Bush urges Congress to lift bans on OCS leasing

Nick Snow
Washington Editor

WASHINGTON, DC, June 18 -- US President George W. Bush urged Congress to lift oil and gas leasing bans on the Outer Continental Shelf as the first of four steps to increase domestic supplies in response to soaring prices.

"Experts believe that the OCS could produce about 18 billion bbl of oil. That would be enough to match America's current oil production for almost 10 years. The problem is that Congress has restricted access to key parts of the OCS since the early 1980s," Bush said on June 18.

"Since then, advances in technology have made it possible to conduct oil exploration in the OCS that is out of sight, protects coral reefs and habitats, and protects against oil spills. With these advances, and a dramatic increase in oil prices, congressional restrictions on OCS exploration have become outdated and counter-productive," Bush said.

Bush also asked Congress to authorize oil and gas leasing within the Arctic National Wildlife Refuge, remove a moratorium on the development of a federal oil-shale leasing program, and expedite permitting for new US refineries or expansion of existing ones. But Bush's call to end OCS drilling bans produced the strongest responses.

Same old ideas
Congressional Democratic leaders weighed in immediately. Senate Majority Leader Harry M. Reid (D-Nev.) called Bush's OCS proposal and a similar recommendation a day earlier by Sen. John McCain (R-Ariz.), the presumed 2008 Republican presidential nominee, "nothing more than a cynical campaign ploy that will do nothing to lower energy prices and represents another big giveaway to oil companies already making billions in profits."

Reid said oil companies aren't even using half of the federal lands they have leased already, and domestic refined product output actually has dropped despite incentives Bush and Republican Congresses provided to invest in new domestic refineries. "President Bush and John McCain are not serious about addressing [gasoline] prices. If they were, they would stop offering the same old ideas meant to pad the pockets of Big Oil and work with Democrats to reduce our dependence on oil, invest in the renewable energy sources, crack down on excessive speculation and stand up to countries colluding to shake down American consumers," Reid said.

In a statement issued the night before Bush's speech, House Speaker Nancy Pelosi (D-Calif.) said the president's proposal "sounds like another page from the administration's energy policy that was literally written by the oil industry: give away more public resources to the very same oil companies that are sitting on 68 million acres of federal lands they've already leased."

House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) said 81% of estimated oil and gas resources on federal lands, both onshore and offshore, are available for development, or will be pending completion of land-use planning or environmental reviews. "If the oil industry would drill these areas now—areas that are available for them to drill in now, today—the amount of oil produced would represent over 14 years of domestic consumption and 30 years of current domestic natural gas consumption," Rahall said in a statement posted June 18 at the committee's web site.

Sen. Frank R. Lautenberg (D-NJ) said Bush and McCain's calls to expand federal OCS leasing are "a gift to the oil companies that endangers the economic and environmental health of the Jersey Shore and our entire state." He said, "The Bush-McCain drilling scheme chooses Big Oil over American consumers and does nothing to immediately reduce [gasoline] prices. While we have offered real solutions to reduce prices at the pump, the Bush-McCain Republicans have blocked our efforts at the behest of the oil companies."

Move beyond rhetoric
But at least one congressional Democrat, Sen. Mary L. Landrieu (D-La.), broke with most other House and Senate members in her party. She said, "President Bush's attempt today to expand energy production off our coasts is very welcome, and is a wise position he should have taken earlier in the 7 years we've been pushing this White House to get engaged. She added that she plans to immediately reintroduce her bill to allow states to opt-in to offshore production and share federal revenues. "I hope President Bush is prepared to move beyond rhetoric and work with me to build the coalition we will need to get the job done," Landrieu said.

In his speech, Bush said congressional Republicans have proposed "several promising bills that would lift the legislative ban on oil exploration in the OCS." He said, "I call on the House and Senate to pass good legislation as soon as possible." He acknowledged that there also is an executive prohibition against OCS exploration which he will lift as soon as Congress lifts its moratoriums.

The moratoriums have been part of the US Department of Interior's annual budget for more than 25 years, initially renewed annually but recently made permanent. Rep. John E. Peterson (R-Pa.) tried to get them removed on June 11 when the House Appropriations Committee's Interior and Environment Committee marked up DOI's fiscal 2009 budget, but his motion failed in a 9-6 vote along party lines. Peterson planned to try again when the full committee dealt with the DOI budget on June 18, but the hearing was postponed early that morning.

Other congressional Republicans immediately endorsed Bush's plan. Senate Minority Leader Mitch McConnell (R-Ky) said, "With gasoline at $4.07/gal, the American people cannot afford to wait any longer for Congress to act to produce more American energy. When a state chooses to allow environmentally sound deepsea exploration off its coast, they should not be blocked by a decades-old ban that makes no sense today."

Rep. Joe Barton (R-Tex.), ranking minority member of the House Energy and Commerce Committee, said, "The president's proposal kills one of the Democratic Party's sacred cows—the ban on offshore energy exploration—and is both overdue and very welcome. It must be clear to nearly everybody by now that Congress cannot tax or conserve its way out of the $4/gal swamp that's stalling economic growth and forcing working people to pick between driving and eating. Using American resources to help Americans out of this mess is a good idea, and I hope Speaker Pelosi will not simply reject it again because she's a Democrat and the president is not."

America demanding action
Pete V. Domenici (R-NM), ranking minority member of the Senate Energy and Natural Resources Committee, said, "Thus far, the other side has shown no willingness to work with us to increase production. However, over the next several weeks, I will continue to push forward with all or some of these ideas because the American people are demanding action. For instance, a new poll released just yesterday found that 67% of Americans support deepsea exploration offshore," said

The telephone survey by Rasmussen Reports, an electronic publishing firm specializing in public opinion polling, also found that 18% of the respondents oppose more offshore US oil and gas activity while 15% were undecided. Conservative and moderate voters strongly backed the idea but liberals were more evenly divided, with 46% in favor and 37% opposed, the company said on June 17. "Nearly all voters are worried about rising [gasoline] and energy prices, with 79% very concerned and 16% somewhat concerned," it added. Rasmussen conducted its survey before McCain and Bush's announcements.

Following an address given by McCain in Houston June 17, House Minority Whip Roy Blunt (R-Mo.) said, "The problem for Democrats in the House is this: What two thirds of the American people support, a staggering 87% of their caucus has consistently voted against. The result is the continuation of a 27-year-old policy that has locked away 420 tcf of American natural gas, and kept off-limits enough American oil to end our reliance on [the Organization of Petroleum Exporting Countries] for the next 40 years."

In that speech, McCain noted that the US produces 5 million b/d of oil and consumes 20 million b/d, or 25% of the world's daily demand. "A reasonable observer, presented only with these numbers of consumption and production, might draw the conclusion that America has accepted this fate because we have no choice in the matter, or because we have no resources of our own. But just the opposite is true: We do have resources, and we do have a choice," he said.

McCain said the US has enormous oil, gas, and coal deposits, and the means to produce and consume them in environmentally responsible ways. "As for offshore drilling, it's safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston. Yet for reasons that become less convincing with every rise in the price of foreign oil, the federal government discourages offshore production," he said.

Efforts by OGJ to get a response from the presidential campaign of Sen. Barack Obama (D-Ill.), the presumed 2008 Democratic nominee, to McCain and Bush's calls for more OCS oil and gas leasing were not successful.

'Dysfunctional at best'
Oil and gas and other business associations applauded the president's message and endorsed Peterson's amendment. Jack Rogers, vice-president of the Florida Municipal Natural Gas Association, said in a June 17 letter to Rep. Debbie Wasserman Schultz (D-Fla.): "Our current federal energy policy is dysfunctional at best. We have policies that favor gas use because of its clean-burning properties but yet also restrict the exploration and production of natural gas. These two conflicting policies have contributed substantially to the price increase our consumers have suffered and simply cannot coexist in a coherent energy plan."

Natural Gas Supply Association Pres. R. Skip Horvath said that an "enormous amount" of gas is recoverable from the OCS. "Opening up that area would send a strong message that Congress is serious about doing what it can to reduce energy costs. The American public is with us on this issue and we're hoping members of Congress catch up," he said.

American Gas Association Pres. David N. Parker agreed with Horvath, saying, "We applaud President Bush for supporting a repeal of the moratorium on drilling for natural gas and oil on the [OCS]. His decision reflects the reality that America is in the midst of an energy crisis. Despite protests from some sectors, natural gas exploration is in fact an environmentally safe process that will increase our nation's domestic energy supply and lower prices from today's record-breaking levels, providing much-needed financial relief for consumers."

Meanwhile, National Petrochemical & Refiners Association Pres. Charles T. Drevna said, "Today, President Bush outlined clear and crucial steps forward in strengthening our nation's energy security. Allowing safe, environmentally responsible development of our domestic energy resources will help ease volatile global supply conditions, lessen our dependence on foreign sources of energy, and increase supply and stability for American consumers. Additionally, further expansion of domestic refining capacity will help ensure stable supplies of transportation fuels and other refined products critical to our economy as demand for those products continues to grow."

American Chemistry Council Pres. Jack N. Gerard concluded: "This Congress can reverse decades of energy-policy failures and help end the long-term energy crisis by taking steps to enact comprehensive energy legislation that encourages diversity, including lower-emission sources and technologies, efficiency, and expanded domestic supply. Public opinion surveys show a solid majority of Americans support offshore energy development. This summer, we encourage the entire Congress to lead the national toward a more affordable, secure energy future."

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Oneok halting construction at three gas plants

02/24/2015 Oneok Partners LP, Tulsa, has suspended construction on 500 MMcfd of gas processing capacity at three plants in the Williston basin of North Dakota...

Work stoppages commence at largest US refinery, three other facilities

02/23/2015 The United Steelworkers union (USW) has launched additional work stoppages at the largest refinery in the US and three other facilities as part of ...

API: US oil product demand reached highest January level since 2008

02/23/2015 US oil product demand rose 1.5% year-to-year to an average 19.2 million b/d in January, its highest level for the month since 2008, the American Pe...

Expansion work progresses at Lukoil’s Volgograd refinery

02/20/2015 Contruction activities related to the expansion of OAO Lukoil’s 11 million-tonne/year Volgograd refinery in southern Russia are proceeding as plann...

Tesoro advances projects at Anacortes refinery

02/20/2015 Tesoro Corp. plans to move forward with two complementary projects to enhance production of cleaner products at its 120,000-b/d Anacortes, Wash., r...

Yara-BASF JV to build Texas ammonia plant

02/20/2015 A joint venture of Yara International ASA and BASF Group has agreed to build a world-scale ammonia plant in Freeport, Tex., that will require expan...

SIBUR advances grassroots petrochemicals complex

02/20/2015 ZapSibNeftekhim LLC, a subsidiary of Russian petrochemical manufacturer OAO SIBUR Holding, Moscow, has started construction on its long-planned int...

India’s IOC to invest in processing-related upgrades, expansions

02/19/2015 Indian Oil Corp. Ltd. (IOC) has approved a series of expansions and upgrades designed to improve fuel quality and production at several of its refi...

PwC: Chemicals industry M&A activity in 2014 reached 10-year high

02/19/2015 Mergers and acquisitions (M&A) activity in the US chemicals business ramped up substantially in 2014, recording the highest volume in a decade ...
White Papers

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected