Gulf Coast business still suffering from offshore drilling slowdown

02 06, 2012 by Fuel Fix

A Louisiana economic development group says federal permitting for deep-water drilling continues to fall well below levels prior to the 2010 Gulf of Mexico oil spill, causing area businesses to lay off workers and relocate away from the Gulf Coast.

In a report released last week, the Greater New Orleans, Inc. economic alliance studied the rate of federal permitting for offshore activity since the moratorium on deep-water drilling was lifted in October 2010.

The group found that federal regulators have approved about three deep-water drilling permits per month since the moratorium ended, down from six permit approvals per month prior to the spill.

The Deepwater Horizon rig explosion in April 2010 killed 11 people and unleashed the largest offshore oil spill in U.S. history. In its wake, the feds clamped down on offshore oil activity, instituting a six-month moratorium on deep-water drilling.

The study found that permit approval took an average 109 days in 2011, compared to 61 days during the five years prior. The percentage of drilling plans approved fell to 34 percent in 2011, from an average 73 percent.

In the group’s survey of 99 companies, 49 percent said they had laid off workers in response to the moratorium, including engineers, office staff, riggers and captains. About 38 percent said they reduced employee hours or salaries. The average annual revenue for the responding companies fell from $136.5 million before the spill to $104.5 million today.

Of the respondents, 46 percent said they had moved all or part of their operations away from the Gulf of Mexico as a result of the moratorium.

However, the report noted that businesses negatively affected by the moratorium were more likely to respond to the survey, possibly causing skewed results.

Across Louisiana, the oil and gas extraction industry didn’t shed workers, remaining at about 8,500 employees before and after the moratorium, according to the report. The number of workers in supporting industries rose 6 percent, from 37,718 immediately before the oil spill to 39,840 after the moratorium was lifted.

The study attributed the employment growth to greater onshore oil drilling in the state’s shale gas areas.

“Several survey respondents mentioned hiring new workers for shale work,” the report noted. “The Haynesville Shale activity in North Louisiana may have mitigated some of the employment decreases resulting from decreased activity in the Gulf of Mexico.”

Greater New Orleans, Inc. is an economic development alliance that promotes the interests of businesses in New Orleans’ 10-parish area.