Gulf businesses waiting for judge’s ruling on drilling moratorium
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Kai Ryssdal: It’s going to be a while before there’s a final decision on the Obama Administration’s oil drilling moratorium. An appellate ruling yesterday means a lower court judge basically has to go back to the drawing board on the whole thing. The White House imposed the drilling ban almost three months ago. The judge threw it out. The White House came back with another one. Meanwhile, people and businesses along the Gulf Coast are along for the ride. Drill, don’t drill. Make money, don’t make money.
From Red River Radio, Kate Archer Kent reports.
Kate Archer Kent: Oil is king in Lafayette. About one out of every three jobs here is tied to it, and downtown is called “oil center” because of the number of energy companies clustered there. One of them is Stokes and Spiehler, which among other services provides drilling supervisors for off-shore rigs. Since the moratorium, the company has idled nearly a quarter of its 200 supervisors.
The Obama Administration says the temporary drilling ban is a necessary safety precaution, but the order has been challenged in federal court. Bruce Jordan is president of Stokes and Spiehler.
Bruce Jordan: We were enjoying a steady increase in business, and now we have to battle the government to continue to have a business.
Even though the ban only affects deep-water rigs, Jordan has seen much of his shallow-water business dry up too. Since the BP spill, the Interior Department has revamped safety requirements for all drilling operations, and only two shallow-water permits have been approved. Ten are pending. But even before the spill, shallow-water drilling in the Gulf was in decline, because most of the available oil has already been extracted. Jordan says he’s now shifting his company’s focus away from the Gulf altogether and looking for work in the oil fields of south Texas.
Jordan: The rig hands on the rig, one of the things they always want to know is where they’re going to be working tomorrow, and when you don’t know, it concerns everyone.
Still, for some companies, the moratorium has provided a boost in business. M&H Energy Services designs and inspects drilling platforms. Allen Latour is a salesman at the company’s Lafayette office. He says M&H has hired extra engineers to help drillers comply with new federal safety regulations.
Allen Latour: Companies are contacting us to make sure their drawings, their documentation is in order. Initially, it’s going to help us out with companies panicking over what kind of documentation they need.
But, Latour worries deep-water drilling will be slow to rebound once the moratorium is lifted. He says many independent drillers are looking to move their rigs to other countries.
Latour: The rest of the world is not on a moratorium to drill. The rest of the world is trying to get our rigs, our personnel.
Sound of welder pounding iron
Some Lafayette businesses are trying to take the moratorium in stride. In a sprawling open-air machine shop, a welder pounds out an iron drilling tool. Frank’s Casing Crew and Rental Tools got its start during the Great Depression. Today, Frank’s employs more than 600 people.
Jonathon Ancelet is the head of new product delivery. He says there hasn’t been a single layoff, even though 40 percent of Frank’s revenue is tied to Gulf drilling. Ancelet says given the boom-and-bust nature of the oil services business, companies have to be prepared not to make money for three years straight.
Ancelet: Frank’s has the resources it needs to survive for quite awhile. We are in this for the long haul.
Frank’s set an industry record for making the longest well pipe on an ExxonMobil rig in the Gulf. Ancelet says the company is ready to more deep-water work once the drilling ban is over.
Ancelet: We don’t feel like drilling is an either/or. It’s not the environment or it’s not drilling. We can do both. So that’s why people here are really anxious to get back, because we know that we can be successful doing both. And we can get our part of the country and our earnings back into position economically.
The state of Texas is the latest plaintiff to file suit against the moratorium, but no court date has been set. Other legal challenges are also pending.
In Lafayette, La., I’m Kate Archer Kent for Marketplace.
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