NOIA Responds to Revised Projections of Job Losses from Moratorium
"The report from the Obama Administration on the job losses caused by their blanket deepwater drilling moratorium downplays the true impact being felt in the Gulf Region," said Randall Luthi, President of the National Ocean Industries Association. "It will be no comfort to these unemployed workers to read how their plight could be worse had the Department's earlier estimates of 23,000 rendered jobless been realized."
The report, released on September 16 at the Senate Committee on Small Business and Entrepreneurship hearing, reduces the original projections of 23,000 lost jobs resulting from the gulf drilling moratorium to between 8,000 to 12,000, and predicts that most of those will be temporary losses.
"The original estimate of 23,000 job losses was based on the assumption that offshore energy companies would lay off their entire drill-rig related workforces," said Luthi. "Thankfully, offshore oil and gas companies are good corporate citizens who have retained their skilled employees during this unprecedented time, in hopes that the moratorium is lifted soon, permits are issued and drilling activity resumes. However, this ability to keep these workers without work cannot last much longer."
The report also fails to recognize that many displaced workers were given work assisting with oil spill response and cleanup. Since the flow of oil has been stopped for some weeks now, these temporary jobs will end, and these workers will only be able to resume full-time work when Gulf drilling activity resumes.
The Administration is correct in the assessment that the impacts of the moratorium are being felt the deepest by the Gulf's small businesses. Listed below are real life stories detailing the impact felt by some of these businesses and their employees as a result of the blanket drilling moratorium.
Aries Marine Corporation
Aries Marine Corporation owns a fleet of 29 workboats based domestically in the Gulf of Mexico. On September 1, 2010 they took delivery of the newest vessel to their fleet, a 5,553 Dead Weight Tonne Offshore Support Vessel (OSV). This vessel is the largest U.S. flagged conventional OSV in the Gulf today. It has a complete crew of 16 mariners and riggers. Its daily crew cost is $10,000 or $3,650,000 per year. That is $3,650,000 that goes directly to salary and payroll taxes for this one boat. At the moment it is without work and Aries is actively marketing the boat to go to Mexico. Should it go to Mexico, the crew will be split between Americans and foreign mariners. Roughly half of the payroll will be retained by Americans. Crews of other vessels that are not likely to go to Mexico will have to remain in the U.S. where no work is likely to be found due to the lack of drilling.
Aries' current annual gross payroll is $20,000,000, but this is because they rehired 30% of their workforce back last March following an economically challenging 2009. However, in March the outlook was much better and drilling contractors were creating jobs. Subsequently, Aries rehired those they had laid off. The tragic accident of April 20th then occurred and those drilling jobs never materialized. Now with the cleanup activities coming to an end and virtually no drilling permits processed they are again looking at bleak times. If this moratorium is not quickly lifted Aries fears that once again they will have to take drastic and unwanted measures to save the company.
"CapRock Communications delivers turnkey satellite communications that provide offshore drilling rigs, production platforms and support vessels with reliable connectivity to operate more efficiently. The company has served clients in the Gulf of Mexico for 29 years and has grown to over 700 employees globally, several hundred staffed at CapRock's Houston, Texas and Lafayette and New Orleans offices.
CapRock has developed a strong reputation in the industry for delivering extremely dependable communications, even to the most remote locations, which differentiates CapRock from its competitors. It's CapRock's strong service organization, satellite veterans and highly trained technicians that enable CapRock to deliver such service. It would be difficult to replace workers in these specialized positions if CapRock were to let go of employees and then need to re-hire once the moratorium is lifted. Additionally, many CapRock employees began their careers with CapRock and have long tenures with the company. CapRock diligently seeks to remain a good corporate citizen and continue to employ its personnel; however, financial implications from the moratorium continue to mount. If the moratorium is not lifted quickly, CapRock will be forced to reduce its workforce in the Gulf of Mexico." – CapRock Communications
Key Energy Services
"Key Energy Services is a significant participant in wellbore fishing and tubular recovery services in the Gulf of Mexico deepwater. Key's field workforce in this market has been reduced by 40 percent as a result of the decrease in activity due to the moratorium. These are good paying jobs that require many years of training and experience to fulfill. We need our federal regulators to be rational and recognize the hardship that the moratorium has placed on families whose livelihoods have been impacted in recent months." - Dick Alario, Chairman, President and CEO
- Has idled four rigs and furloughed most employees on those rigs (SH2500, SH2505, SH3000, SH2001)
- Each rig has about 50-60 employees – total furloughed around 150 (about 25% of staff)
- One rig and its crew of furloughed employees SH2001 has been recalled
- Has had a total of 58 resignations with many of these furloughed employees
- Some furloughed employees have been called back to fill resignations
- A total of 41 employees remain furloughed (about 9% of their staff)
- Most employees that have resigned have left the offshore industry
Southern States Offshore
"We have not laid anyone off, regardless of utilization, in order to maintain crew continuity, safety and preparedness. We will continue this policy for as long as we can, but economics will force us at some point to lay off crews in order to survive." - Edward Schreiber, Owner/Vice-President
"Actions that the government has taken in the Gulf post-Macondo have certainly had a negative impact on our business. As our business is the licensing of multi-client geoscience data to offshore operators, it is important that E&P companies have a regulatory framework and the appropriate incentives to encourage their continued investment in efforts to locate much needed new energy reserves.
"Our customers, whether due to the moratorium or due to the uncertain future regarding regulation in the offshore US, have definitely taken a 'pause' in their E&P investment decisions in the GOM. This has created considerable uncertainty in our prospects for business growth in 2010. While we have not yet taken cost reduction actions that would result in layoffs at TGS, we have imposed a freeze that has resulted in a decision not to fill 33 open positions that we originally had in our budget for 2010. These are highly salaried, highly technical jobs that we had intended to fill that will now not be filled in the current environment. This may not seem like a large amount of employees relative to other contractors, but for TGS it does represent 5% of our total employment base." - Robert Hobbs, Chief Executive Officer
- NOIA Wants Opportunities for Offshore Oil, Gas, Renewable Energy (Nov 09)
- NOIA Seeks Information on GOM Decommissioning Cost Estimates (Oct 05)
- Musings: NOIA's Position On Offshore Contractor Regulation Shifts (Apr 29)