Sunday, October 23, 2011

Even Cuba Understands What's to Gain from Off-Shore Drilling


One year ago, the Obama administration ended it's blanket offshore drilling ban. But it replaced its drilling moratorium with a permitorium. The bureaucrats said they were allowing drilling, but they granted very few permits and it took months to issue a permit for new drilling.
While the Obama administration is not keen on producing energy domestically, the Cubans of all countries are going to use the technology developed by American companies in the Gulf of Mexico to access their energy resources less than 100 miles from the coast of Florida. When Cuba recognizes an economic opportunity that the administration does not, we should pay attention.
[See a collection of political cartoons on energy policy.]
Even though one year has passed since the end of the moratorium, the administration is still issuing a reduced number of permits. Before the moratorium, the administration was issuing 72 permits per month and now, a full year after the moratorium supposedly ended, they are only issuing 52 permits per month.
Not only has the rate of issuing permits slowed, but the paperwork required to satisfy the administration's bureaucrats has increased exponentially. Before the moratorium, the average permit application was 30-40 pages long. Now a permit application is 3,600 pages long. This dramatic increase in bureaucratic paperwork will create some jobs—but only jobs for more lawyers and more bureaucrats. Creating more work for attorneys and bureaucrats does not help the economy grow.
The administration's byzantine permitting requirements have lead to drilling rigs leaving U.S. waters for countries that welcome energy production. Nearly 40 percent of the deepwater rigs that were in the Gulf of Mexico before the moratorium have left. These rigs could have drilled an additional 60 wells, created 11,500 jobs and generated $6.3 billion in private sector spending. Instead of realizing these positives, the Obama administration is exporting those jobs to other countries.
[Read: How Much Oil Is There?]
The economic benefits of energy production are clear. If Congress permanently lifts the moratoria on energy exploration and production in the Outer Continental Shelf, access to these vast resources would generate:
• $8 trillion in additional economic output (GDP);
• $2.2 trillion in total tax receipts;
• 1.2 million new, well-paying jobs annually across the country; and
• $70 billion in additional wages each year.
But while the Obama administration does not seem to grasp the benefits of job creation and economic growth created by energy production, the Cubans apparently do. According to NPR, geologists estimate there may be 5 billion to 20 billion barrels of oil off the coast of Cuba (between Cuba and Florida). In the past, these resources have been out of reach, but because of the deepwater drilling technologies developed by U.S. workers in the Gulf of Mexico, Cuba will be able to access these resources for the first time. A drill rig is en route from China to Cuba and could start drilling as early as November.
It's not too often that you can say that we should look to Cuba for taking advantage of an economic opportunity, but when it comes to creating jobs and lowering the cost of energy through energy production, we should pay attention. Thousands of hard working Americans are out of work in the Gulf states because the administration isn't following Cuba's example. Now is the time to get these people back to work creating energy.

Sunday, October 16, 2011

Proud to be part of the industry

By Chris John

Last month, the Joint Investigation Team of the Bureau of Ocean Energy Management, Regulation, and Enforcement and the U.S. Coast Guard released their final report analyzing the Macondo incident that occurred in 2010.
Within the detailed and thorough report, there were recommendations made on how best to upgrade and enhance the regulatory structure and industrial prowess for offshore drilling at the BOEMRE. In reading these, I was struck by the similarities in the suggestions made in the report and the overhauls already enacted at the BOEMRE and the additional, voluntary requirements industry has adopted.
Throughout what I still consider to be an unnecessary six-month moratorium, the oil and gas industry remained committed to the highest levels of safety by voluntarily creating and designing the Marine Well Containment Company. This is part of an effort to improve prevention, well-intervention and spill response. When it became evident that the permit process needed drastic improvement, the industry and state government officials worked with the BOEMRE to improve the efficiency of the permit review process. While we are still not happy with the pace of things by any stretch of the matter, they are getting marginally better.
Despite this slowdown, the industry is getting back to work.

For example, just last month, Chevron announced a major discovery in the deepwater Gulf of Mexico on a well it began drilling in early 2010. Also last month, BP submitted its first deepwater exploration plan since Deepwater Horizon. Its 212-page plan includes a number of measures that go above and beyond current BOEMRE requirements. This indicates BP’s confidence in its lessons learned from its detailed analysis of what led to the Macondo incident. BP’s pledge and singular focus to doing the job safely are guiding it through the next steps as it returns to the Gulf of Mexico.

Week after week, more and more companies are getting back to work in the Gulf of Mexico, and this commitment to the region underscores its importance to this country’s energy mix. I am proud to be part of an industry that is answering the call in a responsible and safe way, all while continuing to provide good, high-paying jobs that fuel Americas’ energy security.

Sunday, October 2, 2011

Alaska leaders make the case for ANWR — again

Congressional hearing focuses on coastal plain as a source of jobs, energy and revenue; critic calls it ‘kowtowing’ to industry

It’s long been the case that Alaska’s top elected officials, regardless of party, have supported opening the coastal plain of the Arctic National Wildlife Refuge to oil and gas development. ANWR
The state’s current crop of leaders again demonstrated that stance during a Sept. 21 congressional hearing that one witness panned as “political theater.”
The House Natural Resources Committee and its Republican chairman, Rep. Doc Hastings of Washington state, convened the hearing to discuss ANWR in the context of jobs, national energy supply and reducing the deficit with leasing and royalty revenue.
The witness list was stacked with supporters of opening the coastal plain to drillers. They included Alaska’s three-member congressional delegation, Gov. Sean Parnell, a prominent resident from a village along the ANWR coast, and a truck driver who hauls freight to the North Slope oil fields.
They said opening the coastal plain could sustain or create scores of jobs and work economic wonders for the state and nation.
Murkowski ‘insulted’
Alaska’s senators, Democrat Mark Begich and Republican Lisa Murkowski, each expressed support for opening the coastal plain.
“With gasoline prices averaging $3.65 in the lower 48 states and unemployment around 9 percent, Alaska is here to help,” said Begich, according to the text of his testimony. “We can offer relief to consumers at the pump, provide well-paying jobs in Alaska and the Lower 48 and help reduce our $14 trillion deficit.”
Murkowski focused on the Obama administration’s consideration of designating practically all of the refuge — including the potentially oil-rich coastal plain — as wilderness. Such a move, which would take the consent of Congress, would pretty much foreclose the possibility of drilling.
“I find it to be both misguided and, as an Alaskan, somewhat insulting when federal agencies continue to look for ways to lock up additional wilderness in Alaska when Alaska doesn’t want it and when the law says, plainly, ‘no more,’” Murkowski’s written testimony said.
She was referring to the U.S. Fish and Wildlife Service effort write a new “comprehensive conservation plan” for ANWR. Murkowski argues the Alaska National Interest Lands Conservation Act of 1980 prohibits agencies from undertaking studies for new wilderness areas without congressional authorization.
“When an agency’s response to our Nation’s current debt and jobs crisis is to seek more ways to twist the law just to keep money buried in the ground, our priorities have spun out of the realm of rationality,” said Murkowski’s written testimony.
Young, governor weigh in
Alaska’s lone congressman, Republican Don Young, also cited the high price of gasoline in his testimony. It’s because domestic oil production hasn’t kept pace with demand, he said.
He gave a nod to those who fear oil and gas activity would compromise what has been described as ANWR’s pristine character.
“Let’s be honest and say that there will be some consequences to exploring and producing in ANWR,” said Young’s written testimony. “But let’s also be honest and say that if we import the oil it will arrive in the U.S. in foreign ships that sometimes are not up to our standards. And our environmental safeguards for oil production are much more stringent than theirs are. So if you are really concerned about the environment you should prefer oil to be produced here rather than somewhere else in the world. Just a few short weeks ago news broke of a deal that will partner Exxon and Russia to drill in the Arctic. Do we really trust that Russia can protect the Arctic better than we can?”
Gov. Parnell, a Republican, spoke to the committee via video conference.
“Look at the states doing relatively well in this economic downturn — they are America’s major energy producers,” he said. “And Alaska is one of those states. Yet we are held back from contributing more affordable energy to other Americans by federal regulators who want to keep federal lands off-limits to oil and gas exploration.”
Parnell told the committee the viability of the trans-Alaska pipeline is threatened by declining oil production. His goal is to boost throughput to 1 million barrels a day, well above the current level of around 600,000 barrels.
With modern technology, the governor said, the oil industry’s “footprint” could cover less than 2,000 acres of the refuge, which is nearly the size of South Carolina.
“For most of the year, the coastal plain is frozen. It has low biological activity,” Parnell said. “Experience shows that seasonal restrictions and other environmental stipulations can be used to protect caribou during their six-week calving season each summer. Appropriate restrictions can also protect migratory birds and fish. Our experience with other North Slope fields shows it can be done.”
A villager and a trucker
The U.S. Geological Survey, in a 2005 paper, estimated the coastal plain’s undiscovered, technically recoverable crude oil at 5.7 billion to 16 billion barrels, with a mean of 10.4 billion.
Fenton Rexford, a member of the Kaktovik City Council and a candidate for mayor of the North Slope Borough, told the committee that people in his village support responsible development on the coastal plain.
“I am a life-long resident of Kaktovik and I intend to grow old there,” his written testimony said. “I can compare what life in Kaktovik was like prior to oil development on the North Slope to the quality of life we have today because of my personal experience.”
He said ANWR development means a continuation of modern life for villagers: running water and flush toilets, a local school, police and fire services.
The Inupiat villagers wouldn’t favor development, Rexford said, unless they were confident development wouldn’t hurt their subsistence way of life.
The committee also heard from Carey Hall, a truck driver for Carlile Transportation Systems. He said he works on the “ice roads” hauling freight to and from the North Slope.
Finding new oil in places such as ANWR is crucial, he said.
“The oil and gas industry represents the cornerstone of our business,” he said. “It is not only important to contractors and vendors such as trucking companies but to all our citizens in the state of Alaska and as a nation. It produces jobs, lots of jobs, and we need jobs.”
The critics
Two witnesses invited by the committee minority had a markedly different view on using ANWR as a tool for creating jobs and fighting the national debt.
Gene Karpinski, president of the nonprofit League of Conservation Voters, said he is fighting for permanent protection of the coastal plain. He characterized the hearing as “nothing more than political theater.”
“Drilling in the Arctic Refuge is and always will be a political hot potato that has been voted on 20 times in the past 30 years, in the House of Representatives alone,” said the written text of Karpinski’s testimony. “Over and over again, pro-drilling members of Congress have trotted out our nation’s last great wilderness place as a panacea for everything from the budget deficit and high unemployment to providing heat for the poor, relief to hurricane ravaged states, support for our troops and health benefits to coal workers.
“Through it all, every attempt to drill the Arctic Refuge has ultimately failed because of the continued strong support of the American people who see this never-ending political spectacle for what it is — a kowtow to the wealthiest corporations in the world, the only ones who will actually benefit from opening the Arctic Refuge to drilling.”
David Jenkins, of Republicans for Environmental Protection, questioned the idea of the industry disturbing only 2,000 acres. Citing the USGS, he said any oil is likely to be scattered in small pockets across the entire plain.
“Oil development would necessitate a massive spider web of pipelines throughout the area,” he testified.
Rosy job projections on ANWR’s unproven oil reserves are overblown, and even a major oil find would be unlikely to significantly improve the nation’s energy security or reduce gasoline prices, Jenkins said.