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Big winner in Gulf spill may be Brazil: institute

NEW ORLEANS -- For decades the oil industry pushed deeper and farther into the sea in search of black gold while the U.S. government did little to ensure they had the resources needed to prevent blowouts and mitigate massive spills.

U.S. President Barack Obama insisted Friday that the government will no longer rely on “assurances” from oil companies after the catastrophe in the Gulf of Mexico showed not only the flaws in back-up systems but that BP “had no idea what to do when the systems broke down.”

Crude continues to spew into the Gulf more than six weeks after the BP-leased Deepwater Horizon sank spectacularly after an explosion that killed 11 workers some 52 miles off the coast of Louisiana.

Heavily oiled birds, turtles, dolphins and other marine life are now being found as a black tide coats beaches and fragile coastal wetlands despite a massive response effort.

And while BP's latest effort to contain the spill appeared to be working, officials caution that they could once again be stymied by the complexity of working 5,000 feet below the surface.

A six-month moratorium Obama imposed on deepwater drilling could end up blocking oil and gas development for six years because of the scarcity of drilling rigs, cautioned Eric Smith, associate director of the Tulane Energy Institute.

Some 33 deep water drilling rigs currently working in U.S. waters were shut down by the moratorium, and with operating costs of US$500,000 a day they will need to seek friendlier harbors.

“The big winner in all this is President (Luiz Inacio) Lula (da Silva) in Brazil,” Smith said in reference to massive deepwater reserves recently discovered under a thick salt layer offshore.

“He was thinking he'd have to wait three years for his first drilling rig and he can go bid on 33 of them right now at really good prices.”

The offshore oil industry has an excellent safety record — nearly 50,000 other wells have been drilled in U.S. waters without major incident, 700 of which were as deep or deeper than the BP-leased one — and a strong incentive to make sure nothing goes wrong, Smith said.

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