Grijalva Call to Employ Gulf Workers in Plugging and Dismantling Idle Oil Rigs Leads to Better Economic Performance, More Gulf Jobs

October 12th, 2010

Washington, D.C.– Rep. Raúl M. Grijalva today hailed the news that his call for federal action on plugging and removing abandoned oil rigs, which produce no oil or gas and generate no economic activity, has led to a noticeable increase in the Gulf of Mexico oil service industry’s economic prospects.

Grijalva wrote a letter to Interior Secretary Ken Salazar Aug. 2 calling on him “to encourage owners of idle structures to hire Gulf workers to remove them as soon as possible.” As the letter stated, “These structures, commonly referred to as ‘idle iron,’ now provide us with a unique chance to create jobs and open up future economic opportunities throughout the Gulf region.” On Sept. 15, the Department of the Interior (DOI) released new regulations mandating that beginning Oct. 15, all companies must permanently seal wells that haven’t produced oil or gas in the last five years.

Recent analysis indicates that the policy is generating new economic activity. According to a report from Dow Jones Newswire:

In the middle of the regulatory uncertainty that has sprung from this summer’s Gulf of Mexico oil spill, offshore services companies are touting a federal mandate to plug thousands of abandoned wells and remove hundreds of unused platforms as a likely source of steady income. [. . .] Federal regulators estimate that throughout the Gulf there are some 3,500 non-producing wells and about 650 idle platforms whose owners must move to dismantle.

[. . .]

James West, an analyst with securities researchers Barclays Capital, said the industry dismantles about 150 platforms a year and, barring the arrival of new equipment, can probably handle 250 platform removals a year. The number of wells permanently plugged each year could grow from a high now of about 1,200 to as many as 2,000, West said.

“This is exactly the kind of outcome we should all be rooting for: more employment in the Gulf, a safer and cleaner environment, and fewer risks of leaking rigs,” Grijalva said. “This is not complicated stuff. By removing rigs that have outlived their usefulness, we put people to work right away, open the Gulf to other economic opportunities, and help to make sure we don’t suffer another Deepwater Horizon disaster. This is a good policy from DOI, and we can all be happy about the positive economic impact it’s going to have.”

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