BP Ban on Bidding Could Hurt Energy Industry, U.S. Gov't

Banning BP from bidding in future offshore lease sales could have a hugely negative ripple effect on drilling contractors and the rest of the offshore industry as well as the Gulf region, and even the federal government, the National Ocean Industries Association (NOIA) and the International Association of Drilling Contractors (IADC) reported Friday.

The offshore oil and gas industry, which is based almost entirely in the Gulf of Mexico, supported over 200,000 American jobs in 2010 and contributed nearly $80 billion in revenues to the Federal government from 2001-2010.

BP is the largest operator in the Gulf of Mexico, and its investments in the region create business opportunities for many other companies, create and sustain good jobs in the region, and generate much needed government revenue.

The timing of the EPA announcement was unfortunate, coming on the same day as the first offshore lease sale in the Administration’s new five year plan. Although BP submitted no bids, the Federal government profited by $133 million from this week’s Western Gulf lease sale. The next offshore lease sale, scheduled for March 2013 in the Central Gulf of Mexico, is expected to bring in a much bigger take for the Federal government.

NOIA and IADC, both of which count BP as a member, feel that EPA’s suspension may be overly punitive, considering BP’s diligent efforts to work with the Federal government on cleanup and restoration efforts, and given the further potential far reaching impacts of the action.

We are hopeful that the offshore industry, the Gulf region, and the Federal government can benefit from BP’s participation in the upcoming Central Gulf sale and future offshore lease sales.