No work and no revenue. That’s how the owner of R & D Enterprises describes business in the wake of last year’s Deepwater Horizon blast and the subsequent deepwater drilling moratorium. R & D provides equipment to drilling rigs and has, over the past several months, lost 100% of its revenue stream.
R & D is one of the Gulf-based businesses highlighted in Greater New Orleans Inc.’s study into the Deepwater Horizon and its aftermath. Last week, Greater New Orleans released the second part of a three part study and one of its most striking findings was that, months after the drilling moratorium officially ended, the region is braced for the worst of the economic impact.
CEA has repeatedly cautioned that even short-term changes in the regulatory process can have a long-term impact and this new study confirms those concerns. The moratorium that was imposed on certain types of drilling in the Gulf last year was always supposed to be temporary, but as Greater New Orleans notes, “deepwater permit issuance in the Gulf of Mexico has not significantly improved in the past three months.” Only two deepwater permits have been issued since the moratorium was lifted. Meanwhile, drilling in the Gulf’s shallower waters is also down modestly, even though that region was never covered by the moratorium.
But the reason the region may not yet have felt the brunt of the economic impact is that many Gulf businesses, like R & D enterprises, have managed to hold on so far by adopting temporary emergency measures like restructuring their businesses and their expense structures. As the study points out, these actions “are not feasible long-term solutions.” It warns that without a resumption of more consistent drilling activity, regional businesses “will be forced to begin significant lay-offs.”
Lest anyone assume that last year’s drilling disruption has been resolved, this new report from Greater New Orleans reminds us that the Gulf region remains in a state of limbo, with no clear picture of how much business the oil and gas industry will be able to generate going forward. And when such a critical part of the region’s economy is in limbo, the people of the region face an equally uncertain future.