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A Project of The Annenberg Public Policy Center

Senator Mangles Facts on Drilling Moratorium

In an email to constituents, Republican Sen. David Vitter of Louisiana claims “the Obama administration shut down the entire offshore oil and gas industry” after the 2010 Gulf of Mexico oil spill. That’s not true.

The administration halted the drilling of all new wells for one month. And the Interior Department issued a months-long moratorium on deepwater drilling. New safety requirements also slowed down the permitting process for shallow-water drilling.

But existing offshore wells continued to pump out natural gas and oil.

Our thanks to a Louisiana resident who sent us the senator’s email and pointed out Vitter’s false claim. We’re including this piece on our Spin Detectors page, through which we ask our readers to help us monitor political claims and campaigns across the country. The Louisiana reader asked us to withhold his name.

Misrepresenting the Moratorium

Vitter makes his “shut down” claim in a July 11 constituent email. His letter focuses on government investigations into an administration report that recommended the drilling moratorium.

David Vitter, July 11: Louisiana is still suffering from the job-crushing moratorium put in place after the BP oil spill. The Obama administration shut down the entire offshore oil and gas industry and thousands of jobs were lost because of it. Many Louisianians, including myself, pleaded for answers to why this happened, but we could never get a clear one.

The entire industry was not “shut down.” The government’s action affected only the drilling of new wells.

The explosion on the Deepwater Horizon oil rig on April 20, 2010, killed 11 people and resulted in the largest oil spill in U.S. history.

Ten days after the disaster, White House senior adviser David Axelrod said the administration would halt new drilling in domestic areas until “there is an adequate review of what happened here and what is being proposed elsewhere.”

On May 6, Interior Department Secretary Ken Salazar announced in a press release that “no applications for drilling permits will go forward for any new offshore drilling activity until the Department of the Interior completes the safety review process that President Obama requested.”

Following the month-long review process, the administration did three things: It imposed a six-month moratorium on drilling deeper than 500 feet. It lifted the temporary freeze on drilling in shallower waters. And it issued new safety requirements with which all drilling companies must comply.

The Louisiana Mid-Continent Oil and Gas Association, a trade group, said the deepwater drilling moratorium did “not affect the 4,515 shallow-water wells, and it does not affect 591 producing deepwater Gulf wells.”

The association said the moratorium halted work on 33 exploratory wells, although the Interior Department later said the order idled only 21 rigs.

A federal judge lifted the deepwater moratorium that June after a company sued the Interior Department, claiming potential economic harm. But the department issued a second moratorium order the next month based not on water depth but on technology that most deepwater operations use. Like the first order, the second moratorium did not apply to “production activities” (see page 19).

While the deepwater moratorium continued, shallow-water drilling significantly slowed down. That’s because companies had to prove they could comply with the new safety requirements, which include independent, third-party verification that oil rigs are prepared to handle a well blowout.

The Houston Chronicle reported in August 2010 that the government had issued two permits since it had imposed the new safety guidelines in June. Before the spill, the government issued 10 to 15 permits a week. (The Interior Department’s Bureau of Safety and Environmental Enforcement has now issued more than 130 new well permits for shallow-water drilling).

A similar slow down occurred with deepwater drilling after the Interior Department lifted the moratorium on October 12. Companies failed to receive any permits to drill in deeper waters until late February 2011, because they had to comply with the new safety regulations. (The Houston Chronicle recently reported that the government is awarding more deepwater drilling permits, although the number has failed to reach 2009 levels.)

As we’ve written before, offshore wells continued to produce oil and natural gas in the months following the spill.  In fact, offshore oil production in the gulf in 2010 reached 1.551 million barrels — half a percentage point lower than production in 2009.

The moratorium has affected production. But the effect hardly amounts to a shutdown of the entire industry.

The independent Energy Information Administration estimated the moratorium would reduce oil production by 31,000 barrels a day in the fourth quarter of 2010 and 82,000 barrels a day in 2011 — a year that saw the Gulf of Mexico produce 1.3 million barrels a day.

The EIA estimates that offshore natural gas production will decline by 0.8 trillion cubic feet — or 31 percent — from 2010 through 2014 before production increases again. But the EIA said the moratorium caused only some of that decline. The agency said “a temporary moratorium affected some [Gulf of Mexico] drilling; however, natural gas production in the Gulf has been declining for the past several years as producers shift to more economical areas of production.”

— Ben Finley