BP's Rig Worker Aid Extended To Deepwater Offshore Suppliers
February 16 2011 - 4:58PM
Dow Jones News
The administrators of a fund created to aid deep-water rig
workers who lost their jobs in the wake of BP PLC's (BP, BP.LN)
Deepwater Horizon disaster on Wednesday said they would expand the
pool of eligible recipients to include employees in offshore
support industries.
But the fund remains closed to those who were laid off from
shallow-water rigs.
BP created the $100 million Rig Worker Assistance Fund at the
urging of the White House, which placed a six-month moratorium on
deep-water drilling after the Deepwater Horizon exploded in the
Gulf of Mexico on April 20, killing 11 and unleashing the worst
marine oil spill in U.S. history.
Originally the fund was restricted to those employed on the 33
deep-water rigs operating in the Gulf on May 6 when the government
enacted the drilling ban.
BP tapped the Baton Rouge Area Foundation, which distributed $45
million to displaced Louisiana residents after Hurricane Katrina,
to administer the fund. Mukul Verma, a spokesman for the nonprofit
organization, said that fund administrators expected the $100
million to be used up by thousands of out-of-work deep-water rig
workers after the government shut down the business. But Verma said
that few of these workers ended up needing the help.
"Most of the rig owners kept workers on hand to update their
rigs or do maintenance," Verma said.
In all 343 applicants were awarded a total of $5.3 million in
financial aid, or about $16,000 per person. Now the foundation
estimates that 9,000 workers--ranging from employees who delivered
food and drilling fluids to the deep-water rigs to diver and crew
boat pilots--may be eligible for payments ranging from $3,000 to
$30,000.
The foundation will accept applications between March 15 and May
13 and expects to distribute funds by mid June.
The fund administrators have been asked, by Louisiana Sen. Mary
Landrieu among others, to extend aid to out-of-work shallow-water
rig workers. Though the government never officially banned drilling
at depths less than 500 feet, drilling companies contend that they
have seen a "de facto moratorium" in which permitting for new
shallow water wells has slowed significantly.
The monthly number of permits for new shallow-water wells dipped
significantly from their three-year averages last year. Last month
U.S. regulators issued only seven new permits, down from 22 the
January 2010 and an average of 36 for the three years prior to
that. There have yet to be any permits for new deep-water
wells.
"It's a sad, sad irony that the shallow-water industry was hurt
the most by the deep-water spill," said Jim Noe, general counsel
for Hercules Offshore Inc. (HERO), which owns the Gulf's largest
fleet of shallow-water rigs.
Hercules announced Friday that it planned to purchase the 20
shallow-water rigs owned by its chief competitor, Seahawk Drilling
Inc. (HAWK), which filed for Chapter 11 bankruptcy protection that
same day.
Before the April 20 disaster, Seahawk had about 1,000 employees.
Last year the company shed about half of those jobs, including rig
workers who were denied access to the relief fund. Those workers
were also deemed ineligible for BP's broader $20 billion
restitution fund, the administrators of which have decided all rig
workers should fall under the smaller safety net's coverage.
Noe said that Hercules would try to hire as many Seahawk
employees as possible if a federal bankruptcy judge approves the
sale, "but it's going to be a stretch."
"Undoubtedly there will be hundreds of laid off workers from
Seahawk alone as a direct result of the de facto moratorium," he
said.
Any changes to the fund's eligibility would have to come from
BP, Verma said. A BP spokesman did not immediately respond to a
request for comment Wednesday.
-By Ryan Dezember, Dow Jones Newswires; 713-560-6670;
Ryan.Dezember@dowjones.com;