US energy sector urges White House to ease drilling restrictions

11 July 2011 19:26  [Source: ICIS news]

WASHINGTON (ICIS)--US energy industry leaders on Monday urged the White House to ease restrictions on domestic drilling, saying that within 10 years the nation could be producing enough oil and gas to replace Middle East imports and more.

US onshore and offshore energy industry groups issued separate studies contending that the US could raise employment and tax revenues as well as make the nation more energy secure if industry were allowed to develop more domestic energy resources.

A study cosponsored by the American Petroleum Institute (API) and the National Ocean Industries Association (NOIA) said that if the Obama administration were to restore offshore permitting to the level prior to the April 2010 BP Deepwater Horizon disaster in the Gulf of Mexico, offshore development spending would increase by some 70% to $41.4bn (€29bn) in 2013 compared with the $24.2bn spent in 2010.

In the wake of the Deepwater Horizon rig explosion and resulting massive oil spill, the Obama administration imposed a moratorium on US drilling in the Gulf of Mexico (GOM). 

Although the moratorium later was lifted, offshore energy industry officials accuse the Obama administration of slow-walking the permitting process for new drilling, resulting in what the industry termed a “permitorium”.

The API-NOIA study said that offshore energy development would create sorely needed jobs, boost the nation’s gross domestic production (GDP) and generate more tax revenues “if the government pursues a balanced regulatory approach that allows for the timely development of the backlog of GOM projects in an environmentally responsible manner”.

API president Jack Gerard told a press conference that “As the US economy continues to struggle in this weak recovery and unemployment has increased again, the oil and gas industry can help generate new jobs, new revenue for the government and increased energy supplies”.

In contrast, he said, the Obama administration and many in Congress want to increase the tax burden on energy production, which would further inhibit domestic oil and gas output.

In a parallel study, the Western Energy Alliance (WEA) said that by 2020 six major oil and gas producing states in the US west could be producing as much energy on a daily basis as the US now imports from Saudi Arabia, Iraq, Kuwait, Venezuela, Colombia, Algeria, Nigeria and Russia combined.

But that increase in onshore energy output can only happen, said the alliance, “if western producers are allowed to develop the vast domestic energy resources found on public lands”.

However, said the alliance, “federal government policies are significantly undermining these growth projections, investment and expansion [and] making western energy development increasingly more difficult, time consuming and expensive”.

The three energy trade groups urged the White House to review and reform federal policies on leasing, environmental analysis and permitting for onshore and offshore energy development.

The API also urged the Obama administration to open the 85% of US outer continental shelf (OCS) regions that remain closed to oil and gas development.

The US petrochemicals sector and downstream chemical manufacturers also advocate broader US domestic energy development. 

The US chemicals industry is heavily dependent on natural gas as both a feedstock and power fuel.

($1 = €0.70)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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