Industry execs tell OTC access lacking to offshore acreage

The power outages that have rolled across California are nothing compared to the "blackout of vision" on energy issues that plague US consumers and regulators who focus only on low prices, industry executives said Monday at the opening of the annual Offshore Technology Conference in Houston.


Sam Fletcher
OGJ Online

HOUSTON, Apr. 30 -- California's recent power outages are nothing compared to the "blackout of vision" on energy issues that continues to plague many US consumers and regulators, the vice-chairman of the International Association of Drilling Contractors said Monday at the start of the Offshore Technology Conference.

"To the energy-consuming public, 'no news is good news' when it comes to energy -- as long as prices are low. This complacency has often stalled the development of new sources of clean energy vital to the American economy and to maintaining a high standard of living for the American people," said C. Stedman Garber Jr., who is also president and CEO of Santa Fe International Corp.

Garber joined with J. Michael Talbert, president and CEO of Transocean Sedco Forex Inc., the largest offshore drilling contractor; and Loren Carroll, president and CEO of M-I LLC, at a morning press conference to urge the US Minerals Management Service (MMS) hold proposed federal lease Sale 181 in the eastern Gulf of Mexico, scheduled for December.

Talbert, who is also chairman of the National Ocean Industries Association, said although he is confident that lease sale will be held, it is still threatened by opponents to offshore drilling in that area.

The proposed sale would be the first in the eastern gulf since 1988 and has been under study by the US Department of the Interior for more than 5 years.

The northern tip of the proposed lease acreage in federal waters provides a 15-mile buffer zone off Baldwin County, Ala., with the bulk of the acreage more than 100 miles from Florida beaches.

The area is thought to contain some 7.8 tcf of recoverable gas resources and 1.9 million bbl of oil -- enough to "satisfy the current natural gas needs of Florida's 5.9 million households for the next 16 years," Garber said.

It is "much more logical" for Florida to tap the potential gas supplies in that region to fuel its escalating demand for electric power rather than continue competing for gas supplies from the western and central gulf, said Garber.

But Florida Gov. Jeb Bush, under political pressure from environmentalists in that state, is opposing the lease sale, which his predecessor endorsed, Garber said. The governors of Texas, Louisiana, Mississippi, and Alabama have endorsed the proposed sale.

The three industry executives also called for other US offshore areas now under drilling moratoria to be included in the next 5-year leasing plan that the MMS will finalize this year. Operators need greater access to those offshore areas to provide oil and gas supplies that will be needed in the future, they said.

Carroll, who is also chairman of the Petroleum Equipment Suppliers Association, said the offshore industry has proven its ability to explore and produce oil and gas reserves without harming the environment.

Its technological advances are winning acceptance by government officials around the world, he said.

As a result, Carroll said, "More areas are being made available in the rain forests of South America where the potential is enormous. We have recently seen a well drilled in Greenland. We are moving to the northernmost reaches of the North Sea, the Barents Sea, and the East Coast of Canada."

Some 80% of the new petroleum development during the next decade is expected to occur in tropical areas around the world, said Carroll.

"The potential there and in other environmentally sensitive areas is tremendous," he said. "We have to continue to merge environmental goals with production and business goals and be 'green' in everything we do.

"We must not take these steps and develop these technologies only because the public and regulations demand it. We must do so because it is critical to the health of the world we inhabit and the industry we operate in and because it's the right thing to do."

Contact Sam Fletcher at samf@ogjonline.com

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