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Drilling Moratorium Could Imperil Louisiana’s Expansive Oil Industry

June 4, 2010 at 12:00 AM EST
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In our continuing coverage of the Gulf oil leak, Spencer Michels reports on how the spill may impact Louisiana's lucrative drilling industry as lawmakers impose a moratorium on offshore drilling and vow to ramp up regulation on the industry.
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JEFFREY BROWN: The Gulf of Mexico is literally dotted with thousands of offshore drilling rigs.

And, as “NewsHour” correspondent Spencer Michels reports, the BP catastrophe has had a ripple effect throughout the industry.

SPENCER MICHELS: Like many people in Louisiana, Neal Ryan, who owns a small offshore drilling company, doesn’t like hearing about any more restrictions on oil production. He’s concerned and a little confused about a moratorium on new deep-sea drilling the Obama administration is promulgating.

He agreed to take us out by helicopter to see what his industry is fighting to save. We flew over endless marshlands dotted with oil platforms. Oil has been big business in Louisiana since the first offshore well was drilled there in 1947.

From overhead, we could see the vast petroleum infrastructure in Port Fourchon, the state’s southernmost port. It services over 90 percent of the Gulf of Mexico’s deepwater oil production, with over 600 oil platforms. The petroleum industry accounts for 17 percent of all jobs in the state.

And we saw hundreds of the 5,000 or so oil platforms that dot much of the Gulf Coast waters, a virtual city on the water, pumping oil and gas and piping it to shore. Thirty-seven miles offshore, on the continental shelf, more than 90 miles from the BP Deepwater Horizon, that was our destination, a production platform called Ewing Bank 305. Built by Conoco in the 1980s, it is now owned by independent oil producer Louisiana-based Stone Energy.

This production platform operates routinely, sending 2,500 barrels of oil and 11 million cubic feet of gas to the shore every day. Since Stone bought it eight years ago, it has had no leaks, no problems.

Running night and day, the platform’s 18 wells descend deep beneath the ocean floor 10,000 to 18,000 deep. The Ewing Bank 305 will not be affected by the moratorium, but drilling on a Stone Energy well several miles away is being curtailed, pending a safety inspection, to the company’s dismay.

On board the Ewing Bank, the six-man crew watch TV raptly for news of the oil spill that could affect their livelihoods. They were not allowed to talk to us, but the oil and gas industry claims that thousands of jobs could be lost if all new offshore drilling was stopped.

NEAL RYAN, oil executive: I think that there’s people that don’t understand what it means for the state and don’t really understand what it means for the nation. They probably do have that opinion, that they would like to see the whole thing shut down.

I’m not saying that — that the spill isn’t an awful event, and it isn’t going to impact our communities. We live in — in Louisiana. We want to make sure that the water that we go and fish in and have recreational activities in is safe. And we don’t enjoy the fact that there’s pollution. But we also don’t want to see an entire industry killed off as a knee-jerk reaction to that.

SPENCER MICHELS: Ryan says the industry is especially concerned about a possible stoppage of so-called shallow-water drilling in depths less than 500 feet.

Yesterday, the Minerals Management Service office that oversees drilling canceled permits for two shallow-water operations that it had approved the day before.

And you think that’s a possibility they might turn that off?

NEAL RYAN: That seems to be the rumor of the day. So, if — if that is the actual reaction from the government, then the state of Louisiana is going to have a lot of issues moving forward.

SPENCER MICHELS: Back on land, the support for drilling is equally strong. In Lafourche Parish, with a population of 90,000, the oil industry presence is everywhere.

And parish officials like Brennan Matherne want to keep it that way.

BRENNAN MATHERNE, Lafourche Parish, La.: We feel like we have lived with oil and gas industry most of our lives. We now have one of the — one of the biggest ports, one of the most important ports in the nation, and certainly the hub for oil and gas here in the Gulf of Mexico.

I mean, the bottom line is, you know, the attitude is, yes, there’s some people upset. Obviously, we’re all upset with BP for this happening, but all we’re asking for here on the local level is not to move the entire industry out. This was one platform, one company.

SPENCER MICHELS: Matherne says that even fishermen who have been restricted from their favorite waters don’t want to see the oil industry go away. Many work on oil rigs in the off-season, so they too are dependent on the industry for much of their livelihood.

Those not working for the industry and worried about pollution also support oil drilling. Scuba diver Ricardo Gutierrez makes his living cleaning the bottom of expensive pleasure boats in Metairie, Louisiana.

RICARDO GUTIERREZ, scuba diver: If there’s oil out on the water, the pleasure craft are not being used. It affects my business. I’m afraid that it will stop our economy, particularly here on the Gulf Coast.

SPENCER MICHELS: Gene Hemand is a marine repairman whose livelihood is dependent on recreational boating, which, along with the fishing and tourist industries, has taken a hit. But he’s even more fearful of what could happen to the oil industry.

GENE HEMAND, marine repairman: It would be like if you have a plane crash. You can’t shut down the whole industry just because one plane crashes.

SPENCER MICHELS: Hemand thinks that BP alone should be held responsible.

GENE HEMAND: It would put so many people out of work that, you know, the economics of it would just kill us.

SPENCER MICHELS: Meanwhile, though, the oil spill has already cost Louisiana billions of dollars of lost income. Many fishing operations have stopped. Tourism is down. Seafoods companies are in trouble. And the state’s main industries, a large source of America’s energy, are facing an uncertain future.