WorldWide Drilling Resource

www.starironworks.com SERVING THE WATER WELL INDUSTRY Serving the Drilling Industry 257 Caroline Street Punxsutawney, PA 15767 800-927-0560 • 814-427-2555 Fax: 814-427-5164 16 DECEMBER 2019 WorldWide Drilling Resource ® Senator Pleads for Royalty Relief on Shallow Water Oil Production Adapted from Information by the Office of Senator Bill Cassidy, M.D. and the Institute for Energy Research Senator Bill Cassidy, M.D. of Louisiana is urging the U.S. Department of the Interior to provide royalty relief to encourage more shallow water drilling in the Outer Continental Shelf. Offshore oil drilling in shallow waters (depths of less than 500 feet) has been in existence since World War II. At one time, shallow water oil production in the Outer Continental Shelf was booming with more than 7000 platforms in the Gulf region. Since November 2000, shallow water oil production has declined 75%, with less than 2000 of the platforms remaining and most of them producing fewer than 300 barrels of oil equivalent each day. Although overall production in the Gulf of Mexico has continued to rise, most of the production is coming from deeper waters further off- shore, causing shallow water producers to struggle. The decline has im- pacted not only producers, but also operators, contractors, and oilfield service companies that support drilling. Senator Cassidy wrote a letter to Interior Secretary Bernhardt stat- ing royalty relief is needed to help shallow water operators stay in busi- ness. The Outer Continental Shelf Lands Act (43 USC 1337) grants the secretary the authority to set royalty rates. “Increased shallow water drilling increases production, which increases federal royalty payments, and creates more American and Louisiana jobs,” said Dr. Cassidy. “This begins by making a better business case for drilling.” Providing royalty relief for existing shallow water operators will encourage business activity in the Gulf. It will provide the revenue operators need to open new wells, invest in more workers, and implement new technologies to update aging wells and infrastructure. The country’s energy resources in the Gulf of Mexico are essential to meeting our growing energy demands. “The United States should be energy dominant. Shallow water producers can play a critical role in achieving energy independ- ence,” said Dr. Cassidy. Shallow water oil drilling is less risky than its deeper coun- terparts. One of the big differences is the blowout preventer is above water, making it easier to maintain and inspect. Photo courtesy of the Institute for Energy Research. G&O