As prepared for delivery
Press briefing teleconference on California energy opportunity
John Felmy, API chief economist
Thursday, May 9, 2013
Good afternoon everyone. Thanks for calling in.
America has a game changing opportunity to build a stronger economy and to secure a brighter energy future thanks to our vast supplies of newly accessible oil and natural gas. Full development of these resources could mean millions more jobs, stronger and more rapid economic growth, and trillions in added tax revenue, all while strengthening our position vis-à-vis the geopolitics of oil and natural gas markets.
Unfortunately, current federal policy continues to prevent our nation from taking full advantage of this opportunity. The most recent example of this is BLM’s decision to postpone oil and natural gas lease sales in California until the fall, at the earliest.
We now know that California holds a vast amount of oil and natural gas resources, especially in the Monterey Shale located in the central part of the state. Some estimate that this play could account for as much as two-thirds of all of the nation’s shale oil.
A study by University of Southern California and the Communications Institute estimates that developing this formation could produce half a million jobs in just two years and 2.8 million jobs by the end of the decade. And that it could generate $4.5 billion in government revenue in two years and $24.6 billion by 2020.
California, with one of the highest unemployment rates in the nation and weakest economies, could clearly use the economic boost brought by these high-paying jobs.
Not to mention, the revenue from development of the Monterey Shale would go a long way to helping the state address its serious budgetary problems.
For now, that’s not to be. Thanks to short-sighted political games in Washington, D.C., Californians will have to wait.
More broadly, the California example is not unique. It is, in fact, emblematic of a broader pattern of the federal government taking too much of America’s vast energy resources off the table.
For the last several years, the federal government has shown virtually no interest in promoting new energy development. Today, eighty-seven percent of federal offshore areas remain off limits to oil and natural gas production. And where development is possible in federal areas, permitting and leasing is a slow and cumbersome process. According to the Department of the Interior, from 2008 to 2012, the number of drilling permits issued on federally controlled onshore land dropped over 36 percent while the actual number of wells drilled dropped 40 percent, which depresses production.
A Congressional Research Service study has found that in federal areas, production from 2009-through-2012 was down, 6 percent for oil and 21 percent for natural gas. In contrast, on private and state lands, where development does not need permission from the federal government, oil production is up 31 percent and natural gas production is up 25 percent. This difference is not due to geologic science, but rather political science.
Demonstrating how government policies can drastically hinder energy development and production.
As we look ahead we know that our nation has the workforce, the innovative and the entrepreneurial spirit to make the most of the energy renaissance created by the energy from the shale revolution. We also know that all too often, what’s lacking is political leadership and vision. We therefore urge lawmakers on all levels to work together to create a fact-based energy policy, so that our nation can take full advantage of its bright energy future and secure its place as a 21st century global energy leader.
Thank you. And now I’d be happy to take your questions.