As tens of thousands of energy professionals descend upon Houston this week for the 2012 Offshore Technology Conference, we are reminded just how far technology has come in such a short time. In the two years since the Deepwater Horizon tragedy, both the private sector and federal regulators have advanced new technologies and practices that enhance the safety of offshore development.
Despite these advancements, the future of Outer Continental Shelf (OCS) exploration and production remains in limbo. In a recent Wall Street Journal Op-Ed, Virginia Governor Bob McDonnell underscored how pervasive some of the political hurdles in offshore development have become. From Virginia to Texas and up to Alaska, access has been curtailed through limited leasing programs and regulatory hurdles. In November of 2011, the Administration inexplicably removed leasing off Virginia from its five-year leasing plan, despite strong bipartisan and public support for offshore development. At a time when economic growth remains the top priority for most states, the federal government has denied Virginia the immense economic benefits that offshore development brings.
Virginia is not the only state affected by limited access to its offshore resources. Nearly two years after the drilling moratorium, investment in offshore production continues to lag. As a result, the Energy Information Administration has stated that Gulf oil production will decrease by roughly 200,000 barrels of oil a day this year when compared with production levels prior to the moratorium. Last year, independent research firm IHS-CERA issued a report that indicated that a return to pre-Macondo production levels could create anywhere from 110,000 to 230,000 jobs.
Meanwhile off Alaska, Shell has invested nearly $4 billion dollars to explore areas of the Chukchi and Beaufort Seas. After years of planning, Shell has amassed one of the largest, most comprehensive safety and response capabilities in the history of offshore exploration and is ready to move forward with its exploration program this summer. Both the federal Bureau of Ocean Energy Management and the U.S. Coast Guard have signaled that, given the level of coordination between the operator and federal agencies, they are confident operations can and will proceed safely off Alaska this summer. However, some dissenters now argue that no level of safety preparedness is sufficient. Alaskan OCS development has the ability to create upwards of 55,000 jobs per year nationwide over the next 50 years. Over that same timeframe, federal and state treasuries would collect an estimated $193 Billion in tax revenue.
We cannot afford to turn our backs on the enormous economic potential of our OCS resources out of remote fear. Rather, federal regulators and private industry must continue to advance environmentally friendly practices and technology. We applaud the thousands of companies at OTC who are doing exactly that: demonstrating that energy development and environmental protection are not mutually exclusive.