As prepared for delivery
Press briefing teleconference on offshore five-year plan proposal
Erik Milito, API group director for upstream and industry operations, November 15, 2011
Opening statement:
Good afternoon everyone. Thanks for calling in.
Last week, the U.S. Department of the Interior issued a proposed plan for offshore oil and natural gas development for the period 2012 to 2017. The plan provides for leasing mostly in offshore areas in which our industry already operates. It omits the Atlantic, the Pacific and almost all of the Eastern Gulf of Mexico, and it would open significantly less acreage to leasing than the administration's 2010 plan.
We believe these omitted areas could hold substantial amounts of oil and natural gas, the development of which could greatly benefit our economy and our energy security.
Research completed in September for us by Wood Mackenzie concludes that full development of these areas could by 2030 provide hundreds of thousands of additional new jobs, more than $100 billion in cumulative additional revenue for government, and nearly 4 million barrels of additional oil and natural gas production. The additional oil and natural gas could help reduce the amount of energy we import.
We agree with the Department's goal of "expanding safe and responsible production" to help "grow America's energy economy", and we are ready to work with them to achieve this.
We have raised the bar on offshore safety, and we believe the new rules, procedures and technology we have worked together to implement would promote safe and responsible development in all coastal areas where development is allowed to occur.
The Department suggests its new offshore plan encompasses the vast majority of all undiscovered technically recoverable offshore resources – about 75 percent. It indicates this estimate was used to help decide which of our offshore areas to include and which to leave out. This is a flawed approach.
The "75 percent" number is inaccurate. It is based on old and inadequate information. The areas left out of the plan – the Atlantic, Pacific and most of the Eastern Gulf of Mexico – may hold very large amounts of oil and natural gas.
Basing five-year plans on old data puts us in a Catch-22. It prevents the leasing in new areas needed to spur the costly exploratory work that would provide a truer picture of resource potential. Historically, the more we look, the more we find, and, as technology improves, the more we can recover. We believe there are likely to be very large amounts of recoverable oil and natural gas off our coasts.
In media reports the Department has asserted we are producing more oil and natural gas, suggesting that its policies are already putting us in a good position to meet our nation's future energy needs. The facts don't support their optimistic assessment.
While oil and natural gas production is increasing today, this is largely due to the development of shale oil and natural gas on private lands in North Dakota, Pennsylvania, Texas, Arkansas, Louisiana and elsewhere – and because of leasing and development on public lands and federal waters initiated many years ago.
We need a robust strategy for developing offshore areas and BLM-administered lands because they are and will continue to be important to the nation's oil and natural gas production. We need to be doing the right things today to be able to meet our energy needs tomorrow.
The U.S. oil and natural gas industry is a vital part of our nation's economy. It supports millions of American jobs and delivers billions of dollars in annual revenue to our government. Last year, it directly contributed more than $470 billion to the U.S. economy in spending, wages and dividends, and it is one of few industries creating jobs throughout the recession and the ongoing national economic downturn.
We can create even more jobs and generate far more revenue if allowed to responsibly develop and produce here in the United States more of the oil and natural gas we need. But more development – especially on public lands and federally controlled waters – requires that industry and government share a vision of the potential benefits and act as partners to fully realize them.
The Department's new plan maintains the status quo. It limits what we could and should be doing to secure more domestic energy for our future. We hope there will be opportunities to move the administration's offshore proposal closer to the proposal it issued in early 2010.
Thank you. Now I'd be happy to take your questions.