Dismantling our industry, rig by rig

Posted on 04 May 2011

Samuel Giberga, Hornbeck Offshore Services

Samuel Giberga, Hornbeck Offshore Services

Our industry has fought the Obama Administration in the judiciary, in congress and in the media. Yet, in defiance of federal court orders and repeated bipartisan requests from Congress, the Administration continues to pursue a destructive policy. Their strategy is cynical but, so far, amazingly successful.

US Interior Secretary Ken Salazar says that he is in favor of a “robust” oil and gas industry in the United States, but then aggressively blocks the issuance of drilling permits. He insists that his policies foster safety, but turns a blind eye as highly trained and skilled workers are forced to leave our industry. The Administration publicly paints a rosy scenario and hopes that nobody will take notice that an entire industry is being dismantled, rig by rig, vessel by vessel, worker by worker.

The inevitable result of this policy will be a significant drop in domestic production. Production in the Gulf has fallen by more than 300,000 bbl/day, and it’s going to get a lot worse. The Energy Information Administration is forecasting a drop of 600,000 bbl/day by July 2012. We think this forecast is unduly optimistic as the few permits that have been issued thus far are for activities that will yield little incremental production.

As an industry, we must help the American people understand that the outrageous behavior of this Administration is leading our nation to realize Secretary Stephen Chu’s vision of gasoline prices on par with those in Europe. Lower production will mean higher prices, more foreign dependency and fewer US jobs.

Moreover, the Administration’s extremist policy will weaken our ability to develop oil and gas resources in a safe and environmentally sound manner by forcing key assets and human capital to leave the region and industry.

We cannot let this happen.

Contrary to the Administration’s statements, a de facto drilling moratorium is alive and well, and it has already resulted in the loss of thousands of jobs, while more layoffs are being made each week. At Hornbeck Offshore, we have felt these losses directly. We have reduced our payroll and laid off workers for the first time in our company’s history and deferred spending on capital projects. We are also moving assets out of the Gulf of Mexico into foreign markets.

Although it’s clear that lessons must be learned from the Macondo incident, we must also recognize that more than 40,000 wells have been safely drilled in the Gulf since the 1950s. We are not somehow safer by not working, and we do not get better by not working. In fact, by not working, we lose crucial assets and experienced personnel who have the necessary know-how to work safely. We all know that a safe Gulf is a working Gulf.  Let’s carry that message to the American public and to our leaders in Washington, DC. Our employees do not want an unemployment check or a bailout. We simply want to go back to work.

Samuel A Giberga is senior VP and general counsel of Hornbeck Offshore Services Inc. This editorial was adapted from his March 2011 testimony to the US House of Representatives’ Natural Resources Committee.

Editor’s note: Eleven deepwater drilling permits have been issued since January 2011.

2 Comments For This Post

  1. Kevin Stevenson Says:

    Excellent article. It will not change until this group in Washington is changed. Vote these people out.

  2. Kevin Stevenson Says:

    Excellent article. These people are not interested in what is best for America. They must be voted out. Vote.

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