Tuesday AM June 8th, 2010

The six-month ban on deep-water offshore drilling is forcing oil and gas firms to idle equipment and thousands of workers. Many rigs are being redeployed elsewhere, as Ed Mayberry reports.

oil rigThere are over 30 deep-water drilling rigs that are affected by the ban, and many are expected to leave the Gulf for contracts elsewhere in the world.  And economist Ray Perryman notes that it won’t be a quick and easy task to get them back.

“If people learned anything out of this whole process, they’ve learned just how big and complex these offshore drilling rigs are.  They’re almost like having a small city out in the middle of the waters.  And so it is a very difficult thing to redeploy.  It’s not something that you could have happen overnight.  It does take time and effort and expense to do that, and obviously people respond in terms of relative costs versus the returns they get from drilling in various places, the risks they perceive, and all that entire dynamic is going to be impacted by what’s happened here.”

Perryman says redeployments of rigs and manpower can also lead to delays on future U.S. projects.

“When the workers are redeployed — which is fairly common in the offshore industry — some of the money will come home to be spent locally with the families, assuming they remain in the area.  But a lot of it does get diverted elsewhere.  The equipment, the leasing revenues and those types of things, can also be diverted as well.  And that while Houston is the center of a lot of this activity, people purchase some things locally, and if the industry tends to move in other parts of the country or other parts of the world, then a lot of the smaller local companies, in particular, would be adversely affected.”

Development of deep-water fields became practical in recent years with new drilling technologies and equipment.

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