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Oil rig moratorium's effect still unknown

June 18, 2010 at 7:43 AM   |   Comments

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VENICE, La., June 18 (UPI) -- Economic fallout from U.S. President Obama's moratorium on deep-water drilling in the Gulf of Mexico is unknown because layoffs are just starting, analysts say.

The Louisiana Mid-Continent Oil and Gas Association warned that many of the rigs affected by the six-month moratorium could go elsewhere to drill for oil, endangering the 800 to 1,400 jobs per rig, including third-party associated service jobs, The New York Times reported Friday.

President Barack Obama imposed the moratorium on drilling in waters deeper than 500 feet after the Transocean Deepwater Horizon rig exploded April 20, killing 11 workers, and then sank. Oil has been spewing into the gulf since in what has become the worst oil spill in U.S. history.

Obama, addressing the nation Tuesday, apologized for the effect the moratorium is having on oil workers and the region, but he said investigators need to "know the facts" before allowing deep-water drilling to continue.

Securities firm Raymond James & Associates forecast the moratorium could last into 2011, devastating entire communities that rely on deep-water drilling, similar to shutdowns of auto plants and steel mills, the Times reported.

Lawrence Dickerson, chief executive officer of Diamond Offshore Drilling, owner of six deep-water rigs in the gulf, told the Times that 15,000 to 20,000 rig and associated jobs were in peril. He said he expected some deep-water rigs would remain in the area waiting to resume drilling, but all operations would be forced to cut staff as the moratorium continues.

© 2010 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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