Opportunity seen to raise support of offshore work

April 25, 2005
High oil and natural gas prices provide offshore producers a significant opportunity to build public support.

High oil and natural gas prices provide offshore producers a significant opportunity to build public support. But it won’t be possible without involving coastal states and communities from the outset, federal and state government officials told the National Ocean Industries Association’s 2005 annual meeting.

“The atmosphere in Washington is changing,” declared Sen. Mary L. Landrieu (D-La.). “For those who produce oil and gas offshore, this is the opportunity to tell their story to a nation that might be willing to listen for the first time in years.”

She pointed out that offshore oil and gas production is second only to personal and corporate income taxes as a federal revenue source.

“Since 1953, this industry has contributed $147 billion to the Treasury in taxes and royalties. It does not need to apologize to anyone,” Landrieu said. “I think the American public is waking up to this issue. But we need to act in a politically responsible way.”

Landrieu conceded that while she favors environmentally responsible oil and gas production, many other members of the Senate Democratic caucus have become “unnecessarily antiproduction” because they are not aware of the past three decades’ technological advances.

But she also sees hope in the Virginia legislature’s recent approval of a bill endorsing the State Enhanced Authority for Coastal and Offshore Resources (SEACOR). While Gov. Mark R. Warner vetoed the bill, Landrieu said that she believes her fellow Democrat has an open mind “for the right kind of deal.”

Asked following her remarks if she was aware that Warner issued his veto partly because there was not yet federal legislation to which Virginia could respond, the senator replied, “We’re getting that together now. It’s becoming part of the energy bill as we speak.”

Rising costs

Frank W. Wagner, the Republican state senator from Virginia Beach, Va., who introduced the bill, said he did so because industries in the state are feeling the impact of rising energy costs.

In an interview prior to his appearance before NOIA’s government affairs committee, he pointed out that Honeywell International Inc.’s plant at Hopewell, Va., is the largest single consumer of natural gas east of the Mississippi River at 50 MMcfd. Within his district, Wagner said, Stihl Inc., a leading worldwide chain saw manufacturer, has a large heat-treating plant at its US headquarters in Virginia Beach.

“We need another leg under our economic table,” he said. Wagner predicted that the commission Warner established to study Virginia’s offshore oil and gas situation will reach a conclusion similar to his own: “There’s a moratorium off the Eastern Seaboard, but it’s already been lifted in Canada, where oil and gas is being produced off Newfoundland and Nova Scotia. I’ve made this my raison d’etre for the coming year.”

Wagner expects that new revenues from offshore production could increase political support to 80-90% if money flows to local communities that will be called on to provide services.

“I felt I was going out on a political limb when I did this. Then I found I was in an oak tree,” said Wagner. “We’ve ignited a debate. The paradigm is shifting as people pay their utility bills and fill their cars’ gas tanks.”

Local involvement

James L. Connaughton, chairman of the White House Council on Environmental Quality, told NOIA members that the next generation of environmental policy would be sustained only through economic growth.

“In ocean development, we are moving into the realm of local involvement,” he said. “It involves a little more investment up front, but it means that coastal communities and states will help design programs and policies that are more in their interest than the previous paternalistic approach.”

He said the federal government already has interagency efforts in areas such as offshore leasing and maritime transport.

“What’s been missing has been top-level accountability, which we plan to demand,” Connaughton said. He said the White House also is encouraging regional efforts, such as the one led by Florida Gov. Jeb Bush, who is convening a meeting of governors from Gulf Coast states later this year.

Louisiana’s needs

Landrieu said it’s vital for Louisiana and other states to start getting offshore revenues from beyond the 3-mile limit.

“It’s difficult when 350 children in Grande Isle can’t get drinking water... when they see oil and gas platforms where their parents, grandparents, and great-grandparents worked that are producing revenues without the state getting a dime,” she said.

“Louisiana is in environmental meltdown. We have lost coastland to erosion equal to the state of Rhode Island. It’s happened because the Mississippi River has been dredged for barge traffic and the coastal wetland channels have been deepened for oil and gas production,” Landrieu went on. “You’ve heard our plea. You know what Louisiana has not received the last 50 years.”