Oil Rigs – and Jobs – Already Moving Out of Gulf

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.