Expanding Offshore Access is Key to U.S. Energy Security

Mark Green
Posted May 1, 2017

Last week’s presidential executive order embracing increased access to America’s offshore natural gas and oil reserves jumpstarts an important conversation about the needed, positive steps to make the United States’ energy future more secure. With 94 percent of federal offshore acreage currently off limits to development, there are more questions about that future than if safe offshore access was the rule instead of the exception to the rule. The president’s order begins the process of changing the offshore equation.

API Upstream Group Director Erik Milito talked about the offshore executive order and the need to build on it during a conference call with reporters. Highlights:

• America’s offshore oil and natural gas reserves are critical to a “robust, forward-looking energy policy” that will secure our energy future.
• Future federal leasing plans should include safe exploration and development in the Eastern Gulf of Mexico, because it is close to existing Gulf production and key refining and pipeline infrastructure.
• Opening areas in the Atlantic and Pacific could lead to production of more than 1 million barrels of oil equivalent per day and generate thousands of jobs.
• Arctic development is key to America’s future offshore development. The Beaufort and Chukchi seas are estimated to hold the world’s largest undiscovered but recoverable oil and natural gas resources.
• Offshore development is safer than ever. Industry has the technology and expertise to safely develop resources in the Arctic.

Milito stressed that offshore decisions today are strategic, affecting America’s energy picture years down the road – and that decisions made in the past are “keeping us from realizing the potential benefits” of production today.

With the Trump administration looking to revise or replace the current five-year federal offshore leasing program, there’s a great opportunity to fully harness America’s energy potential. As Milito said, the leasing program is primarily about ensuring offshore options – about not taking key areas off the table. Our country needs to maintain all of its options for safe offshore development. It’s the right approach to securing our energy future.

Below, Milito’s full remarks:

This past weekend marked the 100th day of the Trump administration, and the White House has made steady progress on removing unnecessary regulatory barriers to oil and natural gas development, recognizing that energy production is a key pillar of U.S. economic growth and national security.

On Friday, the administration took another step forward by issuing an executive order advancing offshore domestic energy production. Developing our abundant offshore energy resources is a critical part of a robust, forward-looking energy policy that will secure our nation’s energy future and strengthen the U.S. energy renaissance.

American consumers are seeing real benefits from responsible domestic energy development and refining that provides an abundant supply of oil, natural gas and fuels. Drivers saved over $550 at the pump in 2015, while household budgets saved $1,337 on utility bills and energy-related expenses. U.S. industrial electricity costs are 30-50 percent lower than those of our foreign competitors, thanks to expanded use of natural gas in power generation, spurring a manufacturing renaissance.

But while we lead the world in production and refining of oil and natural gas, we’re still not taking full advantage of our energy resources – especially offshore, where restrictions from previous administrations keep 94 percent of federal offshore acreage off limits to responsible energy exploration.

We must particularly look to and embrace the future development of domestic sources of oil and natural gas in the Eastern Gulf of Mexico.  Exploration in this area is critical to our national security, and we continue to see our neighbors in Mexico and Cuba pursue these opportunities. The Eastern Gulf is in close proximity to existing production and infrastructure, and opening it would spur investment and economic activity, which could create thousands of jobs and provide billions of dollars in government revenue.

In addition to the Eastern Gulf, also opening areas in the Atlantic and Pacific could lead to production gains of more than a million barrels of oil equivalent per day and generate thousands of well-paying jobs. Increased access to energy resources is not only important for jobs and our economy, but also our national security. Resources discovered in the Atlantic, a virtually unexplored area, would take years to bring on line, and it is decisions made in the past that are keeping us from realizing the potential benefits now.  In the Pacific, there is also existing infrastructure and production, as well as known reserves that are being kept off-limits.

Nowhere is energy’s central role in national security more evident than in the Arctic region, where Alaska’s Beaufort and Chukchi seas contain the world’s largest remaining conventional, undiscovered oil and natural gas reserves, according to estimates. With Russia and China already active in the region, the Arctic bears strategic significance even beyond its potential to supply enough oil and natural gas to meet California’s energy demands for close to 40 years.

And with comprehensive efforts focused on safety systems and capabilities, offshore development is safer than ever. Plus, decades of experience operating in Arctic environments show the oil and natural gas industry has the technology and expertise to safely develop Arctic offshore resources.

While this administration has made steady progress, there is still work to be done before we can fully embrace our offshore energy potential. Two days before President Trump’s inauguration, the U.S. Customs and Border Protection Agency (CBP) released a proposal that would make drastic changes to long-standing rulings related to the use of Jones Act vessels in offshore oil and natural gas activities. CBP’s proposal would not only overturn more than 40 years of precedent, it would place serious limitations on the industry’s ability to safely, effectively, and economically operate. A new report also projects that losses in the range of 30,000 industry-supported jobs could occur in this year alone, increasing to as many as 125,000 jobs lost by 2030 –with the Gulf region most impacted. That is why CBP’s rushed proposal should be withdrawn immediately.

Eighty percent of U.S. voters support increased domestic oil and natural gas production, and projections show that is what we need in order to meet domestic and global demand.

Even under the most optimistic scenarios for renewable energy growth, oil and natural gas will supply 60 percent of U.S. energy needs in 2040, and worldwide energy consumption will jump a projected 38.6 percent over the same period. Our success leading the world in reduction of carbon emissions – which have reached 30-year lows in the power sector due primarily to clean-burning natural gas – demonstrates that energy security and environmental progress aren’t contradictory goals.

So long as the vast majority of offshore areas remain off limits, the United States will never realize the full economic and security potential of our energy resources. That’s why we commend this administration and Congress on unleashing our offshore energy potential and look forward to working with the Department of Interior on developing a new five-year offshore leasing plan that acknowledges America’s long-term energy security needs.

Expanding offshore access is a significant achievement for the first 100 days of a presidential administration, but it’s even more important for U.S. energy security over the next several decades.