Report: Shallow-water permit slowdown could cost 40,000 jobs

The slowdown in shallow-water drilling permits following the BP oil spill could cost tens of thousands of jobs and impose a tougher economic blow than the formal moratorium on deepwater projects, according to an upcoming industry-backed report.

Drilling companies and their Capitol Hill allies will likely use the report to criticize the Interior Department, which is coming under strong political pressure from Gulf Coast lawmakers to accelerate permitting.

The report, which will be widely released Wednesday, is written by the Maguire Energy Institute at Southern Methodist University. The Shallow Water Energy Security Coalition, a recently formed industry group, commissioned the report. It surveys various analyses to date of the drilling restrictions that have followed the oil spill.

“[T]he Interior Department's drastic slowdown in approving permits for shallow-water drilling operations has very serious economic implications for the region that rival, or exceed, those of the spill and moratorium. Thus far, this impact has attracted little attention from Congress, the media, or third-party analysts despite the fact that the nearly 40,000 jobs related to the Gulf of Mexico's shallow-water drilling industry have been placed in jeopardy by the Department of the Interior's apparent decision to slow-walk the shallow-water permit approval process,” the report states.

The Interior Department has imposed a series of new safety requirements in the wake of the spill. The report notes that issuance of shallow-water drilling permits has slowed drastically from its pre-spill rate of 10 to 15 permits per month.

Over one-third of the shallow-water drilling fleet was idled by the end of August, the report states. It also warns that slowing down natural gas development could ultimately raise prices for everything from food to clothing to building materials.

The ban on deepwater oil-and-gas drilling is slated to end in late November but administration officials have signaled that they're preparing to end or scale it back earlier.