Merged Judge blocks moratorium on off-shore drilling

[Arrow]

Looks like the first oil drilling rig is leaving the gulf. The Diamond Offshore rig, Ocean Endeavor, is heading to Egyptian waters. Despite loosing in the courts, Obama plans to continue fighting, dragging this out. As long as this fight could lasts, imagine more oil drillers will be leaving the gulf soon.

http://michellemalkin.com/2010/07/11/jobs-float-away-economy-rigged-for-failure/

 

[thaiboxerken]

Looks like the first oil drilling rig is leaving the gulf. The Diamond Offshore rig, Ocean Endeavor, is heading to Egyptian waters. Despite loosing in the courts, Obama plans to continue fighting, dragging this out. As long as this fight could lasts, imagine more oil drillers will be leaving the gulf soon.

http://michellemalkin.com/2010/07/11/jobs-float-away-economy-rigged-for-failure/

I think this is a good thing.

 

[Beerina]

I think this is a good thing.

I think this is a horrible thing, given the idiotic, reactionary nature of the attempts to ban the drilling.

 

[AvalonXQ]

I think this is a good thing.

Anything Obama can do to further sabotage the economy is a good thing, then? Or just this?

 

[lomiller]

Looks like the first oil drilling rig is leaving the gulf. The Diamond Offshore rig, Ocean Endeavor, is heading to Egyptian waters. Despite loosing in the courts, Obama plans to continue fighting, dragging this out. As long as this fight could lasts, imagine more oil drillers will be leaving the gulf soon.

Probably has a lot more to do with the changing risk involved in deep water drilling in the Gulf then any proposed moratorium.

The fact is that with current technology no oil company can guarantee it’s investors one of their wells will not suffer the same fate as the deepwater horizon well. With the type of liability BP is being saddled with, drilling in the Gulf of Mexico no longer makes sense once risk is priced in.

While it’s still somewhat dependant on how BP fares I think a lot of investors will take the stance they can’t put their money in any company operating in the Gulf of Mexico. No matter what precautions you take accidents can and will happen and the deepwater horizon spill points to such an accident destroying most of all of my investment for any company conducting this type of drilling in US waters.

 

[Newtons Bit]

Probably has a lot more to do with the changing risk involved in deep water drilling in the Gulf then any proposed moratorium.

The fact is that with current technology no oil company can guarantee it’s investors one of their wells will not suffer the same fate as the deepwater horizon well. With the type of liability BP is being saddled with, drilling in the Gulf of Mexico no longer makes sense once risk is priced in.

While it’s still somewhat dependant on how BP fares I think a lot of investors will take the stance they can’t put their money in any company operating in the Gulf of Mexico. No matter what precautions you take accidents can and will happen and the deepwater horizon spill points to such an accident destroying most of all of my investment for any company conducting this type of drilling in US waters.

This was a preventable "accident". The more I see about what happened the more I think that what BP did falls into the realm of criminal negligence. It wasn't just one thing, it was a systemic pattern of ignoring test results that said things that they didn't want to hear.

The engineer who made the call to replace the drilling mud with seawater would lose his license if petroleum engineers were required to be licensed. They're not. And we need to change that. In any event, the person who was responsible for managing this project (on the technical side) needs to be charged with manslaughter. This only happened due to a blatant disregard for human life.

To address your post, investors don't decide to pull investment in a particular (lucrative) economic activity due to one set of dumb's acting in a manner that falls into criminal activity.

 

[Lurker]

To address your post, investors don't decide to pull investment in a particular (lucrative) economic activity due to one set of dumb's acting in a manner that falls into criminal activity.

Actually, if insurance rates rise dramatically it will effect profit.

 

[lomiller]

All accidents are “preventable” with 20/20 hindsight this never has and never will stop them from occurring. Like most such disasters the deepwater horizon explosion requires multiple people from multiple companies to screw up, and most of those people worked for Halliburton and Transocean. The notion that a well drilled by someone else can’t/won’t suffer the same fate is un-defendable and the smart money understands that, which is why you are starting to see an exodus from the Gulf of Mexico.

 

[lomiller]

To address your post, investors don't decide to pull investment in a particular (lucrative) economic activity due to one set of dumb's acting in a manner that falls into criminal activity.

An investor’s entire role is to price in risk, and for most companies drilling in the Gulf of Mexico now represents a risk for a near total loss of their investment. So, yes investors can, should and will move away from investments where the risk profile is high, or at least the smart ones will.

 

[The Mutha]

Looks like the first oil drilling rig is leaving the gulf. The Diamond Offshore rig, Ocean Endeavor, is heading to Egyptian waters. Despite loosing in the courts, Obama plans to continue fighting, dragging this out. As long as this fight could lasts, imagine more oil drillers will be leaving the gulf soon.

http://michellemalkin.com/2010/07/11/jobs-float-away-economy-rigged-for-failure/

I have a friend on that rig. He's going from 14 on/14 off to 28 on/28 off. He's still got a job, but what about the folks who supported that rig? The supply boats, helicopter firms, etc...

And the Ocean Endeavor was finished drilling it's well over two months ago. The employees were told that they'd be going overseas at that time, so it's no new recent development.

 

[Lurker]

I have a friend on that rig. He's going from 14 on/14 off to 28 on/28 off. He's still got a job, but what about the folks who supported that rig? The supply boats, helicopter firms, etc...

And the Ocean Endeavor was finished drilling it's well over two months ago. The employees were told that they'd be going overseas at that time, so it's no new recent development.

It sounds like the management of Ocean Endeavor, Diamond Offshore, is making their announcement now as pure politics, letting everyone believe the move is due to Obama.

 

[JoeTheJuggler]

Perhaps nationalizing US deepwater areas (to provide a US equity interest in future efforts) is a possible answer.

Could you expand on this? I'm not sure what nationalizing the deepwater areas would mean. (You're not saying the U.S. should nationalize the wells already there or future wells in those areas, right?)

My understanding is that those areas are already more or less the property of the people of the U.S. That's why we have this system of permits required to drill there. Yet the U.S. federal government doesn't get a cut of the profits or have an "equity interest".

But your notion (if it wasn't made sarcastically) is intriguing. After all, the general public is already sold on the idea that the oil from offshore drilling in the Gulf (and other US waters) somehow is "our" oil or somehow reduces our dependence on "foreign" oil.

 

[JoeTheJuggler]

All accidents are “preventable” with 20/20 hindsight this never has and never will stop them from occurring. Like most such disasters the deepwater horizon explosion requires multiple people from multiple companies to screw up, and most of those people worked for Halliburton and Transocean. The notion that a well drilled by someone else can’t/won’t suffer the same fate is un-defendable and the smart money understands that, which is why you are starting to see an exodus from the Gulf of Mexico.

And back to the issue of the moratorium: it's not that proponents of it are demanding a guarantee that accidents will never happen. I'm skeptical of the notion that BP is a rogue player in the industry and is the only company taking safety shortcuts (and I agree with Newton's Bit that it looks like their actions may constitute criminal negligence) and that the rest of the industry are all exercising prudent and good judgment.

The investigation has already shown that the industry at large hasn't been taking contingency plans very seriously.

BP wasn't the only company to copy and past instead of setting up a real plan. BP wasn't the only company to refer to walruses in their Gulf of Mexico regional plans.

How do we know that BP wasn't also the only company to be negligent on safety?

Obviously, we should know that. That's the responsibility of government regulators. But we know the old system wasn't working--that regulators and the industry were in bed together (again, both literally and figuratively). Basically, we were operating on trust. I hope Congress isn't satisfied with simply renaming the agency that regulates this industry and pretending that that solves the problem.

And I have no problem with blaming the economic impact of the moratorium on BP and holding them responsible for that as well.

 

[The Mutha]

I've got to read up on the new moratorium that was announced today. Our local news said that it was a moratorium on all wells that used a BOP as the deep water wells do. I hope that's not the case because every oil well I've ever heard about on land or sea uses a BOP. It's standard safety protocol in the oil industry. It would basically shut down all new drilling both on land and in the ocean...

 

[WildCat]

Actually, if insurance rates rise dramatically it will effect profit.

A company the size of BP probably self-insures.

 

[thaiboxerken]

I think this is a horrible thing, given the idiotic, reactionary nature of the attempts to ban the drilling.

Anything Obama can do to further sabotage the economy is a good thing, then? Or just this?

So you believe that Obama's plan all along was to find an excuse to ban off-shore oil drilling? You think he wants to sabotage the economy?

You two don't believe this has anything to do with trying to make sure another record-breaking oil spill doesn't happen?

 

[AvalonXQ]

So you believe that Obama's plan all along was to find an excuse to ban off-shore oil drilling? You think he wants to sabotage the economy?

I think he'll ban every kind of drilling he can, yes. And, yes, I think he wants to sabotage the economy. Crippling the private sector has always been a big part of his M.O.

You two don't believe this has anything to do with trying to make sure another record-breaking oil spill doesn't happen?

I really don't.

 

[JoeTheJuggler]

I've got to read up on the new moratorium that was announced today. Our local news said that it was a moratorium on all wells that used a BOP as the deep water wells do. I hope that's not the case because every oil well I've ever heard about on land or sea uses a BOP. It's standard safety protocol in the oil industry. It would basically shut down all new drilling both on land and in the ocean...

I'd like to hear more specifics too. Originally, I thought the new order would be more restrictive than the first one (in order to address Feldman's concerns). From what I've read, it sounds more like they're just emphasizing the argument some of us have been making in this thread: the issue of contingency plans in the event of a blow out. I think they're on pretty strong legal ground there. If the plans were a requirement for the permits, and the investigation has shown that viable plans are not in place, I see no problem with a temporary moratorium on drilling. In fact, if this were something like a permit that you or I would be seeking, the regulator could just as easily revoke the bad permits and make them re-apply completely.

ETA: I mention this stuff about their legal grounds because otherwise I don't understand why they'd issue a new order given that there is a de facto moratorium in place while the appeal on Feldman's decision goes forward (and a promise to expedite the government's motion to reinstate the ban temporarily if one of the projects in question starts up again). I think the new order means they're more or less abandoning the appeal.

 

[thaiboxerken]

I think he'll ban every kind of drilling he can, yes. And, yes, I think he wants to sabotage the economy. Crippling the private sector has always been a big part of his M.O.

So when he opened up more of the coastline to off-shore drilling, he was really planning on banning off-shore drilling all along?

Crippling the private sector? That's absurd. Regulation is not the same as crippling, it's an attempt to protect the public interests from unscrupulous risks taken by shady corporations.

I really don't.

Have any actual logical, coherent argument as to why?

 

[AlBell]

Could you expand on this? I'm not sure what nationalizing the deepwater areas would mean.

The US is sfaik the only major oil producing country that doesn't have a National Oil Co which employs technical experts and explores, evaluates by drilling, and produces crude as Operator (most often with partners usually major oil companies). Note that as Operator is bears it's share of risk, like the risk BP-Anadarco-Mitsui now face 100% as private companies.

(You're not saying the U.S. should nationalize the wells already there or future wells in those areas, right?)

Likely all areas below, say, 1000' water depth. How to un-entangle existing leases would pay a lot of lawyers.

My understanding is that those areas are already more or less the property of the people of the U.S. That's why we have this system of permits required to drill there. Yet the U.S. federal government doesn't get a cut of the profits or have an "equity interest".

Federal lands, yes. The govt collects lease bonus payments upfront, and collects royalties on production.

But your notion (if it wasn't made sarcastically) is intriguing. After all, the general public is already sold on the idea that the oil from offshore drilling in the Gulf (and other US waters) somehow is "our" oil or somehow reduces our dependence on "foreign" oil.

I'd say those considerations are both irrelevant and erroneous. What it would do is entice Majors -- partnered with the new National Oil Co -- to conduct operations in the deepwater GOM rather than leave as those with any sense will be doing ASAP. The 100% risk of another deepwater spill is too enormous; drilling and producing will always have opportunities for something to go wrong.

In this regard the Moratorium is a godsend that will allow Operators to cite force majeure to break existing deepwater GOM rig contracts.