Chair, National Ocean
President & CEO,
Oil States International
Each May, members of the offshore oil and natural gas industry gather in Houston for the Offshore Technology Conference to learn about the newest technology that enables our industry to stay at the forefront and safely develop resources that, not so long ago, were thought to be unreachable. This year, the gleam of the new technology will be somewhat dulled by the collapse of oil prices, but the long-term outlook for our industry remains sound - as long as US regulations and policies provide an environment that supports long-term energy growth.
Recently, I was named as chair of the National Ocean Industries Association, a trade association consisting of more than 330 member companies, all engaged in the offshore energy business. Oil States International, which I lead as president and CEO, is a long-time member of NOIA.
The NOIA membership represents all segments of the offshore energy industry, from large multi-national corporations to family-owned businesses and everything in between, including offshore wind developers.
The NOIA staff advocates on behalf of the industry in the halls of Congress and with federal regulatory agencies for policies supportive of our industry and keeps its membership apprised of what laws, policies, and regulations are being considered in Washington.
Formed in 1972, NOIA has always had one core mission -- to promote the opening of more of the outer continental shelf (OCS) to energy exploration and development. With more than 85% of the OCS closed to oil and natural gas exploration and development, our work is cut out for us.
Large areas of the OCS are open for wind development, but like all energy sources, those projects are subject to multiple permitting requirements and take years to come to fruition. Ideally, both the traditional and non-traditional energy sectors should enjoy open and fair access to more of the OCS, a concept NOIA promotes and supports each and every day.
In January, there was some positive traction toward opening more offshore access for the oil and gas sector. The Bureau of Ocean Energy Management released its 2017-2022 Draft Proposed Program for offshore oil and gas leasing. The DPP proposes an oil and gas lease sale in the southeast Atlantic, an area where exploration has been off-limits for about 30 years.
After evaluating public comment on the DPP, BOEM will release a Proposed Program in early 2016. Hopefully, the Atlantic sale will remain in the program and actually occur in 2021.
NOIA and the American Petroleum Institute recently commissioned a study to evaluate the economic potential of opening up more of our OCS. In the Atlantic alone, the benefits are substantial. Quest Offshore Resources estimated that should the Atlantic be opened for oil and natural gas exploration and development the result would be 280,000 jobs, $24 billion per year to the US economy, $51 billion in additional revenue to federal, state and local governments, and 1.3 MMboe/d. That's enough oil to fuel 7 million cars per year and enough natural gas to heat 23 million homes per year.
While the US is slowly considering opening up a small portion of our OCS, Canada, Mexico, Cuba, Venezuela, Brazil, and Western Africa have already taken rapid strides to open more of their offshore areas. Energy and service companies will naturally go where they are allowed to work, creating the incentive to further export capital and jobs out of this country.
The best energy policy provides a firm and consistent basis for the safe development of all forms of energy, and that is what NOIA and our members support. It also makes good business sense: the Energy Information Administration predicts that traditional forms of energy such as coal, oil, natural gas, and nuclear will still provide about 88% of our energy needs in 2040, even as the non-traditional energy market share continues to grow.
While in the short-term, falling commodity prices are taking a toll, we all recognize the cyclical nature of our industry and have confidence that brighter days lie ahead. Industry wide, we have already seen layoffs and project delays. Shallow-water operators and service companies have certainly had to cut back. Deepwater projects are by nature long-term and will continue, albeit at a slower pace. The reduced interest shown in the most recent Central Gulf of Mexico lease sale is most certainly a sign of the times.
In times like this with excess production and supplies, there is a risk that the US loses focus on the importance of affordable and reliable energy and takes it for granted. During these times, reasonable voices that support consistent, long-term offshore development must make themselves heard. It is my honor to be one of those voices as NOIA and our industry face difficult economic times in an increasingly restrictive and uncertain regulatory environment.