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Critics say drilling suspension extends Gulf's economic woes

By the CNN Wire Staff
STORY HIGHLIGHTS
  • Critics say drilling suspension will worsen economic woes of Gulf region
  • Thousands of jobs at risk, says Sen. Mary Landrieu, D-Louisiana
  • American Petroleum Institute calls drilling halt unnecessary
  • Federal government says safety first approach is needed

(CNN) -- Whether you call it a moratorium or a suspension, the government's new halt on deepwater oil drilling will cause economic harm, according to industry advocates and Sen. Mary Landrieu of Louisiana.

"Please consider that idling the 33 deepwater rigs currently permitted to drill in the deepwater Gulf would immediately impact employment for as many as 46,000 crewmen, deck hands, engineers, welders, [remotely operated vehicle] operators, caterers, helicopter pilots, and others who operate and service these vessels," Landrieu, a Democrat, said in response to Monday's announcement of a new suspension order.

Landrieu and Jack Gerard, president and CEO of the American Petroleum Institute, warned that halting deepwater drilling would amount to overkill, causing far-reaching economic harm.

"It is unnecessary and shortsighted to shut down a major part of the nation's energy lifeline while working to enhance offshore safety," Gerard said, adding that the new suspensions threatened "enormous harm to the nation and to the Gulf region."

In addition, Gerard complained "no certain and expeditious path forward has been established for a resumption of drilling."

The deepwater rigs in the Gulf have passed government inspections, he noted.

In announcing the new order, Interior Secretary Ken Salazar labeled it a suspension after losing two court battles over an initial moratorium on deepwater drilling he unveiled in May.

Salazar's new order covers all drilling involving blowout preventers -- the fail-safe mechanism against the kind of rig explosion that led to the Gulf oil disaster -- positioned underwater or on floating rigs.

It expands the suspension beyond the original moratorium, which only covered deepwater operations in the Gulf of Mexico, to include those off California.

At the same time, Salazar noted the revised suspension order focused on the specific technology involved and type of drilling operation, rather than the depth of water in which it occurs. The order also made clear that some operations included in the previous moratorium could be permitted under the new suspension order, which extends until November 30.

"I remain open to modifying the new deepwater drilling suspensions based on new information," Salazar said in a statement, "but industry must raise the bar on its practices and answer fundamental questions about deepwater safety, blowout prevention and containment, and oil spill response."

According to the statement, the temporary deepwater drilling pause will provide time for operators to demonstrate "that they have the ability to respond effectively to a potential oil spill in the Gulf, given the unprecedented commitment of available oil spill response resources that are now being dedicated to the BP oil spill."

It will also allow for an assessment of "strategies and methods" in the event of another deepwater rig blowout as well as further investigation of what caused the April 20 explosion and sinking of the Deepwater Horizon rig that killed 11 workers and led to the Gulf oil catastrophe, the statement said.

Oil companies and many Gulf state politicians and residents vehemently opposed the first moratorium, arguing it was unnecessary and would damage a regional economy still reeling from Hurricane Katrina.

However, Sen. Bill Nelson, D-Florida, said Monday that a suspension of deepwater drilling was the right step for now.

"Until we know what happened with the Deepwater Horizon, and we'll know very soon, it makes sense not to put Gulf Coast residents and the economies there at further risk," Nelson said in a statement.

Landrieu disagreed.

"Whether you call it a moratorium, a suspension, or a pause, the result will still be a substantial loss of jobs," she said Monday in a statement to a presidential commission created to investigate the Gulf oil disaster. "Even the revised moratorium will force thousands of hard-working Louisianians and others along the Gulf Coast into the unemployment lines."

Landrieu said the drilling suspension would result in 10,000 lost jobs in Louisiana alone within "a few months." "That is not something we can survive or tolerate," she said. "We cannot simply close down the offshore oil and gas sector without devastating economic impacts."

In a background document accompanying Salazar's statement, the Interior Department said the difference between the original moratorium and the suspension order Monday involved "new evidence regarding safety concerns, blowout containment shortcomings within the industry, and spill response capabilities that are strained by the BP oil spill."

"The May 28 moratorium proscribed drilling based on specific water depths; the new decision does not suspend activities based on water depth, but on the basis of the drilling configurations and technologies," the document said.

Salazar's suspension order does not apply to "production activities" and drilling necessary to help stop the Gulf oil leak as well as some other activities, the document said. It also doesn't apply to shallow water drilling that complies with safety regulations, according to the document.

However, members of the Shallow Energy Security Coalition complained Monday the government has stopped issuing new permits for shallow water drilling.

"To date, and despite assurances from the White House and the Interior Department, about one-third of the shallow water fleet has been idled by the application of what can only be called a de facto moratorium," said Jim Noe, senior vice president and general counsel of Hercules Offshore. "Unless Interior changes course, and matches their action with their rhetoric, another third of the fleet will be idled and thousands more workers will be furloughed within the next few weeks."

CNN's Tom Cohen, David Mattingly and Alan Silverleib contributed to this report.