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January 2017 Issue


A New Administration Brings Hopes of Balanced Energy Policies


By Randall Luthi
President, National Ocean Industries Association (NOIA)
The 2016 election was certainly one for the ages. Traditional political pundits couldn’t have been more wrong and both campaigns emphasized the negative to energize voters. Policies seemed to take a back seat throughout the discord, but now will be front and center. One of the policies that should thankfully return to the forefront is energy.

Despite being the bastion of American energy security and productivity, the oil and gas industry took an unprecedented beating in 2016. Early in the year, oil prices fell to $28 per barrel, the lowest price in 14 years. Tighter budgets and smaller payrolls prompted the loss of nearly 118,000 oil and gas jobs in the United States. Unfortunately, low commodity prices are only one part of 2016’s legacy.

The outgoing Obama Administration released an unrelenting tide of costly regulations, some of which are constricting oil and gas exploration and development without increasing safety or environmental protection. While other industries are facing similar challenging situations, and sometimes receive federal bailouts, the oil and gas industry not only trudged on unaided, but was targeted through a regulatory fiat.


Oil and Gas Regulations Impact
The health of the oil and gas industry impacts each American. The industry safely produces reliable and affordable energy that helps keep businesses operating, vehicles running and homes heated and powered. The Obama Administration put all of this at risk when it apparently bowed to the unrealistic demands of the “keep it in the ground movement” and issued many regulations and policies that limit access to offshore oil and natural gas. The onslaught of costly and highly prescriptive regulations at the hands of the Obama Administration was unprecedented. Industry estimates place the combined industry costs of three of the largest offshore rules—well control, Arctic drilling and air quality—at more than $55 billion over a 10-year period. The impact could be more devastating for the rest of the economy, potentially reducing U.S. GDP by a cumulative total in the hundreds of billions of dollars. What’s more, these rules do not improve safety or provide increased environmental protections. The well control rule’s provisions on drilling margins may actually increase risk, the Arctic drilling rule does not accurately reflect current industry capabilities, and the air quality rule was proposed before government studies meant to inform the rule were even completed. Beyond the regulatory fiat, the Obama Administration took steps to directly limit offshore access. Sixteen percent of total U.S. crude oil production and 5 percent of total U.S. natural gas production comes from federal offshore areas, despite federal policies keeping over 85 percent of the U.S. Outer Continental Shelf (OCS) closed to oil and gas exploration and development for over three decades.


Atlantic, Alaska Lease Sales
Last March, the Obama Administration removed Atlantic Lease Sale 260 from the 2017 to 2022 OCS Oil and Gas Leasing Program, effectively keeping the entire Atlantic OCS off-limits for oil and gas development. A majority of the residents of the states bordering the initially proposed lease sale, as well as their governors, various other state and local elected officials and stakeholder groups from other industries, supported the Atlantic lease sale.

Much of the Atlantic debate was informed by seismic survey data collected over three decades ago. Those data are practically ancient given the tremendous science and technology advances made over the past 30 years.

Without the permits required to conduct safe and modern seismic surveys, which the administration has delayed for years, there is no telling how much more recoverable oil and gas might be found in the Atlantic. After successfully taking the Atlantic lease sale off the table, environmentalists turned their attention to proposed lease sales in the Beaufort and Chukchi Seas in Alaska, ignoring that 90 percent of Alaska state revenues are generated by the oil and gas industry and that 72 percent of Alaskans support offshore development. Alaskans, and especially Alaska Native communities, know that oil and gas is the lifeblood of the state. In addition, top military leaders, including former National Security Adviser General James Jones, believe that Arctic energy development is vital to our national security. It can take 10 or more years, from exploration to development, before a single drop of oil is produced from an offshore well. So, when a lease sale is dropped from a Five-Year Program, it could be 15 years or more before it is reoffered, explored, developed and begins production.


New Administration
The new year means a new administration, and a new hope, that pragmatic, forward-thinking policies will rule the day.

Thanks to the hard work and innovation of the oil and gas industry, U.S. consumers are no longer at the mercy of OPEC or Russia.

Smart policies that went into effect 10 or more years ago, like the 2006 Gulf of Mexico Energy Security Act (GOMESA), mean that 88 percent of the energy we use in the U.S. is now domestically produced, and U.S. oil imports have been dramatically reduced.

The U.S. is currently the global leader in oil and gas production, and we can continue an energy renaissance and maintain our energy leadership position with the right federal policies in place.

With an eye toward a bright and prosperous energy future, NOIA will continue its efforts to ensure the new administration is on the same page as scientists, engineers and business leaders, and truly understands what it takes to keep America running.




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Sea Technology is read worldwide in more than 110 countries by management, engineers, scientists and technical personnel working in industry, government and educational research institutions. Readers are involved with oceanographic research, fisheries management, offshore oil and gas exploration and production, undersea defense including antisubmarine warfare, ocean mining and commercial diving.