Oil Rigs – and Jobs – Already Moving Out of Gulf

posted at 1:45 pm on January 28, 2011 by Jazz Shaw

We have previously covered the disappointing response from the Obama administration in approving new drilling permits following last summer’s oil spill in the gulf, warning that such an unofficial “permitoreum” would have consequences. Among the many negative potential results would be energy companies taking their ocean-going rigs and moving them to places where they could get back to work, rather than sitting idle and costing them huge amounts of money. And when the rigs leave, the jobs leave, along with all of the associated economic stimulus to other related American businesses. Well, that didn’t take long.

Jan 27 (Reuters) – Some of the 30-plus deepwater rigs that were in the Gulf of Mexico have moved to other markets, first because of a U.S. halt called last May after BP Plc’s (BP.L: Quote) well blowout, and then because of the lack of permits once the moratorium was lifted.

A few of the heavy hitters include:

  • Diamond Offshore Drilling – The Ocean Endeavor to Egypt and the Ocean Confidence to the Congo.
  • Transocean, the world’s largest offshore drilling contractor – The Marianas rig to Nigeria and Discoverer Americas to Egypt.
  • Pride International Inc – Deep Ocean Ascension heading to the Mediterranean Sea
  • Noble Corp – The Clyde Boudreaux moving to Brazil and they expected more to follow

It is worth noting that some of these rigs are listed as being “currently scheduled to return to the gulf,” but that’s not going to happen unless they have permits in hand before they pull up stakes and move again. And that remains in the capable hands of the government.

This week CNBC’s Lori Ann LaRocco interviewed one industry official who described the oil industry in the gulf as being on life support.

We have not been able to get any drilling permits. None have been issued for Deep Water. There have been a few in the shallow water. Individual companies and associations like the API (American Petroleum Institute) continually engage with the regulator, The Bureau of Ocean Energy Management and try to get clarity on what they will require to approve these permits. This has been going on for some time but it has intensified since the lifting of the moratorium in October.

Since the initial moratorium in May, we have had three deep water drill ships that were all long term contracts- go idle.

As he describes, for each rig there is a crew of roughly 200 people out of work, but with the associated support industries, suppliers and contractors, it translates into “thousands of jobs for each one of these drill ships.” They are slowly filing out of the gulf in seek of other waters where they can actually perform their function. And they are taking all those jobs with them.


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Comment pages: 1 2

DJ Rick on January 28, 2011 at 1:52 PM

I call BS. You’re pretending to be left wing for trolling’s sake. Gotta be. No way someone actually believes that stuff.

apollyonbob on January 28, 2011 at 2:04 PM

I think Rick left the /sarc tag off. This one broke the meter off of my sarcasm detector.

Random Numbers (Brian Epps) on January 28, 2011 at 5:30 PM

No problem, let the rigs and the jobs leave. Once we’re ready we’ll just get new rigs.

Oh, there’s a backlog of several months to a year to get new drilling equipment?

The company’s backlog grew from $0.9 billion at March 31, 2005 to $11.8 billion at September 30, 2008, but has fallen to $5.4 billion on March 31, 2010. Most notably, the land rig backlog comprises 13 percent while the offshore backlog comprises 87 percent of total orders as of March 31, 2010.

http://manualofideas.com/blog/2010/05/

Approximately $2.4 billion of the $4.9 billion in backlog on the books as of June 30, 2010, is scheduled to flow out in revenue through the remainder of 2010, with $2 billion scheduled for 2011 and the balance thereafter.

http://seekingalpha.com/article/217523-national-oilwell-varco-q2-2010-earnings-call-transcript

So if you wanted one this year, or next year… sorry; they’ve got 2 trillion/year already booked to be built and sold. And they’re taking orders around their production runs. But if you know 2 years ahead of time when you’d like the rigs and the jobs back, be sure to place an order.

** Disclaimer; I’m invested in NOV (which is how I knew what to look for). I don’t work in the drilling sector; but a lot of my money does.

gekkobear on January 28, 2011 at 5:43 PM

Here we go again with the sites on the internet begging for money to get the politicians to do their job. What is holding our new Congressman back from doing what they promised to do once they got in office? It’s starting to look like the SOS that has been going on for years. What’s it going to take to light a fire under these politicians? Is it going to take another two years to come up with a plan to cut the budget? Or are we going to concentrate on appeasing the left trying in vain to convince them we are not that crazy as they propose. I want to see some ACTION NOT TALK FROM MY GOP CONGRESSMEN.

mixplix on January 28, 2011 at 5:53 PM

Obama’s America

Keep voting democrat!

Inanemergencydial on January 28, 2011 at 6:11 PM

I stopped reading the link when the dude claimed grazing rights were protected. I bet they are as well protected as those water rights in California and Oregon were. The rule of law really doesn’t exist anymore.

chemman on January 28, 2011 at 5:19 PM

Well I do agree with you.
Ranchers who graze on public lands are pretty much FUBARd.
Which I think is why my bro-in-law sold his ranch out betw Camp Crook SD & Ekalaka MT-he had some deeded & mostly Forest Svc lease.
The lease is relatively cheap, but the price it takes to comply is not worth it.
What I worry about is DEEDED land. For those folks with their deeded either butting up against, or surrounded by, federal lands under wilderness designation, what happens to them?
Federal agencies are also looking at private deeded lands that are still native prairie. They greedily watch this stuff very closely, i.e. sending out game & fish guys etc on their 4-wheelers asking questions. Very intrusive questions, I might add. And oftentimes, they act threatening if you do not wish to answer them.
Our private deeded land has a lot of native prairie.
We do not farm.
We’ve had state & federal agencies interested in looking at the native species numbers on our land.
It scares us.
I shouldn’t have to live in this kind of fear.

Badger40 on January 28, 2011 at 6:18 PM

“return to the gulf” is not really that positive, because if drilling contracts are elsewhere transportation costs and insurance premiums just for the move will cost some really big bucks.

Kermit on January 28, 2011 at 6:42 PM

Thank you Obama, our nation is weaker and our enemy richer

Wade on January 28, 2011 at 9:16 PM

Now if we can go nuclear….

Badger40 on January 28, 2011 at 4:38 PM

Gas goes to $5-6 a gallon and a lot of people are going to go nuclear.

trigon on January 28, 2011 at 9:39 PM

The rule of law really doesn’t exist anymore.

chemman on January 28, 2011 at 5:19 PM

True, because our laws give unlimited power to pursue wrong-headed or arbitrary goals: EPA, just one case in point.

There is no rule of law or private property when the powers of the state have no real limits.

AshleyTKing on January 28, 2011 at 10:46 PM

Comment pages: 1 2