After a year of seemingly endless political gridlock on the energy front, we at the National Ocean Industries Association are hopeful that 2015 will bring actual results, not just rhetoric. Last year saw a cycle of the House of Representatives passing energy related bills, the White House threatening to veto those bills, and the Senate refusing to take any of the house-passed bills up for consideration. This was the fate of numerous pieces of energy legislation, including bills aimed at opening more of the outer continental shelf (OCS) for oil and natural gas development. The Senate, unable to move any major form of energy related legislation, figuratively threw up its hands in surrender and waited for the mid-term elections. On the Administration side, regulatory efforts such as hydraulic fracturing, blow out preventer, and arctic rules continued to be delayed until after the mid-term elections.
The long-awaited mid-term elections are now over, and House and Senate Republicans are faced with the decision to either continue showing their differences with the White House or, prove their ability to govern. And the decision will not come easily, as the GOP searches for solutions that will reach across and unify their ranks, rather than divide and splinter. Should the new Congress want to start on areas where there is already much consensus, offshore energy could be a rallying point and a bi-partisan effort.
Energy is a non-partisan issue, or at least it could be. Where it has become rancorous and partisan is whether to develop fossil fuels. But even here, there is room for a broad consensus. There is widespread support for reliable, affordable, and secure energy. Right now, and for the foreseeable future, the traditional energy sources – coal, natural gas, oil, and nuclear – supply the US with the large majority of its energy needs. The Energy Information Administration predicts that by 2040, approximately 88% of the nation's energy will still come from natural gas, oil, coal and nuclear. This author personally believes that the non-traditional mix, i.e., biofuels and renewables, will be much higher than 12%. But even if the non-traditional mix reaches 20%, traditional sources of energy will still be our mainstay.
There is also broad general agreement that the United States should be a leader in energy development and production. Thanks to directional drilling and hydraulic fracturing, the US is on the brink of becoming a world leader in the production of natural gas and oil. The ability to be energy secure should be a unifying theme among members of Congress and Obama Administration officials. One of the ways to be more energy secure is to diversify the types of energy and the locations of the sources of that energy. An all-the-above and all-the-below energy policy confirms the former, and opening up more of the OCS to exploration would provide more security through diversity. Currently, due to Federal policies, almost 87% of the OCS is closed to exploration for oil and natural gas. Furthermore, it has been closed for two generations. It is time to lift this political embargo and find out just how much reliable, affordable domestic oil and natural gas exists to supplement our robust onshore supplies. This can be the year to make this dream a reality.
Is there energy potential in the OCS? We think so, but we are basing that decision on decades old data. Other countries such as Canada, Mexico, Venezuela, Brazil, Gabon, Angola, Russia, and Cuba are expanding their offshore oil and natural gas programs. Geologists are saying that there are similar geographic features off the Atlantic coast in which other countries have made significant offshore discoveries. Old government estimates say there could be over 40 Bbbl of oil and 187 tcf of gas waiting to be discovered off US shores. We won't know unless we look.
Are there any economic benefits? New studies conducted by Quest Offshore Resources and released by the National Ocean Industries Association and the American Petroleum Institute say there could be. If the Atlantic, eastern Gulf of Mexico, and the Pacific were finally opened up to exploration and development, that could create an additional 840,000 jobs, a capital investment and spending figures of $450 billion, and increases in revenue to state and federal government to the tune of about $200 billion. We know how prolific the offshore GoM has been for the last 40 years, and these new figures would more than double what the GoM currently provides.
We can open up the OCS through two methods. The first is through the Administration's Five Year Program. The Five Year Program is developed through the Department of the Interior and establishes an offshore lease sale schedule. We are currently in the 2012–2017 Five Year Program, which does not include any new areas. However, the process has already begun for the 2017–2022 Program. This year is the perfect time to add new areas such as the Atlantic, eastern Gulf of Mexico, and the Pacific to the planning process. The second method is through congressional action. Last year saw the House of Representatives pass legislation opening new offshore areas, only to have the bills languish in the Senate. This can be the year to complete the legislative process.
Yes, 2015 can be the year of energy. It can be the year of political unity behind energy measures. Time will tell, but, as we have learned, the window of opportunity is short. Some are already talking about waiting until the 2016 general elections. To do so would truly waste and squander a great opportunity for job and economic growth. Let's not look back on 2015 with that regret.
National Ocean Industries Association (NOIA)