Law

Gulf drilling ban expected to cost thousands of jobs, millions in pay

Employment attorney news: The drilling moratorium was expanded to six months, will cost thousands their jobs.

06/04/2010 // West Palm Beach, FL, USA // Tara Monks // Tara Monks

Washington, DC – The White House extended its ban on new offshore drilling in the Gulf of Mexico and the North Slope of Alaska, along with an order to cease any ongoing deep sea drilling operations on Thursday, May 27, 2010. The six month moratorium is projected to result in the loss of approximately 46,000 jobs, according to a CNN Money report.

The White House decision was met with scrutiny from Louisiana Governor Bobby Jindal, who wrote a letter to President Obama Wednesday, June 2, 2010, stating that prohibiting deepwater drilling could result in the loss of 6,000 jobs for Louisianans for this month alone.

The ban requires all Gulf of Mexico wells in waters over 500 feet to shut down. It also bans any new permits from being issued for any new deepwater drilling anywhere. The White House changed the ban from 30 days to six months last week to allow for investigations into what caused the Deepwater Horizon oil rig to explode on April 20.

White House spokesman Ben LaBolt defended the moratorium, stating, “The President believes we must ensure that the BP Deepwater Horizon spill is never repeated,” and stressed that the Louisiana Mid-Continent Oil and Gas Association ban is only for deep water drilling. Shallow water rigs are not subject to the ban.

Currently, some 4,515 shallow-water wells are present in the Gulf, according to the Louisiana Mid-Continent Oil and Gas Association (LMOGA).

Deepwater drilling accounts for the majority of oil production for Louisiana though. The LMOGA reported that 80 percent of the Gulf’s oil comes from wells deeper than 1,000 feet.

Jindal explained that 22 of the 33 deep water rigs that will be idled due to the restrictions are of the coast of Louisiana. Each of the rigs is estimated to employ 1,400 people.

The jobs on the rigs pay people an average of $1,804 a week. Wages lost for all 33 rigs could reach $330 million per month, according to the LMOGA.

The oil and gas industry brought in $234 billion in 2007.

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