Witnesses describe benefits from expanding OCS activity

Expanded oil and gas activity on the US Outer Continental Shelf would produce substantial economic and energy security benefits, three witnesses told a US House Natural Resources subcommittee. But a fourth witness said alternative energy and other offshore industries should also be allowed to grow.

Most of the witnesses at the Energy and Minerals Subcommittee’s June 6 hearing applauded the goals of HR 2231, which US Rep. Doc Hastings (R-Wash.), the full committee’s chairman, introduced on June 4. The measure would expand federal offshore oil and gas leasing beyond areas that are part of the 2012-17 OCS program.

“It would safely open up new areas that were previously under moratoria—such as the Mid-Atlantic, Southern Pacific, and Arctic,” Hastings said in his opening statement. “This would create over a million new American jobs and generate hundreds of millions of dollars in new revenue to the federal treasury.”

John C. Felmy, American Petroleum Institute chief economist, testified, “If offshore energy production were extended to new areas, it could generate a bounty of job creation and new revenues to the government while improving America’s energy security.”

He added, “Earlier this year, a single lease sale in the Gulf of Mexico generated $1.2 billion in revenue for the federal government. As wells are drilled and the leases begin to produce, the revenue impact will only grow, along with the prospects for employment in the region and around the country.”

Christopher Guith, vice-president for policy at the US Chamber of Commerce’s Institute for 21st Century Energy, said in his written statement that HR 2231 is necessary because more than 86% of the US OCS is presently off-limits to oil and gas activity.

Systematic increase

“By increasing access to the OCS and establishing long-term production targets for the [US} Department of the Interior to plan around when formulating oil and gas leasing programs, the country can begin to systematically increase its energy security and reap the economic benefits that entails,” Guith suggested in his written testimony.

While the deepwater western and central gulf continue to be productive, the US needs to explore other OCS areas to keep stimulating its economic growth and increasing its energy security, recommended Spectrum Geo Inc. Pres. Richie Miller.

“For the Atlantic OCS, we need to update our understanding of the resource, and modern seismic imaging is needed to make this evaluation,” Miller said in his written statement. “With higher quality data about the resource, [the US Bureau of Ocean Energy Management] will have a great understanding of the resource value. This will ensure that the taxpayer gets a greater return from federal OCS acreage.”

Michael Conathan, ocean policy director at the Center for American Progress Action Fund, said creating more US jobs is a good motive. “With unemployment stubbornly hovering around 8%, we clearly need them,” he said in his written testimony.

“There is, however, more than one way to generate employment from our oceans and coasts, and, in many cases, accelerating offshore oil and gas development will hinder job creation in other industries,” Conathan continued. Recreation and tourism, commercial fishing, and offshore renewable energy are equally important, he maintained.

Contact Nick Snow at nicks@pennwell.com.

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