Policy changes in Washington provide basis for optimistic outlook
The seasons are not the only thing changing in Washington, D.C., where this author serves as President of the National Ocean Industries Association (NOIA), a trade group representing the interests of the offshore energy industry.
National Ocean Industries Association
The seasons are not the only thing changing in Washington, D.C., where this author serves as President of the National Ocean Industries Association (NOIA), a trade group representing the interests of the offshore energy industry. After a year (2016) that felt as if it might never end, we are now racing through 2017 and not looking back. One of the most welcome changes in our nation’s capital, aside from the weather, is that both US energy security and regulatory certainty are now in vogue. With President Trump’s budget emphasizing cost-cutting and efficiency on the federal side and economic growth on the private side, the offshore industry has the chance to regain ground as a major economic driver for America.
This is not our first rodeo. Between 2008 and 2013, during the doldrums of the global economic crisis and through the anemic recovery, the oil and gas industry was responsible for nearly 40% of the overall US GDP growth. The offshore sector was an integral part of this success, contributing $32 billion to the US economy in 2011 alone. Time and time again, the offshore industry has been our nation’s economic engine.
The offshore industry supports more than 240,000 jobs across the country, and in 2016, generated more than $22 billion in direct revenue. And, our industry could do even more with the right policies in place, an objective regulatory environment, and more access to our offshore resources. After eight long years, we are beginning to make progress in the right direction.
Despite a contentious confirmation process in the Senate, Congress has been active in rescinding many of President Obama’s midnight regulations. Using the Congressional Review Act (CRA), a legislative tool that allows Congress to roll back 11th-hour regulations, Congress has sent one resolution after another to President Trump’s desk to block harmful rules. An obscure act that had previously been successfully utilized just once, the CRA has already been used several times in 2017. Congress has applied the CRA to take up resolutions on, coal regulations, Bureau of Land Management onshore gas rules, and SEC disclosure rules for oil companies.
There has also been welcome progress on the Bureau of Ocean Energy Management’s (BOEM) Financial Assurance and Bonding Notice to Lessees (NTL). A prime example of “premature regulation,” the NTL is based on incomplete data and unrealistic assumptions, and would cost companies an astounding $14.6 billion, while providing few, if any, safety or environmental benefits. Fortunately, after extensive efforts by NOIA and sister trades, the Obama administration issued a six-month stay of the rule, allowing industry more time to provide regulators data useful to finding a solution that is cost-effective and provides assurance that no longer used platforms are timely decommissioned. The Trump administration subsequently withdrew a sole liability order tied to the NTL.
Even with these successes, there is much to be done, and undone, if the US is to retain its mantle of global energy leader. First, the 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Program is woefully inadequate to meet our energy needs. The bottom line is that nearly 94% of our OCS is still off limits to oil and gas exploration. Crafted under the specter of the “Keep it in the Ground” movement, the current leasing program willfully places thousands of jobs and billions of dollars in revenue out of reach. Our nation desperately needs a new Five Year Oil and Gas Leasing Program that offers more access to our OCS.
NOIA is calling for a new, and expedited, Five Year Program; however, President Obama’s “permanent” withdrawal of Arctic waters under Section 12(a) of the Outer Continental Shelf Lands Act (OCSLA) must be addressed. Under Obama’s pen, more than 23 Bbbl of oil and 104 tcf of natural gas were rendered inaccessible. Fortunately, what one president can do, another president can undo. A new executive order reversing the withdrawal would finally give voice to the nearly three-quarters of Alaskan residents and native Alaskans who support oil and gas development offshore Alaska, and would give credence to our nation’s top military commanders who believe such development is a vital piece of our national security puzzle. While we stand idle, countries like Norway and Russia are upping their presence in Arctic waters. These countries are developing infrastructure and projecting their power in the Arctic region. At a time when Russia is widely recognized as the top US geopolitical foe, it would seem prudent to at least try to keep up with them in the Arctic.
Finally, we seek approval for seismic survey permits in the Atlantic that were blocked by the previous administration. Claiming environmental concerns, the outgoing Obama administration issued a blanket denial of the permits, despite BOEM’s own top scientist’s statement that there has been zero evidence of seismic surveys harming marine life. This obviously political decision keeps the American public in the dark about the true resource potential of the Atlantic OCS, because existing resource estimates are based on surveys that are more than 30 years old.
While the new administration brings hope for the future, NOIA’s work on behalf of the offshore industry is still clearly cut out for us. NOIA looks forward to working with the administration and Congress to help the offshore industry be the fountainhead of growth and development that it should be.