HOUSTON– Randall Luthi, president of the National Ocean Industries Association (NOIA), praised the role of oil and gas producers in his address at the Offshore Technology Conference.
“You fuel our economy and provide affordable energy to tens of millions of Americans,” said Luthi, speaking to a sold-out audience of 125 OTC participants at breakfast. His talk onTheOffshore Consequences of Washington Politics pointed to a rebound in oil and gas production from the Gulf of Mexico after the 2010 Macondo well blowout.
“Industry will continue to harvest the benefits of drilling in the Gulf,” predicted Luthi. He acknowledged that permit review times for drilling wells in the outer continental shelf (OCS) had declined under recent DOI administrators. Luthi also praised the industry’s prompt response to adoption of new safety rules for rigs and platforms after the Macondo spill.
“The federal government is more likely to provide reasonable regulations when they understand our industry,” said Luthi, a former MMS official in the Bush Administration and Wyoming legislator. “But we in industry must communicate more effectively with Congress and agencies.”
The veteran energy spokesman forecast continued growth in production from the Gulf, perhaps rising to as much as 2 MMb/d in 2020. He also predicted that the US may create an export for natural gas within the next eight to 10 years. “If you told me 10 years ago that America would be exporting gas in my lifetime, I would have told you ‘That’s Crazy,’” said Luthi.
But he expressed disappointment with the current Five-Year Plan for offshore drilling devised by the Obama administration. “It should include more tracts in the Gulf, and in offshore Alaska, and the mid-Atlantic.” Luthi noted that the governors of Virginia and the Carolinas all favor exploration in the OCS.
While the 2012 Five-Year Plan allows for seismic surveys to be conducted offshore Virginia and other mid-Atlantic states, Luthi said it does not go far enough. “We believe the time is now for leasing Atlantic tracts to producers. Leasing will stimulate seismic work in ways that are meaningful, not the other way around.”
Luthi told the OTC audience that alternative energy will grow from 7% to 15% of domestic energy by 2035. Small declines in coal, oil, and nuclear energy are expected, with increased natural gas production helping to pick up the slack. “We cannot forget that the United States will need a vibrant oil and gas industry for a long time to come,” observed Luthi.
In response to questions about pending legislation, Luthi praised the federal revenue sharing bill sponsored by Senators Mary Landrieu (D-LA) and Lisa Murkowski (D-AK). The bill would enable coastal states to share in more of the lease revenue associated with federal offshore lands.
Luthi believes that offshore leasing is also an important source of government revenue. In the years before the Macondo spill, DOI gained as much as $13 billion per year in combined leasing fees and royalty income from producers. Leasing of offshore lands is the second largest source of federal revenue, after payments to the IRS.