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Erik Milito's remarks on offshore energy development and the benefits of American energy leadership




Press briefing on offshore energy development and the benefits of American energy leadership
Erik Milito, API Group Director, Upstream and Industry Operations
Wednesday, April 13, 2016

Opening statement as prepared for delivery:

Good morning, thank you for joining today’s call to discuss the Well Control Rule, as well as the importance of expanding offshore oil and natural gas development into additional areas and ensuring continued offshore lease sales in the Gulf of Mexico and the Arctic in the final 2017-2022 five year program. 

As the Well Control Rule is finalized, we have repeated our comments to the administration on the importance and potential impacts of the rule.  Offshore operations must be conducted safely and we support actions that enhance the protection of human life and the environment. We continue to have significant concerns, however, that the rule as proposed may have unintended negative consequences for safety and the environment.

Accessing offshore oil and natural gas resources is safer now than ever before. Regulators and the industry working together have made great strides to enhance the safety of offshore operations in recent years.

Immediately following the Macondo incident, now more than a half decade ago, the industry launched a comprehensive review of offshore safety measures and practices. We identified areas for improvement to strengthen accident prevention, intervention and response capabilities, and we have relentlessly pursued that work.

One of API’s primary roles is the development of industry standards. Since 2010, we have published more than 100 new and revised standards for well design, blowout prevention equipment, worker safety and other elements of exploration and production, including API Standard 53 Blowout Prevention Equipment

Systems for Drilling Wells, released in 2012 after two years of work. Pushing for innovation in safety and working with engineers to craft solutions, can enable the development of standards that improve reliability, safety, quality, and environmental performance. This industry leadership and ability to bring in experts for active participation with regulators was integral in the development of the standard.  API Standard 53 is an important part of the regulatory approach being undertaken by BSEE and demonstrates how the expertise of the industry positively contributes to the enhancement of offshore safety.

The industry also launched the Center for Offshore Safety or COS, which is devoted entirely to fostering safety culture and sharing best practices and lessons learned throughout the industry. COS has made significant progress in collecting, analyzing and reporting safety performance data. Industry and government see the data as instrumental in helping companies build enhanced data-driven safety programs, which are based on an API industry standard, now required by federal regulations.

These industry actions were praised by the co-chairs of President Obama’s national spill commission, who said that offshore drilling is now even safer.

We will continue to build on these achievements because our goal is zero accidents and zero spills. Our daily commitment is one of constant improvement until that goal becomes reality.

The millions of men and women who work in our industry – and all Americans whose lives are powered by oil and natural gas – deserve no less.

This is why our concerns about the imminent well control rule proposed by BSEE are so pressing. As we noted in our comment letter to the agency as well as in testimony to the U.S. Senate, we believe that the narrow, duplicative requirements included in the proposal, if left in, could stifle innovation and delay implementation of new technologies that can improve safety and operations.

To be clear, this rule will affect offshore energy projects for years to come. If left unchanged from the proposal, the flaws in the rule could lead to increased risks and decreased safety in offshore operations.

The American Petroleum Institute (API), the International Association of Drilling Contractors (IADC), the Independent Petroleum Association of America (IPAA), the National Ocean Industries Association (NOIA), the Offshore Operators Committee (OOC), the Petroleum Equipment & Services Association (PESA), and the US Oil and Gas Association drew on the expertise of over 300 subject matter experts from more than 70 companies who expended thousands of collected hours to provide comments to aid in BSEEs efforts to create a robust and effective well control rule. 

The oil and natural gas industry will continue to work with regulators, as we have engaged with the agency throughout this process, to work for an ever safer offshore operation environment.

The ongoing success of our nation to grow our economy, provide consumers with abundant affordable energy, improve our environment and lead the world in energy production can continue.

To that end, what history has taught us is that if the U.S. is to remain an energy leader and stay competitive at a global level, we must have the foresight to plan ahead. Today’s decisions determine tomorrow’s energy.

Both BOEM and the EIA state that the Gulf of Mexico area is one of the most important regions for energy resources and infrastructure.  And this administration continues to acknowledge through its Annual Energy Outlook that oil and natural gas will be needed to supply Americans with the energy they need for decades to come.

With Americans enjoying some of the lowest gasoline prices of the decade and world energy markets are less susceptible to shocks that could be caused by unstable regions, adding production capacity may not seem urgent. But that kind of shortsighted thinking is not the way to maintain our position as the world’s leading oil and natural gas producer. Continuing to pursue offshore development – in the Gulf of Mexico and throughout the Arctic as proposed in the 2017-2022 5-year program – is key to sustaining an American energy resurgence that has proved vital to our economy and security.  We have an enhanced system of safety with increased capabilities to prevent, contain and respond to any potential incident, and we should not sit idly by while other countries advance technologies and develop resources in areas such as the Arctic and the Atlantic.   

We need to get the policies and regulations right today to continue to supply Americans with the energy they will need for decades to come.

Thank you for listening. I am ready to take your questions.