Tag: offshore drilling

Interior’s First Scheduled Lease Sale of 2011

The Department of Interior released a schedule of oil and gas lease sales in the Gulf of Mexico.  This is the first lease sale in 21 months.  It is an encouraging move by Interior as drilling in the Gulf of Mexico accounted for some 242,000 jobs in 2010 with 60,000 of those positions linked directly to the oil and gas industry and some 180,000 related to those industries that provided equipment and services. 

In total, offshore drilling can create 500,000 jobs and more than $190 billion in government revenues by 2025.  These are much needed jobs when the nation is facing a jobless rate of 9.1 percent. 

However, this schedule of lease sales comes with some strings attached.  The one that is most troubling is the increase in the minimum bid requirement which is nearly doubled.  This has the potential to discourage investment by companies that have been paying for leases that they didn’t used during a moratorium and the permitorium that followed.  While the Administration is putting a good foot forward by holding a lease sale, it is still placing a lot of demands and conditions on an industry that has the potential to create a lot of jobs.

Mahta Mahdavi is director of energy and resources policy, National Association of Manufacturers.

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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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Manufacturers Call on Interior Department to Expedite Drilling off Alaska’s Coast

Yesterday, the National Association of Manufacturers (NAM) filed comments with the Department of the Interior’s (DOI) Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) urging them to expedite the permitting and lease process in the Chukci Sea and other areas of Alaska’s Outer Continental Shelf (OCS) for oil and natural gas development.

Estimates show that in Alaska’s OCS, there are roughly 27 billion barrels of oil and 132 trillion cubic feet of natural gas. It is time to put an end to needless red tape, excessive delays and unreasonable regulations preventing domestic exploration and production.  Using these abundant resources will not only generate $193 billion in revenue to the government over the next 50 years, it will also create tens of thousands of jobs, increase our energy security and our domestic supply as well.

While unemployment continues to increase, and energy prices are at record highs, it is time we use the domestic resources readily available to us to solve the problems we face.

Manufacturers support responsible and environmentally sensitive practices that promote safety and conservation, and this can be achieved; all while securing our energy future and rebuilding our shaken economy. It is time to open up Alaska’s OCS.

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As Summer Heats up, So Do Discussions on Offshore Drilling and Job Creation

With the grim announcement today of the unemployment rate ticking up to 9.1 percent and only 54,000 jobs created in May, nearly 100,000 short of the estimated number, the issues of creating jobs by putting our domestic energy companies back to work is taking center stage in Congress.

Yesterday, in the House of Representatives, offshore drilling was the hot topic with three committees holding hearings on the issue. Manufacturers know that resuming drilling in the Gulf of Mexico and increasing domestic energy production will help invigorate our embattled economy and add more jobs to the payrolls.

The House Energy and Commerce Committee passed a measure yesterday to streamline permitting for offshore drilling operations and to eliminate the bureaucratic red tape that holds up new exploration and production. According to the Committee, the measure will help create jobs and increase domestic energy supplies.

In the House Oversight and Government Reform Committee, Chairman Issa released a report critical of the BP/Administration Response to the Gulf Oil Spill and also held a hearing assessing the recovery efforts after the spill. Mississippi Governor Haley Barbour and Director Michael Bromwich from the Bureau of Ocean Energy Management, Regulation, and Enforcement at the Department of the Interior, both testified.

And in round three of hearings, the House Natural Resources Committee , Subcommittee on Energy and Mineral Resources held a hearing on Alaskan oil and gas drilling, and the need for faster action in the permitting process. The subcommittee stressed the importance of expediting exploration and production to reduce dependence on foreign oil and create hundreds of thousands of jobs.

As summer goes on and gas prices hover around four dollars a gallon, unemployment continues to tick up, the cost of goods and services rises, domestic energy production will continue to remain in the forefront of congressional debates.

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Virginia Gov. McDonnell, Business Leaders Hail Move Toward OCS Drilling

Speaking at a Richmond-area gas station as a backdrop, Gov. Bob McDonnell and other Virginia leaders on Thursday praised legislation in the U.S. House to move forward with oil and gas development in the Outer Continental Shelf, including areas off Virginia.

The House passed one of the bills, H.R. 1230, requiring the Secretary of the Interior to conduct certain offshore oil and gas lease sales, by a vote of 266-149 on Thursday.

The other bill cited at the news conference was H.R. 1372, the Virginia Energy Act, sponsored by Rep. Bob Goodlatte (R-VA).

Excerpts from the news release:

Gov. McDonnell: “America has an energy policy problem.  Today, Virginia businesses and families are paying, on average, $3.88 per gallon for gasoline.  That’s up $1.00 from a year ago. The Energy Information Administration estimates that gasoline will cost the average U.S. household $1,210 more this year than in 2009. That is money that could be spent by families on education, groceries and vacations. Instead it is money being spent at the pump.  The pain at the pump is the result of many factors, one of which is the result of our ongoing dependence on foreign sources of oil. That is why I strongly support increasing domestic energy production from every possible source, including wind, solar, biomass, nuclear, oil and natural gas. A key part of that effort should be the environmentally responsible development and production of oil and natural gas off of Virginia’s shores.”

Rep. Goodlatte: “Virginians understand that a major component in lessening energy costs is to produce more energy. I believe that Virginia should have every tool available to access its energy supplies. That is why legislation like the one the Congress is considering today, that would provide for access to Virginia’s energy supplies as well as legislation that I have introduced that would provide for revenue sharing with the Commonwealth for its energy resources are vital to the Commonwealth of Virginia. In addition to helping us become energy independent, access to these resources will help create thousands of jobs for Virginians and infuse the Commonwealth with new capital growth.” (continue reading…)

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House Overwhelmingly Backs Offshore Oil, Gas Development

The House of Representatives this afternoon voted 266-149 to pass H.R. 1230, the Restarting American Offshore Leasing Now Act. That’s a huge bipartisan level of support for the bill, which directs the Secretary of Interior to move ahead with previously scheduled offshore oil and gas leases.

The overwhelming support came despite the White House issuing a formal Statement of Administration policy opposing H.R. 1230 and H.R. 1229, the Putting the Gulf of Mexico Back to Work Act.

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Gas Prices: Markets Will Respond to Increased U.S. Oil Production

One argument Americans do NOT need to hear in today’s House debate on H.R. 1230, the Restarting American Offshore Leasing Now Act, is encouraging domestic energy production will do nothing to lower high gas prices today because, after all, it will take years for any new drilling to produce oil and gas. That old argument is just an excuse for inaction.

And it is an old argument. As Rep. Doc Hastings (R-WA) observed on a conference call with bloggers Wednesday, opponents are always saying it will take 10 years or seven years to have impact, but they were saying 10 or seven years ago. With action then, we might not have this problem.

Hastings, chairman of the House Natural Resources Committee, then dared to cite market forces in his further rebuttal:

But to me, there’s a bigger portion to this, and that is, crude oil is a global commodity and that we know. Yet we are sitting on potential reserves here that are absolutely huge, and the world knows that. And if we send a signal to the markets that we’re going to go after the resources that we have in this country … — and keep in mind, OPEC controls about 45 percent of the market — I think that will send a signal to the market that we are very, very serious about utilizing our resources, and I think that will have a positive impact on driving the price of gasoline down.

As a matter of fact, that happened in 2008, if you recall. Because there was a congressional and a presidential moratoria [on outer continental shelf drilling] in 2008 going into the gas crisis, $4 a gallon in August of that year. Both of those moratoria went away, and you know, the gas prices dropped, and I think there’s no question about that, it was because there was a signal to the market….

A lot of people say there are other factors controlling prices, and my short answer to that is, sure there are other factors. It’s called OPEC. They’re a cartel….In any sort of cartel, if you want to beat a cartel, you increase the supply of whatever that cartel is controlling. So if we send a signal that we’re going to increase the potential supply of crude oil in the world, I think the market will respond accordingly.

The National Association of Manufacturers sent the House a “Key Vote” letter Wednesday endorsing H.R. 1230, as well as H.R. 1229, the Putting the Gulf of Mexico Back to Work Act.

News coverage …

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Manufacturers Support House Bills to Increase Domestic Energy

The House of Representatives today debates H.R. 1230, Restarting American Offshore Leasing Now Act, one of three bills House Republicans have proposed in their American Energy Initiative to increase the reliable production of domestic oil and natural gas. (House floor schedule)

The National Association of Manufacturers on Wednesday sent the House a “Key Vote” letter urging support for the bill, as well as H.R. 1229, the Putting the Gulf of Mexico Back to Work Act. Excerpt:

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

Every day of unnecessary delay in permitting costs jobs and hurts America’s manufacturers and their employees. Thousands of jobs were lost during the 2010 offshore moratorium. Companies that make and supply equipment, services, engines, boats and materials such as steel and concrete suffered under the moratorium and continue to suffer.
(continue reading…)

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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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Issuing Only Three Permits for Offshore Drilling is Not Enough

This afternoon, the Department of Interior issued a deepwater permit to ATP Oil & Gas Corp. to resume drilling 90 miles south of Venice, Louisiana.  The project was put on hold by the drilling moratorium.  Although this is a good step forward by the Interior, the permitting process is still slow and more permits need to be issued.  During a time when the price of gas at the pump continues to rise, companies waiting for permits should be allowed to go back to drill in the Gulf of Mexico. 

Currently, a number of companies are keeping their rigs “warm” by continuing to pay for their leases and maintaining a skeletal group of workers so that they can immediately return to drilling when they receive their permits from Interior.  These companies can incur costs up to $1 million a day while their rigs sit idle. 

Offshore drilling is a significant part of the U.S. economy.  As Scott Angelle, Secretary of the Louisiana Department of Natural Resources, noted in his testimony this week, one third of our nation’s domestic production comes from the Gulf, and nearly 90% of that production is from deepwater drilling.  Furthermore, drilling in the Gulf directly impacts nearly 16,000 companies and 153,000 employees. 

Although the Interior is on the right track by issuing its third permit, this will not address those jobs that are put at risk and the slowdown of oil and gas production.  The Interior needs to streamline its permitting process and to issue permits more quickly.   The U.S. is still struggling with a recovering economy with high unemployment.  Furthermore, with the unrest in the Middle East that is causing even higher prices at the pumps, the Interior needs to be more efficient in issuing permits that will boost our domestic production of oil and gas and put people in the region back to work.

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