Lawmakers tour oil rig, discuss energy issues

Members of the House of Representatives got a post-oil spill look Friday at offshore energy production aboard a deepwater rig in the Gulf.

“A lot of people bad-mouth the industry, but if you come out here and see what these guys do, it's amazing,” said U.S. Rep. Steve Scalise, R-Houma, who hosted the tour.

Scalise was joined by Republican Reps. Morgan Griffith of Virginia, Dennis Ross of Florida and John Shimkus of Illinois. Along with Scalise, Griffith and Shimkus serve on the House Energy and Commerce Committee, which handles legislation tied to the oil-and-gas industry.

“We are just trying to educate them on what we do and how we do it safely,” said Lynne Hackedorn, vice president of government and public affairs for Cobalt International Energy. ENSCO owns the rig. Cobalt contracts ENSCO to run the rig and drill the well design created by Cobalt.

Through a thick layer of clouds the rig appeared as a tiny island in the Gulf of Mexico, about 100 miles from south Lafourche Parish.

Inside the $500 million vessel's control room, a wall of computer monitors is flanked by an endless view of water.

Here, Chris Johnston, general manager for ENSCO's North American deepwater operations, explained how the vessel is dynamically positioned, which means its towering operating decks and equipment sit atop massive pontoons floating in the Gulf. Eight 3,500-horsepower thrusters synchronize to keep the hulking structure positioned over its well 5,500 below the water's surface.

On Friday, crews on the exploratory rig were preparing the blowout preventer for installation before drilling can begin, Johnston said.

Hackedorn said the operation is a highly expensive risk as there is no guarantee the oil found when the rig drills 6½ miles under the sea floor will be commercial grade and plentiful to the point of profitability.

It's a question that will be answered after a $200 million investment. The rig costs about $1 million per day to operate, Hackedorn said.

The rig is operated by about 280 people who work in 12-days-on, 12-days-off shifts.

James Painter, executive vice-president of Cobalts Gulf of Mexico division, estimated the rig indirectly is responsible for about 1,000 jobs through its servicing.

And there are many more jobs that can still be filled in the energy industry.

“In all honesty, we need more people with a technical bend,” said Steve Brady, vice-president of ENSCO's western hemisphere operations.

Brady estimated the entry-level roustabout position that requires a high-school eduction and clean drug test pays $55,000 per year. He also noted rig work is a good opportunity for returning servicemen.

“We need them at all levels,” Brady said. “A lot of the guys out there have a high-school education, and it goes all the way up to engineers.”

The congressional visit served as an opportunity for the rig operators to ask them to push for consistency in energy regulations and leasing of new areas for exploration.

“We want to see some predictability and stability in all aspects,” Brady said.

The trip came at somewhat of an uncertain time for many industries that require government oversight. If Congress does not agree on deficit reductions more than $1 trillion in across-the-board cuts to government services, a process known as sequestration will take place.

In a letter to the Senate Appropriation's Committee, outgoing Secretary of the Interior Ken Salazar said sequestration will mean delays in the leasing of new federal land for oil exploration in the Gulf.

He noted some 550 exploration plans or development documents before the Bureau of Ocean Energy Management will be jeopardized by the cuts.

Earlier this month, the bureau announced a lease sale in March that will open up 38 million acres in the central Gulf for exploration. It is the second lease sale for the central Gulf since the 2010 BP oil spill. It's unclear if sequestration could affect the sale.

Analysis by the Democratic staff of the House Committee on Natural Resources also noted about $8 million and 52 positions would be cut from the agency created after the oil spill to oversee the safety of offshore drilling.

“An 8.2 percent across-the-board cut could gut oversight of offshore drilling—less than three years after the BP oil spill,” the report said.

Scalise took the trip as an opportunity to highlight what he sees as a disconnect with President Obama on energy and reducing deficits.

“What we would like to see is the federal government to open up more areas,” Scalise said, referring to efforts to open federal waters off other states for exploration. “The demand is there, but right now there are companies taking jobs to other countries.”

House Republicans passed a plan for avoiding the sequester, which would give the Department of the Interior greater leeway to determine what areas get cut, Scalise said.

Democrats' proposal for avoiding the sequester involves eliminating about $5 billion in tax deductions for oil companies, according to The Associated Press.

“It would tax American oil companies and raise the cost of production here. It wouldn't increase taxes on Saudi Arabian oil, and you would make us more dependent on foreign oil,” Scalise said. “It's one of the most insane policies I have seen.”