Back in April, I discussed the Biden administration’s imposed moratorium on new federal leases in the Gulf of Mexico and the uncertainty that it would create. I’ve stated before that prior to this moratorium, I fully expected deepwater drilling activity to increase into the latter half of 2021 with a further increases into 2022 and 2023.
As of June 15th, a Louisiana federal judge issued an order lifting the moratorium for new oil and gas leases on federal land, including those offshore in the Gulf of Mexico. Thirteen states had challenged the original halt and this preliminary injunction is a small victory for those states and our industry. This fight might not be over yet, though.
While the judge ruled that the a moratorium on lease sales could not be enacted unilaterally via Executive Order (as was done in this case) the door has been left open for Congress to continue the freeze. Can they get the support needed to take on this issue and bring back the restrictions? It is very unlikely but something we will need to watch very closely.
Though oil prices have steadily climbed since the beginning of the year, (WTI is above $73 / bbl) deepwater rig counts have languished in the mid-teens. As of today there are 14 active deepwater rigs. With oil above $70 and a ruling favorable to the oil and gas industry, let’s remain optimistic that we’ll begin to see the long awaited increase in deepwater activity.
As we JOO continues to execute on our long-term contracts, are positioned take advantage of these improving markets.