[StBernard] Gulf Energy Production Matters

[Westley Annis]

Gulf Economic Survival Team 	
May 30, 2012	 

Gulf Energy Production Matters

Dr. Bernard L. Weinstein, Associate Director of the Maguire Energy Institute, Cox School of Business, Southern Methodist University, today released a report <http://app.systememerge.com/emaill-3241362-60563-227598.html>  detailing the fallout from two years of difficulty implementing offshore regulations that were revamped after the Macondo blowout.   The continuing regulatory issues have led to decreased federal revenue, fewer active rigs in the Gulf, and lower forecasts of future production from the Gulf of Mexico.  The report was prepared for the Gulf Economic Survival Team (GEST).
 
According to the report <http://app.systememerge.com/emaill-3241362-60563-227598.html> , companies attempting to plan and execute enormously expensive, multi-year offshore energy projects are not receiving the transparency and predictability required to conduct business.  When the market lacks confidence that the government will remove obstacles to energy production in the Gulf of Mexico and elsewhere, traders incorporate this risk into current thinking and future price structures.  Today’s offshore regulatory regime has bred a high “U.S. regulatory risk premium” that is dampening production and causing a hidden surcharge on the price of oil and gasoline in the market.
 
“Regulatory actions matter,” said GEST Executive Director Lori LeBlanc.  “They affect business confidence, investments and ultimately production, and these factors in turn affect prices.  When President Bush lifted the drilling moratorium off America’s coasts in 2008, the price of oil fell twelve percent.  Yet when President Obama lifted the deep-water moratorium after Macondo, similar price drops did not occur.  Why?  Because new rules governing Gulf activity were simultaneously announced and issued with very little clarity. In turn, the market correctly predicted a lengthy and choppy period of implementation with the potential to negatively affect offshore activity.”

The national economic consequences of this regulatory uncertainty are clear and significant:

• Federal revenues from Gulf activity have dwindled. Under the Obama Administration, offshore lease sales have gradually declined each year, depriving the U.S. Treasury of a sorely needed source of revenue. New lease bids went from $9.4 billion in 2008 to $979 million in 2010 to a mere $36 million in 2011.

• Total active rig counts in the Gulf are far short of pre-moratorium numbers. In May 2010, there was an average of 27 "active" rigs in the Gulf - those engaged in drilling activities as opposed to maintenance, completions, and workovers.   As of May 1, 2012, there were only 18 total active rigs in the Gulf.

• Production in the Gulf is down by 30 percent over projections. According to the Energy Information Administration (EIA), Gulf production fell from 1.55 million barrels per day in 2010 to 1.32 mb/d in 2011.  This year, EIA estimates Gulf output will fall further to 1.23 mb/d.  But two years ago, before the moratorium, EIA predicted that production would reach 1.76 mb/d this year.  

Read more online at www.GulfEconomicSurvival.org <http://app.systememerge.com/emaill-3241362-60563-227599.html> 

 	 
LeBlanc Participates in Rep. Scalise's Energy Roundtable

GEST Executive Director Lori LeBlanc participated in an energy roundtable discussion May 24 in New Orleans hosted by U.S. Congressman Steve Scalise and focused on Gulf of Mexico drilling and production.   

"I want to thank Rep. Scalise for hosting this meeting of local and national leaders to talk about an issue that impacts the economic and energy security of our entire nation," says LeBlanc.

"As Rep. Scalise and others noted, there is so much more we could do to better harness the productive capacity of our offshore resources.   As it now stands, over two years after the Macondo incident, regulators are still struggling to implement the new rules of the road.  This results in an enormous lack of clarity for companies pursuing extremely costly and time-consuming projects, forcing them to cope with spotty information about approvals for exploration plans, permits to drill, and other key milestones required to develop their operations."

Also participating in the roundtable were Port Fourchon Executive Director Chett Chiasson, South Central Industrial Association's Lori Davis and Jane Arnette, LA 1 Coalition Executive Director Henri Boulet, consultant Ted Falgout, OMSA's Jim Adams, Chevron's Warner Williams, and others.

American Energy Workers Tell Their Stories
 
In the April issue of our e-newsletter, GEST asked Gulf energy workers to share with us the work they do to provide American energy and why they are proud to do it. Here is a sample of the replies we received:


>From Mike Prevost:


My whole family is in the oilfield. My stepdad is in Russia on a rig. My uncle owns a coil tubing company. My grandfather owned a coil tubing company before him.   I work for a company that deals with heavy lifting capabilities. We make slings, spool wire rope cable for offshore use, and do inspections.  I am proud to work for this company and I am proud to be a part of the oilfield. And so is my family. We have all made a great living from it.


>From John Simon:


I am happy that you are trying to promote domestic drilling for the good of the U.S. economy.   I’ve been in the oilfield working on drilling rigs since the early 1970’s and have worked on land rigs and offshore rigs.  For the past 4+ years I have been working overseas on an offshore drilling rig so that I can continue to earn a living in the oilfield.   I would love to see the Gulf of Mexico drilling operation prosper again so we Americans could get back to work producing oil and gas for the US.


>From Richard E. "Rick" Dennis:


I'm the founder of the Wind River Company L.L.C. a Louisiana based limited liability company and a global leader in the employee drug and alcohol testing industry. I've been providing security and drug and alcohol testing services to the petrochemical industry in the Gulf since 1984.

The Gulf has provided my business with sustainable revenue for many years which in turn has allowed me to hire Louisiana workers. There are a lot of families in Louisiana that depend on the Gulf for the sole support of their families.  The Gulf cutback has hurt and placed hardships on these families.

The oil & gas produced from the Gulf is certainly vital to the national and economic security of our nation.


>From Donald "Coach" Gagnard:


I represent PRO-NDT, an oilfield inspection company. We managed to make it through the hard times since the oil spill.Our jobs now as an inspection company has many hurdles to jump.

One thing that I do know and agree with; America thrives on the oilfield industry in one way or another. High gas prices ? We never compare the price of a gallon of gasoline to a gallon of milk. The process from beginning to the pumps requires many more procedures and costs than getting a gallon of milk on the market.

Read more at http://www.gulfeconomicsurvival.org/voices <http://app.systememerge.com/emaill-3241362-60563-227600.html> 

We'd love to hear YOUR story!   Please write to us at lori at gestnews.org. <http://app.systememerge.com/emaill-3241362-60563-227601.html>  
 Back  to work with  American  Energy<http://app.systememerge.com/userfiles/2023/image/smallbacktowork_1328819835.jpg> 	
 	 
In The News
• A Political Debate Plays Out Among Louisiana Oil Rigs <http://app.systememerge.com/emaill-3241362-60563-227602.html>
• June Lease Sale Anticipated; Producers Contend a Little Not Enough <http://app.systememerge.com/emaill-3241362-60563-227603.html> 
• GEST Comments on Lease Sale Announcement <http://app.systememerge.com/emaill-3241362-60563-227604.html>  	
Angelle Champions Legislative Efforts to Promote State Energy Production

 
As interim Lt. Governor of Louisiana in the summer of 2010, Scott Angelle founded the Gulf Economic Survival Team, which allowed oilfield workers, support companies, and communities to join together in calling for an end to the drilling moratorium.  Today, as DNR Secretary and Gov. Jindal's Legislative Liaison, he continues to champion efforts to ensure that Louisiana remains a leader in energy production, while protecting its environment and natural resources.

During this legislative session, Angelle was instrumental in working out a compromise on legislation pertaining to legacy lawsuit issues between landowners and the oil and gas industry that, if left unresolved, could have seriously stifled exploration in the state. 

In addition Angelle was a vocal advocate for recently approved HB 504 by Rep. Gordon Dove that modifies current law to allow ultra-deep drilling in the state as a result of recent advances in drilling technology.  

"Louisiana's oil and gas industry has a strong record of providing jobs and opportunity for our citizens and this legislation represents a new chapter in Louisiana's long history of working together with industry to provide the energy that fuels America," Angelle said.

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Contact Executive Director Lori LeBlanc to find out how you or your company can become a more active GEST supporter. Email <http://app.systememerge.com/emaill-3241362-60563-227606.html> or call 985-448-4485.

About Us:
GEST <http://app.systememerge.com/emaill-3241362-60563-227604.html>  is a grassroots organization created in June 2010 to oppose the federal moratorium on deepwater oil and gas drilling in the Gulf of Mexico. Now an independent non-profit group, GEST acts as a liaison between industry and local communities and the federal government in an effort to resolve federal permitting issues that are delaying a return to drilling in the Gulf. GEST is located within the South Louisiana Economic Council (SLEC) on the campus of Nicholls State University in Thibodaux, Louisiana. Visit our website: www.GulfEconomicSurvival.org <http://app.systememerge.com/emaill-3241362-60563-227604.html> 
Contact GEST:	 
Lori LeBlanc, Executive Director
Telephone: 985-448-4485
Email: lori at GulfEconomicSurvival.org <http://app.systememerge.com/emaill-3241362-60563-227607.html> 	 Mail:   P.O. Box 2048/NSU
Thibodaux, LA 70310
Website:  http://www.gulfeconomicsurvival.org/ <http://app.systememerge.com/emaill-3241362-60563-227604.html>