Jack Gerard's speech at the 57th Southern States Energy Board Annual Meeting
As prepared for delivery
Jack Gerard, API president and CEO
57th Southern States Energy Board Annual Meeting
September 25, 2017
Thank you, Majority Leader Norris, for the introduction and for your leadership in Tennessee. I also want to thank Governor Hutchinson for the opportunity to speak with you today.
This year’s theme, “Exploring the New Vision for America’s Energy Economy” is especially timely given the administration and Congress’ embrace of our nation‘s energy potential by implementing policies that build on the United States’ positive energy trends, chief of which is our nation’s rise to become the world’s leading producer of natural gas and oil. Our energy policy must align with this new energy reality if we are to remain a global energy leader and able to meet this nation’s and the world's ever-increasing need for more energy.
While we've seen much progress made in the last several months to realign our nation's energy policies to our country's much-improved reality, there remains room for considerable improvement in an important area, access to offshore energy resources. As it stands today, too much of our nation’s offshore acreage is out of reach to responsible energy development, still more than 90 percent.
The fact is the United States will never fully realize its potential as a global energy leader by severely restricting access to offshore energy resources.
Lifting some of the shortsighted restrictions that keep the vast majority of federal offshore acreage off limits to energy development could lead to production gains of more than a million barrels of oil equivalent per day and generate hundreds of thousands of well-paying jobs. Today, the industry accounts for $1.3 trillion total of GDP, which for context, is larger than the entire GDP of Spain in 2016. Nationally, direct, indirect and induced employment supported by the oil and natural gas sector stands at approximately 10.3 million.
Staying on the sidelines means forfeiting the opportunity to build on the energy security and domestic abundance brought about by America’s 21st century energy renaissance, possibly lowering future economic growth and opportunity for thousands of Americans, all without changing the fact that the broad consensus of experts agree that we’ll need more energy from all sources for decades to come, with natural gas and oil as the foundation.
Oil and natural gas constituted almost two-thirds, 65 percent, of our nation’s energy consumption in 2015. The Energy Information Administration estimates that in 2040 oil and natural gas will supply more than 60 percent of U.S. energy needs, even under the most optimistic projections for renewable and other sources. Globally, the International Energy Agency estimates that energy consumption will increase 48 percent by 2040, primarily due to expanding economic opportunities in developing nations, and more than three-quarters, will be met by fossil fuels be they from North America or elsewhere. The question is whose economy and workforce will benefit. The United States has the energy resources to remain a global energy superpower for decades to come.
Ultimately, America’s 21st-century energy renaissance is about more than increased domestic production of natural gas, oil and refined products; it is also about economic growth and opportunity for thousands of Americans all along the skills continuum.
The United States’ energy revolution has also made domestic manufacturers more competitive globally. American energy abundance provides producers of steel, chemicals, plastics, medicines, and numerous other products an important competitive advantage through lower material and production costs. A 2015 study by the Boston Consulting Group estimates that American manufacturing costs are now 10 to 20 percent lower than costs in Europe, thanks in part to affordable and abundant domestically produced energy and could be 2 to 3 percent lower than in China by 2018, a significant competitive advantage.
America’s abundance of reliable, affordable and domestically produced energy, according to an IHS study, saved the average household as much as $1337 in 2015 and drivers $550 according to Triple-A.
What’s more, in spite of substantial increases in natural gas use by businesses, residences and electricity suppliers, carbon and other greenhouse gas emissions continue to decline steadily, proof that we can produce and use more energy and improve the environment.
U.S. carbon emissions from power generation in 2016 were at their lowest levels in nearly 30 years, largely as a result of increased use of natural gas in electricity generation. In fact, the growing use of natural gas in power generation accounts for 60 percent of the power-related CO2 emissions reductions since 2005.
More broadly, thanks to the industry’s investments, including developing cleaner fuels and modernizing equipment and facilities, in combination with more fuel-efficient vehicles, air quality continues to improve. U.S. air pollutants have been reduced by 73 percent between 1970 and 2016 even as vehicle miles traveled have increased by 190 percent. Also, since 2000, ozone concentrations are down by 17 percent. All of which makes the United States not just an energy superpower, but also a global emissions reduction leader at a time of increased energy production, consumption and economic growth, something no other nation has achieved.
Securing the energy resources America and the world needs requires some of the most technologically advanced operations, of any industry, working at some of the most unforgiving and inhospitable locations anywhere on the planet. That’s why the industry’s principal focus is always on safety and the responsible stewardship of the resources we have been entrusted to protect.
That core commitment to worker and environmental safety and responsible stewardship continues to shrink the remaining risk out of industry operations. The industry’s fundamental commitment and demonstrated record of reducing risk should be part of the discussion as elected leaders and regulators, at all levels of government, balance land use priorities and make policy decisions that impact energy development.
You probably don’t know that API was founded almost a century ago as a standard-setting organization for the oil and natural gas industry. Today, there are more than 650 standards and technical publications, with more than 100 incorporated into U.S. regulations.
The oil and natural gas industry's standards are recognized by both the federal and state governments with more than 130 standards incorporated in Federal Regulations more than 430 times and more than 240 included in state regulations more than 4130 times and are the most widely cited industry standards by international regulators.
Specific to offshore energy development, 96 API standards are incorporated or referenced by the Bureau of Safety and Environment Enforcement in their offshore safety regulations, which, is more than triple all organizations listed in the regulation combined. We ask that they consider the leadership role that industry standards play in reducing risk and improving environmental protections and worker safety, through API’s Global Industry Services.
These are considered the benchmark for offshore safety because policymakers and regulators, all over the world, understand that these standards represent the accumulated best practices and expertise gained from decades of real-world experiences that have been validated by the American National Standards Institute using the same transparent, data-driven and scientifically rigorous accreditation process used to accredit programs at the national labs.
The ability to responsibly recover the energy we need is only part of the equation. To fully realize America's potential as an energy leader, policies that promote private investments in our nation’s energy infrastructure will be vital. The United States’ network of more than 190,000 miles of liquid pipelines and more than 300,000 miles of natural gas pipelines – long enough to complete a roundtrip to the moon – is a central factor in our ability to provide affordable energy throughout the nation. And it is a tangible reminder of how interconnected we all are to the energy we need.
Beyond the obvious benefits of safely and efficiently transporting, storing and delivering the energy we need, research shows that investing in energy infrastructure spurs economic growth and opportunity. To better understand the scope of that opportunity, API contracted with the international consulting firm ICF to investigate the economic impact of likely oil and natural gas infrastructure development in the U.S. through 2035.
The study found that the additional infrastructure needed to keep pace with the nation’s increased energy production could generate between $1 and $1.3 trillion in private investment from 2017 through 2035. The study found that level of infrastructure development could support an average of roughly 1 million American jobs annually, not only within states where infrastructure development occurs but also across ALL states.
We will continue to work with leaders in Washington and statehouses across the nation, from both parties, to ensure that industry has the regulatory certainty that comes from a responsive, fair and transparent permit review process that protects public safety, ensures responsible environmental stewardship and allows the private sector to expand our nation’s energy infrastructure.
The question is whether the nation's consumers, workforce and communities will continue to benefit from the cost savings, economic expansion and environmental improvements brought about by the United States’ energy abundance.
There’s no question that the American energy renaissance has delivered significant economic and environmental benefits. They are now so enduring that it can be easy to take our new energy reality for granted. With gas prices low and energy imports down, investing in infrastructure may not seem as urgent to some. However, they should remember that today's energy security is the result of decisions and investments made many years ago. That's why now is the time to invest in the pipelines, rails, roads, and other structures needed to transport, store and deliver the energy required to meet growing demand here and around the world.
The fact is, energy, in all of its forms, is with us in ways both obvious and obscure all day, every day. That makes the national discussion about energy policy of importance to everyone, everywhere.
We look forward to working with governors, Congress, the administration and anyone who wants to advance energy policies that benefit consumers, workers, the environment, our economy and long-term American global energy leadership. The best way to achieve those goals is through a true all of the above energy policy. Because, ultimately, energy policy is about our nation’s long-term economic strength, sustained environmental improvement and enhanced economic opportunity for thousands of hard-working Americans.
Thank you for your time.