Watching Government NOIA's chief worry today not political

For years, the problems faced by the National Ocean Industries Association have been mostly political.

Last week, following another big Gulf of Mexico lease sale (OGJ, Mar. 17, 1997, p. 34), NOIA's annual meeting in Washington, D.C., examined the shortage of offshore drilling rigs, which has been worsening for months around the world (OGJ, Nov. 25, 1996, p. 24).

David Herasimchuk, Global Marine Inc.'s vice president of market development, painted a bleak picture. "We're just about out of rigs. The effective utilization of the ready fleet is over 98%."

He said of 66 idle offshore rigs, 20 are cold-stacked and not operational, 40 more are getting ready for jobs, and six are available-although three of those are about to get jobs.

Herasimchuk said, "If you're in a hurry to drill, the pickings are pretty slim." He said they will remain so for some time, because rig construction capacity has shrunken and, although day rates are rising, they are still well below what is needed to spur new construction.

For instance, he said a 250-ft-rated jack up would cost $65 million to build, but would require a 5-year contract at $60,000/day.

Policy issues

Sen. Frank Murkowski (R-Alas.), energy committee chairman, complained about the lack of cooperation from the Clinton administration on energy issues.

"The administration just seems to take the energy industry for granted. They support natural gas but they're not very supportive of domestic oil production, especially from the offshore."

He said environmentalists in Vice President Gore's office and in other government councils are setting energy policy, "not the professionals in the various government departments." He added that other resource industries-such as livestock grazing, mining, and timber-face the same problems.

Murkowski said the deepwater royalty relief law has been such a success in the Gulf of Mexico that he plans to seek ways to offer royalty relief for drilling in frontier offshore areas.

MMS plans

Cynthia Quarterman, Minerals Management Service director, displayed a map showing the leased and unleased tracts in the central and western Gulf of Mexico.

She said, "As you can see, there's not much left out there to be had," adding, "The eastern Gulf is a bit busier than you might think, too."

Quarterman said MMS is optimistic about prospects for a Beaufort Sea lease sale next year, although it has not yet decided to proceed with the offering off northern Alaska. If MMS schedules the sale, she said, "We expect some production from the Beaufort Sea before 2000."

She said MMS soon will issue a rule implementing last year's law that relaxed offshore operators' oil spill liability insurance requirements.

And Quarterman said MMS wants to resolve the problem of a 4 million-acre "donut hole" in the western Gulf of Mexico, part of which is claimed by both the U.S. and Mexico. She said progress might come at a meeting between the U.S. and Mexico next December in New Orleans.