Spill victims to include seabirds, turtles and local oil firms

Pic courtesy of Jeffrey Warren/Grass Roots Mapping Project

, the bond-rating agency, suggests BP's Gulf of Mexico oil spill could smother more than pelicans and turtles.

Its victims could also include dozens of smaller independent oil producers and oilfield service companies that for decades have been the lifeblood of the US Gulf Coast oil industry.

"The Macondo oil spill in the Gulf of Mexico has created an unprecedented financial, legal, reglatory and environmental crisis for the companies that operate there," Moody's said yesterday in an overview to its report on the impact of the spill on the oil industry.

If the current US government moratorium on deepwater drilling continued, "the smaller producers that depend heavily on Gulf drilling to replace their reserves will be the hardest hit", it said.

"The new US policy on deepwater drilling that eventual emerges in the wake of the accident could also greatly slow down the permitting proess and make it more expensive - a risk particularly for smaller producers," the agency said. "Even small producers operating in shallow Gulf area face a risk of a slower, more costly permitting process."

"Overall, small producers that rely wholly or heavily on offshore drilling to replace declining reserves could face proportionally large declines in production, and could be the most at risk for negative rating actions."

Moody's similarly surmised that smaller oilfield service providers with high exposure to Gulf production could be hurt.

As for the big boys: "The lastest oilfield drillers and servce companies could emerge largely unscathed, thanks to their global scope and flexibility to operate in different regions."

Moreover, if the US government adopted a proposed measure to remove liability caps for deepwater oil producers, some companies might re-evaluate whether to continue operating in the Gulf. Open-ended liability, and the soaring insurance costs that would result, could spell the end of the road for smaller firms.

The implications of the moratorium have not gone unnoticed by local politicians. On June 2, the Louisiana governor Bobby Jindal

to the US president Barack Obama saying, "I fully understand the need for strict oversight of deepwater drilling. However, I would ask that the federal government move quickly to ensure that all deepwater drilling is in proper compliance with federal regulation and is conducted safely so that energy production and more importantly, thousands of jobs, are not in limbo."

Currently, a third of the world's deepwater oil rigs are deployed in the Gulf of Mexico. Already, one firm has suspended the drilling of three wells and will move its rig, the Louisiana-based journalist Rolfe McCollister

in the

Baton Rouge Business Repor

t

.

The moratorium is currently set to last until the end of November, posing huge uncertainties for all companies operating in the Gulf of Mexico.

The bigger ones, like BP itself, have the

, and drill they will - in places like Iraq, Angola and Venezuela.

Would that help create a cleaner environment? Possibly - for the local population of the US Gulf Coast, which would be shrinking due to rising unemployment.