Let’s hope public hearings on the Obama administration’s draft offshore oil and natural gas leasing program – starting this week – help spark serious discussion of how the nation’s offshore energy reserves will be managed in the near future. Needed is greater public awareness of just how limited the administration’s approach is, reflected in a draft plan that simply doesn’t go far enough.

We say public awareness because the administration has been able to foster the perception that it favors more oil and natural gas development and energy infrastructure when, in fact, its policies have done little to support that development (did somebody mention the Keystone XL pipeline?).

In the case of offshore energy development, it’s important to move the administration toward a plan that actually increases access to reserves. The draft plan for offshore leasing for the 2017-2022 time period is less than meets the eye, offering just a single Atlantic lease sale in 2021 as part of the five-year program, which Interior Secretary Sally Jewell said could be withdrawn as the leasing plan process evolves. That’s not a balanced approach, that’s an attempt to manage the perceptions game.

API President and CEO Jack Gerard, Randall Luthi of the National Ocean Industries Association and Barry Russell of the Independent Petroleum Association of America talked about the high stakes involved in offshore energy development during a conference call with reporters.

Gerard said offshore energy is part of a “unique American moment” – the opportunity to sustain and build on resurgent oil and natural gas production that has created jobs, spurred economic development and made the U.S. more energy secure in the world. Gerard:

“America has a chance to be the world leader in energy now and for decades to come. But the opportunity could slip through our fingers if the government keeps 87 percent of offshore waters closed to oil and natural gas leasing.”

Luthi:

“This draft program offers fewer sales than the current plan and has questionable (areas) such as the 50-mile buffer zone in the Atlantic, reduces the area for future analysis and development in the Beaufort and Chukchi seas and omits other offshore areas from consideration altogether. The (proposal) effectively keeps about 87 percent of the offshore areas locked away. … The administration has missed a chance to include additional (outer continental shelf) areas in the plan. We do look forward to increased opportunity in the Atlantic, but we are disappointed that so much in the outer continental shelf will remain closed without the possibility of finding out if there are valuable resources in these areas.”

Access to energy reserves is key to energy development and the potential benefits that come from it. Studies by Quest Offshore Resources show that offshore oil and natural gas leasing could create nearly 840,000 U.S. jobs and raise $200 billion in revenue for the government by 2035. But these benefits evaporate like a mirage if 87 percent of our offshore areas remain off limits to exploration and development.

Gerard:

“We’re seeing the opportunity for the United States to become energy secure while also having the potential to expand into the market places where we have not been for many, many years. And that raises issues like crude exports, which we really haven’t had the need to consider in this country for 40 years. But this is a unique window and it gives us a chance to really increase our security, our job creation, our revenue (for government). It’s a multiple winner across all fronts. … But if government chooses to limit our opportunity, it has repercussions, and it has adverse ripple effects up and down that economic value chain.”

Certainly, the round of public hearings is important to shaping the draft proposal into a final document. As Russell pointed out, with the development of the five-year plan just beginning, it doesn’t make sense to exclude so many offshore areas from the discussion. Gerard:

“We need to open up for public conversation the maximum potential. It’s a little like the president’s budget proposals this time around. In one breath he takes credit for the oil and natural gas renaissance, yet we all know the vast majority of that is occurring on state and private land and federal production is actually down for both oil and natural gas. And then at the same time he proposes another $95 billion tax (increase) hit to the industry. One of the great ironies is in the Interior budget that came out just recently, Secretary Jewell pointed out that she needed another billion dollars for her budget. But (they) forgot to mention two months earlier they had announced a billion-dollar shortfall in revenue from production of oil and natural gas on federal lands.”

Russell said the draft offshore plan fits a past pattern by the administration of rhetorically embracing oil and natural gas development but then finding a number of ways to hinder it:

“We do hear this idea of the administration talking about the benefits of the oil and gas industry sometimes. They certainly take credit for those accomplishments, but at the same time when you look across the federal spectrum, you look at the administration’s budget and so forth, whether it’s on taxes or when you look at the set of regulatory things the administration has proposed, they always seem to be going overboard in areas where there are very serious hits to the industry but at the same time with very few benefits.”

As Gerard has said, the surge in oil and natural gas development is creating a generational opportunity for the United States to take greater control of its energy security and future overall. We have the energy reserves, we have the technologies. What’s needed is leadership from policymakers that will allow safe and responsible development of these reserves – more leadership and vision than is apparent in the draft offshore leasing plan.

American voters are seeing the benefits of increased supply, and they sense the golden opportunity to harness the country’s energy wealth. Voters in Florida, Georgia, North Carolina, South Carolina and Virginia strongly support offshore development in recent polling. Gerard:

“According to recent polls, voters … across the country support offshore oil and natural gas development and want to produce more of these vital energy resources here in the U.S. The same polls show voters do not think the federal government is doing enough to reach that goal. Voters have experienced firsthand at the gas pump the benefits of plentiful supply. We must maintain this momentum even as we pursue new markets abroad through exports. Access to the resource is key to both. This is America’s energy moment. But the moment will pass unless our elected leaders allow more exploration and production of our abundant oil and natural gas resources both on and offshore.”

By Mark Green

Originally posted February 9, 2014

Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America’s oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.