Gov?t Shutdown To Stall Deepwater Drilling?

[Stocks-to-Watch]

Unless Congress and the White House come to an agreement on spending, the U.S. government is slated for its first shut down in over a decade and a half on March 4.

FBR Capital Markets analyst Benjamin Salisbury, who now sees the possibility of a shutdown above 50%, notes that it would come at an inauspicious time for deepwater drillers: At a time when geopolitical concerns are putting momentum behind drilling, the Department of the Interior may be unable to issue offshore drilling permits and related requirements, creating a “significant distraction.”

In a research note out today, Salisbury wrote that “Presently, it is unclear whether the Department of Interior’s inspectors would be considered
essential personnel [prohibited from working] during a shutdown. Most people we spoke with believed that permitted drilling operations could continue in the event of a shutdown but the Department of Interior is not making its plans public. Today, Secretary of Interior Ken Salazar is reviewing spill containment systems including a meeting with Helix Energy Solutions. Last week, the Marine Well Containment Company said that it had assembled the equipment and completed testing on a capping stack, allowing the project to be included in deepwater drilling permit applications. The department is expected to review the system over the next few weeks.”

Still, Salisbury notes that with oil prices high and Republicans in a position to push the issue, pressure on the White House to allow the resumption of deepwater drilling, which was halted in the wake of last April’s Deepwater Horizon disaster in the Gulf of Mexico, will continue to mount.



Original Article Source by Barrons.com