Tag: OCS

Offshore Drilling Critical to Manufacturing Growth

On Thursday the Department of Interior granted Royal Dutch Shell approval of a plan to begin the process of drilling exploratory wells in the Arctic Ocean. The plan calls for Shell to begin drilling four wells in the Beaufort Sea off the North Slope of Alaska. 

This is a positive step forward that Interior has granted Shell the approval to move forward with deepwater drilling off the coast of Alaska. Access to affordable energy is critical to manufacturer global competiveness and vital to job creation. Manufacturers hope that the Department of Interior will move forward with additional permitting, not only for the Arctic Ocean, but also for deepwater drilling off the Gulf Coast.

Deepwater drilling provides a significant economic impact to the entire general economy as suppliers and others are impacted when permitting is stalled.  A recent study by Northern Economics and the University of Alaska Anchorage’s Institute of Social Economic Research estimates that as many as 91,500 new jobs would be created by Outer Continental Shelf related development and production in Alaska. The study also estimates that workers in Alaska will benefit with the addition of $62 billion to payrolls and workers in the rest of the U.S. will see $82 billion added to payrolls.  This statistic illustrates the ripple effect of how drilling in Alaska will impact the economy throughout the nation.

The bottom line is that additional deepwater drilling permitting is vital to our energy security and manufacturers’ global competiveness and job creation.

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Gas Prices Top $4 a Gallon in Mukwonago, Elsewhere

When news editors met for the annual agenda-setting conclave last month, they determined that the official theme for today, April 13, would be “Gas Prices are Really High and Getting Higher!”

Those with adequate news-gathering resources would do the second part of the story, the conclavists agreed: “High gas prices could slow economic growth.”

Today the House Natural Resources Committee is scheduled to vote on three bills that could lend some stability to fuel prices by increasing production of domestic energy, legislation that comprises the American Energy Initiative. The bills represent good policy no matter what the gas prices are.

The Committee news release lists the bills: (continue reading…)

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President Should Accept Responsibility for Lack of Domestic Energy

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…)

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House Votes Would Promote Energy Policy for U.S. Jobs, Competitiveness

The National Association of Manufacturers this afternoon sent a “Key Vote” letter to the U.S. House of Representatives calling for specific votes on three amendments to H.R. 1, the continuing resolution, that would promote a jobs- and growth-oriented energy policy. The premise:

Manufacturers support energy policies that: 1) expand domestic supplies; and 2) lower costs for U.S. consumers and for manufacturers, which use one-third of our nation’s energy. Access to competitively priced energy helps U.S. companies compete in the global economy and preserves high-paying jobs here at home.

The NAM urges a vote for two amendments:

  • OCS Exploration. Amendment 251 sponsored by Congressman Steve Scalise (R-LA-1) would prevent delays in approving plans/permits for energy exploration in the Outer Continental Shelf (OCS).The Department of Interior’s (DOI) permitting requirements have effectively brought drilling activities in the Gulf of Mexico to a halt, creating a de facto moratorium.
  • Coal Ash Regulations. Amendment 217 sponsored by Congressman David McKinley (R-WV-1) would prevent the Environmental Protection Agency (EPA) from moving forward with plans that would classify coal combustion residuals (CCRs) or coal ash as a hazardous waste under the Resource Conservation and Recovery Act (RCRA). Regulating coal ash as a hazardous waste will trigger an increase in disposal expenses for coal-fired power plants and other coal ash generators, likely resulting in higher energy costs for manufacturers.

The NAM urges a no vote on one amendment:

Punitive Taxes on U.S. Energy Producers. Amendment 213 sponsored by Congressman Ed Markey (D-MA-7) would impose roughly $50 billion in tax increases on major oil and gas companies by: repealing the Section 199 domestic manufacturing tax credit for these companies; prohibiting their use of last-in, first-out (LIFO) accounting methods; changing the tax treatment of dual capacity taxpayers; and more.

The NAM strongly opposes discriminatory tax policies, especially when they single out a particular type of business or industry sector. Tax increases on the oil and gas industry will lead to increased fuel costs for American manufacturers and consumers. Raising the price of fuel for manufacturers and the broader business community will further stifle their ability to expand and create jobs.

NAM “key votes” are used to determine a member of Congress’ record on manufacturing-related legislation.

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In Oil Commission Report, Substituting Politics for Context

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…)

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Be Careful in Raising Liability Cap on Deepwater Drilling

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.

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Manufacturing Jobs or Deepwater Drilling Moratorium?

The National Association of Manufacturers ran this ad today in Politico.
Politico Deepwater Drilling Ad Paper Version

And we’re giving Scribd a try as an embedding tool.

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Bill That Increases Threat of Litigation Speeds to House Floor

Today the House of Representatives is considering a vote on the Offshore Oil and Gas Worker Whistleblower Legislation Act (H.R. 5851), a bill that was sped to the floor this week. No committee hearing, no mark-up, no careful consideration and no debate other than a few minutes on the floor. So what is this bill and what does it do? The bill expands the OCS Lands Act to provide new whistleblower protections for all employees of any company engaged in supporting or carrying out exploration of oil and natural gas in our nation’s Outer Continental Shelf. However, this bill goes far beyond affirming a process for employees to go to the Department of Labor to seek protection from retaliation, creating an entirely new mechanism that allows employees to sue their employers in district court.

As we’ve noted previously, few whistleblower claims put forward that actually have merit. The language of this legislation will significantly increase the threat of litigation for a wide array of employers, suits from a new universe of employees far beyond oil rig workers.

Many of the bill’s proponents assert that oil rig workers now have no whistleblower protections. And in truth, there are many questions as to the application of existing whistleblower protections. As Congressman John Kline (R-MN) observed on the House floor:

Safety on offshore oil rigs is overseen by the Coast Guard and the Bureau of Ocean Energy Management, unlike most workplaces, where safety is overseen by OSHA. As a result, it is not clear whether these workers are covered by the OSH Act’s whistleblower protections or any of the 17 other statutes enforced by OSHA’s Whistleblower Protection Program. Some might argue oil rig workers are covered by the Maritime Transportation and Security Act, while others point to a 1983 agreement in which OSHA retained whistleblower authority for these workers.

More importantly, as Rep. Kline notes, these questions could be answered if the bill were to go through regular order, with its committee hearings, research, testimony and inquiry. Unfortunately, the bill and its hastily cobbled together provisions are being rushed to the floor for a vote.

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Energy Insecurity: Liability Caps and Drilling Moratoriums

The House has just started debating the rule for H.R.3534, the Consolidated Land, Energy, and Aquatic Resources Act, i.e., the House “energy” bill. Or was that Waxman-Markey?

The National Association for Manufacturers just sent a “Key Vote” letter to the House, acknowledging that the bill has been made less economically damaging than earlier versions, but would still do too much harm to the jobs and American energy security.

From the “Key Vote” letter:

Manufacturers believe it is critically important to understand the causes of the Gulf of Mexico accident and its long-term environmental impacts before enacting policies that could make a serious problem much worse. While we appreciate efforts made earlier this week to improve H.R. 3534, NAM members continue to oppose the bill, as it would, in its current form, drive up energy costs, create uncertainties in the availability of supply and adversely affect U.S. jobs.

While there appears widespread agreement in the industry and on Capitol Hill that the $75 million liability cap needs to be updated, requiring an unattainable level of insurance coverage for domestic energy producers on the Outer Continental Shelf is not the solution. By eliminating the cap, H.R. 3534 would effectively retain the moratorium on offshore drilling for all but a handful of the world’s largest international companies, forcing the vast majority of American companies out of U.S. waters.

NAM’s key vote letters are developed and approved through a committee of representatives of manufacturing companies of all sizes. The NAM uses the votes to assess a member of Congress’ record on manufacturing issues.

On the House floor, Rep. Jim McGovern (D-MA) just characterized the upcoming debate: If you support the bill, you support the American people. If you oppose the bill, you’re an apologist for Big Oil.

That’s politics, not persuasion.

UPDATE (9:58 a.m.): Rep. Pete Sessions (R-TX) just read the NAM letter on the floor, noting that the NAM represents “jobs creators.” Thank you, Congressman.

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Judge Blocks Drilling Moratorium as Ill-Founded, Capricious

U.S. District Court Judge Martin L.C. Feldman today blocked the Obama Administration’s moratorium on deep water drilling. His ruling is here. Excerpt:

The Deepwater Horizon oil spill is an unprecedented, sad, ugly and inhuman disaster. What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm. While the implementation of regulations and a new culture of safety are supportable by the Report and the documents presented, the blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.

On the record now before the Court, the defendants have failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium with the facts developed during the thirty-day review. The plaintiffs have established a likelihood of successfully showing that the Administration acted arbitrarily and capriciously in issuing the moratorium.

On May 28, the National Association of Manufacturers issued a statement from NAM President John Engler raising concerns about the overbroad moratorium.

(Hat tip: Michelle Malkin.)

UPDATE (4:40 p.m.): (Reuters) – A majority of Americans still support offshore drilling on the U.S. coastline despite the devastating oil spill in the Gulf of Mexico, according to a Reuters/Ipsos poll released on Tuesday.

UPDATE (4:50 p.m.): A statement from John Engler, president of the National Association of Manufacturers:

Today’s decision by Judge Feldman is appropriate and important for manufacturers and the entire supply chain. The moratorium immediately shut down 33 deepwater rigs in the Gulf of Mexico and cost thousands of men and women their jobs. Estimates show that the six-month moratorium would result in lost wages ranging from $165 million to $330 million and cost tens of thousands of additional jobs.

Manufacturers throughout the country who make and supply equipment, services, engines, boats and materials such as steel and concrete also would suffer massive economic consequences as a result of the President’s overly broad moratorium.

Today’s ruling is vital to our future energy independence and a step in the right direction for the health of the economy.

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