Time to Remove Roadblocks to Offshore Energy Production

Houston Chronicle

By NOIA Chairman Dick Alario

July 16, 2013

A decade ago, it seemed far-fetched that America would be poised to become the world's energy resource leader. Yet, that's the case today.

America is on the path to overtake Russia as the top natural gas producer in 2015, according to the International Energy Agency. Some experts even predict that we will become the world's largest oil producer about five years later, surpassing Saudi Arabia.

Thanks to technology, energy companies can now safely and cost-effectively recover domestic oil and natural gas from shale onshore and from deep reservoirs offshore. The industry has become a jobs machine: It's one of a handful of sectors that saw double-digit percent job growth between 2010 and 2012, according to an analysis by CareerBuilder. Add the indirect jobs from the U.S. energy boom, and the number of new jobs rises well into the hundreds of thousands.

Tapping unconventional energy on land is driving much of this remarkable growth, but there is tremendous potential to increase energy production off our nation's shores as well - from oil, gas and wind - in the Outer Continental Shelf. Unfortunately, the federal government has placed 87 percent of the outer shelf off the table to oil and gas exploration.

Leaders in Congress are trying to jump start increased offshore oil and gas production with at least two important pieces of legislation. Last month, the U.S. House of Representatives passed the Offshore Energy and Jobs Act, sponsored Rep. Doc Hastings, R-Wash. This legislation would require the Obama administration to scrap its current restrictive five-year outer shelf oil and gas leasing plan and expand lease sales in untapped offshore areas estimated to hold at least 2.5 billion barrels of oil and 7.5 trillion cubic feet of natural gas. (Note that these estimates are based on decades-old seismic data, and are therefore likely underestimates.)

The act would require lease sales in new areas, including offshore Virginia, South Carolina, southern California and in Alaska's North Aleutian Basin.

Thus, states like South Carolina and Virginia, where broad bipartisan support exists for offshore energy exploration and production, would finally be allowed to participate in America's energy revolution.

The act would allow states with energy production offshore to share in 37.5 percent of the resulting revenue, similar to current law that applies to Gulf Coast states. It would also create a health and safety academy to train government inspectors and support an Outer Continental Shelf Energy Safety Advisory Board that will provide independent advice to the offshore energy industry.

Also last month, the House passed the Outer Continental Shelf Transboundary Hydrocarbon Agreements Authorization Act, sponsored by Rep. Jeff Duncan, R-S.C.

This act would also help expand America's offshore energy production and improve relations with our neighbors to the south by formally authorizing an agreement signed between the U.S. and Mexico in February 2012 to facilitate cooperation on energy development in the maritime boundary between the two countries in the Gulf of Mexico.

The agreement would lift the moratorium on drilling in that area, which is estimated to hold up to 172 million barrels of oil and some 300 billion cubic feet of natural gas. The Mexican government ratified the agreement in April 2012.

Now is the time to remove any unnecessary obstacles to safe, cutting-edge domestic offshore energy exploration and production so that the U.S. can live up to its energy potential. The House has done its part by passing two important pieces of offshore energy legislation. Now it is the Senate's turn to act.


Alario is chairman, president and CEO of Houston-based Key Energy Services Inc. and chairman of the National Ocean Industries Association.


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