Another article at http://www.bloomberg.com/news/2010-06-22/u-s-deepwater-oil-drilling-ban-lifted-today-by-new-orleans-federal-judge.html provides a little more insight.
They also said regulators failed to tell Obama that all active deepwater rigs passed an immediate re-inspection after the Deepwater Horizon exploded and sank, with only two rigs reporting minor violations and the rest getting approval to continue operations.
"Lack of speed can be overcome. In the worst case by patience." --Znork
I apologize, I do not want to live in a country where anytime a citizen or a corporation does something that is legitimately wrong is subject to some sort of political pressure that is again in my words amounts to a shakedown. So I apologize.
For the record, even Fox News has his statement. Many of his fellow Republicans were ashamed of his original statement. They even continued to be ashamed of his spoken statement and he later sent out a written statement in an attempt to appease members of his own party. Rep. Barton's statements were completely self serving considering he is on the House Energy and Commerce Committee as well as a very large recipient of big oil and BP's campaign donations. Even more so, if you take his statement for face value, he is saying that nobody should ever be punished for their misdeeds.
This concern isn't about producing wells. It is about drilling rigs.
It was recently reported in various news channels that Anadarko was trying to break a contract with a drilling operator in the gulf because Anadarko couldn't use their contracted drilling equipment due to the moratorium. The owner of the equipment replied they could use it elsewhere. The drilling costs IIRC were on the order of $400,000/day. Other deep water drilling day rates I've seen go up to $800,000/day.
If the moratorium continues, the drilling rigs will move where they can be utilized, and they'll stay there while there is work. Most won't just sit around and wait the moratorium out and hope it isn't extended. There are limited numbers of deep water drilling rigs, they take time to build, and nobody wants to build replacement rigs to meet a spot shortage because they've all moved to other areas due to this. So there could be a longer term impact even if the moratorium does end in 6 months.
Likewise, the exploration companies are going to pick places to explore for oil based on the likelihood of being able to produce from them, and the moratorium also puts that at risk. There are many variables in that equation that are continually reviewed, but politics in all its forms factors in heavily.
Take a nominal production rate from the Deepwater Horizon experience (as it'll be replaced ASAP), multiply it by 365 and then by 33+. That's a lot of barrels of oil and cubic feet of gas produced locally each year that we don't have to depend on less stable countries for. Regardless of your opinions on alternative forms of energy for cars, we're going to be dependent on oil for many years to come. Why shut off a good source?
Everybody learned something from this disaster, including the major oil companies. Nobody wants to repeat it, although at some point one probably will. If the government doesn't like the consequences, maybe they should open up more shallow water tracts in other areas of the country where problems can be fixed more easily when things go wrong.
>>>Consider this week the news is full of European countries enacting substantial budget cuts. We know that's the wrong thing to do.
"We" do? Not all of us agree. I'd estimate about 1/3rd of economists say cutting spending & taxes is the Correct thing to do, because it frees excess money to the private sector who can use it to invest in new factories and jobs and personal goods. In fact that's why the Depression of 1921 only lasted a year - the government cut spending/taxes and it freed-up money to be invested (at the corporate level) and spent (at the consumer level).
The EU states are doing precisely the right thing according to the Hayek, Friedman, and Austrian economic models.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
Yes, Keynesian economic policies were recently practically killed by - believe it or not - a group of Harvard economists. Here is a link to the paper. It turns out that if you measure the economic effect of government spending, that effect is net lower employment, net lower commerce, and net lower investment.
Essentially, no one in their right mind competes with someone supported by the government.
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