As oil prices continue to climb, a backlog of more than 100 offshore drilling plans for the Gulf of Mexico are awaiting approval from the Obama administration, according to federal data.
The federal government has not approved a single new exploratory drilling plan in the Gulf of Mexico since lifting its deepwater drilling moratorium on Oct. 12. There are currently 103 plans awaiting review by the Bureau of Ocean Energy Management, Regulation and Enforcement.
The information reveals that the Obama administration — not the oil industry — is the culprit for the slowdown of drilling activity in the Gulf. The Gulf of Mexico accounts for more than 25 percent of domestic oil production.
“These new findings prove that BOEMRE cannot claim it isn’t receiving job-creating plans from oil exploration and production companies,” said Gregory Rusovich, chairman of the Business Council of Greater New Orleans and the River Region. “The plans are there. Until BOEMRE reviews the 103 plans awaiting approval, our economy’s stability remains in jeopardy.”
Every two weeks Greater New Orleans Inc. releases a Gulf Permit Index based on publicly available federal data. Thursday’s index revealed an 88 percent decline in deepwater permits compared to the historical average. Not a single deepwater permit was approved in January.
Even shallow-water permits have taken a hit in the Gulf, despite not being subject to the administration’s moratorium last year. Only two new shallow-water permits were approved by BOEMRE in January. Permit issuance is down 30 percent from the historical average.
The decline in drilling is having an economic impact on the Gulf region and also threatens to exacerbate the problems with rising oil prices.
It also means less money for the federal government. With production in the Gulf of Mexico expected to drop this year by 220,000 barrels per day, according to the U.S. Energy Information Administration, that equals about $3.7 million in lost revenue each day (based on the $90/barrel oil and the royalty rate of 18.75 percent).