Deepwater Horizon’s Lingering Impact

Months after oil stopped flowing into the Gulf, the region is still feeling pain.

Seven months ago, when the Deepwater Horizon blew, killing 11 men and unleashing an unprecedented amount of oil into the Gulf of Mexico, the nation stopped and took notice. As the weeks and months went by with oil continuing to gush from the ocean floor, it became obvious that the “status quo” for offshore oil rigs was a thing of the past. The government sprung into action, doing what it felt it had to do to prevent a repeat of the disaster. The United States Department of the Interior and Secretary Ken Salazar ordered a six-month moratorium on off-shore drilling and the immediate inspection of all deep-water operations in the Gulf. This brought the drilling industry and the suppliers that support it to a screeching halt. It was another huge blow for local businesses that were still dealing with the after-effects of Hurricane Katrina and the financial crisis.

Collateral Damage
As is often the case with sweeping, unilateral regulations, especially those enacted hastily, the ban had deep impact.  It’s not just the Gulf Coast region that’s hurting. The impact is being felt all over the country. “When they shut down the drilling in the Gulf, that really hurt our industry because there are a lot of welded items on those rigs,” says Weld Plus (Cincinnati, OH) President Paul Rensing. “We’ve we’ve definitely seen some trickle-down. And the guys in the south, they’ve really been hit hard.” According to Rensing, items sold to oil rigs include basic welding supplies and automation systems for round, circular and straight-line welding. The resulting backlash, combined with a legal battle, resulted in the lifting of the ban on shallow water drilling after only two months. Last month the ban on deepwater drilling came to an end. “Hopefully things are going to open up again,” says Rensing.

However, despite what the press clippings might have you believe, the wells are not yet flowing freely. According to the Christian Science Monitor, despite the moratorium being lifted, drilling permits are still not being approved. This has critics crying foul, claiming that, while the ban may be gone in a legal sense, it essentially remains in place. It’s a sentiment that is echoed by GAWDA Member Lori Kearns Kneeppel of Gas and Supply (Baton Rouge, LA). “The ban has been lifted,” she says, “but they still haven’t released any permits, which has people concerned.” It’s an understandable sentiment for a company that derives a large percentage of its sales from the industry.

The lack of permits is also a concern for many of the drilling companies in the region, some of which are trying to take action. In fact, several of the major drilling firms recently met with Salazar and threatened to take their business abroad if permits don’t start to open up. If this happens, the results could be devastating for their suppliers.

A Silver Lining
If the drilling companies do stay, the potential is there for something positive to come out of the moratorium for gases and welding distributors. An increased focus on safety, regulatory compliance and quality of materials means that those companies that provide a quality product will be counted on going forward. “The end-users are going to have much more stringent requirements, especially when it comes to material certification and quality control,” says Champion Industrial Sales Company President Mike Kegg. “They’re going to demand that every product that goes into one of these rigs is completely traceable.”

So what do you think? Was the government right to halt offshore drilling? Will it end up being a positive or a negative for the industry in the long term?

Gases and Welding Distributors Association