Aboard a shallow-water gas rig, regulatory confusion keeps crew waiting
Sunday, June 13, 2010
ABOARD THE SEAHAWK 2602 DRILLING RIG, GULF OF MEXICO -- Under a sweltering sun, rig manager Joe Boop watched as three of his crew yanked with grease-stained hands on a huge red wrench to adjust long brown pipes that stretched down through 210 feet of water and nearly a mile beneath the seafloor.
A few feet from the rig, globs of orange-brown oil floated in the sparkling ocean water -- a reminder that Boop's rig sits about 32 miles northwest of where the Deepwater Horizon sank nearly eight weeks ago.
On Friday afternoon, Boop estimated that his rig, which is about half the size of a football field, had only 24 hours of work left and then would have to sit idle because of delays in permits and confusion about new safety regulations.
President Obama has declared a six-month moratorium on drilling in deep water in the Gulf of Mexico in the wake of the Deepwater Horizon accident. In shallow water -- up to 500 feet deep -- he said drilling by rigs such as Seahawk's could continue.
But rig owners say that confusion over safety regulations issued last week by the Interior Department and uncertainty about additional rules Interior says are on the way could extend delays in the issuance of shallow-water permits, creating a de facto moratorium. And that could force companies to idle rigs and furlough thousands of workers. Since the April 20 accident, the number of rigs actively drilling in shallow water of the gulf has dropped by half.
"Putting semantics aside, there are no new permits being issued in shallow waters," said James W. Noe, general counsel of Hercules Offshore, the biggest shallow-water rig operator in the gulf. Noe and other executives met with lawmakers from Gulf Coast states on Thursday and Friday, including some of the 10 senators who had earlier urged Obama to exempt shallow-water rigs from his moratorium.
"The pace of new contracting and permitting is slowing down . . . as operators and contractors get up to speed on the new requirements," said a report by Jefferies & Company, an investment firm. It said that that four of Seahawk's jack-up rigs -- whose legs stand on the seafloor -- have permits pending.
"We've submitted the paperwork we think they're asking for, but nothing's really clear," Rick Storey, Seahawk's director of sales and marketing, said of the Minerals Management Service, which oversees the industry. "The regulations are so vague."
The Houston-based Seahawk, with roughly 1,000 employees, has nine rigs in the gulf. Two of them are idle because of permitting delays, costing the company about $60,000 a day.
"We'll start laying off pretty quick . . . because you just can't afford to keep paying crews if you can't work the rig," Storey said.
Despite calls in Congress and from Interior Secretary Ken Salazar last week for BP to pay lost wages to workers affected by Obama's deep-water moratorium, BP has balked at the suggestion. "A line has to be drawn somewhere," said a person familiar with senior BP officials' thinking. "And this would seem to be on the other side of that line."
Rig owners and workers aren't the only ones hurt -- the costs are spilling onto shore, too. Chett Chiasson, executive director of Louisiana's greater Lafourche port commission, said the six-month deep-water moratorium along with delays in shallow-water drilling could mean a loss of up to $750 million for the area and layoffs among the 4,000 workers there who provide support to rigs.