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US Gulf States, Energy Companies Applaud Lifting of Deepwater Drilling Moratorium

FILE - In a Tuesday, June 8, 2010 photo, a deepwater drilling rig operates near the site of the Deepwater Horizon disaster in the Gulf of Mexico

FILE - In a Tuesday, June 8, 2010 photo, a deepwater drilling rig operates near the site of the Deepwater Horizon disaster in the Gulf of Mexico

The Obama administration has lifted the moratorium on deepwater drilling for oil and natural gas in the Gulf of Mexico it imposed after an accident in the Gulf in April that killed 11 workers and led to the biggest oil spill in history. Reaction from the energy sector and Gulf state political leaders is positive, but cautious.

Texas Governor Rick Perry, who sued the federal government over the drilling ban, heard about the lifting of the moratorium while on a visit to Houston. The Republican governor was cautious in his response to the news.

"The devil is always in the details, so let's take a look at what the actual lifting of the moratorium says and we are going to continue to go forward with our efforts if we see any restrictions to our ability to create jobs and search for oil in the deepwater," he said.

Louisiana's Republican Governor Bobby Jindal, whose state has suffered the most from the BP oil spill and job losses from the moratorium, said the White House decision to lift the ban was good news and "long overdue."

Democratic Representative Sheila Jackson Lee, who represents a Houston district, said the announcement from the White House was great news for the Gulf region.

"The [Obama] administration is going to lift the moratorium, and I think it is clear that Democrats and Republicans understand the vitality of the energy industry here," she said. "It should be very well noted that the administration early on told many of us that they wanted to do a thorough review, but they were open to ending this moratorium before November 30th. The administration is not against Texas; it is not against deepwater drilling. In fact, the president of the United States, before this horrific accident that saw the loss of life at BP, indicated his commitment to offshore drilling."

Jackson Lee said a bipartisan effort by senators and representatives from Gulf states like Texas, Louisiana and Mississippi influenced President Obama and Interior Secretary Ken Salazar to lift the ban as soon as possible.

Federal officials estimate that the ban on deepwater drilling cost between 8,000 and 12,000 jobs. Officials in Louisiana, however, say many small companies felt the brunt of the moratorium more the big oil firms that had the financial resources to remain idle.

One energy expert in Houston with a strong opinion in the subject is former Shell Oil President John Hofmeister, who now runs the private organization Citizens for Affordable Energy.

"This moratorium was a bad idea to start with; it was not necessary," he said. "The industry has operated safely, with the exception of this horrible accident [i.e., the BP spill]. But we have horrible plane accidents where we do not stop all planes from flying. There was no basis on which to stop the 33 drilling rigs from operating. They all passed inspections. This was a political act for which there will be political consequences, I am sorry to say."

Hofmeister says the damage from the moratorium and other actions by the Obama administration that have slowed domestic oil production will cause a doubling in the price of fuel in the United States by 2012. He says restrictions on domestic oil producers will likely mean an increase in oil imports to meet rising U.S. energy demands.

Obama administration officials say drilling in the Gulf of Mexico probably will not begin any time soon because companies will need to meet new safety requirements.

Officials say it might take weeks to approve permits for drilling. But Interior Secretary Salazar says companies willing to play by the rules can operate in the Gulf, which accounts for more than 30 percent of U.S. oil production.