Small Businesses May Sink Under Drilling Hiatus

Lawyers for the Obama administration and the oil industry will be back in court Thursday in New Orleans to argue whether a six-month moratorium on deep-water drilling is legal.

Workers hold up signs supporting lifting the moratorium on deep-water drilling i

Workers hold up signs supporting lifting the moratorium on deep-water drilling during a rally at Gulf Island Fabrication last month in Houma, La. In June, a federal judge overturned the federal government's six-month moratorium on deep-water drilling, and refused to let the ban stay in effect while the government appeals. Chris Graythen/Getty Images hide caption

itoggle caption Chris Graythen/Getty Images
Workers hold up signs supporting lifting the moratorium on deep-water drilling

Workers hold up signs supporting lifting the moratorium on deep-water drilling during a rally at Gulf Island Fabrication last month in Houma, La. In June, a federal judge overturned the federal government's six-month moratorium on deep-water drilling, and refused to let the ban stay in effect while the government appeals.

Chris Graythen/Getty Images

The Interior Department wants the time to develop new safety and environmental regulations, but last month a federal judge sided with the industry and ruled the agency acted too hastily in putting the moratorium in place.

All the big names in the oil industry will be paying close attention to the legal arguments. There also will be hundreds of small businesses that'll be watching. Unlike the big companies, their very existence could be at stake if the moratorium continues.

Job Security?

There's a sign in front of Delmar Systems' headquarters in Broussard, La., that reads: "Mr. Obama you should not eliminate our jobs."

If the current moratorium continues, it could hit Delmar especially hard. The bulk of the company's business is anchoring and mooring semi-submersible drilling rigs. If there are no rigs drilling in the Gulf — there's nothing to anchor. So, it's a little surprising how much activity there is in Delmar's shop these days.

"We're probably actually a little busier than usual because we've got a large number of mooring components that are coming to the beach," says Delmar Executive Vice President Brady Como.

Crews are busy bringing rigs into shallower water as drillers wait for the moratorium issue to be resolved. Como says he has enough work to keep Delmar's workers busy for 90 days. But after that, it's anyone's guess.

"Delmar has been around south Louisiana for 42 years — first time in the history of the company that our 300 employees will look around and see that there's no activity," says Como. "People got to begin to wonder about job security and what they've chosen to do for a living."

And this is just one company — there are hundreds more like it.

More Consolidation, Less Competition

"We figure that for every deep-water well, there's about 1,400 jobs affected," says Randall Luthi, president of the National Ocean Industries Association.

Currently 33 rigs are idled — by Luthi's calculation, that's more than 45,000 jobs hanging in the balance. Luthi says the bulk of those workers are employed not by the big names in the oil industry, but by companies like Delmar.

"Companies that bring food out to the rigs ... companies that help build the rigs ... helicopter companies that fly people to and from the rigs," says Luthi.

Some of the companies likely won’t survive a six-month moratorium. Luthi says that'll lead to more consolidation in the industry and less competition — something he thinks will hurt his industry in the long run.

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