Oil Spill Implications For US Oil Production

According to a seemingly not well publicized Bloomberg report last week, President Obama's ban on deep water drilling has serious implications for future US oil output;

May 28 (Bloomberg) -- Energy companies are scrambling to cope with the extension of a deep-water drilling ban, a situation many never foresaw before BP Plc’s oil well began spewing crude into the Gulf of Mexico last month.

President Barack Obama yesterday said the suspension is being lengthened by six months and work on 33 exploratory wells will be halted. The decision follows an April 20 rig explosion that killed 11 workers and sent oil from BP’s Macondo well gushing toward the U.S. coast.

Companies can’t plan for an event such as the extended moratorium, said Gene Shiels, a spokesman for oilfield-services provider Baker Hughes Inc., based in Houston. The industry may move personnel and equipment to other markets, such as Brazil and West Africa, and may see job losses, he said.

“The spill is like the 1,000-year flood: it’s the worst- case scenario,” said Brian Youngberg, an analyst with Edward Jones in St. Louis. “It’s hard to prepare for those extreme situations like that.”

Obama also dropped plans to open waters off the coast of Virginia to drilling, canceled a lease sale in the Gulf, and suspended the permitting process for Royal Dutch Shell Plc’s planned wells off of Arctic Alaska. He said new safety rules will be imposed on offshore drilling.

U.S. oil output may be cut by 160,000 barrels a day next year as a result of the ban, according to Deutsche Bank AG. A one-year delay to deep-water projects would reduce global supplies by 500,000 barrels a day between 2013 and 2017, Sanford C. Bernstein said.

[Emphasis added.]

Needless to say, that's not a good thing.