U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

74–311 PDF 2013

S. HRG. 111–1153 

THE DEEPWATER DRILLING MORATORIUM: AN 

ECONOMIC DISASTER FOR LOUISIANA’S SMALL 

BUSINESSES 

FIELD 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND 

ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

AUGUST 17, 2010 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED ELEVENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

OLYMPIA J. SNOWE, Maine, Ranking Member 

JOHN F. KERRY, Massachusetts 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

JOSEPH I. LIEBERMAN, Connecticut 

MARIA CANTWELL, Washington 

EVAN BAYH, Indiana 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY HAGAN, North Carolina 

CHRISTOPHER S. BOND, Missouri 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

MICHAEL B. ENZI, Wyoming 

JOHNNY ISAKSON, Georgia 

ROGER WICKER, Mississippi 

JAMES E. RISCH, Idaho 

DONALD R. CRAVINS, JR., Democratic Staff Director 

WALLACE K. HSUEH, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Vitter, Hon. David, a U.S. Senator from Louisiana .............................................. 9 

WITNESSES

Davis, Lori, Owner, Rig-Chem, Houma, LA .......................................................... 11 

Goodson, Charles, Owner, Charley G’s Restaurant, Lafayette, LA ..................... 17 

David, Dewitt, Commercial Real Estate Broker, Van Eaton and Romero .......... 21 

Cloutier, Troy, Regional President, Midsouth Bank ............................................. 28 

Angelle, Hon. Scott, Lieutenant Governor, State of Louisiana ............................ 32 

Chabert, Hon. Norbert N., Louisiana State Senate, District 20 .......................... 52 

Champagne, Hon. Simone B., Louisiana House of Representatives, District 

49 ........................................................................................................................... 57 

Williams, Hon. Arlanda, Council Chairwoman, Terrebonne Parish Consolidated Government ................................................................................................ 58 

Matte, Hon. Timothy, Mayor, Morgan City, LA .................................................... 65 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Angelle, Hon. Scott 

Testimony .......................................................................................................... 32 

Prepared statement .......................................................................................... 35 

Response to post-hearing questions from Chair Landrieu ............................ 125 

Chabert, Hon. Norbert N. 

Testimony .......................................................................................................... 52 

Prepared statement .......................................................................................... 54 

Champagne, Hon. Simone B. 

Testimony .......................................................................................................... 57 

American Energy Alliance Report: ‘‘The Economic Cost of a Moratorium 

on Offshore Oil and Gas Exploration to the Gulf Region’’ ......................... 80 

E-mail from Heidi Martin ................................................................................ 108 

Cloutier, Troy 

Testimony .......................................................................................................... 28 

Prepared statement .......................................................................................... 30 

Response to post-hearing questions from Chair Landrieu ............................ 122 

David, Dewitt 

Testimony .......................................................................................................... 21 

Prepared statement .......................................................................................... 23 

Davis, Lori 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 14 

Response to post-hearing questions from Chair Landrieu ............................ 116 

Deep Water Activity ......................................................................................... 132 

Shelf Activity .................................................................................................... 133 

Deep Water Work History ............................................................................... 134 

Revenues ........................................................................................................... 135 

Moratorium Effect on Rig-Chem, Inc. ............................................................. 136 

Graph of Moratorium Effect on Rig-Chem, Inc. ............................................. 137 

Freyou, Ernest 

Letter ................................................................................................................. 138 

Goodson, Charles 

Testimony .......................................................................................................... 17 
Page

IV 

—Continued 

Prepared statement .......................................................................................... 19 

Response to post-hearing questions from Chair Landrieu ............................ 120 

IHS Global Insight 

Special study ..................................................................................................... 110 

Landrieu, Hon. Mary L. 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 5 

Fax letter from experts and attachment ........................................................ 73 

Mason, Joseph R. 

Report ................................................................................................................ 90 

Prepared statement .......................................................................................... 40 

Matte, Hon. Timothy 

Testimony .......................................................................................................... 65 

Prepared statement .......................................................................................... 69 

Miller, Mark K. 

Prepared statement .......................................................................................... 140 

Randolph, Charlotte 

Response to post-hearing questions from Chair Landrieu ............................ 130 

Report 

Potential Economic Impacts of Proposed Increases in Regulation and 

Taxes on Deepwater Drilling in the Gulf of Mexica .................................. 111 

Tea Party of Lafayette 

Press release ..................................................................................................... 144 

Vitter, Hon. David 

Opening statement ........................................................................................... 9 

Williams, Hon. Arlanda 

Testimony .......................................................................................................... 58 

Prepared statement .......................................................................................... 61 
(1) 

THE DEEPWATER DRILLING MORATORIUM: 

AN ECONOMIC DISASTER FOR LOUISIANA’S 

SMALL BUSINESSES 

TUESDAY, AUGUST 17, 2010 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Lafayette, LA. 

The committee met, pursuant to notice, at 10:02 a.m., in Suite 

209, Louisiana Immersive Technologies Enterprise (LITE), 537 

Cajundome Boulevard, Lafayette, Louisiana, Hon. Mary L. 

Landrieu (Chair of the committee) presiding. 

Present: Senators Landrieu and Vitter. 

OPENING STATEMENT OF THE HON. MARY L. LANDRIEU, 

CHAIR, AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. If everyone would take their seats, I would like 

to thank you for coming. I am pleased to be here, and I have been 

particularly pleased to chair the committee the last year and a 

half. 

I will start with opening statements, as is our custom, and then 

we will go to our panelists and have five minutes of questions with 

a second round, if necessary. 

I want to begin by saying, first of all, thanks to the LITE Center 

for having us and also for Mark Miller and Brian Hanks, who 

helped, with the help of the Chamber and many other organizations, to put out the notice for this hearing. We are very, very 

grateful. 

A hundred-and-twenty-one days ago, the Deepwater Horizon explosion 50 miles off the coast of Louisiana took place. It took the 

lives of 11 men and sent an estimated five million barrels of oil 

spewing into the Gulf of Mexico, onto our shores and into our 

marshes. This accident has threatened our environment, our economy, and our way of life. The Macondo well may be capped, but the 

crippling economic impacts caused by this disaster and the ensuing 

moratorium continue to impact our communities in substantial 

negative ways. 

Louisiana’s families and businesses are getting hit on two fronts. 

First, our seafood industry, which accounts for roughly 40 percent 

of the lower 48’s production, is suffering from both actual impacts 

from the spill and no less damaging the perception that our seafood 

is no longer safe. Shrimping season opened today. We are going to 
2 

do everything we can to talk about how fresh and flavorful our Gulf 

shrimp are. 

Secondly, our offshore energy exploration industry and hundreds 

of businesses that support it have been put in jeopardy by the 

heavy hand of the Federal Government. Regrettably, the Administration reacted to the Deepwater Horizon tragedy by halting all 

deepwater exploration activities in the Gulf and canceling the 

scheduled Western Gulf lease sale which would have occurred this 

month. While some very limited shallow water drilling is underway 

in the Gulf, only two permits have been granted since April 20, and 

all deepwater drilling has been brought to a complete standstill as 

a result of this ill-conceived action. 

The decision to stop virtually all new energy exploration in the 

Gulf was uninformed, in my view, and it borders on reckless. 

Today, thousands of Gulf Coast businesses are fighting their way 

out of this government-imposed economic disaster that not only 

threatens our jobs and businesses, including the oil and gas field, 

transportation, fabrication companies, hospitality, and restaurants, 

but it also threatens our way of life just as surely as the massive 

oil spill did and perhaps even more. 

This Administration’s decision to halt drilling activity did more 

than threaten the livelihoods of rig workers and oil service crews. 

It substantially reduced general economic activity throughout the 

Gulf region. We will hear testimony today that will highlight the 

hardships and challenges that this moratorium has imposed on 

Gulf Coast small businesses. 

While we are here today to discuss the moratorium’s economic 

impact on local and regional economy, we cannot ignore the consequences to our environment and our national security, and I 

would like to address both just briefly. 

The Administration’s stated goal of this moratorium is to protect 

the environment. I believe the action to impose this moratorium 

has actually increased environmental risk to our oceans and coastal 

wetlands, and this is why. The United States continues to consume 

20 million barrels of oil every day. It did so the day before the Deep 

Horizon explosion and it is doing so today as we meet here at the 

LITE Center. Therefore, by stopping all new drilling here at home, 

offshore drilling in the Gulf, which is virtually shut down, the U.S. 

will necessarily increase oil imports from other countries with far 

weaker environmental standards than our own and regulatory regimes that do not function as well as ours. In countries like Niger, 

Angola, and Venezuela, the record shows that these countries suffer significantly more spills at a much more frequent rate, causing 

more harm to the world’s oceans, not less. 

In addition, all of that oil must be tankered into U.S. ports. 

While tankers are much safer today than they were before the 

Exxon Valdez spill, the fact is that prior to the Deepwater Horizon, 

the record will show that spills from tankers were four times more 

volume and frequency than spills from the drilling rigs themselves. 

The negative impacts of the moratorium on national security 

should also not be overlooked. The U.S. demand for oil will not decline simply because Gulf Coast exploration has been shut down. 

This means that less oil used by Americans going forward will have 

been produced by Americans and more will have been produced off-
3 

shore and imported to our shores. As we all know, some of these 

imports will invariably come from hostile nations, or nations hostile 

to U.S. interests. In 2008 alone, Americans transferred nearly $700 

billion overseas to pay for oil imports. That number, in addition, 

will increase as future Gulf Coast production lags due to the longterm effects of this ill-conceived moratorium. This is a blow also to 

our national security, and one that we could do without. 

At a hearing I chaired in Washington, DC, last month through 

the Small Business Committee, we heard testimony from Louisiana 

State University Professor Joe Mason who said that under the current moratorium, the Gulf Coast region will lose more than 8,000 

jobs, nearly $500 million in wages, over $2.1 billion in economic activity, as well as nearly $100 million in State and local revenue. 

The moratoria’s spillover effect could mean 12,000 jobs and nearly 

three billion nationwide, including almost $200 million in Federal 

tax revenues just in the first six months. This is a very serious 

issue, not only related here in Lafayette Parish and in this region, 

not only to the State of Louisiana, but to the nation as a whole. 

According to Dr. Mason, if the moratorium lasts longer, some 

25,000 jobs could be in jeopardy, and we will hear from our panelists along those lines today. 

Another expert from a research firm, from Dun and Bradstreet, 

estimated that in Lafayette Parish alone, 780 businesses employing 

close to 10,500 people could be negatively affected. Businesses here 

in Lafayette are some of the hardest hit, which is why I chose this 

site and this venue for this important field hearing today. 

Consider what we know. Idling deepwater rigs that were permitted to drill in the Gulf will immediately impact crew members, 

as many as 46,000 directly. According to the Gulf Economic Survival Team, which is represented here today by Lieutenant Governor Scott Angelle, and, I might add, has been ably represented 

by him, it says that the long-term job loss could reach 120,000 by 

2014. 

While Gulf waters may be clouded by oil in some spots, the data 

that we are accumulating against this moratorium is crystal clear. 

We cannot close down the Gulf offshore oil and gas sector without 

devastating economic impacts to our region, increased environmental risk to our ocean, and weakening our national security. 

I think it is noteworthy that the Administration was forced to revise its stand in July after a Federal court decision ruled that its 

action was without solid legal basis. As one of the first Senators 

to call for a full investigation into the accident and request more 

effective safeguards against future spills, I share the Administration’s goal of a safer oil and gas industry. We all do, but this blanket moratorium will not help us achieve or advance that goal. 

The fact is that Louisiana’s coastline is a working coast that 

brings the country an abundance of energy, seafood, and provides 

navigation assets for commerce for the world. The Mississippi Delta 

is our home, and there is no one who wants drilling to be safer 

than we do, no one who wants the water to be cleaner than we do, 

and no one that wants the seafood to be fresher than those of us 

that serve it and consume it in our restaurants daily. 

I am confident that we can strengthen the safety record of Gulf 

drilling as we move forward while promoting a balanced and diver-
4 

sified economic future. But we also know that any hope for a prosperous future will be challenged by a prolonged suspension of deepwater drilling. 

We will hear today from grocery store owners, restaurants, real 

estate companies, and local banks and other small businesses that 

have been directly and negatively impacted by this moratorium. 

Our Federal Government has a responsibility, particularly in these 

difficult times, to make sure that these paychecks do not turn into 

pink slips. In this hearing today, we will build a strong case for lifting this moratorium now, and that is the purpose of this hearing, 

to hear directly from small businesses that are being adversely affected about this ill-conceived and heavy-handed action by the Federal Government that does not, as I have said already, and it is 

worth repeating, does not meet our environmental needs, our national security needs, and it most certainly does not meet our economic needs. It fails on every test. 

I believe this Congress needs to hear these stories of these small 

businesses, and I am very proud that my committee will be able 

to supply this for the record, and this record will stay open for two 

weeks. We invite all those in attendance to submit any written 

comments they feel perhaps were not given on the record today. 

I also want to take a moment to introduce a person that is here 

at my request, and I want you all to be polite. Mark Doms is the 

Chief Economist at the Department of Commerce. Mark, would you 

stand up just so people can recognize you? He is here to listen to 

this testimony. He is one of the lead officials that will be making 

the report to the President in September, and we hope that the report will lead to a lifting of the moratorium. 

I am committed, along with members of the Gulf Coast and our 

delegations, both Republican and Democrat are united across the 

board, from Texas to Louisiana to Mississippi to Alabama, to get 

this message out so this moratorium can be lifted. 

I was proud to introduce legislation in the Senate this month 

that will lift the moratorium and build on the work of others, most 

notably Representative Melancon in the House that has gotten the 

House on the record, both Democrats and Republicans, against this 

moratorium. 

If the Gulf Coast is going to recover from this nightmare, it will 

be because of the health and production of coastal Main Street 

small businesses that support the production of energy that fuels 

our nation. We cannot continue to support a policy that will close 

the doors on small businesses in Acadiana, in Louisiana, in Texas, 

or for that matter, throughout the United States. 

So I thank you all very much for being here. I now turn the 

opening statement over to Senator Vitter, a very strong member of 

our committee. Thank you, Senator. 

[The prepared statement of Senator Landrieu follows:] 
5 

(As prepari?djhr delil'cr.v) 

SE;-';A TE COMMITTEE 0;-'; 

S\,IALL BUSI;-';ESS A;-.;n E;-';TREPRE;-';EURSHIP 

Senator Mary L. Landrieu, Chair 

Opening Statement for 

Field llearing entitled: "'The Deepwater Drilling Moratorium,' A Second 

Economic Disaster/()r Louisiana's i)"mall Businesses:' " 

August 17.2010at lO:OOa,ffi. 

Louisiana lmmersive Technologies Enterprise (UTE) Center 

Some 121 days ago. the Deepwater Horizon explosion took the lives of II men and sent an 

estimated 4,9 million of barrels of oil spewing into the GulL onto our shores, and into our marshes. 

This accident has threatened our environment. our economy. and our way of life. The Maeondo well 

may be capped, but the crippling economic impacts caused by this disaster and ensuing moratorium 

continue to impact our communities. 

Louisiana's EUl1ilies and businesses are getting hit on two tronts, First our seafood industry. 

which accounts for roughly 40 percent of the Lower-48's production, is suffering from both actual 

impacts from the spill. and, no less damaging. the perception that our seailx)d is not safe to consume. 

Secondly, our offshore energy exploration industry -and the hundreds of business that support it-, 

have also been put in jeopardy by the heavy hand of the Federal govcrnment 

Regrettably. the Administration reacted to the Deepwater Horizon tragedy by halting all 

deepwater exploration activities in the Gulf and cancelling the scheduled \v'estern Gulf lease sale 

that would have occurred this ml'nth, While some very limited shallow water drilling has heen 

allowed to move fomard. only two pern1its have been granted since April 20, and all deepwater 

drilling has been brought to a complete standstill as a result ofthis ill conceived action. 

The decision to stop virtually all new energy exploration in the Gulf of Mexico was uninformed 

and in my vie\\ borders on reckless. Today, thousands of Gulf Coast busincsses arc lighting their 

way out of this government imposed economic disaster that not only threatens jobs and businesses -

including oil and gas lleld services. transportation, and fabrication companies but also a way of 

life. just as surely as the massive oil spill docs, and perhaps even more. The Administration's 

decision to halt drilling activity did more than threaten the livelihoods of thousands of rig workers 

and oil service crcws: it substantially reduced the total amount of economic activity taking place 

along the Gulf Coast and Texas. We will hear testimony today that highlights some of the hardships 

that this moratorium has imposed on Gulf Coast small businesses. 
6 

Page 2 

While we are here today to discuss the moratorium's economic impact on the local and regional 

economy, we cannot ignore its consequences to our environment and our national security, In fact, 

although the Administration's stated goal of the moratorium is to protect the environment, I believe 

that action to impose the moratorium has actually increased environmental risk to our oceans and 

coastal wetlands. 

The United States of America continues to consume 20 million barrels of oil a day. That is what 

our economy needs to function. That was the case the day the Deepwater Horizon exploded and now 

some 4 months later, America still consumes 20 million barrels of oil a day. Therefore by stopping 

new drilling here at home, the U.S. will necessarily increase its oil imports from other countries with 

far weaker environmental standards and regulatory regimes, such as Nigeria, Angola and Venezuela. 

The record shows that these countries suffer significantly more spills at a much, much more frequent 

rate, causing more harm to the oceans of the world. In addition, that oil must then be tankered into 

U.S. ports. And while tankers are much safer than they used to be, the fact is that prior to the prior 

to the Horizon Disaster they still spill roughly four times as much oil as offshore drilling rigs do - a 

statistic that is likely to increase as we increase the number of tankers coming into our ports. 

The negative impacts of the moratorium on national security should also not be overlooked. 

U.S. demand for oil will not decline simply because Gulf Coast exploration has been shut down. 

This means that less of the oil used by Americans going forward will have been produced by 

Americans, and more will have been produced offshore and imported to our shores. As we all know, 

some of those imports will inevitably come from nations hostile to U.S. interests. In 2008, 

Americans transferred nearly $700 billion overseas to pay for oil imports, and that number will only 

increase in the future as Gulf Coast production lags due to the long term effects of the moratorium. 

This is a blow to our national security that we could do without. 

At the last hearing I chaired in Washington D.C. last month, we heard testimony from Louisiana 

State University professor Joseph Mason who said that under the current moratorium the Gulf Coast 

region will lose more than 8,000 jobs, nearly $500 million in wages, and over $2.1 billion in 

economic activity, as well as nearly $100 million it state and local tax revenue. The moratorium's 

spillover effect could mean 12,000 jobs and nearly $3 billion nationwide (including almost $200 

million in Federal tax revenues) in just in the first six months. 

According to Dr. Mason, if the moratorium lasts longer, some 25,000 jobs could be lost and 

under the worst case scenario - a permanent moratorium on all oil and natural gas production in the 

Gulf of Mexico - nationwide economic losses would exceed $95 billion and more than 400,000 jobs. 

Another expert, from the research firm Dun & Bradstreet, estimated that in Lafayette Parish alone, 

780 businesses employing close to 10,500 people could be negatively affected. Businesses here in 

Lafayette are some of the hardest hit by the moratorium, which is why I chose to hold this important 

field hearing here. 
7 

Page 3 

Consider what we know today: idling the deepwater rigs that were pennitted to drill in the Gulf 

will immediately impact employment for as many as 46,000 crewmen, deck hands, engineers, 

welders, ROV operators, caterers, helicopter pilots, and others who operate service vessels. 

According to the Gulf Economic Survival Team, which has been very effectively led by Louisiana 

Lt. Gov. Scott Angelle, the long-tenn job loss in Louisiana could reach 120,000 by 2014. While 

Gulfwaters may be clouded by oil in some spots, the data against the moratorium is crystal clear: we 

cannot close down the Gulf offshore oil and gas sector without devastating economic impacts to our 

region. 

I think it is noteworthy that the Administration was forced to revise its ban in July after a Federal 

court decision ruled that the Administration's action was without a solid legal basis. As one of the 

first Senators to call for a full investigation into the accident and request more effective safeguards 

against future spills, I share the Administration's goal of a safer oil and gas industry. But this blanket 

moratorium will not help to advance that goal. The fact is that Louisiana's coastline is a working 

coast that brings the country an abundance of seafood, energy, and navigation assets. The 

Mississippi Delta is our home and there is no one who wants drilling to be safer than we do. No one 

wants the water to be cleaner than we do. No one wants the seafood to be safer than we do. We have 

balanced these industries safely for more than four decades. And I am confident that we can 

strengthen that record of safety as we move forward, while promoting a balanced and diversified 

economic future. But we also know that any hope for a prosperous future will have to involve the 

prompt resumption of offshore exploration activities. We know full well what a prolonged 

suspension of deepwater drilling wiH mean for hundreds of oil service companies and other 

businesses. It will mean economic disaster not just for the rigs themselves, but for the many grocery 

stores, restaurants, real estate companies, local banks and other small businesses that comprise 

Louisiana's economy. Our Federal government has a responsibility, particularly in these difficult 

times, to make sure that their paychecks will not tum into pink slips. This hearing will build a strong 

case for lifting the moratorium now! 

The purpose of our field hearing today is to hear directly from small businesses that are being 

adversely affected by this moratorium. Our goal is to get testimony into the record about the illconceived and heavy-handed action of the federal government that does not meet our environmental 

needs, our national security needs, and it most certainly doesn't meet our economic needs. It fails on 

every test. I believe this Congress needs to hear the stories of these small businesses impacted 

throughout this nation. I am pleased to note that, at my request, Mark Doms, Chief Economist at 

the Department of Commerce is here in the audience to hear firsthand today's testimony. He is the 

lead official on the Administration's economic impact review that will be submitted to my 

committee at a hearing early next month. 

I'm committed, along with Members of the Gulf Coast, to get this message out so that some 

relief can be put into place. I was also proud to introduce legislation in the Senate this month that 
8 

Page 4 

would lift the moratorium and build upon the work the Rep. Melancon has already done in the 

House. If the Gulf Coast is going to recover from this nightmare, it will be because of the health and 

production of coastal Main Street small businesses that support the production of the energy that 

fuels our nation. We cannot continue to support a policy that will close the doors of our small 

businesses: We need to keep Main Street open for business!. 
9 

OPENING STATEMENT OF THE HON. DAVID VITTER, A U.S. 

SENATOR FROM LOUISIANA 

Senator VITTER. Thank you. Thank you very much, Mary, and 

thanks for all your work chairing this committee, particularly on 

this topic. And as you mentioned, this is really a continuation of 

a hearing we had in Washington and it is a very, very important 

discussion. 

I also want to thank our hosts here at LITE and ULL and certainly our panelists and everyone for being here. 

As Mary said, the bottom line is real simple, and unfortunately, 

very stark. It is great news that the oil flow has stopped and the 

ongoing environmental damage is beginning to lessen. But the economic threat continues worse than ever because of this moratorium. And the bottom line is simple. If this moratorium continues 

even a few more months, we will lose more jobs because of it than 

we will lose from the oil itself and it will be devastating economically in the midst of the most serious recession since World War 

II. 

Also, as Mary suggested, it is not just the formal moratorium in 

deepwater. It is really somewhat of a broader discussion. Obviously, the formal moratorium in deepwater is perhaps the most serious and offensive thing we are here talking about. It is very serious. It is costing us a lot of jobs. Those major platforms, major investments are moving to other parts of the world as we speak. 

At the same time, there is a de facto moratorium in shallow 

water, as Mary noted. The Administration says there is no moratorium in shallow or ‘‘open for business’’ or ‘‘open to issue’’ permits. 

Great. Then you ask the obvious follow-up question, how many new 

drilling permits have been issued in shallow water since the Deepwater Horizon explosion, and the answer as of three weeks ago was 

zero, and the answer as of today is two. That means there is a de 

facto moratorium in shallow. That means because of the complicated, cumbersome, uncertain nature of the new rulebook even 

in shallow, even shallow is pretty much shut down. 

And then there is a third component to the threat, which is the 

new regulatory environment we are going to be going into which 

could continue this virtual shutdown even after formal moratoria 

are lifted. Just yesterday, the Interior Department issued a new 

policy moving away from the so-called categorical exclusion for Gulf 

drilling under NEPA that has been in place for decades. What this 

means is that every new project, every new well, will have to go 

through many more hoops of environmental review, even though 

the basic issues are the same throughout the Gulf, which is what 

led to the so-called categorical exclusion before. 

There is already an environmental review for every new project. 

For the Deepwater Horizon incident, there were five levels of 

NEPA work. There were nine comprehensive supporting environmental studies. Many of those were inadequate. I am not arguing 

that. But to add layers upon layers upon layers to that five-plusnine is not protecting the environment any more. It is making 

many drilling projects completely unsustainable economically, and 

I think that is what the environmental left has in mind, quite 

frankly, pushing this ending of the categorical exclusion. So that is 

a big threat. 
10 

What is at issue, as I said, as Mary said, is an enormous number 

of jobs and enormous amounts of economic activity. A recent study 

by IHS Global Insight, for instance, put some concrete, verified 

numbers on that. Independent oil and gas companies in the Gulf 

account for about half of the nearly 400,000 jobs, $70 billion of economic value, $20 billion in Federal, State, and local revenue generated by the industry just in 2009. 

That same study says that if this policy or something like it continues into the future, by 2012, we could lose hundreds of thousands of jobs in the Gulf. It would also cost government major revenue, over ten years, $147 billion in Federal, State, and local revenue from the Gulf region. So there is a lot at stake for the country 

and for Louisiana. 

Again, I am eager to hear from our witnesses. 

In closing, let me say that, again, just like in our Washington, 

DC, hearing, I am very disappointed that our witnesses don’t include any representative of the Obama Administration. In that 

Washington, DC, hearing, Mary and I both invited the Administration to send a representative to lay out the case and the economic 

analysis for the moratorium. They sent no one, complete, utter silence. 

For today, I again specifically invited the Administration to send 

a representative as a witness to testify, to lay out the case for the 

moratorium and their economic analysis. Again, they sent no one 

as a witness. I am happy Mark is here from the Commerce Department. What I, at least, requested—Mary probably did the same 

thing—is a witness to testify, to lay out the case, to lay out the reasoning that led to this draconian action, and they sent no witness. 

We are still waiting to hear the justification. The people of Louisiana are still waiting to hear the justification. 

But with that, I very much look forward to hearing from our witnesses. Thank you, Mary. 

Chair LANDRIEU. Thank you, Senator Vitter. 

We are going to begin with a terrific panel of witnesses that both 

of us have asked to testify. They represent, I think, a broad swath 

of business owners in this region. Of course, we could have filled 

up this room ten times over with businesses that are affected, but 

we are really very grateful to those of you that have prepared testimony in such a comprehensive way to help us build a Congressional record to get this moratorium lifted. 

We would like to begin with Ms. Lori Davis, who is President 

and co-owner of Rig-Chemical, Inc., a small family-owned company 

located in Houma. Rig-Chem was founded in 1980 as a specialty 

chemical manufacturer distributor servicing the oil and gas industry. Lori is an active member of Petroleum Engineers and a member of American Association of Drilling Engineers. Thank you, Ms. 

Davis, for being here. 

Next, we will hear from Charlie Goodson, a very famous Lafayette leader. He has owned Charley G’s for now, I think, celebrated, 

what, 25 years, Charlie? All of us have eaten at this wonderful restaurant. He also has a great deal of experience with other restaurants in the area, from Cafe Vermilion to Hub City Diner, and 

he is really an outstanding member of this community and we 

thank you, Charlie, for being here. 
11 

Our next witness is Dewitt David, Commercial Sales Manager for 

Van Eaton and Romero Realtors here in Lafayette. He is very, very 

active in the community. He is Chairman of the Commercial Real 

Estate Committee and Realtors Association of Acadiana. We want 

people to understand this goes well beyond oil field service companies and the negative impacts that are being felt. 

Mr. Troy Cloutier serves as Senior Vice President, Regional 

President for MidSouth Bank. As a Regional President, his area includes Houma, Thibodaux, Morgan City, and Lafayette. Bankers 

like Mr. Cloutier are in a particularly front-row seat to see what 

is happening in this region and we are very grateful for you to be 

here, Mr. Cloutier. 

Because Scott Angelle’s presence is required in North Louisiana—work never ends for our Lieutenant Governor—we have 

pushed him up to our first panel, and he will be the last panelist. 

Lieutenant Governor Scott Angelle from Breaux Bridge has been 

serving as Lieutenant Governor since May. Prior to that, he served 

as the Secretary for the Department of Natural Resources that has 

the jurisdiction over, of course, drilling here in our state. He is extremely knowledgeable and he leads our state’s efforts right now to 

overturn the moratorium with the Gulf Economic Survival Team. 

Many organizations are a part of that effort, and he has been the 

leader of that. He is a graduate right here of Lafayette and a 

former President of St. Martin Parish. 

Lori, why don’t we start with you? We are going to limit opening 

statements to five minutes. If you can shorten them to four or five, 

we will go through each and then have a series of questions for 

you. 

Ms. Davis. 

STATEMENT OF LORI DAVIS, OWNER, RIG-CHEM, HOUMA, LA 

Ms. DAVIS. First of all, I would like to say thank you to Senator 

Landrieu and Senator Vitter and for everyone here today. 

Today, I would like to paint for you a picture, a picture of a real 

American dream. During the oil crisis in 1984, when over 50,000 

people left the industry—— 

Chair LANDRIEU. Lori, pull the microphone closer to you, down, 

if you could. There you go. 

Ms. DAVIS. When my father, who had worked for an oil field 

service company for 21 years, was forced into early retirement at 

the young age of 50, with no formal education and a $25,000 severance package that was given to him for his 20-plus years of experience, he took a chance, with my mother’s support, to live a dream 

and buy into a small business. What he didn’t realize at the time 

was that it would become a family business and would support his 

daughters, grandson, niece, and later a daughter-in-law, all as employees of the company now known as Rig-Chem. 

Picture today, 26 years later, we are in a very similar place. I, 

Lori Davis, co-owner of Rig-Chem, and my sister, Penny Molina, 

have no formal education. We are both close to the age my father 

was in the early 1980s and now being forced not into early retirement, but possibly out of business, and not by market demand, but 

by a Federal Government who is taking control of our industry and 

offering no help but to possibly force us all into unemployment, 
12 

which is not the severance package I had hoped for and worked so 

hard to build. All of this because the government feels that one 

company’s mistake should be borne by an entire industry that has 

operated safely and never had anything like this happen before in 

the Gulf of Mexico. 

We have been a company that was debt free, never had to borrow 

money to operate, never had to lay anyone off, always had paid a 

good income to our 17 employees, 14 that live in Louisiana, two in 

Texas, and one that lives in Maine. We offer our employees 401(k) 

matching of four percent. We have given profit sharing of 11 percent yearly per employee. And we pay 100 percent employee health 

benefit, dental, disability, and life insurance, along with two weeks 

of paid vacation. 

We are now facing the worst year in the company’s history, with 

six-figure losses and the reality that we can only hold on until December without having to take drastic measures, such as layoffs 

and pay cuts. This is hard to believe, but this is what the moratorium has done to Rig-Chem, an American dream. 

The only people that will profit from this tragedy will be big 

business. They are the only ones that can survive during this type 

of crisis. They have huge resources, established international divisions, bank support, government connections, and deep pockets 

with no real loyalty to employees, only to stockholders. Once this 

is all done and the moratorium lifted, they will emerge that much 

better, and they now have reduced competition due to this arrest 

in our industry forcing small business closures and access to our 

best employees. 

Small business is usually quick to react to change. That is why 

we have a niche in most markets. Small business can make things 

happen because we are the decision makers. We keep markets competitive. We employ and train talent that allow them to focus on 

their job, not corporate culture. 

Unfortunately, small businesses, the moms and pops of the industry, will not survive this moratorium if it is not lifted soon. To 

add insult to injury, we are receiving daily news of price increases 

on our core materials with concerns of shortages due to production 

changes, all of which are being driven by the fear of what will happen as the price of oil continues to rise, our demand for foreign oil 

increase, and the uncertainty of U.S. oil production and its future. 

Another blow to our industry is that our insurance company is 

not sure what will happen. As a business, we have to be profitable, 

which means we have to operate on budgets. But with all the uncertainty caused by the moratorium, it makes it very hard to 

project the budget. We are being asked to review MSA agreements 

with many clients and now being offered new agreements that have 

language included which there is no insurance coverage available, 

at least not to small business. 

The next hurdle we will have to endure is directly related to 

safety. We already work in an environment that adheres to high 

standards when it comes to safety and performance. We will be 

asked to comply and should to the new requirements that will be 

placed as a result of this incident, which will add yet another financial burden. 
13 

Our picture is not unique. Most small business owners are in the 

same situation and may be some without the fortunate reserves to 

continue to battle through this lockdown and have nowhere to turn 

but to bankruptcy or foreclosure. We need help. We need to go back 

to work and be assured that we will have the support and commitment from our industry and legislators to help keep the American 

dream alive. 

This is not what my parents planned for our future, nor is it the 

one I planned for my son. Thank you very much. 

[The prepared statement of Ms. Davis follows:] 
14 

August 11, 2010 

United States Senate 

Committee on Small Business & Entrepreneurship 

Lafayette, Louisiana 

Prepared by: Lori Davis, President, Rig-Chem, Inc. 

Thank you for giving me the opportunity to share my concerns about how RigChem is reacting to the Deepwater Moratorium imposed by the Obama 

Administration without just cause and addressing the challenges now directly 

affecting our livelihoods, our people and our state. 

Rig-Chem was formed in 1980 as a small business catering to the drilling industry 

and in 1984 my Father was forced into early retirement by the downturn in the oil 

and gas industry. With his $25,000 severance package given to him by his employer 

Schlumberger after 21 years of service he bought stock in Rig-Chem. He and my 

Mother created an environment and opportunity for his children with hopes that 

the company would grow and support our family for many years to come. During 

the years to follow we faced tough times through competition, business challenges as 

many small family owned companies face. Through hard work and dedication we 

continued to fight never turning our focus from the industry we supported and that 

supported us. 

Today as co-owner and President of Rig-Chem I am faced with something that we 

were never prepared to fight, a Moratorium on our industry. I thought this would 

be easy to share but there is nothing easy about what we're facing and it breaks my 

heart and makes me angry all at the same time. The emotions run high and people 

are worried. The majority of my family still work for our company, my sister who is 

my business partner, my son, daughter in-law, cousin and others that have been 

with us for many years who are all just like family are feeling the daily pressure of 

uncertainty. 

I had been asked what we were doing different as a result of the moratorium and if 

we had laid any people off, my answer was "definitely not, not today, we're in 

hurricane mode" "this is what we plan for during this time of the year" We have 

learned from past experiences more recently Katrina, Rita, Gustav and Ike that 

pulling together and being prepared helps us through these difficult times and being 

a small company today is positively a blessing but this can't last forever!!! In this 

competitive environment replacing and training people is too hard in an industry 

driven by experience and safety requirements and letting people go would create 

such a set back that it makes more sense to enter survival mode and adjust instead. 
15 

This was my statement on June 24th today things are quite different. The 

adjustments we have to make just to move forward are deeply cutting everyday into 

a quickly diminishing savings. We are once again putting our plans on hold for 

desperately needed capital improvements to our 22 year old facility. Having now to 

look to the banks and activating lines of credit to keep a float for the basic expenses 

which have been a difficult thing to accomplish during these times with banks 

feeling the pressure and for Rig-Chem having never a need for them until now. I'm 

proud to say we have always been a "liquid company" never owing and always 

keeping enough operating capital to weather through tough times but the tough 

times are only beginning for us. 

We have determined that Rig-Chem can maintain without cutting salaries or 

benefits for our employees, 15 (Louisiana), 2 (Texas), 1 (Maine) who we pay 100% 

employee health care coverage and make an 11% profit sharing plus 4%, 401K 

matching contribution yearly. We also provide disability, dental, life insurance and 

paid vacation. I'm sad to say this can only last until December after this we will be 

forced to lay people off and cut benefits. 

Of our 18 employees 5 are single women and the remaining 13 are responsible for 16 

dependants. The effects of this moratorium does not stop here, we have vendors that 

depend on our purchases they span from Texas, Louisiana, Georgia and as far away 

as Michigan. Then there's the neighborhood restaurants where we eat lunch, 

grocery stores, our yard service, janitorial service, gas station, printing company, 

advertising budget, golf course, marinas and the list goes on who directly derive 

income from our ability to secure their products and services. 

This is only from our business it continues on to our house holds and the house 

holds of those others that no longer can support the additional expenses we all grow 

accustom to. It is a domino effect with the Federal Government ultimately taking 

care of us all. I know there is a false belief that people are still working, and many 

are supporting the BP operations and clean up effort. These jobs will soon be over 

and then what will happen? More unemployment more support by our 

government. We're already hearing about companies that have been preparing for 

layoffs or moving people to other countries and many will not come back. 

Rig-Chem has been forced to look for other opportunities as well some outside this 

state and others outside this country!! This catastrophic event is a hurricane with no 

end in sight and is nothing any of us have ever experienced or could possibly have 

been prepared to handle on any level. 

If the moratorium is not ended soon the layoffs will come and it may be for many 

people those who are close and dear. It may very well mean leaving an industry or 

leaving this state or maybe even this country. At the same time it also prevents us 

from helping our fishermen that are in dire need of help. We are a community and 

an industry that reaches too many in times like these but today we are all in the 

same boat. 
16 

If we're going to change this we have to speak out, share our fears, educate the 

individuals and help them to understand that we're not the bad guys; we're hard 

workers, families, business owners and individuals doing what we know that keeps 

this country moving and doing it safely. 

The Obama administration has done absolutely nothing to protect, help or support 

us as an industry that feeds and powers this nation and we need answers, we deserve 

answers, we need to return to work. 

We're tired of feeling like we're in a constant battle being fought against us by the 

people chosen to lead us during difficult times ....• This is an insult and a direct and 

personal attack on us individually and on us an entire industry that has for many 

years proven that it can operate safely. Why should one company's mistakes become 

the burden for our entire industry ••.•. this is wrong and undeserved. 

We all want a safe, healthy environment; we understand the need for alternative 

energy. It just can't begin by flipping a switch and wiping out an entire industry in 

the process. 
17 

Chair LANDRIEU. Thank you. 

[Applause.] 

Mr. Goodson. 

STATEMENT OF CHARLES GOODSON, OWNER, CHARLEY G’S 

RESTAURANT, LAFAYETTE, LA 

Mr. GOODSON. Senator Landrieu, Senator Vitter, and members of 

the Senate committee, thank you for allowing me to testify before 

you today and thank you for holding this hearing. I appreciate the 

opportunity to tell my story of the possible and very probable effects of the continued deepwater drilling moratorium. 

My name is Charlie Goodson, owner with my wife, Del, of Charley G’s Restaurant. We have been in the restaurant business for 

over 30 years and I have operated Charley G’s concept for the last 

25 years. 

The Louisiana restaurant industry is the largest private sector 

employer in the State, 145,000 people directly and another 70,000 

people indirectly. The restaurant industry in Louisiana has had to 

overcome some significant challenges in the last five years, Hurricanes Katrina and Rita in 2005, Ike and Gustav in 2008, and five 

years and a national recession later, things are finally looking up 

for Louisiana restaurants. Along comes the BP oil crisis. The deepwater drilling moratorium will cripple Louisiana’s economy and 

force many restaurants to lay off workers or even close their doors. 

Traditionally, summer is a slow season, and combined with another hurricane season, times could not be more desperate. Owning 

a restaurant in Louisiana has been a roller coaster ride, with some 

terrific highs and some soul-searching lows. With only what I can 

describe as a stubborn will to stay in business, we have survived. 

In the mid-1980s during the oil bust, it was particularly hard for 

Louisiana restaurants and our city. We pulled out all the stops, 

any marketing strategy we could think of. For a time, we ran a 

promotion, lunch for two for the price of a barrel of oil. I served 

lunch for two for $5.40, definitely not a profitable situation. 

With the deepwater drilling moratorium of six months, I believe 

we are headed back to those struggles, those economic times. As 

small business owners, we hang on economic decisions made by 

others that can take us down in a matter of months. We work hard 

at our business and we budget our sales every year on a day-today basis. This year, I budgeted a seven percent net income before 

taxes. We probably will do somewhere between four and five if we 

don’t have any major problems. This moratorium could be that 

major problem and put us into negative for the year. 

Our management team, my daughters and my wife have started 

to prepare our company for a major slowdown if there are jobs lost 

in the oil industry in our area. Our first line of defense would be 

a hiring freeze, then a salary freeze, then a halt on all leasehold 

improvement. Our second tier of defense would be to discontinue 

our lunch service. By discontinuing lunch, we will be able to eliminate six kitchen positions, four service staff positions, and one 

manager. That represents 25 percent of my entire staff, 11 jobs in 

one small local restaurant. 

Our daughters are now at the age where they will be getting involved in the management of our family business. We hope to pass 
18 

this healthy and growing business on to them. The moratorium 

casts big doubts over the future of this small business. 

Each and every one of us understands the importance of safe offshore drilling to prevent another spill such as the April 20 explosion of BP’s well, not to mention the devastating loss of life. However, reckless shutting down of the industry will result in a tsunami sized wave of economic impact on the other industries in Louisiana. 

Thank you, Senator Landrieu, Senator Vitter, for allowing me to 

speak today. 

[The prepared statement of Mr. Goodson follows:] 
19 

Written Testimony of 

Charles Goodson 

Owner, Charley GIS Restauarnt 

Lafayette, LA 

Before the Senate Committee on Small Business & Entrepreneurship 

Tuesday August 17, 2010 

Senator Landrieu & members ofthe senate committee, thank you for allowing me to 

testify before you today and thank you for holding this hearing. I appreciate the 

opportunity to tell my story about the possible & very probable effects of a continued 

deepwater drilling moratorium. 

My name is Charlie Goodson, owner with my wife Del of Charley GIS restaurant. We 

have been in the restaurant business for over 30 years and have operated the Charley GIS 

concept for the last 25 years. 

The Louisiana restaurant industry is the largest private sector employer in the state, which 

employs 145,000 people directly and another 70,000 indirectly. 

The restaurant industry in Louisiana has had to overcome some significant challenges in 

the last five years with Hurricanes Katrina & Rita in 2005, Ike & Gustav in 2008. Five 

years and a national recession later, things were finally looking up for Louisiana 

restaurants, until the BP Oil Crisis. The deepwater drilling moratorium will cripple 

Louisiana's economy and force many restaurants to lay off workers or close their doors. 

Traditionally, summer is the slow season and combined with another hurricane season; 

times could not be more desperate. 

Owning a restaurant has been a rollercoaster ride with some terrific highs & some soul 

searching lows. With only what I can describe as a stubborn will to stay in business, we 

have survived. In the mid eighty'S, during the oil bust, it was a partiCUlarly hard time for 

our restaurant & our city. We pulled out all the stops and any marketing strategy we 

could think of. For a time we ran a lunch promotion "Lunch for two for the price of a 

barrel of oil", we were serving lunch for two for $5.40, definitely not a profitable 

situation. 

With a deep water drilling moratorium of six months, I believe we are headed back to 

those struggling economic times. As small business owners we hang on the economic 

decisions made by others that can take us down in a matter of months. We work hard at 

our business & budget our sales to the day every year. This year we budgeted a 7% net 

income before taxes, we will probably do somewhere between 4-5%, if we don't hit any 

major problems. If the moratorium remains in effect, it could be our major problem & 

put us into the negative for the year. 

Our management team, my daughters & my wife have started to prepare our company for 

a major slowdown if jobs are lost in the oil industry in our area. Our first line of defense 

will be a hiring freeze, salary freeze & halt all lease hold improvements. Our second line 
20 

of defense is to discontinue lunch. By discontinuing lunch we would have to eliminate 6 

kitchen positions, 4 service staff & 1 manager, which represents about 25% of our staff. 

Eleven jobs for one small local restaurant. Our daughters are now coming to an age that 

they are getting involved in the management of our family business. We hope to pass on 

to them a healthy & growing business. The moratorium casts big doubts over the future 

of our small business. 

Each and everyone of us understands the importance of safe offshore drilling to prevent 

another spill such as the April 20 explosion ofBP's Macondo well, not to mention the 

devastating loss of life. However, recklessly shutting down this industry will result in a 

tsunami-size wave of impact on all other industries in Louisiana. 

Thank you again Senator Landrieu & members of the committee for the opportunity to 

testify before you today. 
21 

Chair LANDRIEU. Thank you, Mr. Goodson. 

[Applause.] 

Mr. David. 

STATEMENT OF DEWITT DAVID, COMMERCIAL REAL ESTATE 

BROKER, VAN EATON AND ROMERO 

Mr. DAVID. Well, good morning, and also, thank you for allowing 

me to be here to share my thoughts on the impact of the moratorium on the local real estate market. 

After receiving the invitation to speak with you this morning, I 

spoke with dozens of real estate agents, investors, developers, and 

others involved in our real estate community and all agree that 

this moratorium is having a devastating effect on their business. 

I would like to share a few quotes with you from some of the individuals that I spoke with. 

First, a couple of residential agents. ‘‘I had a ready, willing, and 

able buyer under contract to purchase. Given the moratorium and 

rumblings at his job about cutbacks, he walked from the contract.’’ 

Another said, ‘‘My phone quite literally quit ringing when the moratorium was announced. Three clients who were on the verge of 

buying decided to sit tight. They were concerned about whether or 

not they would have jobs in a year, and if they did, whether the 

job would be based in Acadiana.’’ 

The vast majority of residential sales are reported to our local 

MLS and there are some disturbing numbers which may illustrate 

the impact that the moratorium has had on our residential market. 

If you compare the residential pending sales, which some people 

call ‘‘under contracts,’’ for the period June 1 to August 13 of this 

year, which I call the basic moratorium period, with last year, we 

find, I think, some startling numbers. 

Last year during that period, 565 families made a decision to buy 

a residential property. Through that same period this year, what 

I call the moratorium period, that 565 dropped to 437. That is a 

22 percent drop in the number of people who made a decision to 

buy a residential property, and there is no doubt since the moratorium went into effect, buyers are taking a waiting and see attitude 

before they purchase a home. What is interesting, this is in spite 

of the fact that interest rates are near all-time lows and home 

prices in the past several months have gotten to be pretty competitive. And, of course, our local commercial market is also showing 

some signs of slowdown. 

Since much of our commercial market is not reported to a central 

database, it is difficult sometimes to quantify exactly what effect 

the moratorium is having on the market. But I spoke to dozens of 

commercial agents in our area and all agree that since the moratorium has been in effect, we have seen a drastic drop in our business and it also seems that it is close to being at a standstill. 

Now, our industry, the commercial real estate market, is heavily 

dependent on the oil industry. These folks lease and buy hundreds 

and hundreds of industrial facilities from here to New Iberia to 

Houma and they occupy thousands and thousands of square feet of 

our office space. I would like to share with you a few comments 

from a couple of our commercial brokers. 
22 

‘‘I was working with an investor from a major city to buy a very 

large apartment complex here in Lafayette. He states, ‘No go until 

the moratorium is over and the economy back in check.’’’ Another 

said, ‘‘I lost a sale to an oil field service company for a tract of land. 

The contract was signed. They were in their due diligence period. 

Then the moratorium was announced. They canceled the agreement and said because of the moratorium, they no longer had a 

need to expand.’’ 

A study that was just completed by the Louisiana Realtors Association projects that the Deepwater Horizon catastrophe will result 

in an initial loss of commission income to South Louisiana Realtors 

of over $6 million from May to April of next year. It also cautions 

that the effects could possibly spread over many years and impact 

our real estate market for years to come. And note this includes 

only the projected lost commission income for the spill. This does 

not include what we assume is surely coming, a loss of revenue 

from the moratorium. 

So both in the areas in our local market of residential and commercial, the phones just aren’t ringing and we hear clients saying 

they are cautious, they are afraid, they are uncertain. The perception is that the worst is yet to come, and there are very few people 

out there in a position to make a commitment on a long-term real 

estate deal not knowing what our economy will bring. 

Many of us here remember the oil bust in the mid-1980s. The reality was, we were all in the oil business, but we didn’t realize it 

until that bust hit us right in the face. Home builders, electricians, 

plumbers, grocers, beauticians, restaurant owners, dance instructors, you name it, we all depended then and we still do on the jobs 

that are generated by this great industry. 

We have all heard the numbers, that for every one job on a deepwater drilling rig there are eight conciliary jobs. But I contend 

there is a much greater impact than those numbers indicate. The 

rig workers, their eight supporting workers and the companies they 

work for are now carefully analyzing their spending habits. 

The bottom line is this. The moratorium is not just on the drilling and the jobs supporting that drilling. The moratorium is a 

strain on everyone in our area. It is critical to our economy that 

the ban on deepwater drilling be lifted immediately so the air of 

uncertainty and fear that is hanging over our heads be removed. 

Senators, I urge you to bring back to Washington our message 

loud and clear. Lift the moratorium. Thank you. 

[The prepared statement of Mr. David follows:] 
23 

The Deepwater Drilling Moratorium: 

An Economic Disaster for louisiana's Small Businesses 

Tuesday, August 17, 2010 

Testimony From: 

Dewitt "Zeen" David 

Commercial Sales Manager, Van Eaton & Romero, Realtors 

Good morning! Thank you for this opportunity to share my thoughts on the 

economic impact of the Deepwater Drilling Moratorium on the local real 

estate market. 

After receiving the invitation to speak to you this morning, I spoke with 

several dozen real estate agents, investors, developers, and other 

individuals in the real estate community. All themoratorium is having a 

devastating effect on their business. I would like to share a few quotes from 

some of the individuals I spoke with. First, from several residential agents. 

(Read several comments) 

The vast majority of residential sales are handled through our local MLS 

and there are some disturbing numbers which may reflect the impact of the 

moratorium on the residential market in Lafayette Parish. Comparing 

residential "Pending Sales" (often referred to as "Under Contract Sales") for 

the period Jun 1, 2010 through Aug 13, 2010, (basically, the time the 

moratorium has been in effect), with that time period in 2009 shows: 

# of Pending Residential Sales 6/1/2009 thru 8/13/2009 565 

# of Pending Residential Sales 6/112010 thru 8/13/2010 437 

Total Drop 128 (22.6%) 

There is no doubt, since the moratorium went into effect, buyers have taken 

a "wait & see" attitude before purchasing a home. And this in spite of the 

fact that interest rates are near all-time lows and home prices in the past 

several months have been very competitive. 

Our local commercial market is also showing signs of a slow down. 

Since much of the commercial real estate activity is not reported to a 

central database, it is difficult to quantify how the moratorium has affected 

local commercial real estate activity. But discussions I've had with 
24 

commercial agents in our area all indicate the activity has slowed 

drastically since the moratorium has been in effect and is almost at a 

standstill. I'd like to share some comments from a few of our commercial 

agents and a local investor. 

(Read several comments) 

A study just completed on behalf of the Louisiana Realtors association 

projects the Deepwater Horizon catastrophe will result in an initial loss of 

commission income for Louisiana Realtors of over $6,000,000 for the 

period May 2010 - April 2011. The study also cautions that the effects 

could possibly be spread over multiple years and impact the real estate 

market for "years to come". 

In both areas of the local real estate market, residential and commercial, 

the phones just aren't ringing like they used to. Clients use terms like: 

Afraid - Cautious - Concerned - Uncertain 

The perception is that the worst is yet to come and few clients are in a 

position to commit to long-term real estate deals not knowing what the 

future of our economy will bring. We hear fears of deepwater rigs moving to 

foreign waters and rig workers and support personnel either following the 

rigs or losing their jobs; families having to relocate and putting their home 

on the market during "soft" times; tenants not wanting to sign any long-term 

leases. Many of us here remember the oil bust in the mid 1980's when the 

fears mentioned above became a reality. The reality was we all here were 

in the "oil business" and didn't realize it until the big bust hit us squarely in 

the face. Home builders, electricians, plumbers, grocers, beauticians, 

restaurant owners, dance instructors - you name it - we all depended then, 

and still do, on the jobs and revenue generated by this great industry. 

We've all heard the numbers that for every one job on a deepwater drilling 

rig there are 8 ancillary jobs. But I contend that there is a much greater 

impact than those numbers reflect. The rig workers and their eight 

supporting workers are now carefully watching their spending and it is 

having an effect on everyone. 
25 

Bottom line is this! The moratorium is not just on the drilling and the 

ancillary jobs supporting that drilling - the moratorium is a strain on 

everyone in this area. It is critical to our local economy that the ban on 

deepwater drilling be lifted immediately so the air of uncertainty and fear 

that is hanging over all of our heads be removed. 
26 

APPENDIX A 

Residential Real Estate Agents 

I had a ready, willing, and able buyer under contract to purchase. Due to the moratorium 

and rumblings at his job about cut backs, he 'walked' from the contract. 

My phone quite literally quit ringing when the moratorium was announced. Three 

clients who were on the verge of buying decided to sit tight; they were concerned 

about whether or not they would have jobs in a year, and if they did, whether or 

not they would be based in Acadiana. 

People are just plain scared! I lost 2 clients recently because of the present situation -

both oil related. Both clients stopped dead in their tracks because of the uncertain future 

in the oil industry in Louisiana. 

I'm in a situation right now where a couple is looking to purchase a $400,000 

home. They are well qualified. The husband is an engineer employed by a firm 

that services oil companies. If the moratorium continues he has been told 

everyone will have to take pay cuts, therefore affecting his debt to income ratio. 

Even though he and his wife have been looking for a while and finally found the 

home they want, they may not move forward because of the moratorium and 

uncertain future. 

Commercial Real Estate Agents 

Just prior to the moratorium, I had negotiated a $1,000,000+ contract on a tract 

of land for a future residential development. A few days after the moratorium the 

developer/builder received a call from his banker suggesting that he rethink his 

decision to proceed in light of the potential effects of the moratorium. The 

developer/builder eventually contacted me and said phone inquiries on his new 

homes had dropped from 14-15 a day prior to the moratorium to only 1 or 2 per 

day since the moratorium. He reluctantly withdrew from the contract. 

I did infact lose a sale due to the moratorium. One of my clients was looking at 

purchasing property to build a "boutique" type hotel but due to his concern with the 

negative effects (of the moratorium) on Lafayette'S economy and the oil service 

businesses, he has put his plans on hold indefinitely. 

Was working with an investor from (major U.S. city) to buy a very large apartment 

complex in Lafayette. He states "no go" until the moratorium is over and 

economy back in check. 
27 

I have seen a dramatic downturn in decision making by oil service and non-oil related 

business as to goingforward with new lease space or acquisition of landfor company 

facilities. The most common thing I hear is "let's wait and see how things shake out with 

the oil spill & drilling moratorium ". Was working on a 7,000 sIJ commercial lease and 

proposed tenant has pulled back even with generous landlord incentives. 

I lost a sale to an oil field service company for a tract of land near Youngsville. 

The contract was signed and they were in their due diligence period when the 

moratorium was announced. They cancelled the agreement and said that 

because of the moratorium they no longer had a need to expand. 

r 

Investor/Developer 

Over the past decade my partners and I have invested no less than $3,000,000 per year in 

real estate in this area. In 2009 through early 2010 we invested close to $20,000,000. 

Since the moratorium we hadfour build-to-suit projects cancelled. The prospective 

tenants were all multi-million dollar companies. We lost our option monies and all our 

pre-development costs. At this time we are no longer looking at this area for investment. 

I was working with two groups of doctors on plans to construct a new office 

building for each group. After the moratorium both backed off. 
28 

Chair LANDRIEU. Thank you. 

[Applause.] 

Thank you, Mr. David. 

Mr. Cloutier. 

STATEMENT OF TROY CLOUTIER, REGIONAL PRESIDENT, 

MIDSOUTH BANK 

Mr. CLOUTIER. Good morning, Senators Vitter and Landrieu. 

Thank you for this opportunity, and also, Mark from the Commerce 

Department, thank you for taking time out of your schedule to 

come here. 

My name is Troy Cloutier. I have worked at MidSouth Bank for over 18 years. MidSouth Bank is a $950 million bank 

headquartered in Lafayette, Louisiana. MidSouth is one of the biggest users of SBA programs in the State, so we thank you for your 

work with SBA that you have done over the past few months. 

MidSouth is an oil and gas bank with numerous lines of credit 

extended to companies to pay their daily expenses during payroll, 

insurance, payables, and other expenses that arise during a business cycle. We also do boat loans, equipment loans. Currently, 32 

percent of our portfolio is in the oil and gas industry or commercial 

and industrial, so we are the people who lend to the oil and gas 

people. Right now, we have $80 million in loans in the South Region, 

which consists of Terrebonne, Lafourche, and St. Mary Parishes. 

Over the past few months, we have seen an increase in companies 

using their lines of credit for oil field cleanup. We have seen boats 

that we couldn’t get to work go to work because of the cleanup. Because of these issues, we have increased in loans $11 million since 

March of this year. So you can see that oil companies are currently—the service companies are currently working, or have been 

working because of the clean-up. 

Going forward, though, we see businesses being very nervous 

about what is going to happen in the oil industry. Because of the 

moratorium on deepwater drilling, some of the big companies are 

going overseas because they have the financial resources to do so. 

The smaller companies, however, like the seven that I put in business over the past five years with SBA loans, are very fearful that 

work will dry up when bigger companies move overseas and hire 

other providers. They are holding on to their money and making 

sure that they do not buy any new equipment or have any additional expenses that might compound their problem once a slowdown occurs. 

During the moratorium, they have already—before the moratorium, they have already scaled back where they could just because 

of the slowdown in the economy today. They have laid off people 

and do not plan on hiring them back anytime soon. I have talked 

to a machine shop owner the other day and he told me that him 

and his wife will work the machine for the next six months and not 

hire any new people. He has let five people go since the beginning 

of the year and does not have any plans to hire any of them back. 

Because businesses are trying to prepare for new regulations 

when the moratorium is lifted, some of the business owners fear 

that the cost of doing business in the Gulf will skyrocket, and not 
29 

just the deepwater operations. So they are holding on to their cash 

now. They are worried about the profits of their business going forward, so they are taking care of their families first. Many of them 

just recovered from Hurricanes—not Hurricane Katrina, but Gustav and Ike, which hit the area very hard, and now are faced with 

this. We hear so much about Hurricane Katrina, but we do not 

hear anything about the other hurricanes that devastated the areas 

below New Orleans. 

I have talked to oil field executives the other day who pointed 

out the irony of the fact that businesses moved to the Gulf the last 

few years because of the political landscape here. Now they are 

moving out of the Gulf because of the political landscape here. 

Those who will be hurt the most are the employees, who are already leveraged as much as they can be financially. Many of the 

employees were working 50 to 60 hours a week a year ago and now 

they are being laid off today. They have seen a decrease in salaries 

just because of the overtime not there, and today, they face the layoff ahead of them. They cannot get home loans today because of the 

regulations. I personally just moved into a house and the mortgage 

process was a nightmare, and I have great credit. So that is why 

they are not buying as many houses. 

Consumers have a lot of credit card debt. Most consumers today 

have a very high debt-to-income ratio, so it is very hard for them 

to get credit today. It is easy to say that they should have done a 

better job managing their finances, but the fact of the matter is, 

they live paycheck to paycheck and they do not have any money 

in reserve to pay for being laid off in the next 30 to 90 days. The 

only way they can make it is to get credit cards from the big banks. 

Many of them do not have the skill to go get another job. They 

come out of college and they see that they can make $60,000 to 

$70,000 a year in the oil field and that is what they go to do. This 

is what they want to do, and we ask you to put them back to work. 

On behalf of community banks, I would like to urge both of you 

to get with BP, ask them to put their money, their $20 billion in 

local community banks because that will be the banks that will 

help the communities and the businesses go forward. So I ask you 

to get with them to put the money in community banks. And I also 

urge you to continue your work on the jobs bill, Bill 5297. I know 

you all have worked very hard on that. That is key for community 

banks to start lending again to companies like Lori Davis’s and 

others out there. The community banks will be the ones to come 

in and help these companies in the future. 

So thank you for what you all have done today and I will answer 

any questions. 

[The prepared statement of Mr. Cloutier follows:] 
30 

Senate Hearing 

Good morning. My name is Troy Cloutier, and I have worked for MidSouth Bank for more than 18 years. 

I am the Regional President over the South Region, which includes St. Mary, Terrebonne, and Lafourche 

parishes - a total population of about 250,000. I have lived in Houma for 7 years, I am on the Executive 

Committee of the Chamber, a member of South Central Industrial Association and a member of 

Independent Community Bankers Political Action Committee. MidSouth Bank is a $950 million dollar 

bank headquartered in Lafayette, La. MidSouth Bank is one of the biggest users of SBA programs in the 

state. 

MidSouth Bank is an oil and gas bank, with numerous lines of credit extended to companies to pay their 

daily expenses, including payroll, insurance, payables, and other expenses that arise during a business 

cycle. We also do boat loans and equipment loans, and currently 32 percent of our loan portfolio is in 

commercial and industrial loans. Right now we have more than $80 million in loans in the South Region. 

Over the past few months we have seen an increase in companies using their lines of credit for oilfield 

cleanup work. We have seen all of the boats that we financed go to work to assist with the cleanup of 

the oil spill. Because of these we have seen loans increase by over $l1million since March of this 

year.We do not have much financed with the fishing industry. 

Going forward we see businesses being very nervous about what is going to happen in the oil industry. 

Because of the moratorium on deepwater drilling, some of the big companies are planning to go 

oversees, because they have the financial resources to do 50. The smaller companies, however, like the 

7 that I have put in business over the past 5 years with SBA loans, are very fearful their work will dry up 

once bigger companies move overseas and hire other providers. They are holding on to their money and 

making sure that they do not buy any new equipment or have any additional expenses that might 

compound their problems once work slows down. Before the moratorium, they had already scaled back 

where they could just because of the slowdown in the economy. They have laid off people and do not 

plan on hiring them back anytime soon. I was talking to a machine shop owner the other day and he 

told me he will work the machine and not hire anyone for at least the next 6 months. He had 5 other 

workers at the beginning of the year and has cut them all. His business will make it, he says, but it may 

just be him and his wife running it. 

Businesses are also trying to prepare for the new regulations once the moratorium is lifted. Some of the 

business owners fear the cost of doing business in the Gulf will skyrocket, and not just the deepwater 

operations. So they are holding on to their cash now. They are worried about the profit of their business 

going forward, so they are taking care of their families first. Many of them just recovered from the 

hurricanes - not Katrina but Gustav and Ike, which hit this area very hard and now they are faced with 

this. We hear so much about Katrina, but we do not hear anything about the other hurricanes that 

devastated the area below New Orleans. 

I was talking to an oilfield executive the other day who pointed out the irony of the fact that businesses 

moved to the Gulf in the last few years because the political landscape in our country was so stable. 

Now those same businesses are moving oversees because of the political landscape in the country. 
31 

Those who will be most hurt by this are the employees, who are already as leveraged as much as they 

can be. Many of the employees were working 50-60 hours a week a few years ago and living off of the 

overtime. They have seen a decrease in salary just because they are not getting the overtime pay. They 

cannot get a home loan today because of all of the regulations. I personally just moved into a new 

house, and the mortgage process was a nightmare, and I have great credit. Consumers have a lot of 

credit card debt. Most consumers today have a yery high debt to income because of all of the credit 

cards they have. It's easy to say they should have done a better job managing their finances, but the fact 

of the matter is that they are living paycheck to paycheck and they do not have any money in reserve to 

be out of work for 30-90 days or longer. The only way they can make it is to get more credit cards from 

one of those big banks. It is also getting much harder for a bank to allow their customers to overdraw 

their account, which some of them live on. Many of them do not have the skill set to do anything else. 

They graduated from high school and were attracted to offshore jobs that immediately allowed them to 

make $60,000-70,000. 

It's what they do, and their work benefits all of us. They just want to get back to work. 

And community bankers want to help them do that. 

On behalf of the Independent Community Bankers of America, particularly its representation of banks in 

the states of louisiana, Mississippi, Alabama and Florida, I would like to appeal to this committee to 

consider a requirement that some of the money BP has put into trusts be deposited into community 

banks in these affected states. 

The ICBA would also like to express its hope that bank regulators understand the impact this crisis is 

having on banks in these states and their customers. 

And finally, on behalf of MidSouth Bank and other ICBA member banks I would like to urge support for 

Sen. Mary landrieu's Small Business Lending Fund. This powerful tool will ensure small businesses get 

access to the credit they need to create the kind of jobs that will drive our economy and get all of us 

back to work. 
32 

Chair LANDRIEU. Thank you very much. 

I have already sent a letter to the Administration and BP asking 

them to put those deposits into local banks along the Gulf Coast, 

which would make a lot of sense, and I hope that that is exactly 

what will happen. 

Now we will hear from Scott Angelle. 

STATEMENT OF HON. SCOTT ANGELLE, LIEUTENANT 

GOVERNOR, STATE OF LOUISIANA 

Mr. ANGELLE. Good morning, Madam Chairlady and Ranking 

Member Vitter. I bring greetings to you from Governor Bobby 

Jindal and the men and women of Louisiana who have been working for the past 120 days to restore our way of life. I thank you 

for bringing this hearing of the Senate Committee on Small Business to Louisiana, which proudly holds America’s most prominent 

oil and gas economy. 

Since oral testimony is limited to five minutes, I will offer brief 

comments and introduce a few faces of the moratorium to make 

certain the public record reflects that this policy is a burden imposed mostly on the middle class of America. 

I thank each of you for your public service and your continued 

interest in a strong, safe domestic oil and gas industry. I say strong 

and safe because that is what we have been about and are about 

in the Gulf of Mexico, with a proven track record of nearly 50,000 

wells drilled over the last 60 years. The issuance of a six-month 

moratorium on deepwater drilling is an overreach, not necessary, 

and has been deemed arbitrary and capricious by the Federal 

courts. 

Not only did five of seven of Secretary Salazar’s experts chosen 

to review his safety study publicly oppose the moratorium, saying, 

quote, ‘‘it will not measurably reduce risk further and it will have 

a lasting impact on the nation’s economy,’’ but in addition, at least 

five independently conducted studies, referenced in my written 

comments previously submitted, forecast a huge negative impact on 

the small businesses of America. I am not speaking of the stockholders of BP, Conoco, Shell, Exxon, or Chevron. I am speaking of 

the middle-class American men and women who work on the drilling rigs, the ones who put on their hardhats and steeltoed boots, 

kiss their families goodbye for weeks at a time, and do the tough 

work of exploring the energy to fuel America. 

But that is not all. The companies that employ welders, fabricators, diesel mechanics, pipefitters, boat captains, and forklift operators are seeing a decrease in business. And that is not all. The companies that employ hotel workers, retail clerks, auto mechanics, 

restaurant workers, and caterers are impacted. And that is not all. 

The banks, auto dealers, and real estate folks are feeling the pressure, I might add, probably the three industries that have most 

been discussed on Capitol Hill, the banks, auto dealers, and real 

estate folks, and we are at a time having a disconnected policy in 

South Louisiana relative to those industries. 

I have said before, this moratorium is not about big oil. It is 

rather about the Calais, the Sheramies, Depueys, the Roberts, the 

Boudreauxes, and the Thibodauxes [ph.], just a few of the South 

Louisiana middle-class families that have taken the risk, borrowed 
33 

the money, created the jobs, paid the taxes, found the energy, built 

our economy, and have done nothing wrong, and yet find themselves in the bullseye of this poor public policy to shutdown deepwater drilling. 

[Applause.] 

But don’t just take my word for it. Todd Citron of Hub City Ford 

reports a 20 percent drop in sales of both new and used cars since 

the moratorium. Flo Meadows, a Lafayette realtor, reports that she 

has had more commercial contracts dropped before closing in the 

last five months than in the the last five years combined. Ken 

Veron, who employs 38 workers in his family-owned Cafe 

Vermilionville restaurant, reports his holiday event schedule is normally booked at this time by oil field service companies with deposits in hand. Today, he does not have a single oil field service company booked for a holiday event, and two other energy companies 

have recently canceled events. 

Layoffs are happening all around us for all the wrong reasons. This comes at a time when our nation has invested nearly $800 billion in stimulus funding to boost the economy and create jobs, yet 

we still have an unacceptable unemployment rate. There is not one 

shred of evidence of systemic failure for operations in the Gulf of 

Mexico, yet we are being treated with a one-size-fits-all approach. 

We certainly have the wherewithal in America to immediately institute enhanced safety practices if we are serious and have a sense 

of urgency about a strong and safe domestic oil and gas industry. 

So the rest of the country can be clear that there are real people 

impacted by this moratorium, allow me quickly to introduce you to 

a few great Americans, to Dustin and Gwen Guy [ph.], a family 

from Broussard. Neither are employed in the oil and gas business, 

but because Dustin’s employer, a flooring contractor, has experienced a slowdown in work from oil and gas companies, they have 

been forced to cancel their home building plans, an example of a 

cascading impact on the economy. 

Bayou Country Harley-Davidson—since the moratorium, owner 

Mike Bruno’s stores in Slidell and Houma have seen a 38 percent 

decrease in sales revenue and a reduction in net operating profit 

in excess of $400,000. He has eliminated all advertising, reduced 

inventory, and laid off 14 of the employees pictured here. 

From Cut Off, Kirk and Sheila Rouse and their six children, ages 

six to 17, Kirk is the owner/operator/truck driver and terminal 

manager hauling offshore equipment and earning commission for 

the loads he transports. The dramatic increase in work since the 

moratorium has the Rouse family unsure of how they will send 

their oldest son, a heart patient, to college this fall because now 

they can’t afford to pay health insurance premiums. 

Dwayne Webstock invested $3 million in a Port Fourchon multiservice dock facility that opened less than three months before the 

moratorium. Since then, he has laid off 30 of his employees and 

made other cutbacks, and he has attempted to find work not related to the oil and gas industry just to keep his doors open. 

Again, thank you Senators Landrieu and Vitter for having me 

here today, for your extreme leadership and your courage in continuing to fight, and with your help, Louisiana will not give up on 

this fight, not today, not tomorrow, not ever. Thank you very much. 
34 

[Applause.] 

[The prepared statement of Mr. Angelle follows:] 
35 

THE DEEPWATER DRILLING MORATORIUM: 

AN ECONOMIC DISASTER FOR LOUISIANA'S SMALL BUSINESSES 

by 

Scott Angelle 

Lt. Governor 

State of Louisiana 

Good morning Chairwoman Landrieu, Ranking Member Vitter, and the 

distinguished members of the Senate Committee on Small Business and 

Entrepreneurship. I thank you for your public service and your willingness to serve the 

nation in these challenging times. I appreciate the opportunity to testify this morning on a 

subject matter of which I strongly believe in - the role of a viable domestic energy 

industry in supporting our nation's economy. Thank you for your continued efforts as we 

all work together to meet one of the nation's biggest challenges of this generation of 

Americans -- the balance of what I call the three E' s- the energy, environment, and the 

economy. 

I bring greetings to you from Governor Bobby Jindal and the men and women of 

Louisiana who have been working, day in and day out, for 120 days to restore our way of 

while never forgetting the families of the II men who lost their lives in the Deepwater 

Horizon tragedy. Let us all remember keep to keep them in our prayers. 

As I address you today, another tragedy continues to unfold in Louisiana and our 

neighboring states on the Gulf Coast as the days and weeks and months pass under the 

economic crush of a ban on drilling for oil and natural gas in the deep waters of the Gulf. 

This moratorium does not threaten the loss of life, but the loss of livelihood for the 

workers who depend on that industry to feed their families, and for the companies that 

employ them. 
36 

2 

In Louisiana, we have a long and distinguished history of fueling America. This 

18th great state of the union is the epicenter for crude oil and natural gas exploration, 

production, distribution, refining, and processing for the nation, as well as for imports of 

foreign crude oil and Liquefied Natural Gas. 

We rank 

1st in OCS crude oil production 

1st in OCS natural gas production 

1st in OCS revenue generated for the federal government 

1st in mineral revenues from any source to the federal government 

1 st in foreign import oil volume 

3rd in crude oil proved reserves 

3rd in total energy from all sources 

1 st in natural gas processing capacity 

2nd in petroleum refining capacity 

2nd in primary petrochemical production 

When it comes to contributing to America's energy security, there is no more important 

piece of real estate in all of America than Louisiana. 

Because of our willingness to host the activities that many states simply refuse to 

do, every American is tied to Louisiana and the Gulf of Mexico through the gas pump. 

About a third of our nation's domestic production comes from the Gulf. And nearly 90% 

of that Gulf oil comes from deepwater wells. 
37 

3 

The July 27 Dun & Bradstreet impact study on the moratorium noted that more 

than 2,800 small businesses in the state of Louisiana, and more than 35,000 workers are 

directly involved in the oil and gas exploration industry. For the Gulf Coast, those figures 

rise to more than 16,000 companies and 153,000 employees. 

Those workers and companies are in tum the customers and income sources for 

other companies, companies that will also feel the blow of lost income due to this 

moratorium. 

A range of studies on the job impact of this moratorium have been completed, and 

even the lowest estimates indicate a devastating impact to our workers. 

• Louisiana's Economic Development agency estimates that 10,000 jobs in 

Louisiana alone could be lost in a six month moratorium, 20,000 in a year to a 

year and a half. 

• Dr. Joseph Mason with LSU's E.J. Ourso School of Business estimates that the 

six-month moratorium would cost Gulf States more than 8,000 jobs, and cost the 

nation more than 12,000 jobs. 

• LSU Economist Jim Richardson's study estimates more than 17,000 Louisiana 

jobs could be lost in the first six months. 

• The LSU Center for Energy Studies estimates that up to 24,000 Louisiana jobs 

could be lost in the first six months of the moratorium, increasing at an average of 

almost 400 per month after that. 
38 

4 

• The Louisiana Mid-Continent Oil and Gas Association estimates job losses could 

be 30,000 or more in the first six months. 

These are not just the men and women who work the drilling rigs - but also the 

service industries: the welders, the fabricators, the diesel mechanics, the pipefitters, the 

boat captains, the forklift operators, the dock workers, the service technicians, the 

plumbers, the sandblasters, the warehousemen, the carpenters, the janitors, the crane 

operators, the pump mechanics and the electricians. The effects do not end there. Also 

affected are also the hotel workers, the retail clerks, the auto mechanics, the restaurant 

workers, the caterers and the waitresses. The job losses and reduced spending of workers 

and companies will affect banks and real estate. The chain reaction will go on to impact 

local government revenues, rolling on to school teachers, police officers and other vital 

services, as recently noted by Lafourche Parish President Charlotte Randolph. Randolph 

said in a June 16 Tri-Parish Times article that, "Nine of the top 10 taxpayers in Lafourche 

Parish are businesses involved in the oil and gas industry. A substantial economic 

downturn for those companies means fewer jobs and more layoffs, and in tum, leads to 

less sales tax collections, which means less funding for schools, law enforcement and so 

on." 

It has already begun, as we can see in an August 9 article in USA Today on the 

hard choices companies have to make. 
39 

5 

• The NREC Power Systems engine repair company in Houma has already laid off 10 

of its 80 workers because boat owners serving the energy industry have delayed 

service. 

• The Harbor Offshore Marine in Galveston, whose boats service offshore rigs, saw the 

number of contracts it could bid on in July fall from the usual 12, all the way down to 

one. 

• The Industrial Material Company in Galveston, which supplies goods to industrial 

companies, has seen its revenue from energy sector clients fall by 17 percent since 

June. 

• The Harvey Gulf International Marine Co. of New Orleans recently cut the pay of its 

350 workers by 10 percent and sent three of its 17 supply boats to Mexico and 

Nigeria. 

• Trinity Yachts of New Orleans, which makes supply vessels for the industry, has 

scaled back plans to add 200 workers to its 1,000-member workforce and lost three 

boat orders - worth $45 million apiece. 

Workers inside and outside the energy industry will bear the brunt of the 

shutdown and no one has indicated who will pay for this cascading impact. This sixmonth moratorium, which the United States federal court system has called arbitrary and 

capricious, will cripple much of the middle class of Louisiana. Simply put, this 

misdirected public policy, while perhaps well-intended, results in a Moratorium on 

Middle-class Americans. While it may be difficult for the federal government to 

understand, the local governments most impacted by this oil spill and the Louisiana 
40 

6 

Seafood Research and Promotion Board have all indicated they are opposed to this 

moratorium. In this unique slice of America, we have demonstrated we can fuel 

America and at the same time provide the nation with over 20 percent of the nation's 

commercial fisheries catch. We understand it can not be business as usual, but this six 

month moratorium is an overreach. 

This is in a time when our American families are already struggling to make ends meet, a 

time when our country can not afford to lose jobs. 

We cannot threaten more jobs when this nation has already invested nearly $800 billion 

in stimulus funding to boost the economy and create jobs; when we still have an 

unemployment rate of nearly 10 percent. 

The longer the shutdown goes on, the more deepwater rigs will be increasingly 

committed to other parts of the world, robbing the American workers who have worked 

so hard to gain the skills to do the tough work of fueling America. 

If those rigs leave our waters, we can't be sure when or if they would return, even after 

the moratorium is finally lifted. The Baker Hughes services company out of Houston has 

already announced it has moved 300 of its 2100 Gulf area employees overseas, along 

with a quarter of its equipment assets. 

Even if the drilling ban lasts only six months, it will mean an estimated: 
41 

7 

• $2.7 billion loss to the U.S. economy 

• $707 million in lost wages 

• $100 million in lost state and local taxes that pay for roads, schools and health care 

• $219 million in lost federal revenue 

The impact that begins on the Gulf Coast will spread the longer the moratorium 

continues. Shutting down new drilling threatens our ability to sustain the production we 

need to fuel this nation. We have seen how quickly a drop in production can hurt our 

economy. Looking back to 2005, Louisiana was devastated by Hurricanes Katrina and 

Rita - storms that interrupted production from the Gulf of Mexico. In the week after 

Katrina, the national average of the price of a gallon of gasoline spiked 46 cents. 

A moratorium does not strike as swiftly as a hurricane, but the longer drilling is halted, 

the more domestic production will suffer as existing wells play out with no new wells to 

replace them. More than 360 new wells were drilled in the Gulf OCS in 2009 and all of 

the resulting production helped to America rely less on foreign imports to fuel our nation. 

The six-month halt we already face could mean an estimated 4 percent drop in 2011 

production - and that production could lag for years. 

And while I have huge concerns about a six month moratorium I am concerned about 

what also may be longer moratorium. 
42 

8 

Morgan Stanley issued a report on June 1,2010, wherein they have estimated a 

60% chance that the moratorium will last at least a year to 18 months, a 35% chance that 

it could last 4 years, and only a 5% chance that deepwater drilling will resume by next 

February. 

These kinds of reports, based on the concern for the administration's ability to 

promulgate regulations in a timely fashion, are drying up investment in the Gulf 

industries and increasing economic troubles for our people, our businesses and our 

government. 

Even in shallow waters, where there is no declared moratorium - drilling has 

come to a near halt, even as the industry has reached out to the regulator to find a way 

forward. In 2009, before the moratorium, the lowest new permit total for a single month 

in OCS shallow waters was eight. The number of new permits approved in the last three 

months combined (5) doesn't even match that low-water mark. 

Again, a substantial interruption of production will mean a greater reliance on 

foreign sources of energy, and greater exposure to increases in price. To put the effects 

into perspective, a 50 cent increase in the price of gasoline shocks the United States 

economy and costs the American consumers around 1.4 billion dollars a week. 

A look over the past several decades is very revealing. We have had six 

recessions in this country since 1972. Prior to each one of them, the price of oil saw a 

sustained increase over the previous year. A major increase in fuel prices has almost 

always been an indicator or a driver of a major recession or downturn in our economy. 
43 

9 

Oil reached $147 a barrel in July 2008, more than double what it had been the 

previous July. By October 2008, our national economy had imploded. Our car 

manufacturers were crippled, along with our banks and our housing markets. All which 

were impacted by energy prices that shocked our markets. 

Offshore drilling has existed in the Gulf waters for almost 60 years, and 

deepwater drilling began in the 1970s. Nearly 50,000 wells have been drilled in the Gulf, 

3,200 of those in deepwater, and never before have we seen this kind of accident. 

Five of the seven experts chosen to review the Department of Interior safety study 

that led to the moratorium publicly opposed the use of their name and involvement to 

justify a blanket moratorium. In their public letter of opposition, on page two, was the 

statement, "A blanket moratorium is not the answer. It will not measurably reduce risk 

further and it will have a lasting impact on the nation's economy which may be greater 

than that of the oil spill." 

When it comes to drilling in the Gulf of Mexico, we believe that we can inspect, 

detect and correct at the same time. We believe that taking a time out to huddle is 

appropriate. This can be done. U.S. Department of the Interior Secretary Ken Salazar 

said recently that shallow water drilling operations are implementing new standards and 

simultaneously continuing to operate. We can make that same standard apply to 

deepwater drilling. 

While the necessary work of finding the fuel this nation needs is going on with a 

renewed focus on safety; industry and government can work together to meet the 
44 

10 

standards laid out in the federal safety offshore report, dated May 27, 2010. If we have a 

sense of urgency to get this done, I am confident the United States of America has the 

resources to make it happen. 

This moratorium affects much more than the oil industry. Access to affordable 

energy impacts every sector of our economy, every state in our nation and every 

American family. This moratorium on deepwater drilling in the Gulf of Mexico is a 

moratorium on energy security, on economic development and on American jobs. 
45 

Chair LANDRIEU. Thank you, Lieutenant Governor. We appreciate your leadership on the coalition. 

I understand you may have to leave, and just excuse yourself 

when you do—we were happy to accommodate your schedule—we 

are going to ask the panel a few questions and then move to our 

second panel. Lieutenant Governor, let me start with you. 

We have gotten a terrific response throughout Louisiana for overturning this moratorium, and I think because of the work that we 

have all done, that message clearly is getting out to our state. The 

issue is how to get it out around the nation. You have traveled to 

Washington. You have been meeting with other delegations. Could 

you give us some insight into how the committees have been receiving the testimony that you have given here and if you feel like we 

are making some progress or not in getting this message out 

around the country, and not just to other delegations, but to other 

cities and elected officials around the country? 

Mr. ANGELLE. Certainly, my concern is that we are talking to 

only our friends. Certainly, our folks in Texas and Mississippi certainly understand what it is that we are doing here and we have 

attempted to reach out to as many folks across the nation. I would 

tell you that my observation is that many folks across the nation 

do not have a full understanding of the value of what happens in 

the Gulf of Mexico, and we will only know that value when they 

begin to see energy prices rise because of the lack of production 

that will come from this moratorium and the cascading impact of 

the regulations that we believe are coming as the other shoe drops. 

Certainly, we have worked with the National Association of 

Counties. You have perhaps received a resolution. The National Association of Counties, representing counties across America, has 

adopted a resolution opposing the moratorium. We have seen manufacturers across the nation opposing this. 

However, I am concerned that America does not yet understand 

that what happens in the Gulf of Mexico is so important to the 

daily lives of the families of America. Fully a third of the oil and 

gas production comes from the Gulf of Mexico and 90 percent of it 

comes from deepwater wells. We will do everything we can to continue to get that message across. Again, I think there are some biases. Somewhere along the way, the oil and gas industry helped to 

create a strong America and somebody hijacked that message and 

began to convince people that what we were doing was somehow 

dirty and not American and nothing could be further from the 

truth. 

Chair LANDRIEU. Thank you very much. 

Could you also comment—I am going to move to others for questions—the meeting that I was able to help establish with you and 

Michael Bromwich about three weeks ago in Washington. The 

meeting went on for eight hours, I understand. Was any progress 

made in terms of the shallow water regulations, because you all 

were getting down into some real detail about how to move that 

forward? Is there anything you would like to report here on that? 

Mr. ANGELLE. I would like to say, to borrow a phrase, I think the 

spirit is willing, but the flesh is weak, and what I mean by that 

is I get into meetings and we hear about the things that we are 

trying to get done from a shallow water perspective, but the proof 
46 

is really in the numbers and there have only been two wells, in 

fact, two new permit for gas wells, relatively low-risk wells, that 

have been issued. We continue to grind, and in ways that I have 

never seen before. 

We hosted a meeting here last week at the LITE Center with operators doing everything we can, sharing best management practices, trying to put the kind of things that we can in front of the 

regulators. There is a strong disconnect between the home office 

and the regional office. There is a culture of fear within the Bureau 

of Ocean Energy. There is a feeling that to do the work that both 

the President and the Secretary have said is legal in America, to 

drill for shallow water—to issue shallow water permits, we believe 

that there is a fear in that agency. There is a culture of better to 

not issue a permit than to issue a legal permit and have someone 

question your job performance. 

And, look, it is tough. I served in a position in a regulatory environment. It is tough to do this work, but that is what the folks 

signed up for. The work that you—the meeting that I think that 

you hosted did help us identify the issues. I thank you for that. 

And I think we are moving in a direction to get shallow water permits. I think we are in the red zone, if you will allow me to borrow 

a sports analogy, but we need to push it over the end zone, over 

the goal line, in a relatively soon manner. 

Chair LANDRIEU. And finally, I just want to be clear that while 

the official moratorium is for deepwater drilling and there were 

about 33 rigs with, I think I understand, four additional that were 

on the way when this happened, into the Gulf, that what we are 

hearing, the testimony is that for all practical purposes, drilling in 

the entire Gulf, including the shallow, is shut down. So I hope the 

members that are representing the Administration here put that 

into their calculations. It is not just the deepwater drilling. 

Let me ask one final question to the panel and I will turn it over 

to Senator Vitter. For all of you, it is important, and I think, Charlie, you hit the nail on the head when you said we didn’t know we 

were all in the oil business, but when the crash happened in 1980, 

we figured that out. I mean, I can remember what a ghost town 

not only Lafayette, the West Bank of Orleans and Jefferson felt 

like, Iberia, Vermilion, Lafourche, Terrebonne. I mean, it was like 

the movies with the sagebrush. You got that feeling going through 

a lot of our neighborhoods. It doesn’t quite feel like that yet, but 

we are getting sort of the first ripples of it. 

Can you describe—you described for your restaurant, but if each 

of you would just take 30 seconds and talk about one of your suppliers or one of your neighbors or someone that is related that is 

being negatively affected so we can get as many stories on the 

record as possible, if something comes to mind. I don’t know, Charlie, do you want to start? 

Mr. GOODSON. Right off the top of my head, speaking with Gerald Breaux over the last few days with the Lafayette Visitors and 

Convention Bureau—— 

Chair LANDRIEU. Speak a little louder, if you could. 

Mr. GOODSON. The motel industry in town locally is really suffering. The vacationer dollars seem to be there. The tourist dollars 

are still there. But the traveler, the business traveler is way, way 
47 

down, and Gerald told me somewhere around 25 percent, that the 

hotel-motel—and that is so directly related to us. A business person 

comes into town to do business, entertains their guests, so if they 

are not coming, it also affects my business, as well. 

Chair LANDRIEU. Mr. David. 

Mr. DAVID. Yes, Senator. We think that it appears that somewhere between 16 and 17 agents that we are aware of have left our 

industry since the first of June to find employment elsewhere. I 

mean, you saw the Louisiana Realtors’ projections that we are 

going to lose considerable commission dollars in the next 12 

months. My fear is that we are going to lose good people, experienced people that just can’t make it unless homes and buildings 

are selling and leasing. So we are beginning to see some of the 

agents seek employment elsewhere. 

Chair LANDRIEU. Mr. Cloutier. 

Mr. CLOUTIER. I have customers all the time who say that they 

are laying off and going to continue to lay off, but I also deal with 

mergers and acquisitions and there is a ton of banks in the FloridaAlabama area that are failing, and this summer was supposed to 

be their resurrection year. They are going down much further than 

they ever thought they would. 

But I would like to offer a solution, because I don’t like people 

coming to my office and throwing a lot of problems on the desk—— 

Chair LANDRIEU. Please. 

Mr. CLOUTIER [continuing]. Without solutions. 

Chair LANDRIEU. We are looking for them. 

Mr. CLOUTIER. I was with a retired engineer this weekend and 

he said that he is working harder now than he ever did because 

of all the new regulations. He is having to find ways to get the rigs 

out there. He says he is working six days a week and he only 

wants to work two to three days a week, at most, and spend time 

with his grandchildren after that. 

So I would offer that there are 33 rigs that you said, which he 

said the same number, 33 rigs on the deepwater. If MMS would 

look at hiring two retired engineers to go through the processes of 

these rigs and make sure they are meeting the regulations as for 

the deepwater, and I am sure there are at least 66 retired engineers out there that would be interested in doing it on a part-time 

or full-time basis—— 

Chair LANDRIEU. That is excellent, and we have generally suggested along those lines a SWAT team concept that Lieutenant 

Governor Angelle and the coalition have pressed the Administration to try to put into place and use the experience here. 

Ms. Davis, and then I will turn it over to you, Senator Vitter. 

Just another story or two about a supplier or a neighbor or—— 

Ms. DAVIS. Well, I mean, we represent—we do business quite a 

bit with companies in Louisiana, but because of the nature of our 

industry, we do have to reach out into other States. I mean, 30 percent of revenues for one of the suppliers that we do business with 

that is in Atlanta, Georgia, is being affected by the downturn in 

our purchases. We have another supplier in Howell, Michigan, that 

is feeling the same effects. And it is not just Louisiana. 

So when we think about this, it is going to reach further and further because that person that is 30 percent down in Atlanta, Geor-
48 

gia, is going to have to cut back somewhere in his business and 

some of the things that he is doing. So it is more than just a Louisiana problem. 

Chair LANDRIEU. Thank you for bringing that up, and I think 

that is one of our strategies moving forward, to get these small 

business owners that are outside the Gulf to start calling their 

Congressmen and their Senators and saying how they are being directly affected, and I think that is a good strategy. 

Senator Vitter. 

Senator VITTER. Thank you, Mary. 

Mr. Lieutenant Governor, I want to go back to the broader issue 

of not just the formal moratorium in deepwater, but the de facto 

moratorium in shallow water and the threat of unreasonable regulation. You have been working with us and others on this shallow 

water problem, as you alluded to. Secretary Salazar told me that 

is going to get solved six weeks ago. Is that solved today? 

Mr. ANGELLE. No, sir. The problem is not solved. There is a 

strong disconnect between what home office in Washington, DC, is 

trying to implement and their ability to communicate that to regional offices throughout America. There is no question that the 

shallow water fleet is getting stacked by the day. We will have 

fewer shallow water rigs working this week than we had two weeks 

ago, and that continues to be the forecast with the uncertainty of 

these regulations. 

Senator VITTER. Is it fair to say, because shallow water rigs and 

projects are smaller and the lead-in time is much shorter—it is 

something like 30 days in terms of getting a rig operating—that 

the negative economic impact is going to be felt even more quickly 

in shallow? 

Mr. ANGELLE. That is absolutely right. I think some of the issues 

that you are hearing about, real estate folks and banking folks and 

car dealers and those kind of things, are all just tied to some of 

the poor public policy of not being able to communicate what it is 

that we want in this country from a shallow water standpoint. 

Again, the President and the Secretary have both indicated publicly that shallow water permitting is a legal business enterprise in 

this country, yet the numbers don’t indicate that the government 

is issuing the license to do that. 

Senator VITTER. Right. And just to be clear for the record, as of 

three weeks ago, the number of those new drilling permits in shallow since the Deepwater Horizon explosion was zero. As of today, 

it is two. The month before the explosion, for a one-month period, 

that number would have been what, I think in the 40s or 30s? 

Mr. ANGELLE. That is correct. I think it was upwards in the high 

30s. So clearly, a significant drop-off, even in spite of the fact that 

it is legal to permit and to prosecute those drilling plans. 

Senator VITTER. Now, in this context, it just happened yesterday, 

but do you have any comments or reaction to this move by the administration, at least in deepwater, possibly broader, to get rid of 

this NEPA categorical exclusion, to have the NEPA process a whole 

lot more complicated for projects? 

Mr. ANGELLE. I think it is terrible public policy. It has been longstanding public policy in this country between Presidents of different parties for a long time to recognize the categorical exclu-
49 

sions, that when the Federal Government produces its five-year 

plan for leasing, it takes into consideration the activity that goes 

on in these areas, and as a result, companies are then able to use 

the environmental reports the government, in fact, provides to indicate that the prosecution of drilling plans is, in fact, synonymous 

with what the Federal Government looks to avoid from an environmental standpoint. 

To now have a situation that we are going to roll back longstanding policy, at least in the deepwater situation—I am not certain yet what kind of impact it has on shallow water, I am continuing to follow that—but in the deepwater, this is going to be a 

significant, significant slowdown, even if we lift the moratorium 

early. If we lift it today, we still, as a result of this announcement 

yesterday, are going to have significant issues getting permits 

issued in a shorter period of time. 

Again, the fact that five out of seven disagree, the fact that there 

is not one shred of systemic evidence here, the fact that we have 

gone to court and the courts have said it is arbitrary and capricious, the fact that the day after we issued—the day after the 

courts issued their order, the Secretary testified to a question by 

Senator Alexander, if the fact—was he aware of the fact that the 

day before the Federal courts had issued and vacated and called it 

arbitrary and capricious, would he simply issue another moratorium, he said yes. 

So it is clear to me that there is a ‘‘damn you’’ attitude towards 

the science and to the analysis. It is clear to me that there is an 

effort at play to move this country artificially or to accelerate a 

move away from the use of hydrocarbons to fuel this country. And 

there are some folks who are going to look at this opportunity, and 

shame on them for using the loss of life of 11 Americans to try to 

bring about a change in the use of where we get our energy. If we 

are going to have an energy debate in this country, we ought to 

have it—— 

[Applause.] 

If we are going to have an energy debate in this country, we 

ought to have it, but we ought to not use this event as the reason. 

Seven percent of America today gets its energy from alternatives 

and renewables and I think that this was about—we all believe 

that this can’t be business as usual. You have testified, both of you 

have testified, it can’t be business as usual. 

Death by a thousand cuts is what is happening. It is a moratorium today. We beat it. We get another one issued the following 

day. We go to court on that on August 25. There will be another 

one. Then we get regulations that are rolled out. Then we can’t understand the regulations because the people who wrote them have 

the duty to explain them can’t explain them fully to us. You just 

begin to get the sense there is something at play a lot more than 

just moratorium and deepwater drilling. I think you get the play 

that this is about an effort to move this country off of hydrocarbons 

premature. 

Senator VITTER. Thanks. Just one—— 

[Applause.] 

Thank you. One closing comment to the other panelists who are 

talking about the investment business environment. You know, for 
50 

a lot of businesses, particularly worldwide businesses, one factor 

they look to in terms of investing in different places is political 

risk. What I am scared to death about is that for energy companies 

and related industries, all of a sudden, the political risk in the 

United States of America is higher, is worse, is more threatening 

than it is in West Africa or a lot of other places in the world, and 

that is quite a comment. 

Would any of you all like to expand on what you think this is 

doing to that business investment environment, including for small 

business here in Louisiana? 

Mr. CLOUTIER. I would say that what we are seeing is that there 

are people who can go overseas that are moving overseas because 

they are just as worried as we are about what it is going to be 

going forward. I mean, we don’t know what it is going to be going 

forward. We don’t know when they are going to open up the permits to the shallow water or the deepwater and what is that price 

going to be going forward. How much is the insurance going to be? 

What are you going to have to do to get that permit? 

So those people who have the financial wherewithal to go overseas, and a lot of them already have had offices overseas, so it is 

very easy for them to bring their rigs, their boats, their equipment 

overseas, they are gone overseas. And I know Anandarko just 

moved three rigs, I think three months ago. 

So we are seeing the movement to overseas and that is going to 

hurt the small businesses here because they are not going to be 

able to move overseas with them. So, yes, that is a big concern of 

ours, is the political landscape and the price of doing business in 

the Gulf is going to go through the roof to us. 

Chair LANDRIEU. Would you all go quickly so—I wanted to get 

this in—— 

Mr. DAVID. Senator Vitter, I am so glad you asked that question, 

because I had a little blip here, but I didn’t have enough time. This 

is from an investor developer. ‘‘Over the past decade, my partners 

and I have invested more than $3 million per year in the real estate in this area. In 2009 through early 2010, we invested close to 

$20 million. Since the moratorium, we had four build-to-suit 

projects canceled. The prospective tenants were all multi-milliondollar companies. We lost our option monies and all our pre-development costs. At this time, we are no longer looking at this area 

for investment and strongly considering investing in Brazil.’’ 

Chair LANDRIEU. Charlie? 

Mr. GOODSON. Quickly, I think as a community, we are where we 

eat and we are where we shop. Local restaurants, local stores are 

who we are—Charley G’s, Cafe Vermilionville, Judy’s—and there is 

only one of those in the whole world, right here in Lafayette. So 

as a small businessman, I would like to do another project in Lafayette with my daughters, but that is not going to be the case. I 

cannot take that risk. I cannot venture out until there is some kind 

of final solution to this problem. So I think more small business, 

like myself, to open up individual local restaurants is going to be 

very, very hard. 

Chair LANDRIEU. Ms. Davis. 

Ms. DAVIS. I would like to say, the oil and gas industry is a very 

global industry, and even as a small business owner, we have had 
51 

to position ourselves, even before the moratorium, to be able to 

compete in a global market because many of our clients are overseas. 

What I am seeing as a result of the moratorium, companies and 

agents that I had been working with and working through in Saudi 

Arabia, Nigeria, other parts of the world, are very pleased with 

what is happening here because they are now going to capitalize 

on the fact that we need to do business there. We will be able to 

send our technology there. We will be able to send our people there. 

We will be able to focus more time and energy to developing those 

business relationships and making them stronger. And it is going 

to be a real pain for us. 

Chair LANDRIEU. Well, that is a perfect place to end, a perfect 

place as a challenge to end this first panel. We have a second 

panel. You all were excellent. I want the Administration to take 

note that even Secretary Chu, the President’s hand-chosen person 

for Secretary of Energy, said that this country is going to be needing a tremendous amount of oil and gas for the next 50 years. I 

would strongly suggest we get as much of that oil and gas here, 

right here at home on American soil, right here along the Gulf 

Coast. The Administration’s policies are in a direct conflict even 

with the statements of the Secretary of Energy. 

Thank you. While this panel is moving and the other panel 

comes forward, I am sorry I cannot recognize people in the audience at an official field hearing. If you want to submit anything for 

the record, you may, and I am going to remain afterwards for a few 

minutes for anyone who wants to talk to me personally. I thank 

you all very, very much for coming. 

Would the second panel come forward, please? To save time, I am 

going to introduce them as they come forward. 

First, we have State Senator Norby Chabert. Senator Chabert 

was born and raised in Petit Caillou. He represents District 20, 

which covers the southernmost sections of Terrebonne and 

Lafourche Parish. He is one of the rising stars in our legislature, 

a dynamic leader in the state, and will speak from a perspective— 

his family, of course, has been in and around the business for many 

years. 

Representative Simone Champagne is a lifelong resident of 

Jeanerette, who worked for First National Bank of Jeanerette for 

23 years. She served as Chief Administrative Officer of Iberia Parish Government. She is currently a member of the legislature and 

an excellent leader. We are very pleased to have Representative 

Champagne with us today. 

Honorable Arlanda Williams is the Parish Chairwoman of 

Terrebonne Parish, the first female to hold this position. She currently serves her first full-time term of District 2 on the Council. 

She was Immediate Past President of Louisiana Police Jury Association, of the Black Caucus, and current President of the National 

Association of Black County Officials, and she has testified in 

Washington and we thank you very much for your leadership. 

And, of course, Mayor Tim Matte from Morgan City, which is the 

gateway to the Gulf of Mexico for shrimp and oil field industries. 

Because of the importance of these industries to the local economy, 

Morgan City has the Annual Labor Day Louisiana Shrimp and Pe-
52 

troleum Festival, and that has been getting a lot of attention 

around the country as people start to really understand how we 

can shrimp and drill in the same waters on the same day and have 

done so successfully and safely for many decades, and we thank 

you for being the spokesperson of that community. 

Let us begin, if we can, Senator Chabert, with you, and if you 

will limit your testimony to four to five minutes and then we will 

have a round of questions. 

STATEMENT OF HON. NORBERT N. CHABERT, LOUISIANA 

STATE SENATE, DISTRICT 20 

Mr. CHABERT. Thank you. Madam Chairwoman, distinguished 

members of the United States Senate Committee on Small Business and Entrepreneurship, my name is Norbert Nolty Chabert, 

but everybody down in the bayou calls me Norby. I am a Louisiana 

State Senator for District 20, and I want to first thank Senator 

Landrieu and Senator Vitter for their service on the committee and 

for giving this serious matter the attention that it deserves. 

Louisiana’s 20th Senatorial District is a very unique and special 

place. Geographically, it is comprised of the southernmost portions 

of Terrebonne and Lafourche Parishes. It is home to some of South 

Louisiana’s most famous bayous, Bayou Terrebonne, my home of 

Bayou Lil Caillou, and the most dominant and legendary bayou of 

them all, Bayou Lafourche. The names of the towns there are synonymous with Louisiana living—Houma, Cut Off, Cocodrie, Dulac, 

and Golden Meadow. District 20 is a microcosm of our State. 

It is flush with shrimp boats, vast sugar cane fields, huge mills, 

fertile hunting and fishing grounds, thousands of camps and boat 

launches, and miles and miles of America’s wetlands. It is also the 

hub of offshore support and supply for oil and gas exploration in 

the Gulf of Mexico. And no disrespect to our dear friends and colleagues here in Lafayette, St. Mary, and Iberia Parishes, but it is 

now the epicenter of the economic impact of the Department of Interior’s moratorium on offshore drilling. 

You see, members, District 20 is not only the home of the Louisiana Offshore Oil Port, commonly referred to as LOOP, where 

over 13 percent of our nation’s oil is piped through over 50 pipelines in the Marsh Pipeline System, but it is also home to Port 

Fourchon, Louisiana’s offshore supply super-port. Currently, each 

and every one of the 33 rigs that have had their drilling suspended 

by this moratorium are based, supplied, and serviced out of 

Fourchon, every single one, members. Much has been made of the 

consequences of the job loss on those 33 rigs. It is estimated that 

there are between 6,500 and 7,000 workers combined on the moratorium rigs. However, it must be noted that were are over 5,000 

workers on the docks of Port Fourchon alone, Fourchon, to say 

nothing of the 8,500 direct jobs of men and women who drive in 

and out of that port every single day to provide the goods and services needed to make that port and our oil and gas industry operate. 

But neither the port nor the large companies that lease space 

there are why I come before you today. Those companies are directly feeling the pain, the financial burden of this moratorium, as 

much as anyone. But they have lawyers and lobbyists to fight their 

fights for them. 
53 

I come before you as a representative of the thousands of mom 

and pop operations in my district, small businesses like Tom’s Gas 

Station in Golden Meadow, Pat’s Dress Shop and Paul’s DriveThrough, both of Chauvin, the Galliano Twist, Marcel’s Supermarket in Bayou Blue, Blackie’s in Lockport. These are places 

where the workers of the oil field buy their tires, they get their groceries, they purchase their children’s school uniforms, and they 

pick up a hamburger or a six-pack after a long day of work. 

But there aren’t a whole lot of extra burgers being bought, not 

a whole lot of dresses being sold. Everyone in my district is feeling 

the effects of the economic depression that has been wrought upon 

us through no fault of our own. Every conversation that I have 

with my constituents, whether it is at a coffee shop on a Monday 

or after church on a Sunday, is filled with the concern of the impact it is having on their businesses and the worry about whether 

or not they are going to keep their job. 

Just this past weekend at my local Rouse’s Market, I was 

stopped seven times by people telling me of the hard times that 

they were facing. Now, Senators, this is not a scene that is unfamiliar to us. Public service is the life we have chosen. However, the 

testimony of these constituents was very much the same, yet drastically different. 

A teacher was worried about the progress of her classroom, 

where three of her kids’ parents had lost their jobs and were going 

to move. A woman working in a print shop had seen a 50 percent 

downturn of orders just in the last three days—excuse me, last 30 

days. A man who owns a tool rental company has had to lay off 

two of his ten workers in his shop just because their services are 

no longer needed. Every one of their testimonies is because of this 

moratorium on drilling. 

Over the last half-century, the hard-working people of South 

Louisiana have built the energy infrastructure that powers this 

country. The people of the Tenth Ward in South Lafourche practically invented the international boat business. Oil and gas is the 

lifeblood of our economy, from top to bottom, and that blood has 

stopped pumping due to nothing more than political posturing. 

In the coming weeks and days, more and more companies will 

lay off employees. Shops will shut their doors for good. Car payments will not be made. Mortgages will not be paid. In Terrebonne 

and Lafourche Parish, the welcome sign will once again read, ‘‘Last 

one out, turn out the lights.’’ 

Once again, I would like to thank the Chairwoman for her leadership and Senator Vitter for his leadership, as well, as well as the 

attention that the committee is paying on this very important 

issue. Thank you. 

[The prepared statement of Mr. Chabert follows:] 
54 

Norbert N. "Norby" Chabert 

State Senator 

20th Senatorial District 

P. O. Box 2417 

Houma. LA 70361 

SENATE 

STATE OF LOUISIANA 

Senate Hearing Written Testimony- U.S. Senate Committee on Small 

Business and Entrepreneurship 

The Deepwater Drilling Moratorium: A Second Economic Disaster for 

Small Businesses? 

Tuesday, August 17, 2010 

Presented by Norbert N."Norby"Chabert, Senator, Louisiana District 20 

Madam Chairwoman and distinguished members of the United States 

Senate Committee on Small Business and Entrepreneurship, 

My name is Norbert Nolty Chabert, but everybody down the bayou calls 

me "Norby," and I am Louisiana State Senator for District 20. I want to 

first thank Senator Landrieu and the Committee for giving this most 

serious matter the attention it deserves. 

Louisiana's 20'h Senatorial district is a very unique and special place. 

Geographically, it is comprised ofthe southern-most portions of 

Terrebonne and lafourche parishes. It is home to some of South 

Louisiana's most famous bayous: bayou Terrebonne, my home of bayou 

Lil Caillou; and the most dominate and legendary of them all. .. bayou 

lafourche. The names of the towns there are synonymous with 

Louisiana living: Houma, Cut Off, Cocodrie, Dulac, and Golden Meadow. 

District 20 is a microcosm our state. It is flush with shrimp boats, vast 

sugarcane fields and huge mills, fertile hunting and fishing grounds, 

thousands of camps and boat launches and miles and miles of America's 

wetlands. It is also the hub of offshore support and supply for oil and 

gas exploration in the Gulf of Mexico. And no disrespect to our dear 

friends and colleagues in Lafayette, St. Mary and Iberia parishes, but it is 

now the epicenter of the economic impact of the Department of the 

Interior's Moratorium on Offshore Drilling. 

11 
55 

You see members, District 20 IS not only the home to the louisiana Offshore Oil Port, commonly 

referred to at LOOP, where over thirteen percent of our nation's oil is piped through over 50 

pipelines in the MARS pipeline system, but it is also home to Port Fourchon - louisiana's 

offshore supply super port, Currently, each and everyone of the 33 rigs that have had their 

drilling suspended by this Moratorium are based, supplied, and serviced out of Fourchon; every 

single one, members, Much has been made of the consequences of the job loss on the 33 rigs, 

It is estimated that there are between 6,500 - 7,000 workers combined on the moratorium rigs. 

However it must be known that there are over 5,000 workers on the docks alone at Port 

Fourchon, to say nothing of the 8,500 direct jobs of the of men and women who drive in and 

out of the port every single day to provide the goods and services needed to make that port 

operate, 

But neither the port, nor the large companies that lease space there, are why I come before you 

today, though those companies are directly feeling the pain and financial burden of this 

moratorium as much as anyone, But they have lawyers and lobbyists to fight their fights for 

them. I come before you as a representative of the thousands of mom and pop operations in 

my district. Small businesses like Tom's Gas Station in Golden Meadow, Pats Dress Shop and 

Paul's drive through, both of Chauvin. The Galliano Twist restaurant, Marcel's Supermarket in 

Bayou Blue, and Blackie's in Lockport, These are the places where the workers of the oilfield 

buy their tires, get their groceries, purchase their children's school uniforms, and pick up a 

hamburger or a six-pack on their way home from a long day of work. But there aren't a whole 

lot of extra burgers being sold, or new dresses being bought right now, Everyone in my district 

is feeling the effects of this economic depression that has been wrought upon us, through no 

fault of our own. Every conversation I have with my constituents, whether it is at the coffee 

shop on a Monday, or after church on Sunday, is filled with concern of the impact that this is 

having on their business, or they are worried about how long they will be able to keep their 

jobs. Just this past weekend at my local Rouses market I was stopped 7 times by people telling 

me of the hard times they were facing. Members, this is not a scene unfamiliar to us, as public 

service is the life we have chosen. However, the testimony of those constituents were all nearly 

the same, and yet diversely different. A teacher worried about the progress of her class room 

where three of her kids' parents had lost their jobs. A woman working in a print shop has seen a 

50% downturn of orders over the last 30 days, A man who owns a tool rental company has had 

to layoff two of his ten workers in his shop because they are no longer needed, Everyone of 

their testimonies is because of this moratorium on drilling. 

Over the last half century, the hard working people of south Louisiana have built the energy 

infrastructure that powers this country. The people of the 10th ward in South Lafourche 

practically invented the international work boat business, Oil and gas is the life blood of our 

economy from top to bottom, and that blood has stopped pumping due to nothing more than 

political posturing, 

In the coming weeks, and days, more and more companies will lay off employees. Shops will 

shut their doors for good. Car payments won't be made, Mortgages won't be paid. In 

21 
56 

Terrebonne and Lafourche parishes the welcome sign will once again read, "last one ouL turn 

out the lights." 

Once again, I would like to thank the chairwoman for her leadership and the committees for 

taking up this very important issue, 

Thank you. 

31 
57 

Chair LANDRIEU. Thank you, Senator. 

[Applause.] 

Representative Champagne. 

STATEMENT OF HON. SIMONE B. CHAMPAGNE, LOUISIANA 

HOUSE OF REPRESENTATIVES, DISTRICT 49 

Ms. CHAMPAGNE. Thank you. First of all, I would like to thank 

Senator Landrieu and Senator Vitter for being here today and listening to us. We really appreciate all the hard work that you all 

are doing in our capital to make the rest of the nation understand 

how important Louisiana is in the oil and gas industry. 

I also, and in your package you will receive, I included a survey 

from an independent oil and gas industry people that did a survey 

on the economics and gives you a little more stats than what I will 

provide. 

To start off, I represent District 49, which is Coastal Iberia and 

one-third of Coastal Vermilion Parish. I am very proud of the fact 

that we don’t compete necessarily with Port Fourchon, but we try 

to complement Port Fourchon on our industry. What we have in 

District 49 are two waterports that do topside as well as fabrication, as well as an airport that is home to the Helicopter Training 

Center that utilizes a lot of the oil and gas industry air providers. 

I also am proud that we are the home of the Henry Hub, which 

provides 25 to 30 percent of the electricity throughout the nation. 

This, I believe, is what we need to make Washington understand, 

how much we provide the rest of the nation, what we do for them 

on a daily basis. 

In my testimony, I also have written from Ms. Heidi Martin, who 

owns Prologue, another woman-based industry, and she is located 

on Highway 90 in Iberia Parish. She does rental and lease for offshore oil storage facilities and drilling. She has received 80 to 85 

percent reduction in her sales and lease since the moratorium has 

taken effect. On the bottom of her statement, which I did provide 

for you all, she gave me a wonderful quote. ‘‘Courage is not denying 

a situation, but denying its power over you.’’ Today, my testimony 

is going to be about not denying the power that the moratorium 

has put on the good people of Louisiana. 

I, like Norby, visit those supermarkets on a daily basis. We have 

families. We have to go home and cook their meals and take them 

to the ballpark and everything else that moms and dads and 

grandparents do on a daily basis. So my testimony today will be 

about the small businesses that I visited in the last several months 

about the moratorium. 

First was Prologue, a woman-owned business that is getting 80 

to 85 percent decrease. The others are our mud cleaning businesses. We all talk about how the drilling rig, how they are pumping mud into the Deepwater Horizon. Well, all of that has to be 

cleaned out at some point in time, and that is what drilling does. 

So we have a lot of that industry in District 49 and across the 

coastal parishes. So they are hurting, because if they are not working, if they are not drilling, they are not cleaning. 

I also visited with supply companies. We have very many. Now, 

we look at supply companies sometimes as giving those fittings and 

the piping, which they do, but we also have supply companies that 
58 

will daily ship to our businesses supplies such as groceries, air conditioners, and heating, linen supplies, our galley hands. If they are 

not drilling and we are not producing oil and gas, they are not 

working. So these people are out of work. They run the risk of not 

having a job in the next six to nine months or as long as this will 

last, and for eternity. 

I also visited our uniform companies that have had a decrease 

of about 50 percent in their sales for uniform companies and printing. So all of this, along with I had an interesting conversation on 

Friday with a caterer, and what she said was—another womanowned business that employs about 35 people—she said, people 

think of caterers as being the wedding people or the special planners, which they are. But I know in the district I represent, they 

also go out to our ports. They furnish daily meals for the industry 

that they sell to workers. And all of these specialty items, they can 

no longer furnish because these are some of the things that are 

being cut back in our economy because of this moratorium. They 

also buy from our local restaurants and our local grocery stores. 

So it is not about the trickle-down effect. It is about the trickleup effect, how it is climbing the ladder. And this will reach Washington very shortly. When this and many others don’t work, local 

sales taxes are down. That affects the services that we provide as 

public servants when it comes to our schools and our drainage 

issues that we have along the coastline. 

We need the rest of the nation to understand how hard 

Louisianans work to provide the many products that are derived 

from this industry. We are the energy corridor. We don’t have to 

be dependent on foreign oil. 

As a wife, mother, and sister of oil field employees, I understand 

the hazards of the industry. I also understand the dilemma that 

families face firsthand about the layoffs that they soon will see. My 

husband and I went through the 1980s, the oil bust of the 1980s, 

with two small children to feed. The uncertain future for these 

families will cause great stress amongst them. We have hard working, resilient people in Louisiana. Allow us to continue to provide 

the quality of life our constituents deserve and have worked for for 

years to accomplish. 

Katrina and Rita issued a huge blow to the Louisiana economy. 

Gustav and Ike kicked us in the gut. The oil spill brought us to 

our knees. But this moratorium and the cease of drilling permits 

will sign our death sentence. 

I ask the Administration to please lift the moratorium, not in October or November or September, but today. Let us get back to 

work. Thank you. 

Chair LANDRIEU. Thank you. 

[Applause.] 

Ms. Williams. 

STATEMENT OF HON. ARLANDA WILLIAMS, COUNCIL CHAIRWOMAN, TERREBONNE PARISH CONSOLIDATED GOVERNMENT 

Ms. WILLIAMS. Thank you. Good morning, Senator Landrieu and 

Senator Vitter. Thank you guys for inviting us here. 
59 

I bring you greetings from the good earth, Terrebonne Parish, 

where I currently chair the Parish Council. The French words 

‘‘terra bonne,’’ meaning good earth, good soil, and good land, are 

more than fitting, as the citizens of our parish have supported 

themselves and their families with the blessings of nature, our 

unique geography that creates abundant fisheries, our beautiful 

landscapes, and a warm culture that draws many every year. Our 

parish symbols, the oil rig and the fishing vessel, represent the importance of the oil and gas industry and the seafood industry to the 

economy of our great parish, with approximately 60 percent of our 

workforce directly or indirectly related to the oil field and approximately 20 percent directly or indirectly related to the seafood industry. 

The explosion of the Deepwater Horizon caused devastation to 11 

families who lost fathers, sons, brothers, or friends, something that 

many of us have probably never experienced, a death with no proper closure. Moreover, the events after the explosion have caused 

detriment to thousands along the Gulf Coast, a reality that some 

of us never thought we would be faced with. 

Although we understand the position of safety, a six-month moratorium would destroy parishes and counties along the Gulf Coast 

that rely heavily on oil and gas as a way of revenue. In our case, 

six months is the equivalent of two to four years. When a company 

that installs and dismantles offshore platforms in the Gulf of Mexico ties up a derrick barge, that act ripples through the region and 

States’ economies. It results in employee layoffs, approximately a 

crew and staff of 100 people, and the subsequent reduction of their 

income, the impact on their ability to pay mortgages, household 

bills, tuition, fewer dinners out, shopping trips, and other dollars 

that can be spent in our local economy. 

My parish depends more or less on services related to the oil 

field industry, so when one company reduces its spending with numerous other companies who supply that operation—groceries, 

welding suppliers, pipe, sheet metal, safety supplies, chemicals and 

cleaning fluids, field, truck transportation, water, driving companies, and even the scrapyard that would be used to buy those scrap 

materials—and those suppliers lose their business, when this happens, they lose their ability to spend dollars on those supplies and 

services and can be forced to lay off employees. This is just from 

one derrick barge that services shallow waters, where permits are 

still not really being issued. 

In Terrebonne Parish, all of this reduced disposable income has 

hurt a local restaurant. Big Al’s, known to many when they come 

and visit our parish, is a long-established seafood restaurant that 

had to close one of its locations. The closure was the result of a decrease of income of $15,000 to $20,000 a month for the last 90 days 

and the difficulty in buying seafood to prepare and sell. He was affected by both the loss in seafood and the lack of employees coming 

in because the oil field services always came in and did lunch meetings or dinner meetings with Big Al’s. While this means no purchases are being made from seafood suppliers, neither are purchases being made from suppliers of other ingredients, supplies, or 

utilities. These workers have lost their jobs and no longer have the 

ability to spend money as freely as they previously did. 
60 

The effect of the moratorium will have more of a lasting effect 

than anyone can conceive. With a Master’s in criminal justice, I understand social strain, and this is a theory used in criminal justice 

to describe increased criminal activity and certain offenders. It is 

the inability to live the quality of life you are accustomed to, thus 

resulting in increased criminal activity which happens when that 

father or that mother cannot bring home the food and the money 

that they are used to and their children cannot live the lives that 

they have been accustomed to living. They result in doing things 

that are unseen and unknown to many because they want their 

family to continue to go and live the life that they have lived for 

so many years. 

But the most important thing are our children. The Terrebonne 

Parish School District went into Reduction in Force for the 2010– 

2011 school year, highly related to a $9 million sales tax decrease, 

a drop in child enrollment causing their MFP to decline because of 

migration out of the parish. The school system receives 46.22 percent of sales tax revenue and will begin this school year in need 

of $11.3 million to balance the general fund, and that is before the 

true effects of this moratorium begins. These numbers are expected 

to almost double, and to put a burden on an already financially 

burdened school system. 

The basis for which this country’s future lies is in our children 

and they are now becoming the sacrificial lambs at the end of the 

situation. Because the public school system will have to prepare for 

an increased amount of students that will transfer in from the parochial system, thus causing overcrowded classrooms mixed with 

all types of behavioral problems, yet there will be no increase in 

the sales tax, to increase the teaching staff will be unattainable, 

thus making ‘‘No Child Left Behind’’ to be changed to ‘‘No Generation Left Behind.’’ 

Am I my brother’s keeper? Am I my sister’s keeper? E. pluribus 

unum, out of many, one. It is this fundamental belief, I am my 

brother’s keeper, I am my sister’s keeper, that this country works 

off of. But if you live in a little area called Pointe-Aux-Chenes, a 

community built on the seafood industry, a community rich in faith 

and hope, a community strong enough to weather every catastrophic storm that has touched the Louisiana Gulf Coast, and yet 

not another disaster has taken away the very industry that they 

need to survive, and now many is taking away the only backup 

plan that they ever had. 

I beg upon you to take back these fundamental beliefs to the administration to let them know that we are a people that can stand 

and we can weather anything. But when you take food out of our 

mouths, when you stop educating our children, then we begin to 

fight, and our fight is not one, but it is all standing together. 

I thank you guys for your support and I thank you guys for having this meeting today. 

[The prepared statement of Ms. Williams follows:] 
61 

Senate Hearing 

Arlanda J. Williams, Council Chairperson 

Terrebonne Parish Government 

August 17, 2010 

Written Testimony 

U.S. Senate Committee on Small Business & Entrepreneurship 

"The Deepwater Drilling Moratorium: An Economic Disaster for Louisiana's Small 

Businesses" 

"Good morning, Senator Landrieu I am bid greetings to you and your esteemed committee 

from the "Good Earth" Terrebonne Parish, where I am currently the council chairwoman". 

The French words Terre Bonne meaning the Good Earth is more than fitting as the 

citizens of our parish have supported themselves and their families with the blessings of 

nature; our unique geography that creates abundant fisheries, beautiful landscapes, and a 

warm culture that draws many visitors each year. 

Our parish symbol the oil rig and a fishing vessel represent the importance of the oil and 

gas industry and the seafood industry to the economy of this great parish, with 

approximately 60% of our workforce directly or indirectly related to the oilfield and 

approximately 20% directly or indirectly related to the seafood industry. The explosion of 

the Deepwater Horizon caused devastation to II families who lost fathers, sons, brothers, 

or friends something many of us probably have never experienced a death with no proper 

closure. The events after the explosion caused detriment to thousands along the Gulf 

Coast, a reality some of us never thought we would be faced with. 
62 

Although, I understand and respect the federal government's position on safety, a 6 month 

moratorium would destroy parishes and counties along the Gulf Coast that rely heavily on 

oil and gas as a way of revenue. In our case, 6 months is the equivalent of two to four 

years. When a company that installs and dismantles offshore platforms in the Gulf of 

Mexico ties up a derrick barge, that act ripples through the region and state's economies. 

It results in employee layoffs (approximately a crew of 100 people) and the subsequent 

reduction of their income, impacting their abilities to pay mortgages, household bills, 

tuition, fewer dinners out, shopping trips, and other dollars spent in the local economy. 

My parish depends more or less on services related to the oilfield industry thus when one 

company reduces its spending with numerous other companies who supply that operationgroceries, welding supplies, pipe, sheet metal, safety supplies, chemicals and cleaning 

fluids, fuel, truck transportation, water, driving companies, even the scrap yard that would 

buy the scrapped materials- and as those suppliers lose their business, they lose their 

ability to spend dollars on their supplies and services and can be forced to layoff 

employees. This is just from on derrick barge that services the shallower waters, where 

permits are also not being issued. 

In Terrebonne Parish all of this reduced disposable income has hurt a local restaurateur Al 

Mahler, who owns a long-established seafood restaurant, and had to close one location in 

Houma. The closure was the result of a decrease in income of $15k to $20k a month for 

the last 90 days and the difficulty in buying seafood to prepare and sell. While this means 

no purchases a being made from seafood suppliers, neither are purchases being made from 

suppliers of other ingredients, supplies, utilities, etc. Those workers have lost their jobs 

and no longer have the ability to spend money as freely as they previously did. 
63 

The effect of the moratorium will have for more lasting affects than anyone can even 

conceive. "Social Strain" ,a theory used in Criminal Justice to describe increased criminal 

activity in certain offenders, is the inability to live the quality oflife you are accustomed 

to, thus an increase in criminal activity. The Terrebonne Parish School District went into 

Reduction in Force, for the 2010-2011 school year highly related to a 9 million dollar 

sales tax decrease, a drop in child enrollment causing the MFP to decline to 1.6 million 

dollars because of migration out of the parish. The school system receives 46.22% of sales 

tax revenue and will began the year in need of$ll,346,904 to balance the general fund 

budget, before the effects of the moratorium truly began. These numbers are expected to 

increase as a result of the moratorium and put a burden on already financially burdened 

school system. The basis for which this country's future lies, our children are the 

sacrificial lambs in this whole situation. Many students in the parochial school system will 

transfer into the public school systems due to layoffs in the oil and gas industry and the 

inability for those in the seafood industry to get beyond the negative image the rest of the 

country has for Louisiana seafood, causing overcrowded classrooms mixed with all types 

of behavioral patterns. Yet, there will be no increase in sales tax, so to increase teaching 

staffs will not be attainable, thus making no child behind become a generation left behind. 

Am I my brothers, keeper? Not if you along lower reaches in Terrebonne Parish in a 

community called Pointe-Aux- Chenes a community built on the seafood industry, a 

community rich in faith and hope, a community strong enough to weather every 

catastrophic storm that has touched the Louisiana gulf coast and another disaster has taken 
64 

a way the very industry they need to survive and man is threatening to take away the 

industry they rely upon as a back up? The moratorium's effects will reach from the oldest 

to the youngest and at the end of the day what will it prove? How many moratoriums have 

been put in place since 1947 when the first deepwater rig was placed in the gulf? This is 

this result of human error, and I don't think that one man's greed should cause another 

man to need!!! 

Arlanda 1. Williams 

Terrebonne Parish Council Chair 

National Association of Black County Officials, President 

Louisiana Democratic Party, Secretary 
65 

Chair LANDRIEU. Thank you. 

[Applause.] 

Thank you, Madam President, very much for that moving testimony. 

Mayor Matte. 

STATEMENT OF HON. TIMOTHY MATTE, MAYOR, MORGAN 

CITY, LOUISIANA 

Mr. MATTE. Good morning, Chairwoman Landrieu and Senator 

Vitter. Welcome to South Louisiana and the Cajun Coast. My name 

is Tim Matte and I am presently serving my 14th year as Mayor 

of the City of Morgan City. 

Morgan City is a community located 70 miles south of here at 

the bottom of the Atachafalaya Basin, the largest overflow river 

swamp in the United States. We are very proud of the fact that we 

are the birthplace of the offshore oil and gas exploration business. 

In 1947, Kerr McGee drilled the first successful oil well outside of 

land just south of Morgan City and brought about this vital industry. At the same time, our community was known as the Jumbo 

Shrimp Capitol of the world in recognition of the huge fleet of 

shrimp boats ported out of Morgan City, harvesting the jumbo 

shrimp from the waters of the Central Gulf of Mexico. Today, both 

of these industries are prominent contributors to our local economy, 

although the support of offshore oil and gas exploration and production make up the majority of our economic base. 

The businesses that call our community home include small marine fabricators, shipyards for both new construction and repair, 

diesel repair shops, equipment rental companies providing equipment utilized by drilling companies for all phases of exploration 

and production of oil and gas, vessel operators, food supplying catering companies, and diving contractors and remote operating vehicle manufacturer and operators, as well as companies providing 

support for all of these businesses. 

Our resident companies are primarily small businesses, but we 

also are home to some of the larger names in this vital business, 

such as the fabricator of many of the offshore structures and production facilities, J. Ray McDermott, Transocean, Halliburton, 

Cameron, the manufacturer of sub-sea equipment, such as blowout 

preventers, and Oceaneering International, the manufacturer and 

operator of those ROVs, or underwater robots that we all watch 

working on the plugging of the Deepwater Horizon well. 

We are also home to the companies that developed and constructed the Big Gulp, the barge skimmer that successfully worked 

in removing large quantities of oil from the Gulf, and the sealing 

plug was fabricated here in our parish. We are also home to a variety of small retailers that rely on the employment provided those 

that work offshore and for those service companies. 

I would like to make a few initial comments as an overview of 

our feelings towards the moratorium, offer some examples from my 

community of the impacts we are seeing and anticipate seeing as 

a result of the moratorium, and wrap up with a few comments 

about the need for safety in the industry. 

It is my understanding that there are 33 rigs seeking permits to 

drill in deepwater in the Gulf of Mexico. I also understand that two 
66 

rigs have already left the Gulf for other projects in foreign waters. 

And I understand that up to six rigs have already sent notification 

that they will be leaving the Gulf of Mexico. My view of the moratorium is that it is punitive to small business in Coastal Louisiana. 

I believe that this is not the intention of the effort, but without a 

doubt, that is the result. 

The larger oil companies will not be adversely affected by the 

withholding of drilling permits as they will simply exploit a resource in some other part of the world. The drilling contractors 

may only suffer minimal impacts as they compete on a worldwide 

basis and have opportunities to drill elsewhere. But our small business community primarily serves the Gulf of Mexico activity. The 

movement of these rigs will cause a loss of jobs and economic opportunity for our resident companies as they will not be in a position to follow the activity to foreign areas. In some cases, they 

would even be prohibited from doing so. 

Let me offer a few examples from my community. Morgan City 

is the home of an offshore caterer, a family-owned business that 

has been operating here since the 1960s, serving companies with 

their food and related product needs out of a downtown Morgan 

City location. They employ 70 to 90 people, depending on workload, 

and of the 33 rigs in question, they have contracts with six. When 

operating, those six rigs represent 30 percent of their gross revenue. The loss of these rigs would lead to a reduction of the staff 

by as many as 30 people. Since he would not have the workload, 

he would also have to return a number of trucks that he has presently under lease, and, of course, the fuel purchases and all of the 

other costs associated with that would have to be reduced. 

One of our small fabricators, another example, builds flow line 

jumpers for these offshore wells once the well is drilled and moved 

to development. He has reported that he has had orders postponed 

for nine jumpers from one oil company and from six from another 

company delayed. He expects this to impact his revenues by over 

$1 million. He does market to companies that do work in foreign 

areas. However, he has not been very successful in doing that in 

that he finds that fabrication is one area where some foreign governments have put a requirement of local content in their projects, 

therefore putting him at a competitive disadvantage. 

Each of these 33 drilling rigs will have one to two ROVs for its 

drilling operation. One of our resident companies had committed 29 

ROVs to those 33 drilling rigs. From a company perspective, he 

hopes to continue to serve those rigs if they move. However, they 

will be crewed by employees from those foreign offices that he has. 

That is going to result in the loss of United States employment, 

without a doubt. 

Our area is also the home to a helicopter company which happens to probably have locations in every one of our locations. They 

have contracts with 22 of those 33 rigs. That is going to have an 

impact all across the Gulf Coast. 

These are just a few examples that we have seen thus far with 

the moratorium. This burden is falling on small business, and consequently it is going to fall on a community like mine as we are 

forced to adjust our budget by reducing the number of people we 

have working for us, thus exacerbating this problem. 
67 

St. Mary Parish was in the disaster area for each one of the hurricanes, Katrina, Rita, Gustav, and Ike. We have come through 

some pretty tough times. These tough times, one of the results of 

that is that it causes a depletion of our reserves. We just don’t have 

reserves to fall back on to wait around. We don’t have the luxury 

of waiting out better times when a drilling moratorium might be 

lifted and when these rigs might come back to the Gulf of Mexico. 

In my conversation with some of the business community, I was 

told that the economic downturn and the effect the moratorium has 

had in some cases has been softened by the opportunities derived 

by responding to the spill or providing services to BP and their contractors, and this has had the result of putting some offshore supply vessels and towboats back to work and barges to work. 

I had one crewboat operator tell me that he has had four jobs 

canceled in deepwater, but he has got five boats working on the 

spill. I believe he has already got notification on one, and the notification on those other four are coming shortly. Those boats are 

going to be laid off. So in addition to losing these four from the 

deepwater projects, he is going to have another five vessels sitting 

at his dock, not spending money, not employing people, and so 

forth. Two vessel crews have already been let go. That is 24 people. 

You know, you operate those vessels around the clock. It takes a 

lot of people to operate them. 

Another contractor, another offshore supply vessel operator told 

me that he has fully one-half of his fleet today committed to BP 

and has already received a notification about those contracts. So 

while we have talked about some very bad things that will happen 

as a result of this, I think the worst is yet to come with the moratorium because this BP work will and has to end. 

We all see that this work is now coming to an end, and our parish right now has an unemployment rate of ten percent. That is as 

of June 2010. That is up from 8.7 percent last year. Once again, 

I think that clearly demonstrates that this moratorium is punishing the wrong people. 

A common theme I am hearing from my business community is 

that the new office replacing MMS, namely the Bureau of Ocean 

Energy Management, is contributing to a reduction in economic activity in the Gulf of Mexico causing the de facto moratorium that 

we have referred to. One local businessman referred to the office 

as chaotic in processing a permit request, and delays are resulting 

in the processing of permit requests for activities that have absolutely nothing to do with deepwater drilling activities other than 

the fact that they both occur in the Gulf of Mexico. And I will add 

to that, not only is it shallow water drilling permits, but it is permits for activities in shallow waters that have nothing to do with 

drilling. This is having an impact on many of the service providers 

in our community that have traditionally served shallow water and 

the shelf areas going back to the early days of the Gulf of Mexico. 

And lastly, let me finish up with one point that I would like you 

all to leave here regarding—my comments regarding safety of offshore oil and gas production and exploration. I think the Macondo 

Well incident, most of you would agree that prior to that incident, 

the industry had a pretty good safety record. While there is and 

will be much debate about the cause of this very tragic incident 
68 

and what should be done about it to prevent a future incident, I 

want to offer this observation. 

I think it is very significant that the loudest voices protesting the 

institution of this moratorium is coming from mayors and parish 

presidents and workers and their families from Coastal Louisiana. 

Those are our sons and daughters on those rigs. Those are our 

brothers and sisters on those rigs. None of us take their health and 

safety for granted. We demand a safe workplace. We have proudly 

served our nation by putting ourselves at risk by undertaking this 

important task because it is noble work, it is important work, and 

it is work that this country needs done. 

I think our willingness to continue this work deserves some recognition. Our citizens want to go back to work. And I thank you 

for this opportunity to share these thoughts with you. 

[The prepared statement of Mr. Matte follows:] 
69 

Good morning Chairwoman Landrieu and Committee members. Welcome to 

South Louisiana and the Cajun Coast. My name is Tim Matte and I am presently serving 

my 14th year as Mayor of the City of Morgan City. 

Morgan City is a community located 70 miles south of here at the bottom of the 

Atchafalaya Basin, the largest overflow river swamp in the United States. We are very 

proud of the fact that we are the birthplace of the "offshore" oil and gas exploration 

business. In 1947, Kerr McGee drilled the first successful oil well "out of the sight of 

land" just south of Morgan City and brought about this vital industry. At that same time 

our community was know as" The Jumbo Shrimp Capital of the World" in recognition of 

the huge fleet of shrimp boats ported out of Morgan City, harvesting the Jumbo shrimp 

from the waters of the central Gulf of Mexico. Today both of these industries are 

prominent contributors to our local economy, although the support of offshore oil and gas 

exploration and production make up the majority of our economic base. The businesses 

that call our community home include small marine fabricators, shipyards for both new 

construction and repair, diesel repair shops, equipment rental companies providing 

equipment utilized by drilling companies for all phases of exploration through production 

of oil and gas, vessel operators, food supply and catering companies, and diving 

contractors and remote operating vehicle manufacturer and operators as well as 

companies providing support for these businesses. Our resident companies are primarily 

small businesses but we also are home for some of the larger names in this vital business 

such as the fabricator of many offshore structures and production facilities J. Ray 

McDermott, Transocean, Halliburton, Cameron, the manufacturer of sub sea equipment 

such as blowout preventors, and Oceaneering International, the manufacturer and 

operator of those ROV's or underwater robots that we all watched working on the 

plugging of the Deepwater Horizon well. We also are home to the company that 

developed and constructed the "Big Gulp" barge skimmer that successfully worked in 

removing large quantities of oil from the Gulf and the "sealing plug" was fabricated here 

in our parish. 

We are also home to a variety of small retailers that rely on the employment 

provided those that work offshore or for these service companies. 

I would like to make a few initial comments as an overview of our feelings 

toward the moratorium, offer some examples from my community of the impacts we are 

seeing and anticipate seeing as a result of the moratorium and wrap up with a few 

comments about the need for safety within the industry. 

It is my understanding that there were 33 rigs seeking permits to drill in deep 

water in the Gulf of Mexico. I also understand that 2 rigs have already left the Gulf for 

other projects in foreign waters. I also understand that 6 other rigs have sent notification 

that they will be leaving the Gulf of Mexico for other areas. 

My view ofthe moratorium is that it is punitive to small business in coastal 

Louisiana. I firmly believe that that is not the intention of the effort but that is the result. 
70 

The large oil companies will not be adversely affected by the withholding of the drilling 

permits, as they will simply exploit a resource in some other part of the world. 

The drilling contractors may suffer only minimal impacts since they compete on a 

world wide basis and have opportunities to drill elsewhere. Our small business 

community primarily serves the Gulf of Mexico activity. The movement of these rigs will 

cause the loss of jobs and economic opportunity for our resident companies as they will 

not be in a position to follow the activity to foreign areas. In some cases, they would be 

prohibited from doing so. 

Let me offer a few examples from my community. Morgan City is the home of an 

offshore caterer, a family owned business, that has been operating here since the 1960's 

serving companies with their food and related product needs out of a downtown Morgan 

City location. They employee 70-90 people depending on workload. Of the 33 deepwater 

rigs in question, they have contracts with 6. When operating, these 6 rigs represent up to 

30% of their gross revenue. The loss of these rigs would lead to a reduction of his staffby 

up to 30 people. Since he would not have the work load, he would also have to return a 

number of his trucks that are presently leased and of course the fuel purchases he makes 

for those trucks would cease. 

One of our small fabricators builds flow line jumpers for these offshore wells 

once the well is drilled and moved to development. He has reported that he has had 

orders postponed for 9 jumpers from one oil company and 6 from another company also 

delayed. He expects this to impact his revenues by $lmm. He does market to the 

Companies that do business in foreign areas however, he has not been successful as yet, 

and has found that fabrication is one area where some foreign governments have been 

requiring some local content in those services, therefore putting him at a competitive 

disadvantage. 

Each of these drilling rigs requires one or two ROV's for its drilling operations. 

One of our resident companies had committed 29 ROV's to those 33 drilling rigs. From a 

company perspective, he hopes to continue to serve those rigs if they move, however they 

will be crewed by employees from those foreign areas as they have offices in those other 

areas. This will result in the loss of United States employment. 

Our area is the home to a helicopter company that supplies transportation to 22 of 

these 33 rigs. Due to their multiple locations we will share that loss of business through 

out the Gulf coast. 

These are but a few examples that we have seen thus far with the moratorium. 

This burden is falling on small business and consequently, it will fall on a community 

like mine as we will be forced to adjust our budget by reducing the number of people we 

have working for us thus exasperating the problem. St. Mary Parish has been in the 

disaster area for Hurricanes Katrina, Rita, Gustav and Ike. We've come through some 

tough times. These though times have also caused a depletion of our reserves. We do not 
71 

have the luxury of waiting out for better times when a drilling moratorium might be lifted 

and these rigs might come back into the Gulf of Mexico. 

In my conversation with some of our business community, I was told that the 

economic downturn and the affect of the moratorium has in some cases been softened due 

to opportunities derived by responding to the spill and providing services to BP or their 

contractors. This has put some offshore supply vessels and tow boats and barges to work. 

We all see that that work is now coming to an end. Our Parish now has unemployment of 

10% as of June 2010. This is up from an 8.7% unemployment rate at this time last year. 

Once again I say this moratorium is punishing the wrong people. 

A common theme that I am hearing from my business community is the new 

office replacing the MMS, namely the Bureau of Ocean Energy Management is 

contributing to a reduction in economic activity in the Gulf of Mexico causing a "de 

facto" moratorium. One local businessman referred to the office as "chaotic" in the 

processing of permit requests. Delays are resulting in the processing of permit requests 

for activities that have nothing to do with deepwater drilling activities other than the fact 

that they both occur in the Gulf of Mexico. This too is having an impact on many of the 

service providers in our community as they have traditionally served the shallow water 

and shelf areas going back to the early days of Gulf of Mexico oilfield development. 

One point I would like the Committee members to leave with is a statement 

concerning the safety of offshore oil and gas exploration and production. I think prior to 

the Macondo Well incident; most would agree that the safety record of the industry has 

been pretty good. While there is and will be much debate about the causes of this very 

tragic incident and what should be done to prevent a future incident, I want to offer this 

observation. I think it is very significant that the loudest voices protesting the institution 

ofthe moratorium is coming from Mayors, Parish Presidents, workers and their families 

from coastal Louisiana. Those are our sons and daughters on those rigs; those are our 

brothers and sisters on those rigs. None of us take their health and safety for granted. We 

demand a save workplace. We have proudly served our nation by putting ourselves at risk 

by undertaking this important task because it is noble work, important work, and work 

that our country needs done. I think our willingness to continue this work deserves some 

recognition. Our citizens want to go back to work. 

I thank you for the opportunity to share these thoughts with you. 

Tim Matte, Mayor 

City of Morgan City 
72 

Chair LANDRIEU. Thank you. 

[Applause.] 

Well, ladies and gentlemen, we have had two excellent panels 

this morning and I think the testimony has been some of the best 

that I have heard, either chairing a meeting or participating, in the 

hundreds that I have participated in since becoming a Senator. So 

I really appreciate it. 

I want to submit for the record, following up Scott Angelle’s testimony, the letter from the five experts, the Administration’s own experts, who have testified and advocated against the moratorium. I 

want to make sure that that gets in the record. 

[The information follows:] 
73 

Fax to: Gov. Jindal: 225-342-7099 

Senator Landrieu: 202-224-9735 

Senator Vitter: 202-228-5061 

From: Kenneth E. Arnold, PE, NAE 

3031 Shadowdale 

Houston Texas 77043 

832-212-0160 

cc. Dr. Robert Bea, Department of Civil and Environmental 

Engineering, Univeristy of California at Berkeley 

Dr. Benton Baugh, President, Radoil, Inc. 

Ford Brett, Managing Director, Petroskills 

Dr. Martin Chenevert, Senior Lecturer and Director of 

Drilling Research Program, Department of 

Petroleum and Geophysical Engineering, 

University of Texas 

Dr. Hans Juvkam-Wold, Professor Emeritus, Petroleum 

Engineering, Texas A&M University 

Dr. E.G. (Skip) Ward, Associate Director, Offshore 

Technology Research Center, Texas A&M 

University 

Thomas E. Williams, The Environmentally Friendly 

Drilling Project 

A group of those named in the Secretary of Interior's Report, "INCREASED SAFETY 

MEASURES FOR ENERGY DEVELOPMENT ON THE OUTER CONTINENTAL SHELF" 

dated May 27, 2010 are concerned that our names are connected with the 

moratorium as proposed in the executive summary of that report. There is an 

implication that we have somehow agreed to or "peer reviewed" the main 

recommendation of that report. This is not the case. 

As outlined in the attached document, we believe the report itself is very well 

done and includes some important recommendations which we support. 

However, the scope of the moratorium on drilling which is in the executive 
74 

summary differs in important ways from the recommendation in the draft which 

we reviewed. We believe the report does not justify the moratorium as written 

and that the moratorium as changed will not contribute measurably to increased 

safety and will have immediate and long term economic effects. Indeed an 

argument can be made that the changes made in the wording are 

counterproductive to long term safety. 

The Secretary should be free to recommend whatever he thinks is correct, but he 

should not be free to use our names to justify his political decisions. 
75 

The Primary Recommendation in the May 27, 2010 

report, "INCREASED SAFETY MEASURES FOR 

ENERGY DEVELOPMENT ON THE OUTER 

CONTINENTAL SHELF" Given by Secretary Salazar to 

The President Misrepresents our Position 

The National Academy of Engineering recommended us as contributors 

and reviewers of the recent Department of Interior ''3~ Day Review" of the 

BP Oil Spill. We were chosen because of our extensive petroleum industry 

expertise, and independent perspectives. The report states: 

"The recommendations contained in this report have been peer-reviewed 

by seven experts identified by the National Academy of Engineering. Those 

experts, who volunteered their time and expertise, are identified in 

Appendix 1. The Department also consulted with a wide range of experts 

from government, academia and industry." 

The BP Macondo blowout was a tragedy for eleven families, and an 

environmental disaster of worldwide scale. We believe the blowout was 

caused by a complex and highly improbable chain of human errors coupled 

with several equipment failures and was preventable. The petroleum 

industry will learn from this; it can and will do better. We should not be 

satisfied until there are no deaths and no environmental impacts offshore -

ever. However, we must understand that as with any human endeavor 

there will always be risks. 

We broadly agree with the detailed recommendations in the report and 

compliment the Department of Interior for its efforts. However, we do not 

agree with the six month blanket moratorium on Ifoating drilling. A 

moratorium was added after the final review and was never agreed to by 

the contributors. 

The draft which we reviewed stated: 

"Along with the specific recommendations outlined in the body of the report, 

Secretary Salazar recommends a 6-month moratorium on permits for new 

exploratory wells with a depth of 1,000 feet or greater. This will allow time 

for implementation of the measures outlined in this report, and the 
76 

consideration of information and recommendations from the Presidential 

Commission as well as other investigations into the accident. 

"In addition, Secretary Salazar recommends a temporary pause in all 

current drilling operations for a sufficient length of time to perform additional 

blowout preventer function and pressure testing and well barrier testing for 

the existing 33 permitted exploratory wells currently operating in deepwater 

in the Gulf of Mexico. These immediate testing requirements are described 

in Appendix 1." 

We agree that the report and the history it describes agrees with this 

conclusion. Unfortunately after the review the conclusion was modified to 

read: 

"The Secretary also recommends temporarily halting certain permitting and 

drilling activities. First, the Secretary recommends a six-month moratorium 

on permits for new wells being drilled using floating rigs. The moratorium 

would allow for implementation of the measures proposed in this report and 

for consideration of the findings from ongoing investigations, including the 

bipartisan National Commission on the SP Deepwater Horizon Oil Spill and 

Offshore Drilling. 

"The Secretary further recommends an immediate halt to drilling operations 

on the 33 permitted wells, not including the relief wells currently being 

drilled by SP, that are currently being drilled using floating rigs in the Gulf of 

Mexico. Drilling operations should cease as soon as safely practicable for a 

6-month period." 

We believe the moratorium as defined in the draft report addresses the 

issues evident in this case. We understand the need to undertake the 

limited moratorium and actions described in the draft report to assure the 

public that something tangible is being done. A blanket moratorium is not 

the answer. It will not measurably reduce risk further and it will have a 

lasting impact on the nation's economy which may be greater than that of 

the oil spill. 

The report highlights the safety record of the industry in drilling over 50,000 

wells on the US Outer Continental Shelf of which more than 2000 were in 

over 1000 feet of water and 700 were in greater than 5000 feet of water. 

We have been using subsea blowout preventers since the mid- 1960s. The 
77 

only other major pollution event from offshore drilling was 41 years ago. 

This was from a shallow water platform in Santa Barbara Channel drilled 

with a BOP on the surface of the platform. 

The safety of offshore workers is much better than that of the average 

worker in the US, and the amount of oil spilled is significantly less than that 

of commercial shipping or petroleum tankers. The US offshore industry is 

vital to our energy needs. It provides 30% of our oil production, is the 

second largest source of revenue to the US Government ($6 Billion per 

year), and has a direct employment of 150,000 individuals. The report 

outlines several steps that can be taken immediately to further decrease 

risk as well as other steps that should be studied to determine if they can 

be implemented in a way that would decrease risk even more. 

This tragedy had very specific causes. A blanket moratorium will have the 

indirect effect of harming thousands of workers and further impact state 

and local economies suffering from the spill. We would in effect be 

punishing a large swath of people who were and are acting responsibly and 

are providing a product the nation demands. 

A blanket moratorium does not address the specific causes of this tragedy. 

We do not believe punishing the innocent is the right thing to do. We 

encourage the Secretary of the Interior to overcome emotion with logic and 

to define what he means by a "blanket moratorium" in such a way as to be 

consistent with the body of the report and the interests of the nation. 

The foregoing represents our views as individuals and does not represent 

the views of the National Academy of Engineering or the National Research 

Councilor any of its committees. 

Kenneth E. Arnold, PE, NAE 

Dr. Robert Bea, Department of Civil and Environmental Engineering, 

University of California at Berkeley 

Dr. Benton Baugh, President, Radoil, Inc. 

Ford Brett, Managing Director, Petroskills 
78 

Dr. Martin Chenevert, Senior Lecturer and Director of Drilling Research 

Program, Department of Petroleum and Geophysical Engineering, 

University of Texas 

Dr. Hans Juvkam-Wold, Professor Emeritus, Petroleum Engineering, Texas 

A&M University 

Dr. E.G. (Skip) Ward, Associate Director, Offshore Technology Research 

Center, Texas A&M University 

Thomas E. Williams, The Environmentally Friendly Drilling Project 
79 

Chair LANDRIEU. I also want to submit for you, Representative 

Champagne, the document, the survey of small businesses that you 

referred to in the record. 

[The information follows:] 
80 
81 

Table of Contents 

Executive Summary 

I. Introduction 

II. Background on U.S. Offshore Oil Production 

A. The Gulf Oil Spill 

B. The White House Moratorium on Offshore Drilling and Exploration 

III. Offshore Oil Production Stimulates Diverse Onshore Economies 

IV. The RIMS II Model Can Be Used to Measure the Economic Impact 

of the Moratorium 

V. Present Offshore Oil and Gas Reserve Estimates 

VI. Decreased Investments in Offshore Oil and Gas Production Will Cause 

Substantial Losses in Wages and, Employment, and Will Have Profound 

Effects on Communities Throughout the Gulf 

A. The Six-Month Moratorium on Offshore Drilling Activity Will 

Cost More than $2.7 Billion in Economic Activity Nationwide, 

and $2.1 Billion in Gulf communities 

B. The Six-Month Moratorium on Offshore Drilling Could Cost 

Thousands of Jobs 

1. BEA Multiplier Analysis 

2. Evaluation of the Types of Employment Loss 

C. The Six-Month Moratorium on Offshore Drilling Will Cause MaSSive 

Wage Loss for Workers Already Hit by Recession 

D. The Moratorium Will Cause the Loss of Millions of Dollars 

in Taxes and other Public Revenues to local, State, and 

Federal Governments 

E. Communities Nationwide Will Suffer from Decreased Health, 

Education, Welfare, and Social Services 

F. The Current Analysis is a Conservative Estimate of Loss 

G. Worst Case Scenario Analysis 

VII. Summary and Conclusions 

Appendix A 
82 

1 I Cost of Moratorium Report 

Halting all offshore deepwater drilling in response to a likely 

low-probability event serves neither to address the root causes of 

the accident, nor to aid in the economic rehabilitation of the Gulf 

region. Indeed, a moratorium on offshore drilling would result in 

billions in additional lost economic in the Gulf. " 

Executive Summary 

from 

to 

be broad 

cmImICI,,,al production, Halting all offshore 

serves neither to address the root causes of the nor to in 

Indeed, a moratorium on offshore drilling would result in billions of dollars 

in ilie Gulf, 

u""""",,,"> the resultant economic elfects if either moratorimn is 

Economic Analysis's RiMS II "inpul:-OlltPIJt" 

production stoppage, Table I smmnarizes the 

will have grave economic consequences the Gulf and the nation, 
83 

I. INTRODUCTION 

The recent Deepwater Horizon oil rig disaster 

and President Obama's subsequent Offshore 

Deepwater Drilling Moratorium ("moratorium"), 

originally issued on May 30th, have fanned the 

flames of the already heated debate over the 

extent to which drilling for oil and natural gas 

off U.S. coasts should be permitted. Until recently, 

the U.S. government has withdrawn leases from 

areas between 3 and 200 miles off the coasts of 20 

states for the extraction of oil and natural gas.' 

Even prior to the April 20th, 2010 explosion on 

Transocean's Deepwater Horizon rig, which was 

leased to British Petroleum (BP), policymakers 

argued that the federal moratoria should be 

renewed. In an effort to respond to the explosion 

and subsequent oil spill, President Obama issued 

Cost of Moratorium Report I 2 

any new deepwater wells; and puts oil and gas 

lessees and operators on notice that, with certain 

exceptions, MMS will not consider for six months 

drilling permits for deepwater wells and for related 

activities. For the purposes of the Moratorium NTL, 

"deepwater" means depths greater than 500 feet... 

Activities necessary to support existing deepwater 

production may continue, but operators must obtain 

approval ofthose activities from the Department of 

the Interior.' 

The moratorium banned deepwater drilling activity, 

but allowed existing production to continue.' 

Critics claim that this policy is unjustified, arbitrary, 

a moratorium on exploratory deepwater rigs. The 

President acknowledged that the moratorium would 

create problems "for the people who work on [offshore] 

rigs, but for the sake of their safety, and for the sake 

and capricious given the economic hann it will inflict 

upon communities dependent upon offshore drilling for 

jobs and revenue.' Accordingly, a federal judge in New 

Orleans blocked enforcement of the moratorium, writing 

that "[t]he blanket moratorium, with no parameters, 

seems to assume that because one rig failed and although 

no one yet fully knows why, all companies and rigs 

drilling new wells over 500 feet also universally present 

an imminent danger,''' justifYing the taking of economic 

value from private sector jobs and fums. Although the 

Obama administration has already filed an appeal with a 

higher court, the judge's decision demonstrates the need 

to consider how the moratorium on offshore drilling will 

affect the economies of the Gulf states (Louisiana, 

of the entire region, [the government needs] to know 

the facts before [they] allow deepwater drilling to 

continue."s These restrictions, however, are causing 

significant hardship and economic loss to communities 

already dealing with a historic recession. 

The White House issued the moratorium on May 30th, 

2010, stating the need to investigate the causes of the 

spill and to determine if future spills were possible. 

The moratorium states: 

The Moratorium Notice to Lessees and Operators 

(Moratorium NTL) issued today directs oil and 

gas lessees and operators to cease drilling new 

deepwater wells, including wellbore sidetrack 

and bypass activities; prohibits the spudding of 

~~ Even prior to the April 20th, 2010 

explosion on Transocean's Deepwater 

Horizon rig, which was leased to 

British Petroleum (BP), policymakers 

argued that the federal moratoria 

should be renewed." 

~u.s. Department of the Interior, Minerals Management Service, Report to Congress: Comprehensive Inventory of U.S, OCS Oil and Natural Gas Reserves, 

Feb. 2006 {hereinafter MMS Report to Congress], at xii (''Part or all afnine OCS planning areas, which include waters off20 coastal states, have been 

subject to longstanding Jeasing moratoria enacted annually as part of the Interior and related agencies appropriations legislation, or are withdrawn from 

leasing until June 30, 2012, as the result of presidential withdrawal (under section 12 ofllie OCSLA). Some of these areas contain large amounts of technically 

recoverable oil and natural gas resources."). See also id. at 3 ("The Federal OCS generally extends from 3 to 200 miles offshore and covers an area of about 

1.76 billion acres.'). 

5 President Bamek Ohama. Remarks by the President to the Nation on the BP Oil Spill. The White House, Iun. 15,2010, (transcript available at 

http://www.whitehouse.gov/the-press-office.!remarlcs-president-nation-bp-oil-spill). 

'Press Release, U.S. Department of the Interior, Interior Issues Directive to Guide Safe, Six-Month Moratoriwn on Deepwater Drilling (May 30, 2010) 

(available at http://www.doLgov/newsipressreleasesllnterior-Issues-Ditecuve--tQ...Guide-&fe.Six-Month-Moratorium-on-Deepwater-Drilling.cfm). 

1 While the moratorium is a de jure stoppage in deepwater, the lack of precise safety regimes going forward has resulted in a de facto stoppage of all drilling. 

'Matt Stephens, Offshore drilling moratorium hurting local companies. The Courier,lui. 13,2010 (available at http://www.hcnanline.comlarticlesl2010l07/13/ 

conroe courier/newslmoratorium071410.txt). 'Laurel Brubaker Calkins & Margret Cronin Fisk, Deepwater Drilling Ban Lifted by New Orleans Federal Judge, Bloomberg,lun 23, 2010 [hereinafter Deepwater 

Ban Lifted by Judge J (available at hnp:/lwww.bloomborg.cominewsl2010-06-22lu-s-deepwater-oiI-driliing-ban-lifted-today-by-new-orieans-fedenll-judge.html). 
84 

3 I Cost of Moratorium Report 

~~ A significant halt to oil and natural gas exploration and drilling would 

not just affect upstream and downstream industries, but could also 

impact state and local governments, as well as small retail stores, 

education services, healthcare assistance, and a host of other industries. 

Texas, Florida, Alabama, and Mississippi), as well 

as the nation as a whole. Despite these legitimate 

concerns, the Obama administration issned a new 

moratorium on July 12th, 20 I 0 - which in fact 

expands on the original moratorium to include 

all floating facilities." 

In this stody, I estimate the total economic harm 

associated with the White House moratorium on 

deepwater drilling." I use data from the U.S. 

Department of the Interior, Department of Energy, 

Census Bnreau, and the Treasury Department to 

estimate the total decrease in output, employment, 

wages, and public revenues to the Gulf states and the 

nation as a whole. Additionally, I use figures presented 

by Louisiana Mid Continent Oil and Gas Association 

and estimated by Wood Mackenzie Research and 

Consulting to get industry estimates for the effects 

of the moratorium. 

My estimates suggest that the moratorium would 

produce broad economic losses within the Gulf region 

and throughout the nation as a whole. Given the 

integrated nature of the U.S. economy, a negative effect 

in one industry is likely to be felt throughout the country. 

A significant halt to oil and natural gas exploration 

and drilling would not just affect upstream and 

downstream industries, but could also impact state 

aud local governments, as well as small retail stores, 

education services, healthcare assistance, and a host 

of otber industries. 

~~ The effective six-month 

moratorium on offshore oil and 

natural gas production will result 

in the loss of approximately $2.1 

billion in output, 8,169 jobs, over 

$487 million in wages, and nearly 

$98 million in forfeited state tax 

revenues in the Gulf states alone. " 

The effective six-month moratorium on offshore oil 

and natural gas production will result in the loss of 

approximately $2.1 billion in output, 8,169 jobs, over 

$487 million in wages, and nearly $98 million in 

forfeited state tax revenues in the Gulf states alone. 

Additionally, althougb a significant portion of oil and 

natural gas production is localized in the Gulf, the U.S. 

is a fully integrated economy, so there is an expectation 

that the loss will "spill-over" Into other states. From 

this spillover effect, there could be an additional loss 

of$0.6 billion in output, 3,877 jobs, and $219 million 

in potential wages nationwide. Moreover, the federal 

government stands to lose $219 million in tax revenue. 

These losses are dramatic in both the context of local 

economies in which the oil Industry operates, and on 

a national scale. 

The remaining sections of this study outline the 

specifics of the moratorium regnlations, and provide 

the methodology for assessing the economic cost of the 

suspension of deepwater drilling. Section II provides 

some background on U.S. offshore oil and natural 

gas drilling, the Deepwater Horizon explosion, and 

the White House moratoriums. Section III describes 

the significance of offsbore oil production activities 

to onshore economies. Section IV outlines the model 

this paper uses to predict the economic impacts of a 

moratorium on drilling. Section V provides estimates 

for oil and natural gas production in the Gulf of Mexico 

and the U.S. Section VI estimates the economic impact 

of the moratorium in the U.s. on both a regional 

and national level. Finally, Section VII discusses 

conclusions from this work, most importantly that the 

implementation of the deepwater drilling moratorium 

would be catastrophic to Gulf and national economies. 

II. BACKGROUND ON 

U.S. OFFSHORE 

OIL PRODUCTION 

Drilling for oil and natural gas off U.S. coasts has 

occurred since the late 19th century, beginning in 

California and eventually spreading to the Gulf of 

to-press Release, U.S. Department of the Interior, Interior Issues New Suspensions to Guide Safe Pause on Deepwater Drilling, Jul. 12, 2010. 

II My analysis considers the moratorium to be in effect since May 30th, 2010, the date of the first moratorium. I do not consider the expanded 

scope of the new momtorium. which includes all floating facilities. Thus, my results in this respect may be conse1Vative. 
85 

~~ By the mid-20th, oil was 

surpassed only by income taxes 

as the largest generator of 

revenue for the u.s. government." 

Mexico and Atlantic coasts.l2 This expansion was 

spurred largely by the advent of the internal combustion 

engine and accompanying increase in demand for 

gasoline, improvements in technology, the development 

of modem seismology, and profitability of offshore 

drilling to local economies." By the mid-20th, oil was 

surpassed only by income taxes as the largest generator 

of revenue for the U.S. government." Growth of the 

industry was slowed, however, as the government 

imposed a legislative moratorium on new drilling on 

the Outer Continental Shelf (OCS) in 1981." President 

George H.W. Bush signed an executive ban reinforcing 

this congressional moratorium in 1990." 

A rew years ago, government policies towards offshore 

drilling once again changed direction. As gas prices 

skyrocketed, the government faced strong pressures 

to find solutions that would offer relief" In 2008, the 

same year that the congressional moratorium was set 

to expire, President George W. Bush terminated the 

executive ban previously in place. IS Then~ on March 

31st, 2010, President Obarna proposed the opening 

of new stretches of water along the Atlantic, Gulf 

of Mexico, and Alaskan coasts to oil and gas drilling." 

As expected, the proposal drew significant criticism 

from environmental groupS.20 

Cost of Moratorium Report I 4 

Less than a month after President Obama unveiled his 

proposal, the debate was renewed by an explosion on 

the Deepwater Horizon oil rig 40 miles off the coast of 

Louisiana. The rig, a joint venture between Transocean 

and BP, sank into the Gulf of Mexico following the 

April 20th explosion at the facility. Since that time, the 

well that had been attached to the rig has continued 

to spill oil into the Gulf of Mexico. Though BP has 

attempted to stop the spill using a variety of methods, 

the company has thus far been unable to seal the leak 

or substantially contain the damage. While precise 

damage from the spill cannot be accurately estimated in 

the short term, news sources and investigators estimate 

that somewhere between 1,000 and 100,000 barrels of 

oil are leaked per day.2I 

On April 30th, 2010, in a dramatic response to the 

unprecedented disaster, n President Obama imposed a 

stay on deepwater drilling until the exact cause of the 

explosion could be determined." Although there 

has been much speCUlation about the source of the 

explosion and the failures to stop the spill, many 

analysts have opined that the proximate causes of the 

Deepwater Horizon disaster were "gross negligence 

or willful misconduct.''24 One Washington Post writer 

noted that "[nJot only did BP take shortcuts during the 

drilling of the well and ignore warning signs in the final 

few weeks before it blew, but it has repeatedly botched 

the cleanup effort and engaged in ham-handed tactics 

to keep the media in the dark."" Nonetheless, one 

month later, the secretary of the Interior announced a 

moratorium on all exploratory offshore drilling. 

IlNationaJ Ocean Industries Association (NOJA) (available at http;/Iwww,lloia.orglwebsikiarticle.asp?id=123); Rick 1ervis, 

William M. Welch and Richard Wolf, Worth the risk? Debate on offshore drilling heats up, USA Today.Jul. 14, 2008 

(available at http://www.usatoday.comlmoney/industrieslenergyl2008.07~13-ofiShore-drillinILN.htm). 

IlJd. 

14National Ocean Industries Association (NOlA). 

UOuter Continental Shelf(OCS): Supplies, Bans, and Natural Seeps,Institute for Energy Research (IBR). 

(available at http://www.instituteforenergyresearch.orglcleaning~up-the..environment-one-more-reason~kHievelop'''the-outer..continental shelt1); 

Offshore Drilling and Exploration, The New York Times. (discussion available at 

h«p:/lt1Jpics.nytimes.comltoplreference/timestopicslsubjects/oIotfshore_dri1linLLarutcxplorationrmdex,html?scp=1..spot&sq=offshore%20dri1ling&sFcse) 

[hereinafter Offshore Drilling and Exploration.]. [Some sources put the exact date in 1982.] 161d. 

17 Offshore Drilling and Exploration, supra. 

I. Outer Continental Shelf (OeS): Supplies. Bans, and Natural Seeps. Institute for Energy Research (IER). 

J9 John M. Broder, Obama to Open OffihoreAreas to Oil Drilling for First Tune, The New York nmes, Mat. 30,2010 

(available at http1/www.nytimes.coml2010103131Isciencelearthl3lenergy.hlml). 

~Offshore Drilling and Exploration, supra. 

1-1 Deborah Zabarenko, Hustle and flow: how much oil is really gushing? Reuters. Jun. 25, 2010, 

(.vail.ble at http1Iwww.reuters.comiarticlelidUSTRE6503C720100625). 

11 In 1969. an offshore plationn explosion off the coast of Santa Barbara occurred Approximately three million gallons of crode oil spilled from the cracks 

in the channel floor, The explosion was caused by a crack at the bottom of the Santa Barbara Channel. Darren Hardy, 1969 Santa Barbara Oil Spill 

http1!www2.bren.ucsb.edu!-dhardyII969_Santa_Batbara_OiLSpilVHome.hlml. 

uTuneline: Gulf of Mexico oil spill, Reuters~ Jun. 28, 2010 

(.vailabl.athttp://www.reuters.comiarticlelidUS1RE65R42W2010062871oomia_O-O:sO:.49:g43:rl:cO.I97842:b352660S2:z). 

:4 Edward Tan and John E. Moms, The Drill: Et TU, Anadarko? Wall Street Journal. Jun. 24 2010 

(available at http://online.wsj.comfarticleIBT-Co.20100622.703614.html?mod=WSJJatestheadlines). 

lSBrendan Borrell, Which oil companies are more ceo-friendly than the rest, The Washington Post, Joo. 29. 2010 

(available at ht1p1/www.washingto","SLcomlwp.<Jynlconte nVarticle!2010l06l281AR201 0062803812.hlml). 
86 

5 I Cost of Moratorium Report 

~ ~ Some findings implicate the 'use of a less robust well design, failure to 

anchor the well's casing using a process recommended under industry 

practices and cutting short p'(ocedures to ensure cementing was sound.' 

A. The Gulf Oil Spill 

The spill began on April 20th, 2010 with an explosion 

on Transocean's Deepwater Horizon oil drilling rig. 

The explosion is reported to have been the culmination 

of poor communication, planning, and management 

by Transocean's leasing partner, BP. Transocean 

was "under contract with [BP] to drill an exploratory 

well."" In preparation for converting the well from 

exploration to commercial production, BP and 

Transocean were planning to temporarily close the 

well. On the day of the explosion, BP's site manager 

and the Transocean team met to discuss the future of 

the rig but did not disclose the precise details of their 

decision." Halliburton was contracted to perform some 

repairs necessary for the reopening of the well, and 

had completed cementing "of casings in the well less 

than 24 hours prior to the accident. "" Two days after 

the explosion, BP sent two remotely operated vehicles 

(ROVS) to investigate the damage and determined that 

there were two oil leaks at approximately 5,000 feet 

below sea level. 

Over the past three months, BP and the U.S. 

government have worked on mechanisms to stop the 

. well from dumping oil into the Gulf. Additionally, 

lawmakers have been attempting to decipher how such 

a disaster was permitted to occur." Some findings 

implicate the "use of a less robust well desigo, 

failure to anchor the well's casing using a process 

recommended under industry practices and cutting 

short procedures to ensure cementing was sound."" 

By all accounts, the decision to use Halliburton's 

cementing method and create shortcuts in preparing the 

well for production was not in compliance with best 

practices. In preparation for the cementing, Halliburton 

even indicated that the well may have gas-flow issues." 

Although investigations are still pending, by some 

accounts, BP appears to have chosen a riskier option 

for the design of the well to reduce costs, thereby 

putting the well in a precarious position even before the 

explosion." 

B. The White House Moratorium on 

Offshore Drilling and Exploration 

The federal government's response to the Deepwater 

Horizon incident has been to hlock exploratory 

drilling in the region. However, the all-encompassing 

moratorium seems misguided given the primary 

allegations of disregard for best practices on the part 

of the involved parties as the proximate cause of the 

disaster. Instead, the overly-broad and unwarranted 

moratorium needleSSly imposes economic costs on an 

already distressed region and a nation in recession. 

Despite the prevailing public perception that the fault 

for the spill was attributable solely to negligent conduct 

by a small number of firms, tbe Obama administration 

ultimately imposed a six-month moratorium on all 

deepwater drilling projects," citing the need to better 

understand what caused the accident before other 

endeavors can be considered safe." The moratorium 

leaves already-producing rigs unaffected but would 

freeze 33 exploratory drilling projects and suspend the 

U Alton Parrish, TimeHne of Events in BF Oil Spill: Day by Day. April 20 to May 26, Before It's News, May 27, 2010 

(available at http://beforeitsnews.comlnewslS0!386!Timeline_oCEventsJn_BP _ Oil_SpiU:_Day_by_Day._April_20 _to_May _26.html) 

[hereinafter Parrish (May 27, 2010). 

11 BP. Transocean argues well plans before rig blast. CNN, May 26, 2010, 

(available at http;//www.cnn.coml2010IUS/051261oilspill.investigationl.mdex.html). 

"Parrish (May 27,2010), sup ... 

29"The more I learn about this accident, the more concerned I become. This catastrophe appears to have been caused by a calamitous series of 

equipment and operational failures. If the largest oil and oil services companies in the world had been more careful, 11 lives might have been 

saved and our coastlines protected." See Hearing on 'Inquiry into the Deepwater Horizon Gulf Coast Oil Spill' Before the Subcomm. 

On Oversight and Investigations Comm. on Energy and Commerce, tIlth Congo (May 12, 2010) (opening statement by Rep. Waxman, 

Chainnan, Comm. on Energy and Commerce). 

"JeffPIungis. BP Raised Risks at 'Nightmare' Well, Lawmakers Say (Update I), Bloomberg-BusinessWeek, Jun. 15,2010, 

(available at http://www.businessweek.comJnews/2010-06~151bp~raised.risk$ooat.nightmare~wen-lawmakers-say.updatel-.btml). 

llId. 

II Matthew Daly and Ray Henry, Documents: BP cut corners in days before blowout, Assodated Press. Jun. 14, 2010 

(available at http://news.yahoo.comlslap120100614/ap_on_biJclus-BUltoiLspill). 

II Secretary of the Interior Ken Salazar recommended "a six-month moratorium on pennits for new wens being drilled using floating rigs. The 

moratoriwn would allow for implementation of the measures proposed in this report and for consideration of the findings from ong-omg investigations, 

including the bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. The Secretary further recommends 

an immediate halt to drilling operations on the 33 pennitted wells, not including the relief wells currently being drilled by BP. that are currently 

being drilled using floating rigs in the Gulf of Mexico." (lncreased Safety Measures for Energy Development on the Outer Continental Shelf, 

Department of the Interior. 3). 
87 

issuance of new permits. leaving time for 

investigations to be completed." Secretary of the 

Interior Ken Salazar explained: 

The six-month moratorium on deepwater drilling 

will provide time to implement new safety 

requirements and to allow the Presidential 

Commission to complete its work. Deepwater 

production from the Gulf of Mexico will continue 

subject to close oversight and safety requirements, 

but deepwater drilling operations must safely come 

to a halt. With the BP oil spill still growing in the 

Gulf, and investigations and reviews still underway, 

a six-month pause in drilling is needed, appropriate, 

and prudent." 

A federal judge in New Orleans blocked the 

enforcement of this initial moratorium on June 22nd, 

2010, citing a lack of basis for the regulation." 

In response, the Obama administration issued a new 

moratorium on July 12th, 2010." When asked about 

the differences between the two moratoriums, the 

Department ofInterior stated, 

Like the deepwater drilling moratorium lifted by the 

district court on June 22nd, the deep-water drilling 

suspensions ordered today apply to most deep-water 

drilling activities and could last through November 

30th. The suspensions ordered today, however, are 

the product of a new decision by the secretary and 

new evidence regarding safety concerns, blowout 

containment shortcomings within the induslty, and 

spill response capabilities that are strained by the 

BPoil spill." 

The effective result of the reissued moratorium is that 

the original moratorium is renewed, so there is still a 

six-month moratorium. There were, however, several 

new provisions which include: I) the moratorium is 

not based on drilling depth, but rather on the basis 

of drilling configurations and technologies; and 2) 

the new moratorium includes all floating facilities .... 

Regardless, the effective result is that there is 

currently an ongoing six-month moratorium 

on deepwater drilling. 

Cost of Moratorium Report I 6 

tt The effective result of the 

reissued moratorium is that 

the original moratorium is 

renewed, so there is still a 

six-month moratorium." 

Unfortunately, the moratorium is not 

economically viable for the Gulf region and it imposes 

significant economic harm upon the rest of the U.S. 

Sections IV and V, therefore, discuss in detail the 

economic implications of this decision. 

III. OFFSHORE OIL 

PRODUCTION 

STIMULATES DIVERSE 

ONSHORE ECONOMIES 

Offshore oil production benefits federal, state, and 

local onshore economies. Broadly speaking, there 

are three "phases" of development that contribute to 

state economic growth: (I) the initial exploration and 

development of offshore facilities; (2) the extraction 

of oil reserves; and (3) the refining of crude oil into 

finished petroleum products. Businesses that support 

those phases are prevalent in the sections of the Gulf of 

Mexico that are currently open to offshore drilling. 

With regard to the exploration and development 

stage, the U.S. shipbuilding induslty, for example, 

has a strong presence in the Gulf region and benefits 

significantly from initial offshore oil exploration 

efforts." This early phase requires specialized 

exploration and drilling vessels, floating drilling rigs, 

and miles and miles of steel pipe, as well as highlyeducated and specialized labor to staff the efforts; thus, 

the jobs and businesses involved in the production of 

these inputs are supported by offshore drilling. 

"Charlie Savage, Drilling Ban Blocked; US Will Issue New Order, The New York 11m .. (available at http://www.nytimes.coml2010l06123Ius123drill. 

html?scp=1&sq=offshore%20drilling'%20moratoriwn&si'=CSe). 

l~Id. 

lfPress Relca5(lJ U.S. Department of the Interior, Interior Issues Directive to Guide Safe, Six-Month Moratorium on Deepwater Drilling. May 3D, 2010, 

(available at http://www.doLgov/ncwslp~relea.sesllnterior-Issues-Directive-fo..Guide-Safe.gix-Month-Moratorium-on-Deepwa1cr-DriUing.cfm). 

3?Deepwater Ban Lifted by Judge, supra. 

"Press Release, U.S. Department of the Interior, Interior Issues New Suspensions to Guide Safe Pause on Deepwater Drilling, Jut 12, 2010. 

19Greenspa.ce, Gulf Oil Spill: New Moratorium Explained, LA Times BIOS Jul. J2, 2010 (available at http://latimcsblogs,latimes.com! 

gm:nspaceI2010l07/guif-oil-spill-new-moratorium-cxpJained.html). 

* Press Re1ease. U.S. Department of the Interior, Interior Issues New Suspensions to Guide Safe Pause on Deepwater Drilling, Jul. 12,2010. 

~l U.S. Department of Commerce, Bureau of Export Administration,. U.S. Shipbuilding and Repair, National Security Assessment (003-009-007194), 

at 9 ("In some niches, however, the United States currently has a significant world market share based mostly on domestic sales. These niches include 

offshore oil platfonns. yachlS, fast patrol boats, and recreational vessels," a preponderance of which are produced in the Gulf Coast region). 
88 

7 I Cost of Moratorium Report 

Along with production, onshore personnel work 

on the oil extraction phase as well. A recent report 

prepared for the U.S. Department of Energy indicates 

that Louisiana's economy is "highly dependent on a 

wide variety of industries that depend on offshore oil 

and gas production,"" and that offshore production 

supports onshore production in the chemicals, platform 

fabrication, drilling services, transportation, and gas 

processing industries." Fleets of helicopters and 

U.S.-built vessels also supply offshore facilities 

with a wide range of industrial and consumer goods, 

from industrial spare parts to groceries. 

The economic benefits produced by the refining phase 

are even more widespread than the effects of the 

two preceding phases. Although capacity is largely 

concentrated in California, Illinois, New Jersey, 

Louisiana, Pennsylvania, Texas, and Washington, 

additional U.S. refining capacity exists throughout the 

country." As a result, refinery jobs, wages, and tax 

revenues are more likely to "spill-overH into other areas 

of the country, including non-coastal states like Illinois. 

The economic benefits to coastal and state communities 

from offshore drilling are substantial. The Associated 

Press reports that offshore workers from Louisiana, for 

example, "frequently earn $50,000 a year or more."" 

One in three jobs in coastal Luuisiana "is related to 

the oil and natural gas industry [and] many of the 

workers earn between $40,000 and SIOO,OOO a year.'''' 

Louisiana alone could lose up to 10,000 jobs in only 

a few months." The state of Louisiana estimates that 

oil and gas production, primarily from the Gulf, 

supports $12.7 billion in household eamings, 

"representing 15.4 percent of total Louisiana 

household earnings in 2005."" 

The moratorium would put a halt to training new 

workers and cut jobs for workers already employed 

within the offshore industry. Additionally, offshore 

workers that lose their jobs due to the moratorium 

would receive only a fraction of their wages in 

unemployment benefits. This will directly affect local 

businesses, many of which were already weakened by 

Hntricane Katrina in 2005 and Hurricane Gustav in 

2008. Some companies in Louisiana, for example, are 

already worried that after taking on "heavy debts after 

Hurricane Katrina [they] may not [be] able to take on 

additional loans."" 

In response, President Obama asserted that the Small 

Business Administration "has stepped in to help 

businesses by approving loans [and] allowing many to 

defer existing loan payments."" This demonstrates a 

key understanding by the current administration that 

small businesses in the Gulf will be hit significantly by 

the moratorium. Additionally, it is unclear how much 

the approval and deferment of loans will mitigate the 

substantial losses taken by small businesses in the Gulf. 

Indeed, a far simpler solution would be to withdraw the 

moratorium and allow businesses to operate normally. 

Wood Mackenzie Research and Consulting's findings 

about the impact of a six-month moratorium illustrate 

the extent to which the offshore industry contributes to 

local and state economies in the nation. Their research 

shows that as many as 1,400 workers would be left 

without jobs, and as many as 46,200 jobs, both on-and 

offshore, would go idle if the 33 drilling platforms were 

shut down." The report goes on to say that as many as 

120,000 jobs could be lost by 2014. Louisiana would 

lose 3,000 to 6,000 jobs alone in "the first two to three 

weeks and potentially more than 20,000 Louisiana jobs 

within the next twelve to eight months."" 

~l Advanced Resources International, Ine .• Basin Oriented Strategies for C02 Enhanced Oil R~very: Offshore Louisiana, Prepared for the U.S. 

Department of Energy. Mar. 2005, at EX-I. 

.3Id. ("For example. Louisiana is the third largest consumer ofnatural gas in the U.S .• and a large number of chemical industry jobs in Louisiana are 

highly dependent on the continued availability of adequate volumes of moderately priced natural gas. Moreover. offshore oil and gas production 

operations support a vast spectrum of other activities in the state, including platfonn fubrication, drilling and related services. offshore transport 

and helicopter operations. and gas processing.',). 

~SeeTabl.AI intheAppendix,infra. 

"Cain Burdeau. Rig workers job hunt after drill ban, Associated Press for MSNBC, JWle 18,2010, 

(available at http://www.msnlx:.msn.comlidl37762247/ns1business-us_busineW). 

46 Stephen C. Fehr, Gulf st.ates fear long-term fiscal effects of oil disaster. Stateline, Jun. 24. 2010 

(available at http://www,stateline,org!liveidetailsistory'lcontentId=493859); Press Release, lust The Facts: Drilling Moratorium's Impact on 

Louisiana's Families and Economy, Government of Louisiana, Jun. ]4.20]0 

(available at http://emergency.Ioui,iana.govlReleaseslO61420JO-rnoratorium.blmI) [hereinafter Just the Facts). 47The projected employment loss forecasted by my analysis is lower that the estimates presented in this section. The likely reason for this is that my 

assessment:is. conservative. For instance, I assume the period ofloss from the moratorium is only six months, while the Louisiana Department of 

Economic Development assumes that the period of less will be 12 to 18 months. Section VI, subsection F outlines some of the ways in which my 

analysis may create a lower bound for loss. 

41 Just the Facts, supra. 

49 Louisiana's c<;onomic hurt wm drilling moratorium warrants action: An editorial. The limes-Picayune, Jun. 8,2010 

(available at httpJIwww.nola.comlnewslgulf-oil-spilV.mdex.ssf72010/06llouisianas_cconomic_hurt_from.html). 

sOPresident Bamek Obama, Remarks by the President After Briefing on BP Oil Spill, The White House, May 28, 2010, 

(tran<lcript available at http://www.whitebousc.gov/the--prcss-officelrcmarks-president-after-briefing~bp--oil~spill). 
89 

In addition to onshore businesses, smaller oil 

companies that stimulate the economy of the region 

will be crippled by the moratorium, Offshore drilling 

has helped develop the oil industry around the country 

by encouraging smaller companies to compete for 

business with larger players, The Wall Street Journal 

reports that the oil industry in the Gulf of Mexico 

was largely developed by relatively small oil and gas 

companies," In the early 1990s "relatively small 

players like Kerr-McGee, Ocean Energy and Unocal 

were acquiring acreage in deep water; their finds helped 

prove the Gulf's worth to bigger brethren like Chevron, 

Devon Energy Corp, and Anadarko Petroleum Corp" 

which later bought these companies at a premium,"" 

New generations of companies have started exploratory 

offshore businesses in the Gulf. Cobalt International 

Energy, for example, is already experiencing delays in 

its business because the "U,S, government moratorium 

on drilling would delay the planned drilling of an 

exploratory well in the Gulfby six months,"" 

IV. THE RIMS II MODEL CAN 

BE USED TO MEASURE 

THE ECONOMIC IMPACT 

OF THE MORATORIUM 

As discussed in the previous section, onshore state and 

local economies benefit from offshore oil production 

by receiving compensation and economic benefit from 

providing goods and services to offshore oil and gas 

extraction sites, Onshore communities provide aU 

manner of goods and services required by offshore 

oil and gas extraction, A variety of industries are 

Cost of Moratorium Report I S 

provide groceries, transportation, refining, and other 

duties, These onshore jobs, in tum, support other jobs 

and other industries (such as retail and hospitality 

establishments), 

The statistical approach known as an "input-output" 

analysis can be used to measure the economic effects 

associated with a particular development project, or 

in this case a production stoppage, This approach, 

pioneered by Nobel Prize winner Wassily Leontif, has 

been refined by the U,S, Department of Commerce 

in the form of the Regional Input-Output Modelling 

System, or "RIMS IT", The RIMS II model provides 

a variety of mUltipliers that measure how a plant 

shutdown or slowdown would affect local and 

regional economies, accounting for the elimination of 

jobs, decreases in wages, and the drain on potential 

government revenues, This analysis focuses on the 

negative direct and indirect effects associated with 

placing a moratorium on offshore drilling, 

The RIMS II model is the standard method that 

governmental authorities use to evaluate the benefits 

associated with an economic development project. 

According to the Commerce Department, the RIMS II 

model has been used to evaluate the economic effects 

of many projects, including: opening or closing military 

bases, tourist expenditures, new energy facilities, 

opening or closing manufacturing plants, shopping 

malls, sports stadiums, and new airport or port 

facilities," State and local governments have also used 

the RIMS II model to perform economic analyses, 

involved in this effort: shipbuilders provide exploration •• 

vessels, permanent and movable platforms, and ~ ~ This analysis focuses on the 

resup!'ly vessels; st~el,:"orke:s fashio~ the drilling negative direct and indirect 

machinery and speclahzed pipes reqUIred for offshore 

resource extraction; accountants and bankers provide effects associated with placing a financial services; and other onshore employees t . ff h d ·11· " mora onum on 0 sore n mg. 

'I Kimberly Morin. GOP Senator introduces bill to terminate Obama's economy killing drilling moratorium, The Examiner; Jun. 17, 2010 (available at 

http://www.examiner.comlx-91 OO~Boston-Conservative-Independent-Examiner-y2010m6d17.GOP-Senators.introduce-biIl-t;o..tennjnate-Obamaseconomy-killingwdn1ling-moratorium). . 

51 Id, citing the Wood MacKenzie Research and Consulting report. Section VI. Subsection F outlines some reasons for why my analysis predicts lower 

job loss projections. 

n Angel Gonzalez, Stiffer Costs, Rules in Gulf Will Squeeze Smaller Players, The Wall Street Journal. Jun. 22, 2010 (available at http://online.wsj.coml 

articleiSBIOOOI424052748704256304575321104202428906.html) [hereinafter StifferCosu, Rules in Gulf], 

~ld. 

j$Id. 
90 

9 I Cost of Moratorium Report 

The Bureau of Economic Analysis (BEA) RlMS II 

model provides mnltipliers that allow researchers to 

estimate the comprehensive effect on output, income, 

or employment as a result of changes to product 

outputs (''final.demand'').'' 

Thus for these figures, I consider that the moratorium 

will prevent oil and natural gas from reaching the 

market and halt operation for 33 deepwater rigs." 

According to the Louisiana Mid·Continent Oil and 

Gas Association (crediting Wood Mackenzie), 

80,000 barrels of oil equivalent (both oil and natural 

gas) a day will not go to market as a result of the 

moratorium. " This equals 2.4 million barrels a 

month, and 14.6 million barrels during the six·month 

moratorium. I assume that the moratorium only lasts for 

six months, and that, after this point, the lost production 

will resume (thus this estimate may be conservative). 

This figure can be converted to a dollar value by 

applying the appropriate price. 

Three final sets of demand multipliers are applied to the 

production loss estimate. First, BEA output multipliers 

measure the total decrease in economic activityincluding the effect on all other industries-resulting 

from $1 of loss of industrial activity in a particular 

geographic region." Next, BEA earnings multipliers 

measure the decrease in wages resulting from a $1 

loss of industrial activity.'! Finally, BEA employment 

multipliers measure the decrease in employment (in 

full·time equivalent jobs) associated with a SI,OOO,OOO 

decrease in industrial activity." For example, in Texas 

the oil and gas extraction output multiplier is 2.0721, 

the wage multiplier is 0.5085, and the employment 

mUltiplier is 8.2985. Thus, a loss of $1 million of oil 

and natural gas extraction translates into a loss of 

$2,072,100 in annual output, $508,500 in annual wage 

income, and approximately 8.3 additional full·time jobs 

for the year. The direct effect associated with the loss of 

oil and natural gas production varies by state. The same 

$1 million loss in production in Louisiana, for example, 

translates into a loss ofSI,793,2oo in output, $407,900 

in wage income, and approximately 6.8 full·time jobs 

for the year. 

The time period over which this loss is felt has been 

subject to much debate. In most cases, the BEA 

considers one year to be the horizon over which its 

mUltipliers will achieve full effect. 63 For our purposes, 

I assume that each BEA multiplier measures the 

changes that are expected to occur within one year." 

To determine the economic effect of a moratorium 

on deepwater oil and natural gas drilling, the BEA 

multipliers for "Oil and Natural Gas Extraction" 

are used (see Appendix Tables A2 and A3). The 

multipliers are available at the connty level, but since 

I am interested in a broader range of effects, state 

and national multip tiers are used in this paper, In the 

following sections, these mUltipliers are applied to 

production loss estimates to determine the state·by· 

state, and overall effects of the deepwater drilling 

moratorium on the Gulf economy, 

V. PRESENT OFFSHORE 

OIL AND GAS RESERVE 

ESTIMATES 

As stated above, to determine the economic effect of 

the moratorium on offshore oil and gas production 

on Gulf States, it is necessary to the estimate the lost 

production of oil and natural gas for each state as a 

result of the moratorium. The Louisiana Mid·Continent 

Oil and Gas Association (crediting Wood Mackenzie) 

stated in a recent report that 80,000 barrels of oil 

equivalent (both oil and natural gas) a day will not go 

'6See U.S. Department of Commerce, Bureau of Economic Analysis, Brief Description: Applications ofRlMS II (availablo at http;/Iwww,bea.govlbea/ 

regionallrimslbrfdesc.cfin ). 

51 See Everett Ehrlich, Steven Landefeld & Betty Barker, Regional Multipliers: A User Handbook for the Regional InputROutput Modeling System 

(RIMS II), U,S. Department of Commerce, Third Edition. at 3 (Mar. 1997). ("If the user can estimate the change in final demand in the initially 

affected industry. the user can estimate the impact on output. earnings, or employment on the basis of final...demand multipliers,") [hereinafter Rims IT 

Handbook], 

sa My calculations are based on the provisions of the original moratorium. and do not include additional provisions provided by the July 12th 

moratorium. As such, my estimates are conservative, 

59 Katherine Schmidt" Oil Industry Predicts Damage to Economy (80,000 bpd says Wood Mackenzie). investor ViI/age, Jun. 4, 2010 (available at http:// 

www.inves ... rvillage.comlsmbd.asp?mb=14S3S&rnid-9098S68&pMnSg)!hereinafterOillndustryPredictsDamage]. 

"RlMS II Handbook, supra, at 3, f'ln this [final demand output multiplier] table, each column entry indicates the change in oulput in each row industry 

that results from a $1 change in final demand in the column industry. The impact on each row industry is calculated by multiplying the fical-demand 

chang. in the column industry by the multiplier for each row.") !hereinafter Rims n Handbook]. 

" See Id, eln this [final demand earnings multiplier] table, each column entry indicates the change in earnings in each row industry that results from 

a $1 change in final demand in the column industry. The impact on each row industry is calculated by multiplying the final-demand change in the 

column industry by the multiplier for each row:'). 

62 See ld. at 4 ("In the fina1-demand employment multiplier table, each column entry indicates the change in employment in each row industry that 

results from a $1 million change in final demand in the column industry. The impact on each row industIy is calculated by multiplying the final~ 

demand change in the column industry by the multiplier for each row.''). 

63 RIMS II Handbook, supra,. at 8 ("RIMS II. like all 1·0 models, is a "static equilibrium" model. so impru;ts calculated with RIMS II have no specific 

time dimension. H~er; because the mode1 is based on annual data. it is customary to assume that the impacts occur in 1 year. For many situations, 

this assumption is reasonable.''). 

64 Id., ("RIMS n, like all 1-0 models. is a 'static equilibrium' model, so impacts calculated with R.Th1S II have no specific time dimension. However, 

because the model is based on annual data. it is customary to assume that the impacts occur in 1 year:'). 
91 

to market as a result of the moratorium. This equals 

2.4 million barrels a month, and 14.6 million barrels 

during the six - month moratorium.''iJ 

I take a two-step approach to estimate state~by-state 

production in the Gulf of Mexico (GOM). First, 

GOM figures are apportioned to the GOM 

assuming that a state's share of oil 

and gas reserves hence the benefits of utilizing 

those reserves) is proportional to its share of the GOM 

production. Then, the dollar value of state 

estimated by the current prices 

to each state ts 

It is reasonable to assume that a state's production is 

tied to its available reserves, and by association the 

state's proximity to oil. The analysis of economic 

impact, therefore, that the economic 

benefits associated offshore oil and natural 

gas production aCCnle onshore firstly in the local 

communities that provide the most convenient labor, 

materials. and support services for offshore 

Thus, to total to the 

I share 

reserves in the GOM. In a previous paper, I 

each state's share of total oil and natural gas reserves, 

and I use those estimates to apportion production in 

the current analysis.~ Table. 2 presents the result of this 

calculation. Louisiana stands to lose the most in tenus 

of production, followed by Texas, Alabama, 

and Mississippi. 

To quantify the monetary loss, I use the U.S. Energy 

Infonl1ation Administration's (EIA) Jatest price 

forecasts from the Short Term Energy Outlook July 7, 

2010. The report indicates that for the second half of 

20 I 0, the average price of oil will be $79 per barreL 

The value of each state's production is calculated as its 

share of available GOM offshore oil production times 

$79.00 per barreL61 At this price. the production losses 

apportioned to coastal states have the dollar values 

reported in Table 2 below. 

Cost of Moratorium Report I 10 

VI. DECREASED INVESTMENTS 

IN OFFSHORE OIL AND 

GAS PRODUCTION WILL 

CAUSE SUBSTANTIAL 

LOSSES IN WAGES AND, 

EMPLOYMENT, AND 

Will HAVE PROFOUND 

EFFECTS ON COMMUNITIES 

THROUGHOUT THE GULF 

In the following sections, the BEA multipliers for "Oil 

and Natural Gas Extraction" are applied to the previously 

discussed estimates of production loss (see Appenrlix 

Tables A2 and A3). Section A explains the effect of the 

moratorium on both lhe Gulf states and total U.S. economic 

output. Section B quantifies the effect of the moratorium on 

employment (a particularly salient topic given the eurrent 

unemployment woes of many Americans). Section C explains 

the negative impact of the moratorium on wages, Section D 

explains the negative moratorium on local, state. 

and federal tax analyses paint a bleak picture 

of the economic impact of the moratorium, Further, as is 

shown in Section E. the analyses do not even consider a 
92 

11 I Cost of Moratorium Report 

number of loss factors, such as rigs not coming back to 

the GOM after leaving or the loss of economic benefits 

as a result of investment in exploration. 

In no way are these figures meant to be definitive. 

Instead, the estimates presented represent a reasonable 

approach to assessing the economic impac.t of a 

deepwater drilling moratorium. 

A. The Six-Month Moratorium on 

Offshore Drilling Activity Will 

Cost More than $2.7 Billion 

in Economic Activity Nationwide, 

and $2.1 Billion in 

Gulf Communities 

The broadest measure of the incremental effect of the 

moratorium is the effect on total economic output. As 

discussed earlier, GDP and GSP represent the two main 

measures of output. The BEA's final demand output 

multipliers can be used to perform a RIMS II analyses. 

The multipliers are applied to the production estimates 

in Table 2 to detennine the expected total decrease in 

output as a result of the moratorium, The production 

loss estimate is used to measure the change in demand. 

In total, the loss in output can be expected to over $2.1 

billion in the Gulf states, $2,7 billion nationwide. 

Using the production estimates from Table 2 and the 

BEA multipliers in Table A2, the estimated decrease in 

economic output based on the estimated oil and natural 

gas production is presented in Table 3. It is important 

to note, that the multipliers in this table only provide 

the decrease in output that is generated at the same 

location as the decrease in production. As an integrated 

economy, however, output in one state is tied to output 

in other states, For example, the oil and natural gas 

produced in Louisiana may be used as an input to 

production in Illinois or Pennsylvania, These effects 

may be considered "spill-over" effects because they 

spread from one location to another location. Using 

the individual multiplier for Louisiana would thus 

under~report the total1055 associated with a moratorium 

in Louisiana. Comparing the total U.S. result to the 

additive total of the output decreases in the individual 

Gulf states, suggests that there are over $659 million 

dollars in lost spillover effects from the moratorium. 

*'Id. 

B. The Six-Month Moratorium on 

Offshore Drilling Could Cost 

Thousands of Jobs 

The moratorium on deepwater oil drilling would also 

result in the loss of thousands of jobs, not only on the 

various DB rigs~ but also in associated industries. The 

Louisiana Department of Economic Development 

estimates a loss of 10,000 jobs within a few months 

after the moratorium" Moreover, they predict that the 

state "risks losing more Ulan 20,000 existing and potential 

new jobs during a 12 to 18 month period."" The analysis 

below offers an alternative estimate for employment 

losses based on the RIMS II model. My results are 

slightly more conservative, because I only estimate the 

period of loss to be six months. As before, effects are 

calculated using estimated state-level production losses. 

1. BEA Multiplier Analysis 

As presented above, this analysis estimates the total 

economic effects associated with stopping deepwater 

drilling. Using the BEA's final-demand employment 

multipliers (denominated in job-years per $1 million 

change in final demand) in Table A2 and the estimated 

production loss in Table I yields the expected losses 

in employment io Table 4. The decrease in employment 

is estimated to be 8,169 full-time jobs in the GOM. 

Louisiana alone stands to lose 4,719 full time jobs. 

Nationwide, there will be an estimated loss of 

12,046 jobs. 
93 

These projections are lower than those presented by 

other studjes because I estimate the period of new 

production loss to be six months. However. 

were to extend the loss new production 

to the 18 months assumed by other sources, we would 

see a loss of36,137 jobs nationally, 24,532 jobs 

lost in the GOM, and 14,156 jobs lost in Louisiana. 

These estimations are more in line with the 

projections presented in Section III by the Louisiana 

Department of Economic Development a.nd Wood 

Mackenzie Consulting. 

The state-level 

decreases in result, jobs one 

drilling being halted in another state are from 

the totals. Again, comparing the nationwide jobs lost to the additive total of the state job losses, yields a 

spillover effect of3,877 jobs lost for the year spanning 

the moratorium period. 

Cost of Moratorium Report I 12 

2. Evaluation of the Types of 

Employment loss 

The BEA data can also be used to analyze the types 

of employment that would be lost by a moratorium 

on deepwater drilling. The production stoppage 

throughout the nation will result in job loss in the 

ancillary industries that support the oil industry, and 

cause instability for thousands of Americans already 

coping with a turbulent economic climate. Further, 

oil producers will reduce their investment in local 

economies as rigs are moved or shut down. 

Oil companies have a great incentive to invest in local 

communities to improve the quality of life for their 

employees and attract talent to their offices and rigs. 

Sheil, for example, started a Center for Petroleum 

Workforce Development at their training center in 

2006, The joint venture between the state of Louisiana, 

Louisiana State and Shell, made the 

{;cnter "available to the industry" in hopes of 

encouraging oil and gas employees from around the 

world to develop their skills.70 As production decreases 

and offices are shut down or moved, the 

for investments such as those spurred on by 

Shell will evaporate. 

For this analysis. the 10sses are broken down using 

specific BEA multipliers for each industry (see Table 

A3), that detennine which industries will stand to lose 

the most from the moratorium on deepwater drilling. 

Table 5 reports the expected total losses 

in employment 
94 

13 I Cost of Moratorium Report 

These tables give a sense of the distribution of the 

jobs lost from the moratorium. A large portion of lost 

positions (approximately 38 percent) would be lost 

in high-skill fields, such as health care, real estate, 

professional services, manufacturing, administration, 

finance, education, the arts. infonnation, and 

management. A sizable portion of job loss will 

obviously occur in mining (which includes oil and gas 

drilling) with these jobs accounting for over 26 percent 

of the total jobs lost in the Gulf area, and about 20 

percent nationally,ll 

C. The Six-Month Moratorium on 

Offshore Drilling Will Cause 

Massive Wage loss for Workers 

Already Hit by Recession 

The moratorium will also cause a huge loss in wages 

for an already distressed workforce. Some analysts 

predict that this could mount to $65 to $135 million in 

wage losses per month,n The BEA multipliers allow 

an analysis of the effect of a moratorium on deepwater 

drilling on wages in affected states. 

To estimate lost wages, the BEA's final demand 

earnings (wage) multipliers are applied to the 

production estimates. Table 6 presents the results. 

As the data indicates, the moratorium will result in 

well over $487 million in lost wages in Gulf states, 

over $707 million nationwide, The previously 

discussed, regarding spill-over effects 

wage analysis. with spill-over 
95 

D. The Moratorium will Cause 

the Loss of Millions of Dollars 

in Taxes and Other Public 

Revenues to Local, State, 

and Federal Governments 

Decreased output, fewer jobs, and lost wages translatc 

into lower tax collections and decreases in public 

revenues. The present analysis applies a broad measure 

of fbe total tax revenues (from all sources) that 

federal, state, and local govemments will lose from the 

moratorium on deepwater drilling. The analysis, again 

using production loss, estimates that $97 million will 

be lost in state and local taxes·n This will translate 

into reduced investment in the local economy, schools" 

hospitals, and other necessary public services. Again, 

even absent current economic conditions, cash-strapped 

communities benefit significantly from the income 

fbat oil and natural gas production brings to fbe table. 

Taking away this income source could potentially deny 

communities access to resources necessary to provide 

important community projects. 

In order to estimate the decrease in state and local tax 

revenue attributable to a moratorium on deepwater oil 

drilling, the analysis follows the approach outlined 

by the Federal Reserve Bank of Boston to determine 

annual state and local tax burdens as a share of GSP 

(see Table A4).74 For each state and the District 

of Columbia, the state and local tILX burden can be 

calculated by dividing annual state and local tax 

revenue by annual GSP Data for state and local tax 

revenues are released by the U.S. Census Bureau 

annually with a two year lag. As such, the state and 

local tax burden calculations are based on the most 

recent available fiscal year, 2008." Those data produce 

the average state and local tax burden in 2008 in each 

state. The effective tax burdens are applied to the 

production estimates, Table 7 presents the estimated 

losses in tax revenues. As before, the losses in tax 

revenues presented have the same caveats regarding 

Cost of Moratorium Report I 14 

"spill-over" revenues." The estimates thus represent a 

lower bound on potential state and local tax revenues 

lost from a moratorium on deepwater oil drilling. 

The decrease in economic activity resulting from 

a moratorium on deepwater oil drilling will also 

produce significant losses in federal tax revenues. 

According to the IRS, the average effective tax rate 

in the United States in FY2008 was 18.98 percent of 

GSP.17 Applying this rate to the total oil and natural 

gas production loss ($1.16 billion) suggests that U.S. 

federal tax receipts would decrease by $219 million." 

In total, therefore, the moratorium can result in a 

loss of nearly $317 million. Dividing the loss equally 

among all U.S. taxpayers" yields an immediate cost of 

about $2.35 per taxpayer. These amounts represent net 

tax effects, and though they may seem modest when 

viewed on a national basis, they add an unnecessary 

burden to an already strained tax base, especially when 

focused on state and community tax revenues that are 

necessary to pay for local services. 

11 Note that this analysis is conservative because it does not consider the state and local taxes produced from "spi1l~over" effects. These tax revenues cannot be accurately measured because spil1~over output cannot be attributed to particular states. Because spill-over output is significant, however, my estimate significantly understates the total incremental state and local taxes that would be produced annually, 14 Matthew Nagowski, Measures of State and Local Tax Burden. New England Public Policy Center, Federal Reserve Bank of Boston (Jul. 13,2006),0 

(available at: http://www,bos,1Tb.orgleconomiclneppc!memosl20061nagowski071306.pdf). 75 Data pertain to period July 1, 2005 - June 30, 2006, U.S, Census Bureau, Federal State and Local Governments, State and Local Government Finances, 2005·2006 Estimate, (available at: http://www,census.gov/govslwww/06censustechdoc.html#fiscalyr). 76It is impossible to quantify these benefits because state and local taxes differ from state to state and because the BEAdoes not provide a means to allocate the spill--over revenues to particular states. To be conservative, the analysis estimates only the revenues that can be accurately assigned and measured, 

71 Department of the Treasury, Internal Revenue Service, SOl Tax Stats,· IRS Data Book: 2008, Table 5, (availabJe at http://www,irs.gov/taxstatsl 

article/O"id=168593.00.html). 

71 GNO Inc. estimated that the moratorium "could cut state and local tax revenue by more $700 million over four years, accruing at a rate of $8 million 

to $15 million a month." See Groups Struggle to Assess Oil's Impact, supra. 

7'.1 IRS, Tax Stats at a Glance, (available athttp://www.irs.gov/taxstatslarticlelO .. id=l02836.OO.html). 
96 

15 I Cost of Moratorium Report 

E. Communities Nationwide 

will Suffer from Decreased 

Health, Education, Welfare, 

and Social Services 

Communities around the Gulf and throughout the 

country will also suffer negative effects associated 

with decreased economic activity as a result of a 

moratorium. Those effects flow from the decrease in 

high-wage, high-skilled employment. For example, 

a ban on drilling may induce related industries, such 

as ship builders, to shut down operations. The loss of 

employees in these indnstries, in torn, woold decrease 

community demand for health care, education, and 

other community services that are available to all 

residents (whether they are employed by the drilling 

facilities or not). Additionally, the resulting loss of tax 

revenues could cause a reduction in the availability 

of these services. The oil and gas industry represents 

a significant portion of the Gulf states' tax revenue. 

In 2006, "the oil and gas industry paid more than 14 

percent of total state taxes, licenses and fees collected 

by the state of Louisiana ... [which represents) a 

substantial portion of Louisiana's budgel."" 

The estimated decrease in employment in the health 

and education is but one indicator of the tertiary effects 

associated with the moratorium. As indicated in Table 

5, a stoppage in oil and natural gas production would 

result in the loss of 974 health care providers and 260 

teachers iri the GOM states. Nationwide there woold 

be a reduction of 1,270 health care providers and 321 

teachers. This indicates that the spill-over effects of 

employments loss would be 296 health care providers 

and 60 teachers to states outside of the GOM. 

While employment and wage losses may seem 

palatable on a national scale, many of the job losses 

would be concentrated in small coastal towns 

like Port Fourchon, Louisiana (which is home to 

substantial resources serving Gulf of Mexico offshore 

ro Just the Facts, supra. 

production)." Indeed, in some communities the 

decrease in demand associated with lost jobs tied to 

offshore drilling moratorium may mean the difference 

between having a local hospital and school or not. 

Coastal cities like Port Fourchon experienced 

significant growth in the last three decades tied to 

their central role in offshore oil and gas production." 

Port Fourchon alone services half of all drilling 

rigs presently operating in the Golf of Mexico. " 

Furthermore. current plans call for more than half of all 

new deep water drilling platforms in the Eastern and 

Central Golf of Mexico to use towns like Port Fourchon 

as their service base." Given the concentration of 

the deep water Gulf of Mexico operations at coastal 

communities, it is reasonable that the loss to this 

community from the moratorium will be substantial. 

Similar small communities stand to lose significantly as 

a result of the moratorium. 

F. The Current AnalysiS is a 

Conservative Estimate of loss 

The current analysis presents a conservative estimate 

of economic loss caused by the moratorium. Several 

scenarios could cause actual Josses to substantially 

exceed those offered here. 

First, the current anaJysis considers the loss to continue 

only for six months, followed by a return to normal 

operations. It is possible, however. that the moratorium 

and/or its effects could last up to a year and half." Until 

a final decision is made by the administration and the 

courts, it is hard to predict the scope of the losses for 

the Gulf region. Thus, the losses could in fact increase 

by a factor of2 or 3. 

Second, as stated earlier, the initial investment stage in 

oil and natural gas extraction produces many economic 

benefits. It is conceivable that some of these benefits 

will be deferred or simply lost as projects are delayed 

or moved." As J discussed earlier the effects could be 

particularly detrimental towards smaller oil 

II In fact. the town bouses one of the rigs that is affected by the moratorium. See Joe Nocera. Moratorium Won't Reduce Drilling Risks. Jun. 25. 2010, 

The New York nmes, (available at http://www.nytimes.coml2010l06l261businessl26nocera.html);ForadiscussionofPortFourchon.seeLoren 

C. Scott Associates, The Economic Impacts of Port Fourchon on the National and Houma MSA Economies, Apr. 2008, (available at http://www. 

portfourchon.comlsitel OO-Ol/lOO1757/docs/port_ fOUIChoD_cconomicJmpact_study,pdf), 

nThe Greater Lafo\U'ce Port Commission was first organlzed in 1960 (the surrounding community had a population of55,381) See Greater Lafourche 

Port Commission. About Us, (available at http://www.portfourchon.comloverview.cfin); U.S. Census Bureau, Louisi~ Population of Counties by 

Decennial Census: 1900 to 1990, (available at http://www.census.govlpopulationlconcountslla190090.txt) [hereinafter Historical Census Datal. 

IJ See LA1 Coalition, Facts and Figures: Port Fourchon, (available at bnp:l/www.1a1coalition.orglfacts.html). The executive direct of Port Fourchon 

estimates that the port "services 90 percent of all the deepwater activity in the GulfofMexico, and all 33 oftbe rigs" that fall under the moratorium. 

Louisiana Port Operator Pleased With Dismissal of Drilling Moratorium, FOX News, Jun. 23, 2010 (available at http://www.foxnews.com! 

storyI0,29ll,595184,OO.btml). 

1-4 See jd. Port Fourchen bas seen an increase of their population to 95,554 in 2006. Overal1, between 1960 and 2006, the Lafourche Parrish population grew by 72.S percent whereas the State of Louisiana population grew 31,6 ~nt See U.s, Census Bureau, Qujckfacts, Lafourche Parrish, Louisiana, 

(available at http://quickfacts,census,gov/qfdlstatesl22122057.html); Histonca1 Census Data, supra, at note 73. 8j A study by Morgan Stanley, for example, a.ppears"c ~the.affected floaters at least "11 

1 IO.pdf). 

" Morgan Stanley "expect[sJ a major supply/demand imbalance as attempt to relocate internationa11y;-whIle an additiona130 un.-centmcted new builds exacerbate the issue. Subsea equipment companies are likely to feel the after-bum, as their orders are a direct function of deepwater drilling." See Id. 
97 

Third, if the end result of the moratorium is to place 

severe restrictions on offshore drilling operations 

for the costs could increase to operators 

signiiicarltly. This could lead to decreased operations, 

and natural and the movement 

of operations to cheaper This would again 

impose significant economic hardship on communities 

throughout the Gulf. 

Last, to the 

economies the nation. Again. it is 

difficult to determine the effect of the moratorium 

on refining It is reasonable to assume that 

some capacity reduced as a result 

extraction, which would 

hardship caused by the moratorium. 

G. Worst Case Scenario 

outcome of the moratorium is that 

in the Gulf of Mexico stops because 

is deemed too 

the analysis 

can be a exercise by 

total amount of output, 

reVenue at stake, 

DeDaf'ime,nt ofthe 

Census 

estimate 

eUmlOYlneint, wages, and 

Utilt :,tales and nationwide. 

the average 

and natural 

2001 through November 

was over 42 million of oil and 295 million 

Mef (Thousand Cubic Feet) of natural According 

to a recent report, 80 percent of GOM production 

and 45 percent of natural comes from 

deepwater operations, affected by the 

Cost of Moratorium Report I 1 t? 

moratorium." to the total 

production and 133 

million gas a month are at risk from 

the moratorium in the entire GOM Thus the 

total a!IDual at risk from moratorium is 

around 410 barrels of oil and 1.6 billion Mcfof 

natural gas. 

ap1portlO:nec to the Gulf States in 

Table 8 presents the results of the analysis:" 

As the results clearly illustrate, the loss would be 

VII. SUMMARY 

AND 

I estimate the net local and national 

that could result from a six-month 

moratorium on offshore - which is 

the Wbite House's 

the Gulf of Mexico. set out to 

to assess the cost of such an 
98 

17 I Cost of Moratoriun) Support 

restrict economic activity. 

potentially loss, aggregate 

a loss of publlc revenues for 

foreseeable future, 

The presidential moratorium will cost apllfoxin1at,ely 

$2,1 billion in economic loss to the 

billion nationally), with some $487 millions to be 

($707 million 

moratorium on 

will cause economic hardship 

negative effects on jobs. wages) taxes, and 

to the of local CUlWJlUlllUC' 

Further, estimates in this paper 

underestimate the effects of the 

it is conceivable that oil rigs leave 

the Gulf region because of the moratorium would 

return after six months (Morgan Stanley believes the 

effccts could continue for up to 12 to 18 months), 

In closing, analysis is only meant to be a 

point discussing the that a cost 

analysis should have on 

moratorium on offshore drilling sp"cjflcally, 

policies toward offshore generally, 

makers must consequences 

acting on imperfect information, The figures and tables 

that I produce are in no wayan exact estimate of the 

economic effects of a six-month moratorium. Certain 

data limitations do not allow for a more refined 

to 

APPENDIX A 
99 

Append;xl 

State 
100 

Joseph R. Mason is Director at 

Navigant Economics LLC, Moyse/LBA 

Chair of Banking at the Ourso 

School of Business at louisiana 

State University, and Senior Fellow 

at the Wharton School. 

Dr, Mason's consulting practice provides firms 

with advice on financial, political, and legal risks in 

banking and finance, Dr. Mason has consulted on 

issues ranging from mortgage, home equity loan, 

home equity line of credit, auto, and credit card 

servicing. and securitization, to discrimination and 

disparate impact in consumer lending and insurance 

pricing, valuing distressed securities, the investor 

recoveries and efficient liquidations of bankrupt finns, 

and economic valuations of complex investment 

and lending arrangements involving asset-backed 

securities, collateralized debt obligations, and hedge 

funds. In litigation, he regularly serves as testifying 

or non~testifying expert on matters related to a wide 

variety of financial market~related claims. Dr. Mason 

has consulted for and advised investment finns, 

corporations, and research institutions, including 

The Conference Board, Inc., Coventry First, 

Deloitte, Fannie Mae, the Federal Deposit Insurance 

Corporation, the Federal Reserve Bank of Philadelphia, 

The Group of Thirty, Pricewaterhouse~Coopers. and 

The World Bank Group. 

Dr. Mason's academic research focuses primarily 

on investigating liquidity in thinly-traded assets and 

illiquid market conditions. Current academic research 

projects analyze default risk, including both immediate 

and cross-default risk, and default resolution costs in 

the contexts of asset-backed securities, in systemic 

and non-systemic environments, as well as the efficacy 

of bailout and resolution poliCies through the history 

of financial markets. His research and economic 

commentary has received hundreds of national and 

international press citations in publications such as 

the Wall Street Journal, New York TImes, Washington 

TImes, The Economist. Financial Times, Barrons, 

Business Week, die Zeit, Neue Zurcher Zeitung, 

Financial TImes-Germany, Los Echos, Forbes, Fortune, 

Portfolio Magazine. Bloomberg Magazine, American 

Banker, and on press syndicates such as Associated 

Press, Reuters. Bloomberg, KnightRidder, and 

MarketWatch-Dow Jones Newswire. 

Dr. Mason received a B.s. in economics from 

Arizona State University in 1990 and a Ph.D. 

from the University of Illinois in 1996. 
101 

SAVE U.S. 

ENERGY JOBS 
102 

Chair LANDRIEU. I have one question for the whole panel, and we 

will then turn it over to Senator Vitter so we can wrap up at the 

appropriate, expected time. 

Part of the feedback that we have gotten when we have been discussing the ending of this moratorium with people is, well, the situation isn’t as bad, Senator, as you describe because there are so 

many people being employed or hired by the clean-up. We try to 

explain that that in no way substitutes for the loss of the permanent jobs and the anxiety that is out there because of just the unknown. 

So I would like to ask you all to respond to this. This hasn’t been 

officially on the record, but we get these comments in private meetings that we have. Would you try to take a minute, each of you, 

to explain to the public the difference between the jobs for the 

clean-up, which might be temporary and sometimes are hiring 

workers that aren’t even from our area, as versus the jobs being 

lost from the moratorium? I don’t know, Mayor, if you want to 

start—— 

Mr. MATTE. I would be happy to. I think what we have seen in 

our community, primarily, those jobs have involved the hiring of 

vessels. And in some cases, these boats were not working, so they 

were able to put those back on. The best example I have, the two 

marine operators that I mentioned earlier, both of them have crew 

boats and supply boats, and the crew boats are the—that is the low 

cost per day rentals. They are very thankful for the fact that they 

were able to put those vessels to work because what is happening 

is the larger offshore supply vessels, those in the 260 even up to 

over 300-foot-long vessels that leave Port Fourchon for the deepwater areas, those are the much higher day rates, require much 

more employment to staff those vessels. Those are the ones that 

are laid off. They are kind of supplementing it with these crew 

boats and some of the smaller boats that are serving the spill. 

But they have already gotten notification, that is it. That is over. 

That is gone. Will it be another week, another month? That is probably the outside time frame we are talking about. Over the next 

month, those jobs will go away. 

Chair LANDRIEU. So it was an inadequate and temporary substitute for the jobs lost, and now that is even coming to an end. 

President Williams. 

Ms. WILLIAMS. Yes, Senator. In Terrebonne Parish, as you know, 

BP has one of their stations is right, unfortunately, right in my district, as well. But we had a serious problem with them even hiring 

our local vessels of opportunity. So to say that people are working, 

people are making money, that is true, but it will not last past 90, 

maybe 180 days at most. But these people that have been placed 

out of these other jobs, it is going to take them, just like I said earlier, two to four years before they can make the living that they 

used to make. 

So you are going from $2,500 a week, example, to $235 a week. 

So that is the false that they are being sold that they are making 

money, but you are not making money every day. You are not guaranteed to go out every day. I have been stopped several times. ‘‘Ms. 

Williams, we go down there and they sent us back home.’’ So that 

is not a job. A job is you know that you have to go from eight to 
103 

five or eight to six, not if I go and they feel like bringing me, then 

I am going to work that day. So that is a false that everybody 

needs to understand. You may see people working today, but tomorrow, you may not. 

Chair LANDRIEU. Representative. 

Ms. CHAMPAGNE. Thank you, Senator. Yes, I agree, and I think 

where we get this false sense is people are confusing the oil spill 

with the moratorium, and every day when we go out in our districts, I know in District 49, my fishermen, my shrimpers and my 

fishermen have been put to work by BP and they are working their 

boats. What the moratorium is doing is it is affecting the stable industry that we have with oil and gas throughout Iberia and 

Vermilion Parish as well as the whole coastline. 

We have oil field service companies and fabrication companies at 

the Port of Iberia that are already setting up shop in Brazil. These 

will not come back. If they leave totally and the economy base in 

Brazil helps them and the climate in Louisiana and the United 

States is not good enough, they are not going to come back. But 

they can’t take all of our people with them when they do this. 

So the false sense that people are actually working is exactly 

that, a false sense of people actually working. The moratorium is 

longstanding, and when I say longstanding, not today or tomorrow, 

a month from now. This is years. It will take years for our economy 

to come back, if it will at all. 

Chair LANDRIEU. Senator. 

Mr. CHABERT. One point that has not been touched upon that I 

know both of you have a tremendous amount of experience in, in 

terms of those jobs that are out there relative to the oil spill, what 

you have during a time of emergency and tragedies like this is the 

influx of profiteers. Unfortunately, we have seen that up and down 

all of our parishes, where you get folks who are not even from the 

State, much less from the area affected, coming in and capitalizing 

on some of the opportunities that were there, be they vessels of opportunity or catering contracts or any of the number of things that 

have been discussed thus far today. 

You know, secondly are those jobs that have absolutely nothing 

to do with the oil spill that we have talked about repeatedly today. 

How do you equate a teacher who is going to lose their job due to 

a reduction in MFP and a decrease in the workforce, how do you 

say, well, that person can go to work for an oil spill clean-up job? 

It is unfortunate that there is that misconception out there, but 

completely understandable that it does exist. 

Chair LANDRIEU. Thank you all for clearing that up. 

Senator Vitter. 

Senator VITTER. Thanks. I just have two questions. First, for the 

Senator and Representative. You mentioned you both represent significant ports, Port Fourchon, Port of Iberia. What percentage of 

those ports’ activity is directly related to offshore oil and gas? And 

if the formal or de facto moratoria continue for six months or more, 

what will those ports look like? 

Ms. CHAMPAGNE. Thank you. The Port of Iberia is 100 percent 

oil and gas related, and if we see a decrease, what will happen is, 

like we are seeing right now, some of our port facilities are looking 

at overseas employment. So they will decrease and these yards will 
104 

be substantially decreased in furnished product here in the United 

States as well as overseas, but I can see if this continues, a reduction of at least 75 to 80 percent. 

Mr. CHABERT. And as we have stated before, 33 of those rigs that 

are affected by this moratorium are based out of Port Fourchon, so 

that would speak directly to them, but 100 percent of what 

Fourchon does. 

More importantly, I want to speak to something that we have all 

worked on, and I see my good friend, former Senator Cravens, 

Chief of Staff of the committee, you know, the hard work that we 

put in paying for long-term projects to get money down to things 

like Port Fourchon that we all agree are a State asset but they are 

a national asset, we are all familiar with the Leeville Bridge and 

the money that we have all worked so hard to allocate to that. We 

have tied directly the payment of bonds to pay for that bridge on 

the amount of traffic that is going to go to service Port Fourchon 

via the way of tolls. Well, no one has been able to calculate the loss 

of revenue that has been generated due to the number of trucks 

and heavy-load vehicles, which we all know those tolls vary depending on what type of vehicle passes over that bridge. 

So, again, the true impact of this moratorium on things like that, 

that folks possibly in DC aren’t seeing, has yet to be measured. 

Senator VITTER. Right. And Ms. Williams and Mayor Matte, 

again, if the formal and de facto moratoria continue for six months 

or more, what revenue impact will your jurisdiction and your local 

school systems see, and what service cuts will that lead to? 

Ms. WILLIAMS. In Terrebonne Parish, you are looking at a possible 40 percent reduction in sales taxes, which would affect not 

only our school system, which receives 46 percent of it, but it would 

also affect our levee board, who receives about $5 million a year 

through our sales tax revenues, thus prohibiting them from continuing with projects that they have already started. Definitely, we 

have already started with a cut in our school system, so we would 

definitely not be able to increase the staff. 

On the parish side, we have already started looking at different 

measures as far as cutting back. We are only hiring now those positions that are absolutely detrimental to the parish. So with a 40 

percent decrease in our sales tax, you would definitely see lots of 

layoffs on the parish side, and then probably even more layoffs on 

the school systems side. 

Mr. MATTE. Well, Senator, in my parish—first off, I am fairly 

conservative in my budgeting. I budgeted a five percent reduction 

in sales tax for this year and am keeping my fingers crossed that 

that is going to be a sufficient number. We are getting ready to go 

through the budget process for this upcoming year, and, of course, 

this is a big question mark. 

Secondly, you heard me say earlier, my unemployment rate is already ten percent. One of the things that I think you probably 

agree with, unemployment has a tendency to create more unemployment as those dollars—there are fewer and fewer dollars turning over, it broadens its impact and we are going to feel it very dramatically. 

I am already not buying equipment and not buying supplies and 

not buying things to avoid having to lay people off, but there is no 
105 

question that that is the only other place that, from a community 

like Morgan City, the only other place we can go is to begin to lay 

off employees. A moratorium that would continue on from here 

would cause—ultimately would cause the layoff of city employees. 

That would be the only response I would have. 

Mr. CHABERT. And Senators, if I may, on the Mayor’s point, it 

needs to be noted for the record that the lowest unemployment in 

the country prior to this moratorium and the oil spill was right 

here in South Louisiana, with Terrebonne, Lafourche, Lafayette, 

and St. Mary. 

Chair LANDRIEU. And now it is headed to one of the highest. 

All right. This hearing is going to come to a close. I just want 

to say again how much we appreciate the testimony, heartfelt, specific, very detailed, that is going to help us build the Congressional 

record necessary to get this moratorium lifted immediately and 

permits issued expeditiously. So we thank you all very much. 

The record of this hearing will stay open for another two weeks. 

We encourage other testimony to be presented. And I can commit 

to you all, as the Chair of this committee and as a Senator from 

Louisiana, I am going to put the full weight of this committee behind the lifting of this moratorium as soon as possible. 

Thank you. The meeting is adjourned. 

[Whereupon, at 11:58 a.m., the committee was adjourned.] 

(107) 

APPENDIX MATERIAL SUBMITTED 
108 

Champagne, Rep. (District Office) 

From: Heidi Martin [hmartin@prolog~inc.comJ 

Sent: Friday, August 13, 2010 1:45 PM 

To: Champagne, Rep. (District Office) 

Subject: Pro~Log Moratorium Affects 

Ms. O1ampagne, 

We received your inquiry regarding the ways our company has been affected by the Presidents drilling 

moratorium. We are happy to share with you the vastly negative Impact this moratorium' has had and 

will continue to have on our business. 

Pro-Log, Inc. is a small, woman~owned business enterprise employing 41 people. For almost 30 years our 

company has been working in the Gulf of Mexico and other locations, PlI supplies our customers with 

USCG, ASS, ONVand MMS approved portable buildings for lease, rental, and safe, We have worked with 

all of the major operators that have drilling and production operations in the Gulf of Mexico. 

Our sales and rental revenues have experienced an 8(}'85% reduction directly due to the moratorium. 

This translated to a minimum $80,610 revenue loss during the month of May, 2010. This monetary los5 

has been about the same in the ensuing months, making it more and more difficult to maintain cash 

flow and payment to our employees and vendors. 

Additionally, we fear that the long~term rammifications of the moratorium will last a minimum of 10 

months, forcing U5 to reduce our workforce for the first time in our company's history. As a family~ 

owned business, it is a tremendously heartbreaking and difficult decision to reduce numbers in a workforce thatj for the most part, has been a part of our family for many years. 

Below are photos of the many buildings in our fleet that are in yard and off rental due to the 

moratorium. This tragedy becomes exponentially worse the longer the ban on drilling remains In effect, 

We are dedicated to working through this difficu!t time and are even more grateful for our customers 

each day. I hope that this information is of assistance to you in your endeavors. Thank you for the 

opportunity to share our experiences with you. If I can be of further assistance in any way, please let me 

know. 

Kindest regards. 

Heidi Parker Martin 

PrO-lOg. Inc. 

337.364.9276 

Fax: 337.364.7651 

.. Courage is not denying your situation but denying its 

power over you." - Beth Moore 

8/16/2010 

rage I 014 
109 

l'agej OI'+ 

8/16/2010 
110 

1<1" ,-,toom mstgm il "peelal "may ITom It!" ,-,JOoal mSlgm 

The Economic Impact of the Gulf of Mexico Offshore all and Natural Gas Industry 

and the Role of the Independents 

A Special Study by lHS Global InSight 

ExcJusion of mdependents would exact a heavy tOil in lost jobs, govemment revenuos, and economic value, 

J:'age I 01 L 

Copyright@20i(}iHSG!oba!1115ight SlteMap' Terms Of Use • Prw3CYPctlCy 

http://www.ihsglobalinsight.comigulfoilecollomicimpact 8113/2010 
111 

Potential Economic Impacts of Proposed Increases in Regulation 

and Taxes on 

Deepwater Drilling in the Gulf of Mexico 

• Capital costs associated with exploration and production drilling are likely to 

rise in the post Macondo world for the following reasons: 

o higher insurance costs and the potential for unlimited economic liability; 

o additional regulation by permitting authorities; 

o more stringent drilling practices (e.g., requirement for back-up rigs and 

other supporting equipment) and changes to well and rig designs. 

o increased taxes and fees 

• Forty-four GOM deepwater projects are at pre-Final-Investment Decision (FID) 

stage and at risk of an extended moratorium or higher capital costs due to 

overly excessive regulation and taxation which could result in project delay or 

the outright cancellation of projects. Wood Mackenzie has estimated that higher 

drilling costs, regulatory delays and a 25% increase in overall capital costs due 

to increased regulations and taxes, would render the GOM deepwater fields 

sub-economic - unable to achieve a post-tax internal rate-of-return of even 

10%. 

• This analysis estimates the impacts on the US economy should deepwater 

development in the GOM cease due to sub-economic returns. The economic 

impacts reveal that a complete shut-down of deepwater drilling would: 

o Reduce direct and indirect employment in the oil & gas and its service 

industries by 93,000 jobsl - every year through 2035. 

o Reduce an additional 82,000 jobs every year through 2035 in non oil & 

gas related industries due to less income in the economy. 

o Reduce annual GD? by over $20 billion per year or a cumulative impact of 

approximately $500 billion in the next 25 years. 

o Reduce long-term U.S. oil production by 27 percent. 

o Increase long-term U.S. foreign oil imports by 19 percent. 

1 This is slightly higher than the current estimate of approximately 85,000 direct and indirect 

jobs related to deep water exploration and development. Production is projected to be higher 

in the future. 
112 

Analysis 

• EIA's Annual Energy Outlook 2010 (Reference Case originally released in 

December 2009) projected that deep water Gulf of Mexico oil production would 

rise from the 2009 level of 1.2 million barrels per day to over 1.65 million 

barrels per day by 2013. This level essentially remains constant for over 20 

years until the end of the forecast in 2035. 

2.0 

i 1.8 

... 1.6. 

! 

II) 1.4 j 1.2 

6 1.0 

~ 0.8 

~ 0.6 

~ 0.4 

<c 

0.2 

0.0 

Deep QJIf of Mexico Oil Production 

8AAnnuai Energ,r Outlook 2010 - Rnerenm case 

~ ...... ~ ..... ~ 

/ ~ .",.. .".~ 

/ "'-... ~ 

I Average ;;U14 10 "'-'XI -

1.65million barrelsoerdav 

~ 

• Total U.S. oil production is projected to also remain relatively steady between 

2013 and 2035 at a little over 6 million barrels per day. The elimination of the 

deep water GOM oil production would reduce U.S. production by over 27 

percent. 

• The loss of domestic oil production would most likely be offset by increased 

foreign oil imports. The AEO 2010 forecasts projects relatively steady net oil 

imports at approximately 8.65 million barrels per day from 2013 to 2035. An 

additional in 1.65 million barrels per day of imports would equate an increase of 

19%. 

• Deep water natural gas production is projected to Increase from the current 

level of over 5 Bcf per day to an average of 7.75 Bcf per day by 2035. Although 

these volumes may be replaced by increases In U.S. onshore natural gas 

production, the marginal increases would most likely be at higher cost. 

Page 2 
113 

• The projected development expenditures needed to achieve COM deep water 

development is based on a 2009 analysis by IHS Cloballnsight which itemized 

yearly expenditures for a 350 mmboe (250 oil and 100 natural gas) deep water 

COM field at a total cost of approximately $6.5 billion. This is in-line, if not 

slightly conservative, with current Wood Mackenzie estimates that a 200 mmboe 

would require $4.1 billion in capex and a 400 mmboe requires $8.6 billion. 

E 

~ 

I 

o 

'0 

J 

'0 

I 

;Ii 

j 

f 

~ 

o The field life is 15 years. 

o Maximum flow of 47 mmboe for 4 years before declining. 

o Finding costs are assumed to be $3 per boe, in-line with COM historical 

averages. 

Annual Production and CapllalExpendltw:es. TypiclIIGOM OeepwaterFleld 

0.1«1,------------------------...,. $'- +- Elcpl_ .. -- ~-+.+.-----P-... ----- alrot-------------~------------------------_t $1.200 

0.100 t--------------f---'{---------------------------+ $1,000 

~oot_--------------i_--~r_~~------~\_----------_t $300 

o~t_-----------_4------t_+_---------~-----_+ $600 

$4CO 

0.020 t----k----~t_---f_lf_ $'200 

0.000 H ____ .... ___ 4f:,~ __ ~_-__ ...... _-.._..,.......,.._I_$O 

2 3 4 5 a 7 a » ~ u 12 U M U • U ~ W ~ 

T_afl'toj<l<t ...... 0iI_ .... _ ....... ___ _ 

so 

! 

.:: 

.. ::> 

11 

I 

• Since oil and gas fields only produce at a maximum rate for only a few years 

before going into decline, new fields must be developed every year. In order to 

reach and maintain an average 1.65 million barrels of oil projected in the 2010 

AEO, and average of 2.4 similar fields as the one above must start development 

every year for the next 20 years. 

• The capital expenditures for each field differ significantly each year depending 

on the stage of development and peak as production platforms, pipelines, and 

other infrastructure are built right before production. However, since new fields 

must start development each year, total capital expenditures on exploration and 

development would be reasonably constant if long term oil production were to 

remain at a constant volume. To maintain an average 1.65 million barrels of oil 

production through 2035, approximately $16 billion must be spent annually for 

Page 3 
114 

GOM exploration and development2 • 

• The IMPLAN (Version 3) economic impact assessment software was used to 

determine the employment and GDP impacts of a single field each year through 

its 20-year development cycle. 

Categorized Costs for a Deep Water GOM Field 

Total 5<proditures 

i'<I Years ($~~~ns) ·.~~ili~~\~~'~l~~I.i2\~i~~:~~·:i~~~~iiii~~J[I~1!Ill·~l~~~!iilY;)I~ll~ $300 

5499 

$6,547 

Source: Global Insight, 2010. 

50% WatfS transportation 

• To estimate the average annual long-run economic impact of GOM deep water 

drilling, the single field IMPLAN results were multiplied by 2.4 to account for the 

estimated number of fields starting each year needed to meet the AEO 2010 

forecast of GOM deepwater production. They were also summed across years to 

account for the fact that in anyone year, there will be a multitude of fields in 

different stages of development. 

Average Annual long-term Economic Impacts GOM Deep Water Drilling, 2013 -

2035 

($millions per year, except where indicated) 

2 Cost pressures increase as an area is developed and the most promising prospects are 

developed first. However, cost pressures decrease with technology and efficiency advances. 

Page 4 
115 

Impact Type 

Direct Effect 

Indirect Effect 

Subtotal Industry 

Induced Effect 

Total Effect 

Employment' 

30,183 

63,207 

93,390 

82,051 

175,441 

1 Employment as defined by the BLS. 

Value Added 

labor Income (GOP Contribution) 

$3,242 $6,610 

$4,234 $6,706 

$7,477 $13,316 

$3,848 $6,814 

$11,325 $20,130 

• The approximate 93,000 jobs for direct and indirect employment related to 

deep water oil and gas development is slightly higher than current levels. This 

is to be expected with an increase in production rates from the current 1.2 

million barrels of oil per day to about 1.65 million barrels per day by 2013. 

• The additional 82,000 jobs per year that are induced represent the amount of 

jobs created in the economy as income from both labor and equity owner's is 

spent in the economy as a whole. This increases demand for goods and 

services in non oil and gas related sectors. Contrary to popular belief, the 

benefits of oil and gas development and production are not restricted to a 

narrow sector of the economy. Rather, its impacts are broad-based benefiting 

manufacturing, construction, real estate, finance and insurance, health and 

social services among others. 

• Deep water drilling in the COM was projected to contribute $20 billion to the 

u.s. economy. The cumulative impact through 2035 is over $500 billion. 

Page 5 
116 

Chair Mary L. Landrieu 

Small Business Committee Hearing: "The Deepwater Drilling Moratorium: A Second Economic 

Disaster for Louisiana's Small Businesses" 

QuestiOlis for Ms. Lori Davis, Owner, RlG-CHEM 

Question #1-Inland vs. Coastal Impact 

Dun & Bradstreet's testimony before my committee last month noted that only 27 percent of small 

businesses impacted by the moratorium are located in coastal counties. 73 percent are located inland 

"suggesting that a moratorium could be felt more broadly throughout the Gulf Coast states." An example 

is that in here in Lafayette Parish alone, 780 businesses with 10,500 employees are potentially impacted. 

• Can you describe in greater detail this possible upstream/downstream impact of the moratorium 

on your business or businesses you work with on a daily basis? 

• My company is not current with D&B which I'm certain many small businesses that do not do 

business with the federal government are not registered at all. It became very costly and not a 

value so these numbers most likely are even higher. 

• Our company for the past 5 years has purchased promotional items from a certified DBE vendor 

in Jennings and I have informed them that we could not afford to make our annual purchase this 

year. 

• One of our major suppliers is located in Atlanta and has lost 30% of his business as we have 

reduced our purchases. This is true for many other vendors that supply us with, drums, pails, 

transportation services. 

Question #2 - Moratorium's Impact on Business Plan 

In your testimony, you mention that you were a "liquid" company - never owing capital and always 

keeping enough operating capital to weather tough times. Now, as a result of the moratorium, your 

company has had to look to banks for a line of credit for basic expenses. This is frustrating for me as 

your business has made it through multiple natural disasters, including four recent hurricanes, without 

having to incur major debt. 

You indicated that you have not laid off one of your 18 employees (15 in LA, 2 in TX, and 1 in Maine). 

However, if the moratorium continues through December you will be forced to layoff employees and cut 

benefits. 

South Louisiana businesses are a pretty resilient bunch. Can you describe the difference between 

dealing with the uncertainty surrounding this moratorium and dealing with hurricanes (such as 

KatrinalRita or Gustav/Ike)? 

• Hurricanes cnd usually within a short period of time and we know that once we return to work 

more times than not the wells that were "shut in" for storms usually "sand up" and this creates 

more of an opportunity for workover work although not in this case. Existing wells are still 

flowing. No drilling is being performed in obviously deep water but also shallow water as a 

result of the "de facto" moratorium in place. (which has almost completely shut our business 

down with no way to recover business losses as with fisherman, restaurants, hospitality and real 

estate business and industry) 

• We always kept enough in reserve to last at least a month since this has been the longest time 

period we have been out of work. Now I don't have any idea how long it's going to last and our 

cash reserves are dwindling. 
117 

• As one of the businesses on this panel directly involved in the oil/gas industry, can you outline in 

greater detail the indirect impact the moratorium is having on businesses outside the energy 

industry (vendors, contractors, advertising agencies, etc.)? 

• We had budgeted this year for at least 50K in capital improvements to our facility that will not 

take place. Our roof, ceili!1gs and AC have needed repairs since Gustav but were strapped for 

funds and felt we would wait until we were in a better position to pay it off instead of taking a 

loan to do the work. I have cancelled all repairs that had been scheduled only weeks before the 

moratorium took place. 

• We will not be purchasing promotional items or have our annual company Christmas party. These 

may seem small but to these vendors and our employees it is a large hit when you have planned 

for these to take place. 

• Our advertising budget is completely cut. We will not be participating in any industry or 

community sponsored events for the remainder of this year. We have dropped our positions in all 

charity auctions as well as fundraiser golf and sporting events. 

• Our normal donations to various schools (Nicholls, Terrebonne Foundation for Academic 

Excellence) and non profit organizations (Chamber of Commerce, Women's Business Council 

South) have been cut. 

• We were in the process of updating our marketing materials which have also been put on hold. 

• No new computer equipment will be purchased. 

• We basically have a spending freeze on anything non essential purchase. 

Question #3-De Facto Moratorium by Regulation 

It is my understanding that deepwater drilling clients account for over 70 percent of your business. In 

your testimony, you note concerns over the possible financial burden resulting from new 

safety/performance regulations on deepwater drilling. 

• As a small business in the oil industry, can you comment on the process now for getting a shallow 

water drilling permit? The lack of communication and trust between the new BOEM and the 

Obama Administration is quite possibly the most severe bottleneck in the whole chain of events. 

The new bureau in charge of oversight and permit issuance, the BOEM is staffed primarily with 

the remaining bones of the original MMS. These were good people who cared about what they 

were doing and who arc now afraid to make a decision for fear of what may happen to them as 

they have not been given any hard and fast rules that say yes you can do this or no you can not do 

that. There is no process or rules to judge appropriateness of a perm it application that I am aware 

of. It is a real mess!'!! 

• No one wants deepwater drilling to be safer more than Louisiana small businesses. Can you 

comment on how stricter deepwater drilling regulations might impact your small business? Time 

will only tell. We are preparing for the worst especially since recently we have had to take a hard 

look at our contractual agreements and been asked to renew or review old agreements with some 

clients. Many have strong language and requirements which there is literally no insurance 

coverage available. Many companies will choose to sign because they have to be able work which 

out weighs the risk of loss of business. Safety has always been foremost in ALL deepwater 

operations. Ironically enough BP set the benchmark in the early days for the strictest 

requirements for safe operating procedures. This industry is SAFE and always has been. This was 
118 

the "perfect stonn" of events that could never have been predicted. This was caused by a couple 

of careless individuals who chose to ignore the safety procedures already in place and now an 

entire industry is suffering for it!!!!!!!! 

Question #4 - Individual Business Impact 

Your testimony provided us with a detailed look at what your businesses do and how the moratorium will 

impact businesses like yours along the Gulf Coast. I am interested in better understanding how 

specifically the moratorium will affect your business. 

• Will you be able to maintain a viable business if you are not able to sustain your customers for 6 

months? 

• We will IF we can develop the international markets that we are currently working on, Saudi 

Arabia, Nigeria and Norway and hope to establish a market and location in North Louisiana, 

which ALL will take capital to build and support. 

• Do you plan to keep all of the employees that you had before the moratorium on your payroll and 

if not how many employees will you need to let go in order to get your business through this 

period? 

• Pay cuts will come before layoffs and after this we will have to decide where the need is the most 

depending on what we are able to develop and how fast. I will probably first have to release our 

consultant in Maine. 

• Are there other SOurces of income that you can exploit in order to bridge the gap for the duration 

of the moratorium? (YeslNp) 

• It would have been fair to encourage BP to utilize local companies for support. We have been told 

that they were trying to do this but have gotten nothing but run around from all .... very frustrating. 

We were even told that we had a Master Service Agreement in the mail over 1 month ago. The 

competition being utilized in some cases have never worked or supported the oil and gas industry 

with costs higher than we have ever been able to demand. 

• Nothing more than I haven't already explained. 

Question #5 - Compensation for Economic Iujury 

The Louisiana Mid-Continent Oil and Gas Association estimates that lost wages could be as high as $10 

million a month for each of the 33 drilling rigs idled by the moratorium. The Administration has 

announced that a fund of$100 million is set aside for rig workers idled by the drilling moratorium. This 

fund is separate from the $20 billion escrow account BP established in coordination with the 

Administration. 

• $100 million seems like a drop in the bucket compared to the potential lost wages from the 

moratorium. Do you believe this funding would be sufficient to compensate workers impacted by 

the moratorium? (YeslNo) 

• NO and who is going to compensate me for the loss revenues, returned inventory, loss of market 

share when work returns since big business will be squeezing us harder than ever to try and 

regain their losses. We have no protection or guarantee that this will ever rebound. Will we be 

able to afford the insurance? Our cost of materials has been going up since it is all directly 

impacted by oil. 

• The J 00 million does not include or help me. I have an employee that has 75% less offshore days 

in comparison to last year, he will make 50% less income .... is he eligible. There is no clear 

answer as to who is eligible. I have instructed him and support him in filing a claim. 
119 

Question #6 - Small Business Recovery 

The Small Business Administration is offering disaster loans and deferring existing loan payments for 

businesses impacted by the oil spill. It has been noted by other witnesses at our last hearing that 

withdrawing the moratorium is a far simpler solution than giving businesses additional debt. 

As you may know, I have put forward a bipartisan proposal to provide interest relief on impacted small 

businesses with disaster loans from the 2005/2008 hurricanes. The proposal would lower monthly 

payments by reducing interest owed on the loans by up to $15,000 over three years. Unfortunately, this 

proposal has run into resistance from certain members of our committee. 

• If possible, can you comment on how this proposal may benefit business impacted by the oil spill 

andlor the moratorium? 

• I wish I could say this will help. We have never had to borrow money to support our company. It 

seems very odd to think about doing this. I suppose it would be better than no help at all. I just 

don't have a good answer and will try to make the best of what comes our way. We will also need 

more advice and guidance which will cost money. 

• Honestly when you look arour cost to compete $15,000 over 3 years is just not much of a savings 

and I will ultimately pay for this anyway. Nothing is given by government that isn't taken from 

somewhere else! 

Question #7 - Indirect Impact of Moratorium: 

In your testimony, you note that it is not just businesses/employees directly employed in the energy sector 

that are impacted by the moratorium. 

• For the committee record, do you agree that while the moratorium was intended to improve 

safety in deepwater drilling, it is instead hurting the various businesses and communities 

recovering from the oil spill? (Yes/No) YES absolutely! We are 

suffering and recovery will be long and slow. 
120 

Chair Mary L. Landrieu 

Small Business Cnmmittee Hearing: "The Deepwater Drilling Moratorium: A Second Ecnomic 

Disaster for Louisiana's Small Businesses" 

Questions for Mr. Charles Goodson, Owner, Charley G's Restaurant 

Question #1 - Inland vs. Coastal Impact 

Dun & Bradstreet's testimony before my committee last month noted that only 27 percent of small 

businesses impacted by the moratorium are located in coastal counties. 73 percent are located inland 

"suggesting that a moratorium could be felt more broadly throughout the Gulf Coast states." An example 

is that in here in Lafayette Parish alone, 780 businesses with 10,500 employees are potentially impacted. 

• Can you describe in greater detail this possible upstream/downstream impact of the moratorium 

on your business or businesses you work with on a daily basis? 

• 

Question #2 - Indiyidual Business Impact 

In your testimony, you talk about surviving the oil bust in the mid-1980's. There are many parallels 

between the oil bust and this recenf moratorium. That was a certainly a difficult time for south Louisiana, 

and especially for businesses here in Latayette, As you illustrate very well, the moratorium has the 

potential to kill jobs not just in the oil industry but also in service industries, such as restaurants, that rely 

on these employees for business. 

For example, you note that the Louisiana restaurant industry is the largest private sector employer in 

Louisiana with 145,000 direct jobs and another 70,000 indirect jobs. 

• For the record. can you reiterate that if the moratorium continues, restaurants such as Charley G's 

will have to discontinue services. reduce operating hours, and cutback employees? 

• You outline that discontinuing lunch would result in a loss of 25 percent of your staff (11 

employees). Can you describe how discontinuing lunch would also impact other businesses 

which supply/service Charley G's? 

Question #3 - Individual Business Impact 

You have all provided us with a detailed look at what your businesses do and how the moratorium will 

impact businesses like yours along the Gulf Coast. I am interested in better understanding how 

specifically the moratorium will affect your business. 

• Will you be able to maintain a viable business if you are not able to sustain your customers for 6 

months? 
121 

• Do you plan to keep all of the employees that you had before the moratorium on your payroll and 

if not how many employees will you need to let go in order to get your business through this 

period? 

• Are there other sources of income that you can exploit in order to bridge the gap tor the duration 

of the moratorium? 

Question #4 - Small Business Recoverv 

I note that the Small Business Administration is offering disaster loans and deferring existing loan 

payments for businesses impacted by the oil spill. Rightly, I think, it has been noted by other witnesses at 

our last hearing that withdrawing the moratorium is a far simpler solution than giving businesses 

additional debt. 

As you may know, I have put forward a bipartisan proposal to provide interest relief on impacted small 

businesses with disaster loans from the 2005/2008 hurricanes, The proposal would lower monthly 

payments by reducing interest owed on the loans by up to $15,000 over three years, Un!ottunately, this 

proposal has run into resistance from certain members oftbis committee, 

• If possible, can you comment on how this proposal may benefit business impacted by the oil spill 

andlor the moratorium? 

Question #5 - Indirect Impact of Moratorium 

In the testimonies, many of the witnesses note that it is not just businesses/employees directly employed 

in the energy sector that are impacted by the moratorium, 

For the committee record, do you agree that while the moratorium was intended to improve safety 

in deepwater drilling, it is instead hurting the various businesses and communities recovering 

from the oil spill? (Yes/No) 
122 

Chair Mary L. Landrieu 

Small Business Committee Hearing: "The Deepwater Drilling Moratorium: A Second Ecnomic 

Disaster for Louisiana's Small Businesses" 

Questions for Mr. Troy Cloutier, Regional President, MidSouth Bank 

Question #1 - Inland vs. Coastal Impact 

Dun & Bradstreet's testimony before my committee last month noted that only 27 percent of small 

businesses impacted by the moratorium are located in coastal counties. 73 percent are located inland 

"suggesting that a moratorium could be felt more broadly throughout the Gulf Coast states." An example 

is that in here in Lafayette Parish alone, 780 businesses with 10,500 employees are potentially impacted. 

• Can you describe in greater detail this possible upstream/downstream impact of the moratorium 

on your business or businesses you work with on a daily basis? 

I would agree that more of the deep water is serviced out of Lafayette but as stated during the hearing 

in Lafayette the moratorium is affecting the shallow water as well. My guess is that the numbers 

above are the companies that are directly affected but we need to take a broader look at the economy. 

I think that about 80% of the economy in Terrebonne and Lafourche is affected by the oil and gas 

service industry. Houma has seen growth in retail over the last 5 years and many of those companies 

are being affected by the moratorium due to the fact that people are not making what they were by 

working offshore so they are not going out to eat or buy things. The retail and other companies are 

not being added into the numbers above because they are not directly affected. 

We as a bank are not being added into the numbers above but we have seen some slowdown in 

payments and loan demand. We have to work with companies to help them pay their bills because 

they do not have the money to do so. This is taking time and effort from our employees. 

Question #2 - Qil Bust vs. Moratorium Impacts on Real Estate 

This region unfortunately saw businesses and their employees move out of state during the 1980s oil bust. 

Real estate, as a fixed asset, tends to follow the local economy and local employment figures. 

A July 18, 2010 Daily Advertiser article noted this: in 1982, the average price of homes reported as sold 

in Lafayette was $92.470. By 1988, the average had dropped to $58,751. The prices did not return above 

earlier levels until 1995 when it hit $94,015. 

By comparison, the number of residential listings stood at 3,896 in 1982. In 1985, there were 7,874 

homes on the market in Lafayette. Only 1,896 of those homes sold - 24 percent. I am concerned that 

continuation of the moratorium will similarly impact local real estate markets and local jobs in this sector. 

Can you describe the potential impact on the local real estate market if the moratorium results in 

significant job losses in this area? 

Today houses in South Louisiana are not moving. Houma was one of the best housing markets in 

the country. I personally sold my house in Houma in April. It took me 3 days to sell it and I got 

more then what I thought I would get. Today in talking to Ron Brooks who owns a real estate 

agency in Houma he says nothing is moving. He says that the units are down 18% for this year 

over last year and the dollars are down 24% for this year over last year. This is with record 

setting interest rates. Rates have dropped by a half a point since April of this year and we are still 

not seeing any activity in the markets. 
123 

The demand today is not there to sell houses. Because of this the prices of real estate in the 

market will be affected over the next few months. People are scared that they will not have a job 

so this is causing them to not by new houses. 

Question # 3- Individual Business Impact 

You have all provided us with a detailed look at what your businesses do and how the moratorium will 

impact businesses like yours along the Gulf Coast. I am interested in better understanding how 

specifically the moratorium will affect your business. 

• Will you be able to maintain a viable business if you are not able to sustain your customers for 6 

months? 

Yes we will be able to maintain a viable business because we are not concentrated in South 

Louisiana and we are not directly affected by the oil industry. In being a bank we will see many 

of our customers go out of business and have many sleepless nights about their business 

surviving. 

• Do you plan to keep all of the employees that you had before the moratorium on your payroll and 

if not how many employees will you need to let go in order to get your business through this 

period? 

We will not have massive layoffs because of the moratorium we may have to loss some boxes at 

the bank. We are seeing many of our customers cutting back and employees are the biggest 

expenses that they can cut. They are looking out for them and their family. They want to make 

sure that they will still have a company that can make a good income for their family after the 

moratorium. 

They are also worried about the tax increases that are coming on January 1 because the Bush tax 

cuts are not being renewed. Some of them are taking big distributions this year and not taking as 

much over the next few years because it will cost them less in taxes. This may also affect them in 

hiring people back once they are cut. At the end of the day this will affect the income stream of 

the country. 

Are there other sources of income that you can exploit in order to bridge the gap for the duration 

of the moratorium? 

There are no other sources of income that the bank can exploit to bridge the gap. We are losing 

some of our income with all of the regulations that is being voted for in Washington. We are 

losing some interchange fee with the Dodd-Frank bill and our NSF fees are being looked at every 

day. 
124 

Question #4 - Small Business Recovery 

I note that the Small Business Administration is offering disaster loans and deferring existing loan 

payments for businesses impacted by the oil spill. Rightly, I think, it has been noted by other witnesses at 

our last hearing that withdrawing the moratorium is a far simpler solution than giving businesses 

additional debt. 

As you may know, I have put forward a bipartisan proposal to provide interest relief on impacted small 

businesses with disaster loans from the 2005/2008 hurricanes. The proposal would lower monthly 

payments by reducing interest owed on the loans by up to $15,000 over three years. Unfortunately, this 

proposal has run into resistance from certain members ofthis committee. 

• If possible, can you comment on how this proposal may benefit business impacted by the oil spill 

andlor the moratorium? 

This is the same area that has been affected by hurricanes over the last few years. Some of these 

businesses have already gone out of business because of the problems that they had in the past 

few years. Some of these have gotten loans to carry them through the last few years. They did 

not cause the Hurricanes and they did not cause the oil spill but they are being penalized by the 

government because of it by the Moratorium. These businesses need some relief to stay in 

business and this would be a great start to assist them. 

We as banks are being asked by our regulators to work with the companies that we have loans to. 

We are giving them loan extensions for a few months. If the banks can give them relief the 

government, which has caused the problem, should give them some relief. If the company goes 

out of business you do not get paid back and we do not get paid back and employees lose their 

jobs. 

Question #5 - Indirect Impact of Moratorium 

In your testimonies, many of you note that it is not just businesses/employees directly employed in the 

energy sector that are impacted by the moratorium. 

For the committee record, do you agree that while the moratorium was intended to improve safety 

in deepwater drilling, it is instead hurting the various businesses and communities recovering 

from the oil spill? (Y es/No) 

Yes this is killing one of the best economies in the nation. 
125 

Chair Mary L. Landrieu 

Small Business Committee Hearing: "The Deepwater Drilling Moratorium: A Second Ecnomic 

Disaster for Louisiana's Small Businesses" 

Questions for Lieutenant Governor Scott Angelle, State of Louisiana 

Ouestion #1 - Oil Spill Cleanup Jobs 

Some have countered that the jobs related to the current oil spill cleanup/mitigation efforts offset any 

possible jobs lost as a result of the Administration's drilling moratorium. I am concerned about this 

argument as it seems to miss the point. If you are employed in these industries and or have met with 

these impacted businesses, it is clear this is not an 'apples to apples' comparison. A boat captain 

skimming oil for BP makes significantly less than they would catching seafood. With the recent progress 

on capping the Deepwater Horizon well, these jobs are now set to soon disappear. 

• Can you comment on this "red herring" argument that oil spill cleanup jobs are offsetting jobs 

lost as a result ofthe moratorium? 

The argument that oil spill cleanup/mitigation efforts offset jobs lost to the moratorium ignores the 

fact that workers in the portion of the exploration industry directly impacted find themselves in the 

position of going from jobs they already held and are trained and experienced in to competing with 

others for jobs - including workers from out of state - that will continue to dwindle as the cleanup 

progress and fewer tasks exist for workers for whom environmental cleanup is not a specialty. It also 

ignores the impact on businesses that support and supply direct exploration operations such as food 

suppliers, equipment repair and supply shops, and transportation companies. While some rig 

operators and other companies directly involved in deepwater drilling have continued to employ 

many of their workers they cannot do so indefinitely with no certainty of when drilling will be 

allowed to resume. And in the meantime, they are not doing the same level of business with the 

companies that have provided equipment, supplies and services. 

Ouestion #2 - Natinnwide Impact ortbe Moratorium 

In previous testimony, you have noted that five (5) of the seven (7) experts chosen to review the 

Department of Interior safety study that led to the moratorium publicly opposed the use of their names 

and involvement to justifY a blanket moratorium. These experts, on page 2 of their letter to my office 

stated: "A blanket moratorium is not the answer. It will not measurably reduce risk further and it will 

have a lasting impact on the nation's economy which may be greater than that of the oil spill." 

You have also previously outlined the impact that shutting down domestic drilling and increased oil 

prices has caused on the pocket books of American consumers. In particular, production was interrupted 

by Katrina and Rita in 2005 and the national average of the price of gasoline rose 46 cents. It is estimated 

that a 50 cent increase in the cost ofa gallon of gasoline costs American consumers $1.4 billion per week. 

• Can you outline why consumers in other parts of the country, not just here in Lafayette, should be 

concerned about the deepwater drilling moratorium? 

Simply put, there is no sector of the economy or the nation that is not impacted by threats to the 

availability and price stability of oil and natural gas. Every home and business depends on goods and 

services that involve either travel, transportation of goods and equipment, use of energy for climate 

control or combinations of some or all of those factors. Oil and natural gas are unquestionably the 

dominant sources of energy for transportation by land, sea and air, while natural gas has continued to be 
126 

an increasingly critical part of our nation's supply of electricity. The declared six-month moratorium, 

while not directed at production, is having an impact on production because planned wells are not coming 

on line to replace older wells. At six months, the moratorium is expected to cut domestic production in 

the Gulf by 4 percent - an amount that will not be caught back up for several years. A longer moratorium 

will mean greater loss of production and longer periods for recovery. During that time, the U.S. will need 

oil from other sources, such as imports, to meet demand exposing the national economy to a greater 

degree to instability in global prices and increasing the need for shipping oil from overseas. The nation 

has seen in recent years what can happen when fuel prices spike too high, too fast. The reaction to the cost 

of oil and gas in 2008 fed the storm that swept up our national economy and helped cripple our car 

manufacturers, our banks, and our housing markets. We have had six recessions in this country since 

1972. Prior to each one of them, the price of oil saw a sustained increase over the previous year. A major 

increase in fuel prices has almost always been an indicator of a major recession or downturn in our 

economy. At the same time, the transportation of oil has been shown to create a far greater risk, year in 

and year out, of exposure of the environment to man-made oil spills and leaks. 

Question #3 - Environmental ImpactiNational Security Impact of Moratorium 

Two of the reasons cited by the Administration for its moratorium are: 1) environmental concerns and 2) 

public safety. In my view, the moratorium is not the answer to addressing these valid concerns. For 

example, the effect of the moratorium could send these U.S. rigs to foreign waters. These countries often 

have looser environmental regulations than the U.S. This also makes the U.S. further dependent on 

foreign oil- often from countries that are not our friends. 

Can you comment, outside of the economic impacts which have been well documented by this 

committee, on the environmental/national security impacts ofthe moratorium? 

The longer the moratorium lasts, the more domestic production from the Gulf, which makes up roughly 

one-third of U.S. domestic production, will fall off as production from older wells is not replaced by 

newer wells. Less domestic production means a heavier reliance on imported energy to meet U.S. energy 

demands. Increasing that dependence creates a greater exposure of the U.S. economy and the nation's 

security to instability in global energy markets and areas and nations of the world whose interests may not 

coincide with those of the U.S. or may even be overtly hostile at times. This places far too much influence 

on our nation's ability to manage its own economy and the critical need for energy in the hands of 

interests outside our borders. 

Greater dependence on foreign sources also creates a greater need for the shipping of oil. National 

Research Council work on estimating the greatest threats of release of oil into the oceans has shown that, 

historically, the transportation of crude oil or refined products results in the release of three times more oil 

into the waters of North America than do exploration and production activities, and transportation 

accounts for about four times more oil released globally than does exploration and production. 

Question #4-Importance of Energy Iudustry to Coastal Communities 

In his testimony last month before my committee, Dr. Joseph Mason from LSU discussed how important 

the energy industry is to local communities such as those in your parishes. This is also reiterated today in 

many of your testimonies. Not only are there the direct jobs created by those working on the rigs, but 

entire communities also are tied to this industry through local economic activity generated by rigs, their 

workers, and related businesses. 
127 

• For the record, can you outline how important the energy sector is to communities such as Port 

Fourchon, the Port of Iberia, and Morgan City? 

According to an economic study conducted by Loren C. Scott & Associates, Port Fourchon's annual 

regional direct impacts include $ 1.5 billion in business sales, $350 million in household earning, 8,169 

jobs, and $12 million in taxes to local governments. Nine of the top ten tax payers in Lafourche Parish 

have facilities in Port Fourchon. Sixty percent of the Lafourche Parish tax base comes from the area 

between the Intracoastal Canal and Port Fourchon, and 80 percent of that comes from Port Fourchon and 

watercraft. Port Fourchon currently services 90% of the Gulf of Mexico deepwater oil production, and it 

plays a strategic role in furnishing this country with nearly 18% of its entire oil supply. The property tax 

base of Lafourche Parish may lose as much as $30 million to $40 million dollars of its total current annual 

average of$80 million in tax revenues if the moratorium remains in effect. 

The Port of Iberia's primary function is to support the offshore oil and gas industry in the Gulf of 

Mexico. It is a sixty year old fabrication and service port that supports over 100 different businesses with 

a workforce of 5,000 employees, a payroll of $165 Million and an economic impact of $1.4 Billion. Its 

labor force comes from the surrounding seven parish area. The Port's predominant activity is producing 

topsides for large production platforms. Other port tenants support the offshore industry by supplying 

some of the basic parts needed by many segments of the industry. Pressure vessels used in component 

fabrication, corrosion resistant pipe used in the fabrication process and pipe used for subsea delivery 

completion units and oil! gas transmission are also manufactured and fabricated at the Port of Iberia. 

In an economic study recently completed by Dr. James A. Richardson, LSU, in June of 2009, he noted 

that the Port of Iberia region of the State has accounted for the fastest growing part of the State for the 

past eight years and that this growth was driven by the energy markets and grew despite two major 

hurricanes (Katrina and Rita). It has certainly been a growth engine for the State. Fabricated metals and 

manufacturing machinery industries are a major economic driver in the area and the industries are almost 

entirely oil and gas related. 

Question #5 - Timeframe of Moratorium 

In previous testimony, you have cited a June I", 20 I 0 Morgan Stanley report estimating a 60 percent 

chance that the moratorium will last at least a year to 18 months. This same report estimates a 35 percent 

chance that the moratorium could last 4 years and only a 5 percent chance that deepwater drilling will 

resume by next February. This type of report bases these estimates on a concern of the Administration's 

ability to quickly promulgate regulations in a timely fashion. 

This committee has previously heard testimony about the de facto shallow water moratorium, an area 

where drilling has come to a near halt due to slow permitting. 

• If the Administration determined tomorrow that the moratorium is impacting the Gulf Coast 

economy and set about promulgating new regulations, what is a conservative estimate on how 

long it may take for actual drilling to resume in the Gulf? 

That is going to depend on what the new rules require, the time of year the rules are enacted and how long 

the delay might be. The longer the moratorium is in place, the longer it is going to take to get the 

deepwater drilling rigs back in place and operational. I am estimating that it could take months to get the 

industry back to where it was before the Deepwater Horizon incident. The longer the moratorium 

stretches, the greater the risk that deepwater operators will commit assets and employment to other parts 

of the world making commitments that will not all for a return to the Gulf for months or years beyond 

the eventual end of the moratorium. 

• Can you outline the process now for getting a shallow water drilling permit? 
128 

The shallow water pennitting process now centers on the interpretation and execution of BOEMRE 

NTL's 05 and 06, issued earlier this year, and drilling has come to a near halt, even as the industry 

has reached out to the regulator to find a way forward. [n 2009, before the moratorium, the lowest 

new pennit total for a single month in OCS shallow waters was eight. The number of new shallowwater penn its approved in the three months after the deepwater moratorium combined, five, did not 

even match that low-water mark. We have hosted over a dozen conference calls, each with 25 to 30 

participants, since June 22, and a well-attended workshop for industry to get into the details on 

exactly what is being required within the NTL-06, yet since this effort begin, pennits for only two 

new wells have been issued under that guidance - and this is in an area that both the President of the 

United States and the Secretary of Interior have publicly stated are open for drilling. [t is critical 

that BOEMRE employees operate within a culture that allows them to issue the very penn its that the 

President and the Secretary have indicated are available. We have heard from a variety of folks within 

the agency that they are fearful to lose their jobs if they do their jobs in issuing penn its. I think it is a 

concern worth revisiting and providing an increased management review of the shallow water 

pennitting, at the most senior levels of our federal government. 

Question #6 - Inland vs. Coastal Impact 

Dun & Bradstreet's testimony before my committee last month noted that only 27 percent of small 

businesses impacted by the moratorium are located in coastal counties. 73 percent are located inland 

"suggesting that a moratorium could be felt more broadly throughout the Gulf Coast states." An example 

is that in Lafayette Parish alone, 780 businesses with 10,500 employees are potentially impacted. 

• Can you describe in greater detail this possible upstream/downstream impact of the moratorium? 

The simple answer is that no industry operates in isolation. [f an auto mannfacturing plant closes, the 

impact is felt by the local community and by the vendors who sell parts and components to that plant. 

These are always ripple effects. A worker loses a job on a rig, so he spends less at the grocer, auto dealer, 

movie theater, restaurant, gas station, and other small businesses. Each of these places then reduces their 

orders to their suppliers, who then are losing business, so they reduce orders to their suppliers, and the 

cascade effect continues. The loss of earnings leads to spending cuts, which impacts many more 

businesses. At the same time, the rig that is not now operating will need fewer gallons of fuel, less food 

from caterers, less pipe from a pipe fabricator and fewer services from supply vessels. Less business to 

the caterer means fewer purchases from vegetable growers, chicken fanners, cattlemen and bakeries that 

may be located all over the southern part of the state. The cattleman will need less feed, which may affect 

fanners two parishes away. 

Downstream refers to refining and marketing operations, while upstream refers to exploration and 

production activities. Thus vendors who supply the obvious support activity, such as welders, boats, 

helicopters, catering services are immediately impacted. Next the vendors who do business with those 

companies are adversely impacted and so on down the line. Today, refinery margins are low and 

refineries are not operating at near total capacity. Thus some refineries are taking some units out of 

service and some refineries are being closed. Each refining job supports 11 other jobs, according to a 

study conducted by Louisiana Mid-Continent. 
129 

The oil and gas industry has enjoyed a mutually beneficial relationship over the past 100 or more years, 

The Deepwater Horizon event was a disaster in that 11 people died, However, just as we keep flying after 

an air plane crash, keep driving after a car accident, a rebuild after a hurricane, there is no reason to halt 

drilling in the deepwater Gulf for one tragic incident 
130 

Chair Mary L. Landrieu 

Small Business Committee Hearing: "The Deepwater Drilling Moratorium: A Second Economic 

Disaster for Small Businesses" 

Questions for Ms. Charlotte Randolph, President, Lafourche Parish 

Question #1 - President Obama Meeting: 

It is not often that we have witnesses before our committee that have discussed the hearing topic with the 

President of the United States. With that in mind, on May 2Sth you had the opportunity to personally ask 

the President to reconsider his decision on the moratorium. 

• Can you tell us a little more about this discussion with the President and the follow up from his 

visit? 

The President's response to my request that he reconsider his decision on the moratorium 

was that he felt that the mood of the nation was such that he was compelled to take this 

action. He cited the 2417 news media coverage of oiled birds and beaches inDuencing public 

opinion. I reminded him that unemployment and energy costs would rise as a result of his 

action, but he was unswayed. He did offer to send an economic team to study the ban's 

impacts, but the team did not arrive until late July, and the members were initially directed 

to focus on the effects of the oil spill. I also mentioned the amount of royalty revenue 

derived from the Gulf waters and he conceded that potential loss. 

The topic then turned to coastal restoration projects. Mr. Obama said that this was an 

opportunity to address some of the projects, with BP assisting in funding. 

On the beach, I pointed to the visible near shore platforms and reminded him of the safety 

record of the industry, noting that some 50,000 rigs had been drilled in 60 years in the Gulf. 

Dolphins were playing as we talked and I told him of the happy coexistence of commercial 

fishing with the energy industry. 

In your testimony, you mention that 9 of the top 10 taxpayers in Lafourche Parish are located in 

Port Fourchon. This is because Port Fourchon services all 33 rigs impacted by the moratorium. 

How are small businesses faring in Port Fourchon under the moratorium? 

Barely eking by. September is a pivotal time for them, for they have just ahout exhausted 

any excess resources. The owners are being very tight-lipped about their current status in 

the event a rare job is offered. 

An example: Schlumberger consolidated its Venice office with Larose (in Lafourche 

Parish), building a $3 million building to house hundreds of workers. Now most of those 

workers have been transferred throughout the country and the world, with a staff of 10-20 

people at most. The restaurant next door to Schlumberger has experienced a 30-40% 

reduction in business. 

Independent mechanics and welders who would normally service both the commercial 

fishing and marine support vessels have not worked in two months. The claims process is 

thus muddled because BP will only pay for their fishing clients, not work on the tugboats 

that are affected by the moratorium. 

Trucks are idle at the trucking companies, reducing the local gas stations' normal sales. 

Ouestion #2-Importance of Energy Industry to Coastal Communities: 

In his testimony, Dr. Mason from LSU discussed how important the energy industry is to local 

communities such as those in your parish. Not only are there the direct jobs created by those working on 
131 

the rigs, but entire communities also are tied to this industry through local economic activity generated by 

rigs, their workers, and related businesses. 

• For the record, can you outline how important the energy sector is to communities such as Port 

Fourchon in your parish? . 

• With deepwater drilling, the oil and gas industry has experienced a sharp increase in 

business, and thus needed additional employees to man the vessels, to work at the Port, in 

general to service the industry. Aside from excellent pay, the service industry competed for 

workers by offering superior benefits. This resulted in a huge majority of the parish 

residents seeking medical care to be insured. There are three hospital in the parish, as well 

as perhaps two hundred physicians who benefited from this situation, for we all know how 

little the government pays on its own programs. Of course this meant additional office 

personnel and health care professionals. Now the medical sector is suffering. 

• The parish school board planned a new career school, aimed at the students who are not 

destined for college. Because the state had begun to experience some of the national 

economy's problems, some parish teachers were laid off prior to the spill, for this new 

school year. With the uncertainty surrounding the moratorium, and the potential for a 

reduction in ad valorem taxes, the career school project has been postponed indefinitely. 

• The Greater Lafourche Port Commission, which governs Port Fourchon, has reduced the 

rent it charges its tenants by 30%. This decrease in revenue will postpone indefinitely any 

expansion projects planned for the future, and affect the commission's ability to match state 

and federal grants. The toll road leading to Port Fourchon, which was built with borrowed 

money, can only be timely repaid with a steady stream of vehicles traversing it. Those 

numbers have declined. 

• The parish had planned to seek voter approval in October to redirect some taxes to fund a 

new jail to replace our antiquated, overcrowded detention center. We must delay any action 

on improving our current jail until we can assess the impact of the ban on funding sources. 

• A reduction in taxes will alter public works projects, including roads and pumping stations, 

and could change garbage service, depending on the impact. Quality of life issues will suffer. 
132 

Deepwater Gulf of Mexico 

In 

in 

Acee tm 

Stand by Due to Moratonwn 

:vioratnrillm has had lm nm::e 

market. Through 

current status, Once 

We Do 50"1.:1 Shelf Work 

PDR Solvent 

PDR Solvent & Olsplacement 

Could 0 

PDR Solven! 

Minimal 

Mlmmal 

PDR Solvent 

or 

0.00 

82.56600 

150,00000 

0.00 

109,000 00 

109,00000 

325000.00 

0.00 

000 

65.000 00 

3(>0.000 00 

0.00 

65,00000 

0.00 

0,00 

65,000.00 

000 
133 

Shelf Gulf of Mexico 
134 

leep Water Work History 

Qillie&TiB ~B!:s !::IISIQ8:l !2§§PWATER WORK HISTQ8Y 

""""'- Wlli.!t 

""""'"" """"""'" ~ ~ '""" f'l!9.1.lli OPERATOR LOCATlQN °3:~~ .QME SlIvonlp Shell Alamlno!lC;'uWonBlock857 Macaroni SheUOffshore GlIrden Bal'lk1l 802 WaUSAOO2 10108 WeIlAt14 1)1101 WanSAOO1 12108 WetlA#Z 111911 Mlsslsslppl Canyon Block 896 071911 .,."" ShellQITshore VIOscllKno1l1l5& W~I #1 11107 

Wen WetlA#10 10/05 tI4 "., Wenf/S "'" WeIlA#3 , .. , Gnlan Canyon &53 WeUA#111 

Wa1lK1.2 ''''' 11101 WelllVl1 

WtIIIG1-1 01108 w.lIA#13 "''' Wal1G1.2 "''''' Vlo,ea KnoUII30 

WenC1-4 , ... Wen A#3 ST WalIG1.3 """ ""'. Well A#19 ST WeUS2-4 "'" 07108 WeIlAIt9ST WaUK1-3 07108 WeUAtnST "'''' WelISB202 '"'" ''''. WeIlA'10ST 04/0$ WelISCf02 02109 WellA#2:4 """ WeUSS2-2 0Z/09 

Well SB2-3 "., Wel/AII21 ,." WelIG1-4 WellA#13 11102 OSl09 

MississippI C",nyon Block 782 WellAiII11 

Well OM#OO3 """ """ WellAII18ST 

Well #2ST1 01101 WeUAII14 "''' WeIl#18P4 ,." WellAiII8 """ (111)2 

Neptune AtwaterVaUeyBlock574 Agate 

~~~~ Ship Sholll 381 Well #3 .. ,' WaU S8 #02 ST1 01108 Typhoon Green Canyon 237 2000' 

WI!llSC#01 ST3 """ Well #1 WBiII2 Well #03 """ Well 112 WellSC#02 '"'" , ... Green Canyon 23SWeIl #2 03101 WellS802 ,." Well i113WU 112 Ramlngton Garden Banks Block 50s Prtneen Shell Offshore MlssisslpplCanyon7GS WeU/1'3 '''''' WellP#S """ We" #2 

Shall Mississippi canyon Block 809 A;II4 ST2 '''" 870(!' """ ''''' WellP#3 ""'. Shel!Ot'I"shortl Vlosca Knoll 783 1525' WeIlP#2 07103 

W.Uf4Mj """ 06103 

w..UAJ/3 "'" Shell Offshoffl Garden Sank$ 386 

Well A#'- ,." LL#1 2518' ON'" WallA1l1 ., .. 2632' 

Well #5 "'" ''''' Glider Shell OffshOrt! GI1!enCanYOn248 OmonCanyonBle<:k51I65640PN.a01 GW ,..,' 07K14 WeilPN/tOO1 "'" GU" 321>5' 07/04 WelISSIIOO1 03107 ,.,,' wen PS#OO3 01107 Auger Garden Bank$426 WeUPNiIIOO2 ,,., We1lA#10 wen PS#OOf OSl06 WeUA#13 07107 W.II PS#IKl2 , ... WeIlA#8 "'''' W.UP$#008 02/10 

Mlssl5$lppICanyon636 We!lA'2 01107 

WellAJ/.5 ''''. WellA#16st1 0710$ 

Wel1A#4 03103 Man~tee S/lellOl'fshore Green Canyon 155 

WellAll2 "'" Crosby Shell Offshoffl MisslsslpplCanyon899 

Wel1A113 09/97 Well Pastel Pink WeUAII1 "'" ''''' WellAJI6STiII7 10101 

Full GrHn Canyon SOlI wen #2 4275' 01198 WeUAII5ST#2 07101 Gnlen canyon 505 Well #1 4275' ""'51 

""'~ ""''''' Ewing Bank 917 WeU #1 1267' 03198 Oregano Garden Bankll 559 Genesis Oreen Canyon 205 '"'' WeU#2 STl3 08101 WellAll1 Well#1ST#1 07101 W.1IA#17 

WellAJI15 Europa Shell Offshore MississipplCllnyon934 

W.UAII18 We!!A#8 

WellA#8ST#1 11100 12105 

WenA/l1 08100 WellA#3 

WellAll12 "'" """ WeUAJt4 07101 

WellAlU> ,." Garden Banks 412 

WIIlIA,#5 ,." WelISEi113 05105 

WellA114 "". Well#1ST#l WellM'3 "'" "''' Shell Offsllore VloscaKnolltl72WeIl#1 """ 12/01 W.UA#t4 "'" M!sslsslpplClIIlyonn3 5610' WellAll2 WeH#A-5 03105 Typhoon Oreen Canyon 237 Well #7 01102 W.U#2 "''' WtllI#ti WeU#1 ''''' """ WtlUII4 5424' """ Well #3 

popeye Green Canyon 118 """ Well" 5424' 01105 

WeUA#4 02102 RIgel wen #1 5301' OVOS 

WellA#1 """ Seventeen Hands DomIniOn WeIl.1 

Mississippi Canvon 2.92 "'" 11102 

WeU#4 "''' MtsslsslpplCanyon813 

WeI! #3 ST#1 07199 CoulombCII3 

W.U#1 ,." Mississippi Canyon 857 

Desoto Canyon Well illSSOO2 7859' owns CoulombCill2ST#3 OIlSOtOCanyonW"U#1 "'" "'" SheHOffshore Garoen Banks 341 ShflllOffsholll oreenCanyonS5 1350' Well#1ST#4 W,UA#18 "'" "''' 0110& Well #2 $T#1 ,." AlaminosCanyontl67 8105' Angi.!S Gre~;~~n113 07199 Gm:t White GB.oo3 "'". WeUA1I4$T 06199 Great WIllte GB.o04 

WellA#2 ,.,,' GI'9alWllIleOB..O(l2 "'" 07109 

Grea1WlllteGB-001 "'" 
135 

$1,200,000,00 

$1,000,000,00 

$800,000.00 

$600,000.00 

$400,000.00 

$200,000.00 

$0.00 

Revnues 2008 thru 2010 
136 

MORATORIUM EFFECT ON RIG-CHEM, INC. 

Written by: Jan S. Brunet, CPA Controller for Rig-Chern, Inc. 

Rig-Chem, Inc.'s sales, since the moratorium on deep water drilling was issued on May 27, 

2010, has decreased by 63.25% from its pre-moratorium average sales (January 2008 to May 

20 I 0). Its Cost of Goods Sold has decreased by 62.31 % with Gross Profit decreasing by 

64.05%. 

What this means to Rig-Chem, Inc. and its suppliers of product is that they must now work with 

approximately 64% less revenue coming in to support the expenses of their businesses. 

While this has occurred, expenses (other than cost of goods sold) have only dropped by 5.75%. 

Therefore, Rig-Chem, Inc. must reach into its reserve or borrow money in order to maintain its 

employees and overhead during this time period. The alternative would be to layoff employees, 

cut pay, reduce benefits, etc. in an effort to reduce expenses. 

Certain expenses, such as insurance, rent, telephone, and utilities must be paid in order to keep 

the business open for when the moratorium is lifted and we can go back to work. These 

expenses are fixed and do not fluctuate with sales, as does cost of goods sold. 

Some companies have not yet felt the effect of the moratorium, having shifted their assets to use 

in the cleanup effort. Rig-Chem, Inc. has been able to offset its decline in revenue by 1.1 % with 

sales related to the oil spill cleanup. However, the cleanup efforts are now slowing down since 

the well has stopped flowing oil into the Gulf of Mexico. Therefore, more and more companies 

will begin to feel the true effect the moratorium is having on the oil and gas industry and South 

Louisiana in general. 

Rig-Chern, Inc., along with many other small businesses, will only be able to sustain our position 

for so long. If this moratorium is not lifted, and pennits do not begin being issued, we, like so 

many other small businesses, will be forced to make the tough decisions which will include 

layoffs, salary cuts, reduction in benefits to employees, etc. 

Our employees have been faithful and loyal to us over the years and this is a very difficult 

decision to have to make. Should it come to this, not only will it affect the employees who lose 

their jobs directly, but also every other small or large business that they would nonnally frequent 

to spend some of the money they had earned. The effect will not only be on the oil and gas 

industry, but all industry which is supported by the earnings of the oil and gas industry 

employees. 

The attached chart displays the deep declines in sales, cost of goods sold, gross profit and net 

profits which have been sustained by Rig-Chem, Inc. since the moratorium has been issued. It 

also shows that net expenses have not declined at the same rate, nor will in order for us to keep 

our company alive for when this is over. 

We are only one small business which has been affected by this moratorium. While our numbers 

may seem miniscule in the big picture, multiply these numbers by the number of affected 

businesses. The number is not so small anymore. 
1,000,000 

800,000 

600,000 

I!! 

400,0001 .!!! '0 

0 

I 

200,000 

(200,000) 

RIG-CHEM, INC. DECLINE IN BUSINESS SINCE MORATORIUM ISSUED 

Monthly Average 

Pre-Moritorium 

... 

June 2010 July 2010 

III Sales 

i IIIICOG

iCGP 

I 

I III Net E

III Net P
138 

IBERIA PARISH GOVERNMENT 

August 17, 2010 

Senator Mary Landrieu 

Courthouse Building, Suite 400 

300 Iberia St=<. New lberi •. IA 70560-'1543 

(33m65·8246· Fu (33m69-4490 

www.iberiaparuhgovcmment.com 

Senate Small Business Committee 

Ernest Freyou 

Paris.h Prcsidem 

RE: Impact of 6-Month Moratorium on Small Businesses and Local Communities 

Dear Senator Landrieu and Committee Members: 

It is with regret that I could not be present for this hearing on the economical impact 

of the six-month deepwater drilling moratorium on our local businesses and our 

local economy. 

As you know, Louisiana's coast is a working coast unlike any other in the United 

States. For decades, America has relied on Louisiana's coastal communities for both 

bountiful seafood and the energy that fuels the nation and Louisiana has relied on a 

strong oil and gas sector, made mainly of small businesses, to keep its communities 

growing and to provide opportunities for its citizens. Iberia Parish is no exception. 

Located on US Highway 90, future corridor of Interstate 49 South also known as 

America's energy corridor, and a proud Acadiana Parish; Iberia Parish has been at 

the forefront of energy production and is home to hundreds of businesses (over 

97% of which have less than 25 employees) that rely, both directly and indirectly, 

on the energy related business that comes by water through the Port of Iberia, by air 

through the Acadiana Regional Airport, by rail and by road. A truly intermodal 

Parish, Iberia Parish has provided a connection for small businesses to the Gulf of 

Mexico for the 600,000+ citizens of the Acadiana region. 

Iberia's businesses are tough as well. Hurricanes Katrina, Rita, Gustav and Ike could 

not keep us down and our hard working citizens have picked themselves up time 

and again to rebuild and recover and Iberia's small businesses have provided the 

critical jobs that keep them here and rebuilding. 

Recent economic outlooks both nationally and internationally have challenged small 

local business and have forced many to do more with less. Since the recent oil spill 

and the uncertainty caused by the threat of a prolonged moratorium, Iberia's 

businesses are even more uncertain about their fUlures than ever. Many Iberia 

businesses have laid off fearing uncertainty resulting in recent unemployment rates 

of over 8.0% from a 2007 low of 2.2%. This will also affect our local tax dollars 
139 

Senator Mary Landrieu 

Senate Small Business Committee 

Page 2 

which in turn will affect the services we will be able to provide to our citizens. 

Upkeep on current infrastructure, new infrastructure, and just keeping our heads 

above water to provide day to day operations will be a challenge. 

Iberia's small businesses need our support during these uncertain economic times. I 

urge you to continue to support Iberia's small businesses by lifting the moratorium 

and providing the stability necessary for businesses to invest in their future and 

create jobs for our hard working citizens. 

Thank You, 

~t~~ President 

Iberia Parish Government 
140 

MARK K. MILLER 

310 Greenhill Circle 

Broussard, LA 70518 

My name is Mark Miller. I own Merlin Oil & Gas and MKM & Associates, 

Inc. a small oil & gas exploration Company, and also provide petroleum 

landman consulting services through MKM. 

I moved from Charlotte, North Carolina to Lafayette, Louisiana in 1980 to 

start a career in the oil & gas business. I have approximately 32 landmen and 

staff working in my company. 

Recent events have changed the course of our industry and the direct impact 

it has on the workforce and citizens of Louisiana and the Gulf Coast. 

The oil spill was unexpected, but the moratorium was a calculated decision. 

And, while I am convinced the industry did need to take a serious "time 

out" to examine multi-decade old regulations. We have been put in a 

serious bind with the moratorium lingering in place. 

Let me explain ..... 3 years ago the oil & gas industry changed directions by 

devoting large sums of capital into what we call "Resource Plays". These 

are the exploration plays that you are no doubt familiar with .... such as the 
141 

Barnett Shale around DFW airport in Texas, The Eagle Ford Shale play in 

south Texas, the Bakkan Shale play in Montana and Wyoming, and the 

Marcellis Shale play in New York and Pennsylvania. 

The risked dollars are significantly less in theses horizontal trend plays ..... as 

compared to south Louisiana, even though the return on investment is not as 

high as we have here in south Louisiana. Louisiana has been the second 

most prolific oil producing state in the lower 48 for the past 5 decades. 

In 2008 ... Wall Street began to gravitate to the resource plays for less 

risk, and the target product in most of the resources plays is natural gas. 

This departure, has left south Louisiana stagnant. ..... in terms of drilling 

activity .. and exploration dollars. 

In simple terms .. ALL of the projects that my land company has been 

working on in earnest, for the last 3 years ... have been in the resource 

plays ... hundreds of miles outside of the Gulf Coast area .. 

Now, if you add the Moratorium into the equation ... and south Louisiana is 

really getting hammered!! ... Even the companies that are not constrained 

from drilling in the actual "deep water" defined as 500 feet and deeper are 

suffering the wrath of the Moratorium. 

My own company owns interest in MMS leases in 200 feet of water that our 

2 
142 

exploration group is reluctant to pursue .... until the mire unfolds 

surrounding what is going to happen next in the Federal regulatory 

environment. 

Effectively, we have millions of dollars of capital on the starting line, but are 

unsure whether or not to spend it. 

Industry is scared!! !..and so are the investment dollars which are drying up, 

along with new contracts, new projects and current jobs. 

The Lafayette area has suffered a double wham me from the redirection 

of drilling efforts to other parts of the country, and the moratorium has 

amplified the situation .... 

We respectfully request the help of this sub committee and members of 

Congress to carry the message back to Washington, that the Moratorium has 

helped intensify the oversight of the MMS drilling process ... (Mission 

Accomplished!!!) and based upon the record of our industry should now be 

lifted before it tears apart the very fabric of the energy business ... and the 

lives of our hard working men and women in the Gulf Coast! ! 

On behalf of our Community, myself and my family we appreciate you all 

taking the time and effort to visit Lafayette to listen and understand the 

hardships created by the Moratorium. 

In conclusion, we implore you to act quickly to 

3 
143 

protect an already battered way oflife here in coastal Louisiana, .... after a 

litany of successive hardships with 2 major Hurricanes, a worldwide 

Recession. an oil spill and now the death grip of the Moratorium. 

4 
144 

TEA PARTY OF LAP A YETTE - Press Release August 17, 2010 

The questions the reason that the Senate field Hearing being 

hosted by Senator Mary Landrieu is presented with little notice and why the time of 

the event was not included in the Advertiser. This article clearly states that the 

public is invited but will not be allowed to speak or ask questions. While it is true, 

there are a few invited guests such as Mr. Goodson, Charley G's Restaurant and Mr. 

David Dewitt who will speak on the impact of the moratorium upon small businesses; 

most of us will not have an opportunity to speak with the Senator or other officials. 

It is important that the government committees gather facts, but has not this been 

done already? After all, the Gulf Oil Moratorium has been in effect since May 2010. 

What is going on is clearly obvious and this is a waste of taxpayer dollars and an 

insult to those who are being hurt by this government-imposed moratorium. Pres. 

Obama has been here several times and OUf voices have been loud and clear ... .'UFT 

THE GULF OIL MORATORIUM!" At the "Rally of Economic Survival" we 

provided over 11,000 reasons for the Gulf Oil Moratorium to be lifted. Why have we 

not been heard? Where are the Senators and Representatives of the great State of 

Louisiana and this nation what are they doing when our livelihood and culture is at 

stake? There is no reason for this moratorium to continue. Why is Senator Landrieu 

not speaking out in as boldly as is Senator Vitter in what threatens to be an even 

greater devastation to Louisiana than Hurricane Katrina and Rita? 

In addition, Senator Landrieu also voted for the "government controlled health care 

plan" and that is hurting small businesses as well as individuals. Keep in mind that 

she and other elected representatives will not partiCipate in this plan but will have 

their own separate and elite plan for which we, the taxpayer are paying. 

Furthermore, my recently told me that their health insurance premium was 

increased and their increased in anticipation of Obama Care ... Instead of 

a $500.00 deductible ... they are faced with a $2500.00 deductible and this is on each 

member of a family of four. Was Senator Landrieu's premium increased or will she 

and the others "who work for us" still be enjoying their benefits at our expense? 

Another young father that I spoke with has a daughter with severe health problems. 

His company policy will soon be taxed as income and his daughter's college tuition 

will soon no longer be tax deductible. How is he to continue providing for his family 

of three with good health care and the education that he has planned on and saved 

for when he is hit with these types of expenses? This stifles initiative and angers the 

hard- working Americans. 
145 

Æ 

Page 2 

It is time that the people that we elect live by the rules they write for us. They 

need not to be exempt as if they were elite. It is time that they hold town halls 

where they allow the citizens to speak directly with them and they listen to those of 

us who work hard, pay taxes and make every effort to obey the laws of this great 

nation. 

The Tea Party of Lafayette also wants a peaceful and informative event, however we 

want to have a voice and we want that voice to be heard. We are tired of the attack 

upon the middle class American and we are angry that we have worked, saved and 

played by the rules and now those rules are being changed so radically that we are 

not able to enjoy the fruits of our labor .... nor will our children inherit that which is 

ours to give. 

Tell me, Senator Landrieu, why is a tax increase being planned on the dividends of 

our investments? This planned increase rises from 15% to 39.6% and will hit 

retirees who live off of their investments the hardest. Is this the reason we worked 

and saved our money so that it could be taken by the government? We do not want 

the government to tax our estate at 55%after the first million (for those who have 

worked hard enough and been frugal enough to have it). Where will this money go? 

It will not go to our loved ones, our children, our grandchildren .... but to some 

stranger or some government program. Is this the America that you know ... the land 

of the free? We worked for this money, we saved this money and we want it to go to 

our heirs ... But yet Senator Landrieu and others just keep on spending if there were 

no end to the money. When does this end? 

Furthermore, we are supposed to sit quietly while they discuss what is already 

known. Mary and Charles Melancon refused to have town hall meetings where there 

was a real interchange and from what I have read, this is another one of those 

events. Mr. Obama has made trips to the coast as have others. How many factfinding missions do they need prior to doing what is right? 

The Washington politicians are out of touch with their constituents and it is time for 

them to hear us and respond to the fact that we want the Moratorium lifted and to 

let our people return to work. We want to Repeal Obama Care. Originally over 60% 

of the American People did not want this government control of our health care, yet 

they rammed it down our throats. Now the percentage is even higher and they still 

refuse to listen. Who are they representing? 

The TEA Party of Lafayette makes every effort to be respectful and to follow the rules 

and guidelines of what the sponsor of an event envisions. As a group, we want to 

work within the system in a peaceful way but we want to be heard and 

respected. When does this begin? 

It is time for us to remember these words written in 1863 in The Gettysburg 

Address: "That this nation under god, shall have a new birth of freedom-and that 

government of the people, by the people, for the people, shall not perish from the 

earth." 

Joyce Linde!Coordinator! TEA Party of Lafayette 

joycelinde@teapartyoflafayette.com;