Hercules Offshore does not expect to obtain shallow-water drilling contracts until its customers secure new permits. Companies need to spend an average of more than $90,000 per shallow-water well under new federal requirements. "Given these new regulations and the time required for customers to interpret and comply with the requirements, further delays in permitting activity may continue for an indefinite period of time," according to Hercules.
New federal policies on shallow-water drilling have prompted Apache to declare force majeure for a Gulf of Mexico rig it contracted from Rowan. The Interior Department's rules task offshore drillers to verify they have functional blowout preventers and test cement barriers in wells at least twice. "We are working with our customers to meet these requirements," Rowan said, which is studying its response to Apache.
Democratic and Republican senators from oil-generating states requested that the federal government exempt shallow-water oil exploration from the offshore-drilling ban that was implemented after the Gulf of Mexico oil spill. "Also, shallow-water drilling sites predominantly involve natural gas resources with less environmental risks," they said.
Interior Secretary Ken Salazar said his department will reform onshore-drilling regulations that will improve environmental protections on public land. The announcement comes as part of the government's response to the BP oil spill in the Gulf of Mexico.