By Lori LeBlanc, LMOGA Offshore Committee Director for BIC Magazine
Louisiana’s offshore oil and gas industry has seen a lot of change over the past eight years. Not only have operators experienced both the ups and the downs of worldwide markets, but they have had to scramble to make sense of an unprecedented barrage of federal rules that have threatened the vitality of America’s Gulf as an energy province.
Things may soon be changing once again, and we have reasons to be hopeful this time.
In its Annual Energy Outlook for 2017, the Energy Information Administration predicts a surge in natural gas exports and improvement in the trade balance of petroleum products, resulting in the United States becoming a net energy exporter by 2026. It would be the first time the U.S. held that status since 1953.
EIA asserts that, while our nation’s energy demands will continue to grow over the next several decades, domestic oil and gas will meet those demands. The agency takes into account price forecasts and market trends in this projection, as well as the technological revolutions like horizontal drilling and hydraulic fracturing which make energy production much more precise and efficient. The vast offshore resources in the U.S. are vital to this future energy security and economic prosperity of our country.
As those of us in Louisiana readily recognize, the Gulf of Mexico is a critical component of our nation’s oil and gas supply. For the past 60 years, the Gulf has been our primary source for producing offshore energy, generating approximately 97 percent of all domestic offshore oil and natural gas. In 2014, the Gulf supplied the U.S. with 16 percent of total onshore and offshore oil produced and 4.5 percent of all of the natural gas produced. America’s Gulf and offshore energy production are valuable resource that should be nurtured, not crippled.
While crude oil prices have had some impact on recent levels of offshore production, decisions by operators to bid on and to develop leases are made years before production begins. The biggest hindrance to offshore oil and gas development has been the unreasonable and risky government regulations and policies of the previous administration.
In only the past two years, in fact, more than 140 rules and regulations impacting the oil and gas industry as a whole have been issued, in many cases with limited public input. LMOGA’s Offshore Committee is now working with Congressional and Trump Administration officials to address some of these more onerous policies immediately, including the Well Control Rule, Air Quality Control Rule, Decommissioning Bonding and Financial Assurance Policies, and limits on geological and geophysical seismic activities in the Gulf.
Cleary, regulations are major problem, but access is another. The Gulf of Mexico, with the exception of waters off the coast of Florida, and Alaska’s Cook Inlet are currently the only outer-continental shelf waters available for offshore oil and gas development. That means that out of a total 1.7 BILLION acres of OCS in the United States, 94 percent are currently off limits to oil and gas activity.
At the very end of his term, President Obama once again inappropriately used executive powers to impose a so-called “permanent” ban on future oil and gas activity off the Atlantic Coast and a large portion of Alaska’s Chuckchi and Beaufort Seas via an executive order. While President Obama claims it is a permanent ban, President Trump can and should reverse this decision soon.
With over 90% of America’s Outer Continental Shelf closed off to energy exploration and production and American offshore operators holding the key to American energy security, the new administration must look to expanding access to other offshore areas and unraveling the regulations to provide for more certainty and predictability in offshore development. Changes like these will provide hope for our nation’s energy and economic security.