Drilling Deep Defended

One of the world’s largest companies and small businesses in Louisiana have something in common—both say a ban on deepwater oil drilling in the Gulf of Mexico is bad for business.

Royal Dutch Shell, the Anglo-Dutch oil giant, reported today a profit jump of 15 percent, to $4.39, billion in the second quarter.

Royal Dutch Shell’s earnings are a marked contrast to fellow titan BP, which is replacing CEO Tony Hayward with American Robert Dudley and reported a loss after setting aside $32 billion to cover the cost of the Deepwater Horizon disaster in the Gulf of Mexico. Further, BP is facing dozens of lawsuits, and a special judicial panel in Boise, Idaho, is hearing arguments today as to how the lawsuits should be consolidated and moved forward.

But despite its earnings and lack of BP-like nightmares, Shell has some worries related to that BP disaster, and in them, it’s like many small Gulf Coast businesses. The oil titan wants deepwater drilling to continue, in the Gulf of Mexico and around the world, said CEO Peter Voser.

For a look at a Shell project in the Gulf that can drill deeper than anything ever has, click here.

"Worldwide deepwater production has an important role to play in the global energy-supply equation, with potential for production growth with supply diversity and sustained investment in technology, jobs, and services. The recent announcement of Shell's participation in a new, billion-dollar Gulf of Mexico oil-spill containment system is an example of where we are working with governments and partners to improve the industry's capabilities," Voser said.

In that feeling, he was joined by a group of mostly small-business people and consultants from the Gulf of Mexico who say shutting down deepwater drilling in the Gulf following the Deepwater Horizon disaster may hurt small business in the region more than the gusher already has. The Obama administration has put a halt to deepwater drilling to review safety procedures, arguing that the Gulf can’t afford another disaster on the scale of BP’s disaster.

So a group of consultants and businesspeople told the Senate Committee on Small Business and Entrepreneurship headed by Louisiana Democrat Mary Landrieu, The Street reports.

Louisiana Oil and Gas Association president Don Briggs said the drilling ban, due to end November 30, could wind up killing 17,500 jobs on offshore rigs, while Joseph Mason of Louisiana State University's E.J. Ourso School of Business said the moratorium could cost $2.1 billion in lost productivity.

Independent drillers and the small businesses that ferry supplies to and from the rigs in the Gulf, for instance, may not be able to recover from the losses caused by the moratorium.

Landrieu, as have other politicians from her state including Republican Governor Bobby Jindal, said the damage from the moratorium to such small businesses is cause to oppose the moratorium.

Their state’s fishing industry, the second-largest in the United States, has been hammered by bans on fishing in waters polluted by the Deepwater Horizon gusher. One of the other major industries in Louisiana, the oil and gas industry, is taking a hammer blow from the moratorium.

And all of it comes just as the region was beginning to recover from the havoc wrought by Hurricane Katrina on tourism, fishing, and oil production.

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Kent Bernhard Jr. is News Editor of Portfolio.com