A teachable moment

Something big happened for the offshore energy industry in 2008. That year, President Bush lifted administrative withdrawals and the United States Congress allowed moratoria to expire that had kept over 85% of the outer continental shelf (OCS) off limits to energy exploration for nearly three decades. This was what the offshore energy industry had long hoped for and advocates in our nation's capital had tirelessly worked toward. It foreshadowed a promising future for our industry, for American energy security, and for the energy consumer. But here we are in 2010, no closer to producing domestic energy from new offshore areas then we were two years ago.

While this is certainly disappointing, recent announcements from the Obama Administration, provide some new hope. The 2012-2017 offshore plan proposed by the Administration in March provides an historic opportunity for America's offshore energy sector.

The plan incorporates both a court-ordered rebalancing of the current 2007-2012 offshore leasing plan and the environmental scoping for the next 2012-2017 offshore leasing plan. To industry's disappointment, the remaining Alaska lease sales in the current plan have been cancelled. In addition, President Obama has withdrawn Bristol Bay from consideration for oil and gas development through 2017. For the 2012-2017 plan, the entire Pacific OCS as well as the North Atlantic and the most promising areas of the Eastern Gulf of Mexico are not included for consideration. This is hugely disappointing news, as those areas could provide much needed energy, jobs, and revenue for America's struggling economy.

On the positive side, however, the unprecedented lease sale scheduled offshore Virginia remains in the current plan and the Chukchi and Beaufort Seas in Alaska as well as the Western and Central Gulf of Mexico are included in the next plan. The next plan also adds access to a portion of the Eastern Gulf of Mexico as well as the Atlantic Coast from Delaware to Georgia – areas that could eventually mean provide more work for our industry, and more energy, jobs, and revenue for America.

The Administration's goal is to bring about a significant increase in oil and gas development on the OCS while providing balanced environmental protection and a seat at the table for everyone from the general public to industry to special interest groups and federal, state, and local governments. All would be cause for celebration.

The Administration's strategy has three central components: Develop, Explore, and Protect. These are three areas in which our industry excels. This should be our message. The general public and to a large extent decision makers in Congress and state legislatures remain uninformed of the tremendous contributions of our industry, but they do understand the importance in their daily lives of energy, jobs, money, and the environment in which they live. Our industry produces enormous amounts of domestic energy, provides thousands of well-paying jobs and revenue for our economy, and through the use of amazing technology we do it all safely while protecting the environment. These messages resonate with everyone. Without the remarkable safety record, it is most unlikely that these new areas would have been proposed for development.

The prospect of increased access to the outer continental shelf is exciting, but it will take hard work to become a reality. Whether you are an energy advocate in Washington, D.C., a company executive in Houston or New Orleans, or work in the field on platforms, rigs, or boats, you have a responsibility to engage in and inform the debate to ensure our collective interests are communicated. We have a great story; let's not hesitate to tell it.

The world's appetite for oil and other energy sources is growing dramatically. According to government projections, we will need about 40% more energy in 2030 than we consume today. Even with the hoped for growth of alternative energy sources, fossil fuels will continue to provide most of the energy we consume through the next two decades, according to the Energy Information Administration (EIA).

A fourth of US oil production comes from the 15% of the OCS that is currently available to our industry. According to estimates from the Minerals Management Service (MMS), 39-63 Bbbl of economically recoverable oil and 168-294 tcf of natural gas are economically recoverable from the areas included in the 2012-2017 program. Our industry has the know-how and technology to tap these resources safely and with minimal impacts to the environment.

The technology that powers the offshore energy industry rivals that of the space industry. In recent years our industry has pushed technological frontiers, particularly in the deep waters of the Gulf of Mexico. Oil and natural gas reserves are safely being explored in waters more than 10,000 ft (3,048 m) (nearly 2 mi [3.2 km]) deep. As resources closer to shore have become depleted, the industry has developed the technology necessary to reach harder to reach deposits, as the recent Davy Jones discovery shows. Now that oil and gas producers also are moving off of the continental shelf and into the deep, the challenges are increasing, yet the technology is rising to the challenge, coping with the tremendous pressure and high temperatures that complicate operations in this environment.

Clearly, despite claims to the contrary, energy production and environmental protection are not mutually exclusive. In fact, increased technological innovation by the offshore industry continues to improve environmental protection.

Every year, technological innovations make reality of what had once seemed to be science fiction, and drastically lessen the impact of oil and gas activities on the environment. Directional drilling, improved seismic technologies, and vastly more powerful geophysical analysis have improved the targeting of hydrocarbons and reduced the incidence of drilling dry holes.

Subsea well completions and tiebacks, that can connect fields up to 50 mi (80 km) away, micro-bore drilling, and increased efficiency in operating systems reduce the environmental footprint and hide extraction activities from the view of people on the shore or on the ocean's surface.

While environmental organizations would have the public believe that offshore energy production is unreasonable, unmanageable, and unclean, the safety and environmental record of the offshore energy industry proves otherwise. Over the past quarter century, the offshore energy industry has built an enviable record of safe, clean operations. Highly regulated, the offshore industry produces about 1.4 MMbbl of oil from the OCS every day, yet has a 99.999% record for clean operations. The "Oil in the Sea III" study compiled by the National Academy of Sciences shows that less than 2% of the oil in US waters comes from drilling and production. In fact, and probably surprisingly to the lay-reader, 63% of oil in our oceans comes from natural seepage from cracks in the seabed.

America is still in the midst of a global economic downturn. Although energy prices plunged from their record highs of 2008, when gasoline topped $4 per gallon at the pump, they have steadily been creeping back and now hovering around $3 per gallon. That is hurting American consumers and American businesses. Oil and gas is one of the United State's only industries in a position to contribute to the US economy without costing the taxpayers a cent. According to a recent study, production of oil and natural gas resources in former or current OCS moratoria areas (a portion of the Eastern Gulf of Mexico remains under moratoria) could generate $1.3 trillion in additional federal, state, and local government revenue.

When every day brings news of job losses and businesses closing, it is hard to look beyond the headlines, but the oil and gas industry provides 9.2 million American jobs, according to the American Petroleum Institute. Producing energy from previous moratoria areas in the OCS holds the potential for hundreds of thousands of jobs. These are good, family supporting jobs. Oil and gas exploration and production wages averaged $93,575 per year, according to 2007 Bureau of Labor Statistics data -- over twice the average annual pay of $44,458 across all US industries.

Currently in the Gulf of Mexico, oil and gas activities on the OCS directly employ 85,000 people. Indirectly, OCS activity accounts for an additional 85,000 support jobs, many from small business vendors. Government statistics show that the injury and illness rate for offshore workers is about 70% lower than all of private industry.

While the Administration's new offshore energy strategy doesn't give industry and NOIA everything we had hoped for, it does provide us a real opportunity to work with policy makers to craft a comprehensive national energy policy -- one that creates jobs, expands and diversifies energy production, and generates new revenues for governments. Our industry is up to the task. I urge all of you to actively communicate that our industry is up to the task and to engage in the policy debate to help create the right frameworks that will allow this great industry to accomplish what we know we can. This is a teachable moment. If we are successful, America's energy future will be much brighter.

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