[StBernard] Inter-agency report released regarding economic impact of deepwater drilling moratorium

[Westley Annis]

Inter-agency report released regarding economic impact of deepwater drilling
moratorium

Cementing procedures underway to permanently seal Macondo well

 

In response to the Deepwater Horizon oil spill, the Secretary of the
Interior exercised his authority to suspend certain deepwater drilling
activities while inadequacies in existing safety regulations were
investigated. This moratorium was to provide time to determine whether and
how deepwater drilling could continue in a safe and environmentally-sound
manner. The current moratorium is in effect until November 30, 2010. 

 

An inter-agency report was issued this week to estimate the economic
consequences of this moratorium in the five Gulf Coast states.

 

Per the report it was estimated that during the six-month period of the
moratorium, average employment of rig workers in the Gulf of Mexico fell by
about 2,000. Total spending by drilling operators is estimated to decline
$1.8 billion over the six-month period. 

 

"This direct reduction in spending by the rigs impacts employment in the
industries that supply the Gulf drilling industry and then in all other
industries affected by declines in consumer and business spending," the
report states. 

 

The other major economic consequence of the moratorium noted in the report
is delayed oil production. It was estimated that the moratorium will reduce
Gulf of Mexico oil production by about 31,000 barrels per day in the fourth
quarter of 2010 and by roughly 82,000 barrels per day in 2011. 

 

Per a statement released by the National Incident Commander Admiral Thad
Allen regarding the relief well intercept, the Development Driller III
relief well has intersected the Macondo well and cementing procedures are
underway to permanently seal the well.

 

"Through a combination of sensors embedded in the drilling equipment and
sophisticated instrumentation that is capable of sensing distance to the
well casing, BP engineers and the federal science team have concluded that
the Development Driller III relief well has intersected the Macondo well,"
Allen said on Thursday evening. "This determination was made based on a loss
of drilling fluids that indicated communication had been established beyond
the relief well, the pressure exerted against the drill bit as it came in
contact with the well casing and, finally, an increase in pressure in the
choke line of the Macondo well blow out preventer." 

 

"While each of these indicators taken separately would not necessarily be
conclusive, the aggregate data available supports the conclusion that the
two wells are joined. It is also important to note that none of the
measurements supported a scenario where the annulus of the well is in
communication with the reservoir. Accordingly, we intend to proceed with
preparation to cement the annulus and complete the bottom kill of the well."

 

Admiral Allen stated that further information will be provided as cementing
procedures are completed. The plan is to have the well permanently sealed
this weekend.

 

"While we are excited about well interception and the permanent cementing of
the well," St. Bernard Parish President Craig Taffaro said Saturday, "we
must stay focused on long-term recovery and not lose sight of what is still
left to do to achieve that."