WASHINGTON - The economic damage from the BP Plc spill in the Gulf of Mexico will be dwarfed by the Obama administration's moratorium on deep-water drilling, the chief executive officer of a New Orleans business group said.
Meanwhile, BP confirmed yesterday that a new cap had been installed onto the leaking well and that tests on it were ahead, offering hope of containing the gusher.
The six-month drilling ban, which the U.S. Interior Department revised yesterday following lawsuits from local businesses, may affect as many as 24,000 jobs in Louisiana, Michael Hecht, president and chief executive of economic-development group Greater New Orleans Inc., told a presidential commission yesterday.
"Rigs were starting to leave" to drill in other nations, Hecht told reporters after testifying to the commission created by President Barack Obama last month. "The economic impact from the oil spill itself, however broad and long-lasting, will likely be dwarfed by the impact from the moratorium."
Diamond Offshore Drilling Inc., the largest U.S. deepwater oil driller, plans to move two rigs from the Gulf because of the moratorium and regulatory uncertainty, President and chief executive Larry Dickerson told the commission. The chief executive of Oceaneering International Inc., a service provider for offshore drillers, told the commission more companies may follow. "The longer the moratorium and the regulatory uncertainty, the more rigs will leave," T. Jay Collins said. "As rigs leave the Gulf of Mexico, the Oceaneering jobs will follow."
The U.S. temporarily halted drilling in May to give the commission time to study improvements in the safety of offshore operations following the April 20 explosion on the Deepwater Horizon drilling rig. The administration revised the order to comply with a preliminary injunction that lifted the ban after more than a dozen offshore service and supply companies sued.
The main changes to the ban announced by Interior Secretary Kenneth Salazar yesterday focus on "drilling configurations and technologies" rather than on water depths. The new moratorium, which lasts until Nov. 30, applies to most deep-water drilling operations, including those that use subsea blowout preventers, the Interior Department said in a statement. With AP