Justin Williams, Author at NOIA

Should this measure become law, the end result will be more dependence on foreign oil and more American jobs lost, not only in the Gulf of Mexico, but throughout the country by industries that supply materials and equipment used in the production and exploration of energy. The consequences would reach those who make clothing, boots, drill bits, safety equipment and supply materials such as steel.

”We remain opposed to this bill becoming law,” said Burt Adams, Chairman of the National Ocean Industries Association. “Fortunately, House Members now head home where they will get an earful from those whose jobs and lives will be adversely affected.”

”The House has christened a ship that -- should it reach its destination -- will drive up the costs of producing home-grown oil and gas and make it more difficult for independent energy producers to compete in the domestic market,” said Adams.

Unlimited liability, unsubstantiated standards of financial responsibility, a $2 per barrel tax on oil to fund unrelated programs, mandating a technical fix for blow out preventers before knowing the cause of the accident, and the addition of myriads of reviews and clearances -- all of these create an overall burden that may drive many independent producers out of the energy market. “It is truly death by a thousand cuts, “said Adams.

To give credit where some credit is due, however, the House did approve the concept that companies may pool their financial resources to demonstrate a level of financial capability. NOIA fully endorses this concept, but fears that by retaining unlimited liability, the bill may simply be rearranging the deck chairs.

NOIA is supportive of the concept of lifting the deepwater drilling moratorium, however while well intentioned, the language adopted by the House not only misses the mark, but the entire target. “The House has lost a golden opportunity to pass a clean lifting of the job killing moratorium,” said Adams.

“We fully support increased awareness and safety in the wake of the Gulf of Mexico accident. There are many safety and procedural safeguards that could, and should, be put in to immediate effect, and some are already underway,” said Adams. “Unfortunately the passage of CLEAR does little to increase actual safety and is a job killer.”

###

NOIA is the only national trade association representing all segments of the offshore industry with an interest in the exploration and production of both traditional and renewable energy resources on the nation’s outer continental shelf. The NOIA membership comprises more than 250 companies engaged in business activities ranging from producing to drilling, engineering to marine and air transport, offshore construction to equipment manufacture and supply, telecommunications to finance and insurance.

New House and Senate Bills Create De Facto and Indefinite Moratorium

July 28, 2010 by Justin Williams

For Immediate Release: Contact: Nicolette Nye

Wednesday, July 28, 2010 (202) 347-6900

New House and Senate Bills Create De Facto and Indefinite Moratorium

WASHINGTON, DC – NOIA Chairman Burt Adams issued the following statement in response to the House and Senate oil spill response bills introduced this week:

“The Gulf spill certainly demands that tough questions be asked and new policies and standards be considered, but the bills introduced in the Senate and House go well beyond a reasoned and responsible response to the spill. In fact, they clear the way for increased energy costs, more reliance on foreign energy sources, and the loss of more American jobs.

“Both bills’ provisions on unlimited economic liability alone and new financial capability provisions, taxes and fees could change the face of oil and gas production in the Gulf forever, by driving independent producers out of the area and even out of business completely. The role of independents in the Gulf of Mexico is huge. According to a recent IHS Global study, they provide half of the jobs, half of the economic value and half of the federal, state and local revenue generated by the industry in the Gulf.

”The study forecasts that by 2020 an exclusion of independents from the Gulf of Mexico would eliminate 300,000 jobs and result in a loss, over 10 years, of $147 billion in federal state and local taxes from the Gulf region. If independents are excluded just from the deepwater, we would lose 265,000 jobs and $106 billion in tax revenues by 2020.

“The increased taxes, fees and regulation on permitting, exploration and production in the House bill combined with replacing the current 30 day approval requirement for exploration plans with an open ended time frame create a de facto moratorium in the Gulf of Mexico. And the added layers of bureaucracy of regional planning councils in both bills will further erode certainty for the industry and create a planning nightmare.

“One is left asking whether these bills are seeking to address the spill, or are simply a political exercise aimed at punishing domestic energy creation. Furthermore, a drastic increase in the per barrel tax funding the Oil Spill Liability Trust Fund is used to offset the entirety of the Senate bill’s roughly $15 Billion cost, begging the question of whether the Trust Fund will be available to actually deal with oil spills or simply to pay for the bill’s other programs. The fact that these bills have been saved for the waning days before a recess only underscores that they are based upon politics not practical solutions.

“Thoughtful legislative responses to the Gulf spill must consider the economic impact of the oil and gas industry in the Gulf and on the national economy as a whole. This is an industry that provided nearly 400,000 jobs, $70 billion in economic value, and $20 billion in federal, state and local revenue in the Gulf region in 2009 alone. Energy production from the region provides 30 percent of our domestic oil and 10 percent of our domestic gas.

All Gulf of Mexico Senators and Representatives should be concerned about the intended and unintended consequences of these energy killing bills. A better approach is to let these bills sit before Congress and the American people and consider their fate in a non-rushed thoughtful manner when Congress returns in September.

“Now is the time for pragmatic, calm, rational debate on the best ways to prevent a similar tragedy from ever happening again, while continuing to allow offshore energy development to be a critical component of our national energy portfolio. These bills would stretch the current moratorium out indefinitely, paralyze the oil and gas industry in the gulf, and hobble our economy and energy security. “

###

New Study Confirms Importance of Independent Oil and Gas Companies

July 22, 2010 by Justin Williams

Immediate Release: Contact: Nicolette Nye

Thursday, July 22, 2010 (202) 347-6900

New Study Confirms Importance of Independent Oil and Gas Companies

in the Gulf of Mexico

Predicts Dire Economic Impacts of Moratorium and Proposed Policies

WASHINGTON, DC – A new study shows the significant and growing role that independent oil and gas companies play in the Gulf of Mexico, and examines the devastating economic impacts that current and pending draconian policies on offshore drilling could have by forcing independents out of the Gulf. Such proposals include unreasonable financial requirements to operate offshore and overly prescriptive and onerous drilling standards, criteria that only a few major companies and national oil companies can meet and that may actually decrease safety.

“Many in the current administration and Congressional leadership have indicated that it is perfectly acceptable to reduce the number of oil and gas exploration companies to those judged to be big enough to pay,” said NOIA board member Dave Welch. “The move to drastically increase the amount of financial responsibility necessary to bid on leases and to make an unlimited liability cap will, without a doubt, result in many companies being no longer able to stay in business. The result is more and more jobs lost and less energy produced at home.”

The Economic Impact of the Gulf of Mexico Offshore Oil and Natural Gas lndustry and the Role of the Independents, shows that in 2009 about half of the nearly 400,000 oil and gas jobs in the Gulf of Mexico were generated by independents. In that same year, according to the study, independents generated $38 billion in economic value and $10 billion in federal, state and local revenue. The study was commissioned by NOIA member company Cobalt International Energy, Inc, and conducted by IHS Global Insight.

The study also indicates that independents represent a large and growing portion of the deepwater segment of the industry. The entire offshore energy industry in the Gulf of Mexico, including independents as well as majors, has been impacted by the deepwater drilling moratorium, and a de facto shallow water moratorium created by confusing, burdensome, and seemingly unnecessary new rules on shallow water drilling imposed by the Department of the Interior. These crippling measures along with proposed policies on liability caps and insurance, threaten to push independents from the Gulf of Mexico. This would be devastating to the Gulf economy.

In fact, the study forecasts that by 2020 an exclusion of the independents from the Gulf of Mexico would eliminate 300,000 jobs and result in a loss, over 10 years, of $147 billion in federal state and local taxes from the Gulf region. If the independents are excluded just from the deepwater, the job loss would be 265,000 jobs by 2020 and $106 billion in tax revenues over the 10-year period, the study shows.

Independents currently hold majority interests in 81 percent of all producing Gulf of Mexico leases and in 46 percent of the Gulf’s producing deepwater leases, according to the study, and independents have drilled 1,298 wells in the deepwater and currently account for the production of over 900,000 barrels a day of oil equivalent.

The study is available online at: http://www.ihsglobalinsight.com/gulfoileconomicimpact.

###

NOIA’s Dave Welch Urges End to Moratorium at Rally for Economic Survival

July 21, 2010 by Justin Williams

Immediate Release: Contact: Nicolette Nye

Wednesday, July 21, 2010 (202) 347-6900

NOIA’s Dave Welch Urges End to Moratorium at Rally for Economic Survival

WASHINGTON, DC – The following is a statement from NOIA Board Member Dave Welch, who was among more than 15,000 concerned citizens converging in Lafayette, Louisiana today to participate in The Rally for Economic Survival protesting the federal moratorium on deepwater drilling:

“My message to President Barack Obama is let us work! Rigs are on location and ready, helicopters are ready, boats are ready, suppliers are ready, caterers are ready, steel mills are ready, and our people are ready. Let us help the country, let us keep the price of gasoline from going up to $4 a gallon at the pump, let us help the trade deficit, let us help the economy, let us bridge to the future of renewable energy, and let us feed our families. Let us work. End this moratorium.”

“As a business executive, I feel the anger and frustration in the wake of the Gulf oil spill as keenly as the American public – perhaps even more so -- because I know that, overall, industry has a great safety record, and I know the importance to our Nation of the work we do.

“The loss of life on the Deepwater Horizon, and economic and environmental damage as a result of the accident are tragedies. Now another tragedy has been added to the mix with the new deepwater drilling moratorium that further threatens the economic stability of a region already on its knees.

“Gulf coast residents are already suffering from the devastating impacts of this accident to the tourism and seafood industries. This is not the time to add to their misery through the loss of jobs, energy, and revenue provided by an industry so clearly vital to the Gulf Coast way of life.

“Some workers sidelined by the moratorium have found work in the clean up and response effort, but once the well is killed and these actions begin to wind down, these workers will be looking to return to their former offshore jobs. If the moratorium is still in place and permitting of shallow water wells is still moving at a snail’s pace, the economic wasteland being witnessed in the Gulf will continue.

“There are safety procedures already identified by the Administration and other possibilities to allow the offshore industry to go back to work – safely – without this political moratorium. Third party verification, increased inspections, better communication and well design would all contribute to enhanced safety and allow companies to continue to explore in a cautious timely manner while keeping their workers employed.

“Each deepwater rig employs on average 1,400 direct and indirect jobs. Each rig that moves out of the Gulf and overseas as a result of the moratorium and surrounding regulatory uncertainty, takes those jobs with them. This has already begun to happen. One big driller, Diamond Offshore Drilling, is moving two of its five rigs, the Ocean Endeavor and Ocean Confidence, from the Gulf to other regions. The longer the moratorium and surrounding regulatory uncertainly continue, the more rigs and companies we will see leaving the Gulf of Mexico -- perhaps for good.

“But the impacts of the moratorium reach beyond the Gulf as well. Offshore workers live throughout the United States, and products vital to the industry, such as tools, steel and boots are manufactured across this country. All those impacted should tell their congressman to end this moratorium and let the offshore industry in the Gulf get back to work for America.”

###

Dave Welch is also Chairman of the Greater Lafayette Chamber of Commerce, President and CEO of Stone Energy Corporation, a member of the NOIA Executive Committee, and a Gulf Coast resident.