Trump’s order on offshore drilling not likely to prompt quick surge of new rigs

By David Pendered

The week that President Trump signed an executive order to authorize offshore oil drilling, three rigs were moved out of the Gulf of Mexico. The move left 17 rigs in the gulf, down from 24 the same week last year and down from the peak of 176 rigs in 2001, according to industry tracker Baker Hughes.

trump signs offshore oil executive order

President Trump signed an executive order April 28 that authorizes offshore oil exploration and drilling in a move that reversed action by then President Obama. Credit: foxnews.com

Mike Terry, a bridge officer in the U.S. Merchant Marine, has spent a career working in the oil fields in the Gulf of Mexico. Terry said it could take years for the rigs to return to the gulf – even with Trump’s support via his April 28 executive order: Implementing an America-First Offshore Energy Strategy.

Terry said rigs that aren’t working now could go back to work immediately. Those that have contracts must fulfill that work before they could return to the gulf. Contracts typically range from one year to five years in duration, Terry said. This pattern of work explains the steady decrease Baker Hughes observes in its weekly reports. Rigs have been mothballed or moved to other oil fields.

“Really, it depends on the research and development, and geological surveys that were done, as to what is down there and how much,” Terry said. “If they have a survey that shows 200 billion barrels of oil, and they know that because they have ultrasound pictures just like you have ultrasound of babies, they’ll understand what they’re looking at. They can do an almost exact estimate of how much oil is in there and how long it will take to pump.”

The price of oil also is a factor in any decision to drill offshore. Over the past 12 months, the price of a barrel of crude oil has peaked at $56.81, on Jan. 1, according to a report by wsj.com. Those prices don’t seem to support the expense of an offshore rig.

oil rig

The Polar Pioneer oil rig is towed toward a dock in Seattle in this May 14, 2015 photo. Designed to operate in the Arctic and North Atlantic, the rig is rated to drill in water depths up to 1,640 feet and to drill a depth of up to 25,000 feet, according to rigzone.com. Credit: AP via denverpost.com

This situation suggests that the president’s authorization of offshore drilling may not translate into a quick uptick in the number of rigs operating in the well-known oil patch of the gulf, let alone areas in the Atlantic that haven’t been drilled.

Georgia’s offshore waters, for example, have been neither extensively explored nor hosted oil drilling efforts. Georgia’s waters are part of an oil-lease block in the Atlantic Ocean that includes South Carolina and the northern half of the Florida peninsula. President Obama’s administration ruled against opening the block for lease.

The Southern Environmental Law Center issued a statement opposing Trump’s executive order the day before he signed it.

“The Trump Administration has turned its back on Southeastern coastal communities with this renewed attempt to force offshore drilling into a region that doesn’t want it,” Sierra Weaver, a SELC senior attorney said in the statement. “This proposal seeks to put the interests of the oil and gas industry over coastal residents and jeopardizes the vibrant tourism and fishing industries that support our economy. Coastal communities made it clear to the last president that they don’t want offshore drilling, and they’ll do the same with this president.”

Oil rig count

The number of offshore oil rigs continues a downward trend, even as the number of land-based rigs has more than doubled in the past year. Most new land-based rigs drill oil. Credit: bakerhughes.com

The Gulf of Mexico now is home to all the oil wells in the nation’s offshore waters. Alaska and California currently have no oil rigs operating offshore. Louisiana has 16 offshore rigs and Texas has one, according to Baker Hughes’ data.

The fleet of oil rigs in the gulf began trending downward even before the Deepwater Horizon disaster fueled the discussion over the dangers of extracting oil from the gulf, according to Baker Hughes’ historic data.

Eleven workers died in the BP oil spill that began April 20, 2010 and went on to become the largest spill in the nation’s history.

The peak number of oil rigs in the Gulf of Mexico was recorded Jan. 19, 2001. At that time, 176 oil rigs were counted. Most of them were extracting natural gas. Of those 176 rigs, 131 were pulling gas and the remaining 45 were extracting oil.

Baker Hughes’ online records date to Aug. 5, 1994.

The gas drilling business evidently has shifted to land-based operations, according to Baker Hughes’ data. These would be wells drilled by hydraulic fracturing, or fracking. The technique uses high-pressure fluid to create cracks in deep rock. Gas and oil will flow more readily through the cracks than through a drilled hole.

The April 28 weekly report showed the U.S. had 171 gas rigs. That’s almost double the 87 reported the same week of last year.

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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