Interior Secretary Ken Salazar recently visited Murphy Oil’s Medusa platform located about 100 miles off the Louisiana coastline. The spar platform is located in the deepwater Gulf in Mississippi Canyon Blocks 538 and 582. Medusa, as well as other spar and tension leg platforms in the Gulf are a direct result of high-tech industrial breakthroughs in the last two decades and royalty relief incentives that take some of the bite out of the high-risk of investing more than $1 billion apiece in deep-water projects.
But according to news reports this week from Houston, Sec. Salazar says deepwater projects in the Gulf aren’t risky enough for new incentives.
“Technology and industry practices have proceeded to a point of maturity where we see in the Gulf there’s no need for deep-water royalty relief. The deep-water plays are actually very productive and very profitable,” he said.
During the same meeting with editors from the Houston Chronicle, Salazar said his predecessor Gail Norton’s Outer Continental Shelf plans “were thrown out there without a lot of thought given to it.”
Now, Salazar wants to retool the entire policy to determine where it may be “appropriate” to continue to explore and produce.
Companies, such as Shell, ExxonMobil, BP and Murphy are the major players in the domestic deep-water industry. Most of which announced sharply lower profits (Shell announced 5,000 layoffs), which translates into lower E&P budgets, which means fewer jobs for Americans in the offshore oil and gas industry.
It should be noted Salazar was in Houston to see wind energy officials and announce a $200 million grant in federal stimulus funds to speed up the installation of residential meters to keep track of electricity use that will allow new technology in the future.
What about $200 million in relief to spur domestic energy exploration and production?
Americans have short memories. Remember “Drill, Baby Drill!” just 18 months ago when gasoline prices hit $4. Well, domestic production doesn’t come quickly or cheaply. While our leaders focus on green jobs and renewable energy sources they are taking current oil and gas activity for granted, while many of their exploration and investment dollars silently go overseas.