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Small Businesses May Sink Under Drilling Hiatus

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Small Businesses May Sink Under Drilling Hiatus


Small Businesses May Sink Under Drilling Hiatus

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Lawyers for the Obama administration and the oil industry will be back in court in New Orleans tomorrow. They'll argue whether a six-month moratorium on deepwater drilling is legal.

The Department of the Interior wants the time to develop new safety and environmental regulations. But last month, a federal judge sided with the industry and ruled that 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 tomorrow. And there will also be hundreds of small businesses that will be watching. Unlike the big companies, their very existence could be at stake if the moratorium continues.

NPR's Jeff Brady visited one company outside Lafayette, Louisiana.

JEFF BRADY: There's a sign in front of Delmar Systems' headquarters 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.

(Soundbite of shop)

BRADY: It's a little surprising how busy Delmar's shop is these days. Workers are stripping paint off huge pieces of equipment in one area. There are guys welding in another. Executive Vice President Brady Como says for now, the moratorium is creating extra work for his company. That's because crews are bringing rigs into shallower waters as drillers wait for the moratorium issue to be resolved.

Mr. BRADY COMO (Executive Vice President, Delmar Systems): 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. And that increases our inspection and handling requirements.

BRADY: Delmar has about 300 employees, and Como says he has enough work to keep them busy for 90 days. But after that, it's anyone's guess.

Mr. COMO: We're going to grab a hard hat and some safety protection devices, and I'm going to take you for a brief yard tour.

(Soundbite of vehicle)

BRADY: Out in the yard, it looks like someone supersized a toolbox. Everything appears made for a giant: ropes, hooks and spools. It takes big equipment to moor a huge drilling rig.

Como hopes to find more work overseas to keep all this equipment, and the people moving it, working. But if the moratorium lasts beyond a couple of months, this yard likely will be a lot quieter.

Mr. COMO: 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. And people got to begin to wonder about job security and, you know, what they've chosen to do for a living.

BRADY: And this is just one company. There are hundreds more like it. Randall Luthi is president of the National Ocean Industries Association.

Mr. RANDALL LUTHI (President, National Ocean Industries Association): We figure that for about every deepwater well, there's about 1,400 jobs affected.

BRADY: Currently, 33 rigs are idled - 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.

Mr. LUTHI: It would be companies that bring food out to the rigs. It would be companies that help build the rigs. It would be supply vessels. It would be the helicopters - companies that fly people to and from the rigs.

BRADY: Luthi says some of the companies likely wont survive a six-month moratorium. He says thatll lead to more consolidation in the industry and less competition - something he thinks will hurt his industry in the long run.

Jeff Brady, NPR News.

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