The Associated Petroleum Industry held a conference call with reporters this morning in anticipation of President Obama’s speech on energy. The API’s top policy expert on upstream operations, Erik Milito, discussed the many policy and regulatory decisions by the Obama Administration that have prevented domestic energy development, especially offshore oil and natural gas.

Milito was justifiably tough on Tuesday’s report from the Department of Interior on “unused oil and gas leases.” From his prepared statement:

Yesterday, the President’ point person for oil and natural gas development, Secretary Salazar, released a politically motivated and deeply flawed report on so-called idle leases. Among other things, it lists offshore leases that do not yet have approved exploration or development plans as “inactive,” regardless of whether there is exploration or pre-production activity going on such as seismic or technical reviews of the geography. This preparation work is necessary to determine whether natural resources exist on a lease and how to produce any oil and natural gas safely.

The Administration’s report assumes that oil and natural gas are spread uniformly across a lease acreage, suggesting that 70 percent of idled leases equates to 70 percent idled resources – as if finding oil were no more difficult than sticking a pipe in the ground. (continue reading…)

The Department of Interior (DOI) announced this afternoon that it issued its first deepwater drilling permit for the Gulf to Noble Energy.  While this may be a good first step for DOI and the permitting process, there are still 14 deepwater permits pending review and approval.  Since the moratorium on offshore drilling was lifted in November 2010, companies, who can afford to, have kept their lease and rigs “warm.”  

Essentially, these companies pay approximately $550,000  per day in order to maintain their rigs – although for the most part the rigs are idle.  Offshore drilling is a significant part of the U.S. economy both in terms of generating jobs as well as creating a domestic supply of oil and gas.  A recent study noted that there are 125,000 jobs that can be lost by 2015 and we can stand to lose 680,000 barrels of oil by 2019 if the permitting delays continue to linger. 

Although the DOI is on the right track by issuing this one permit, today’s announcement it will not resolve the jobs put at risk and the lost production if the permitting process is not streamlined. In an economy with high unemployment and disruptions in the Middle East that have significantly increased the price of oil, the U.S. cannot afford more permitting delays.

American Petroleum Institute, “API response to commission report: ‘We’ve made progress to improve safety’“:

API Upstream Director Erik Milito said the group is still in the process of reviewing the commission’s report but is pleased the commission is recommending increased funding for the federal agency responsible for inspecting and monitoring offshore activity. However, he said API is deeply concerned that the commission’s report casts doubt on an entire industry based on its study of a single incident.

“This does a great disservice to the thousands of men and women who work in the industry and have the highest personal and professional commitment to safety,” Milito said.

Dan Kish, Senior Vice President at the Institute for Energy Research, “IER: BP Spill Commission Was Flawed From the Start“:

This commission has had problems from the beginning – it has seemed to prioritize creating political cover for the Obama Administration over working towards becoming a fact-finding body. That’s because it’s full of politicians, activists and opponents of offshore drilling. The public needs to know that the Macondo spill was an isolated incident that tragically differed from the oil and gas industry’s history in the Gulf: 60 successful years that generated 50,000 successful wells.

Washington Examiner editorial, “Oil spill antidote: More federal bureaucracy“:

It wasn’t hard to predict the sort of recommendations to expect from the seven-member National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling when President Obama appointed Natural Resources Defense Council President Frances Beinecke, Union of Concerned Scientists board member Fran Ulmer and five other Democratic donors to the panel. All seven oppose offshore oil and gas activity and are environmental movement stalwarts. … (continue reading…)

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling today released its final report making numerous recommendations, including an increase in the current $75 million cap on liability for offshore drilling accidents. The oil spill dommission did not recommend a specific figure for the higher cap, leaving that decision up to Congress.

Manufacturers believe that a substantial or unlimited cap increase is not the solution. Before taking any action, Congress should take a close look at the impact of any cap increase on the industry. Any substantial increase to the liability limit will inevitably lead to higher insurance rates, making operations in the U.S. waters potentially so expensive as to drive producers out of the Gulf overseas. Smaller independent operators, in particular, would suffer competitively. (See this American Petroleum Institute paper, “Impacts of Increased Liability Limits on OCS Operations.”) The result would be to continue an unofficial moratorium on offshore drilling.

Last session, there were discussions of an unlimited liability, while several Senators introduced legislation to raise the cap 13-fold, to $10 billion. Despite intense pressure to act, Congress ultimately passed very little legislation last year in response to the Deepwater Horizon spill, largely out of concern about further damaging the Gulf region’s economy. Those concerns remain valid.

As the Manufacturers have stated before, any delay in off-shore drilling will have a significant economic impact on manufacturers and other industries throughout the Gulf Coast and the nation.  The nation cannot afford increased job loss, especially during a time when the unemployment rate is as high as 9.4 percent.  Additionally, any further delay will have considerable impact on the domestic oil supply where it will drive up the cost of energy and create uncertainty in oil supply because companies will have to go abroad for drilling.

Funny. We always thought Carol Browner was de facto EPA Administrator. Turns out she’s really the de facto Secretary of Interior.

From Politico, “Interior inspector general: White House skewed drilling-ban report:

The White House rewrote crucial sections of an Interior Department report to suggest an independent group of scientists and engineers supported a six-month ban on offshore oil drilling, the Interior inspector general says in a new report.

In the wee hours of the morning of May 27, a staff member to White House energy adviser Carol Browner sent two edited versions of the department report’s executive summary back to Interior. The language had been changed to insinuate the seven-member panel of outside experts – who reviewed a draft of various safety recommendations – endorsed the moratorium, according to the IG report obtained by POLITICO.”

As Ed Morrissey points out at Hot Air: “This is no mere academic exercise. Thousands of people lost their jobs because of this supposed instance of sloppy editing, and the delay it created in safe exploration and drilling may impact the region for years, as well as America’s energy independence.”

The IG’s report certainly bolsters the argument for House oversight hearings into the role of Browner and other White House appointees on energy and climate policy issues. Talk show host Hugh Hewitt this week asked Rep. Fred Upton (R-MI) about the possibility of subpoenaing Browner and other appointed “czars” for oversight hearings. “You bet,” said Upton, who is seeking the chairmanship of the House Energy and Commerce Committee.

Hat tip: Glenn Reynolds, Instapundit. Chris Horner has sharp commentary here, as well.

Responding to today’s report the national unemployment rate had risen to 9.6 percent in August, President Obama made a statement at the White House expressing concern about joblessness. He then continued:

But I want all Americans to remind themselves there are better days ahead. Even after this economic crisis, our markets remain the most dynamic in the world. Our workers are still the most productive. We remain the global leader in innovation, in discovery, in entrepreneurship.

That’s right, and the President’s reminder is useful as context and reassurance.

Still, the statement must clank painfully against the ears of all the people who are out of work or who face the loss of their jobs because of Administration policies on energy, specifically the moratorium on deepwater drilling, and the proposals in Congress to raise taxes on the oil and gas industry. On Wednesday, about 5,500 people, including a heavy representation of energy workers, workers, turned out for “Rally for Jobs” events in held in Houston, Port Arthur and Corpus Christi to protest those policies.

As Jack Gerard, President of the American Petroleum Institute, observed, “Today energy citizens in Texas sent a clear signal to Congress that lawmakers should focus their efforts on reviving our economy and creating more jobs. U.S. unemployment is high and Americans are increasingly concerned about the slow pace of economic recovery.” That message certainly resonates even more today with the latest unemployment report.

API has put together a video report on the Wednesday’s rallies at the EnergyTommorow blog, “Energy Workers Fight for Their Jobs.” More events are scheduled next week in Canton, Ohio, Farmington, N.M., and Joliet, Ill.

The drilling moratorium’s toll on jobs continues to add up. The 33 drilling platforms support between 800 to 1,400 workers each – offshore and on.  This means that as many as 46,200 jobs could be idled by the moratorium in the short term. If a moratorium carries forward, API estimates the loss of jobs could reach 120,000 by 2014. And of course, the economic activity that normally flows through local communities is stifled. (For more figures, see this report from the Louisiana Mid-Continent Oil and Gas Association.)

With the moratorium, it’s as if the Administration is saying: “Jobs. JOBS! Just not those jobs.”

But wasn’t there another rig fire on Thursday? Doesn’t that prove the need for a moratorium?

Only if the standard is the impossible to meet “no risk, ever.” As Charlotte Randolph, president of the Lafourche, La., Parish and an outspoken critic of the moratorium, told The Associated Press, the outcome of Thursday’s platform fire proved that the oil and gas industry practices effective safety procedures: “The people were safely recovered. The oil did not spill. It’s everything the Deepwater Horizon was not.”

The tax and advisory firm Grant Thornton released a new study this week examining how the new regulations stemming from the Gulf of Mexico oil spill will impact deepwater drilling companies in the region. It finds that smaller domestic energy producers in particular are likely to have a tough time keeping up with the new costs, regulations, guidelines and penalties that lie ahead. Many of these companies may be forced out of business or overseas.

“As all of the costs associated with operating in the Gulf continue to rise, deepwater drilling will increasingly become the province of only the largest, most well-capitalized companies,” said Rob Moore, a director in Grant Thornton’s Corporate Advisory & Restructuring Services practice.

The cumulative effect of these new costs and regulations will be to extend indefinitely the drilling moratorium in the Gulf for smaller companies. The moratorium has already created uncertainty and economic instability, is harming America’s efforts to achieve energy independence and is costing jobs throughout the Gulf region. Every day the drilling moratorium remains in place, jobs, U.S. energy security and the nation’s economy are threatened.

Nevertheless, the moratorium will stay in place for at least a few more months. Michael Bromwich, the Interior Department’s top offshore drilling regulator, made the announcement on Monday in a letter to the presidential oil spill commission and said he plans to propose measures to replace the moratorium by the end of October.

The American Energy Alliance on Monday released an analysis of the economic impact on the Obama Administration’s moratorium on deepwater drilling in the Gulf of Mexico. The findings:

• Over 8,000 jobs lost in the Gulf Coast region
• Over 12,000 jobs lost across the country.
• $700 million in lost wages due to the moratorium.
• $2.1 billion in economic activity lost in the Gulf Coast region and nearly $2.7 billion lost nationwide.

The analysis, “The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region,” was conducted by Joseph Mason, the Louisiana Bankers Association endowed professor of banking at Louisiana State University. In the release, Mason commented:

The data are clear. The moratorium will cost the Gulf Coast region jobs, money, and economic development. In fact, the moratorium could be more costly, than the oil spill itself. The region is already struggling from devastating losses from Hurricane Katrina, Hurricane Gustav, and the nation’s depressed economy. By stifling one of the area’s primary economic engines, the administration is crippling the local economy and risking long term consequences.

Gulf Coast citizens will protest the moratorium on Wednesday in Lafayette, gathering at the Cajundome for the Rally for Economic Survival.

Mason appeared in a Bloomberg interview to discuss his finding, with the video at WashingtonPost.com here. (The Post and Bloomberg launched a new content-comingled business website this week. The Post’s business coverage had suffered after it dropped its weekday business section in March 2009.)

Nola.com, the Times-Picayune’s website, also provides an update on the litigation challenging the Interior Department’s moratorium:

Meanwhile, a lawsuit over the moratorium brought by Hornbeck Offshore Services Inc. of Covington continues.

Last week, a suit which represents the interests of shallow water drilling companies, Ensco Offshore Co. v. Interior Secretary Ken Salazar et al, was consolidated into the Hornbeck suit. Shallow water drillers believe that they face a de-facto moratorium because of the ban on deepwater oil exploration.