Smaller Oil Firms Fear Regulation Backlash In Gulf The Deepwater Horizon disaster may lead to a re-mapping of oil production and exploration in the Gulf of Mexico. Smaller oil companies say the additional expense created by increased oversight may force them to look for business elsewhere.
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Smaller Oil Firms Fear Regulation Backlash In Gulf

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Smaller Oil Firms Fear Regulation Backlash In Gulf

Smaller Oil Firms Fear Regulation Backlash In Gulf

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MARY LOUISE KELLY, Host:

The Gulf oil spill may rearrange the map of oil and gas exploration in the U.S. Drilling in the Gulf was already expensive and companies are expecting new regulations that will make it even pricier. As NPR's John Burnett reports, some independent oil companies may be headed back onshore.

JOHN BURNETT: But the Gulf is about to get less attractive to work in. After the BP calamity, operators know that more stringent regulations are coming.

BRUCE VINCENT: Anytime that you increase regulatory burden on any business, you make it more expensive, it takes longer and it cost more.

BURNETT: Vincent hastens to point out that his industry does not oppose additional regulation to prevent another deepwater disaster, but he says what's coming is going to be tough on independents.

VINCENT: What will happen is regulators will build in even more redundancy. You'll need more equipment. You'll need to have it inspected more often. You'll probably need more people on site - certainly higher qualified people - that will take more manpower. All of that will add cost and expense to it.

BURNETT: Bob Tippee, editor of the Oil and Gas Journal in Houston, believes the oil spill will permanently change the players in the Gulf of Mexico.

BOB TIPPEE: It's definitely a game-changer. There's no question about it. The rules are going to change. The question is going to be are the rules going to be constructive, or are they going to be so onerous that many companies will just choose to move their investment elsewhere?

BURNETT: Again, company President Bruce Vincent.

VINCENT: We've reallocated some of our higher risk capital that we were looking at spending in the inland waters of Louisiana, and we've reallocated it primarily to an operation we have in South Texas, where we're exploiting the Eagle Ford Shale.

BURNETT: Dewitt County Judge Ben Prause says the shale boom has enabled his county to lower taxes, improve roads and rent vacant buildings downtown.

BEN PRAUSE: The hotels, all of them seem to be crowded. Of course, cafes and service stations. And, of course, there's been a lot of leases. And these bonuses, you know, they pay for three-year leases and those have soared as high as $2,500 an acre.

BURNETT: John Burnett, NPR News, Boston.

LOUISE KELLY: You're listening to MORNING EDITION from NPR News.

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