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CEA to Lawmakers: 2011 is the Year to Develop Balanced National Energy Policy

CEA to Lawmakers: 2011 is the Year to Develop Balanced National Energy Policy
Consumer Advocacy Group Issues New Briefing Book and Energy Policy Recommendations to 112th Congress

WASHINGTON – Consumer Energy Alliance (CEA) outlined a host of commonsense recommendations advocating an “all of the above” national energy plan in a briefing book issued today to the 112th Congress. The book “Recommendations for a Balanced Energy Policy: A Briefing Book Presented to the 112th U.S. Congress,” focuses on policy changes that could improve the U.S. economy by using affordable energy as a means of creating new jobs, sending revenues back to the states, protecting the environment and responding to climate change.

“With worldwide energy demand expected to rise by 49 percent over the next two decades, and U.S. demand projected to increase by 14 percent, we must act now to change the direction of our national energy policy to meet America’s new energy future,” said CEA President David Holt. “The U.S. economy continues to struggle and unemployment remains high. This is a critical time for the nation to develop and implement a sensible energy policy that generates revenues to help reduce deficits, create jobs and get the nation moving again.”

The book contains sections on a wide variety of key energy issues, including: the development of oil and natural gas resources, wind, oil shale, rare earth elements, advanced biofuels and solar technologies, expansion of nuclear power, combined heat and power, and carbon capture and storage, as well as incentives to spur further energy efficiency, and many others.

“CEA members hope that Congress and the Administration will look beyond politics and embrace a ‘we need it all approach’ to energy,” said CEA board member Jennifer Diggins on behalf of Nucor Corporation. “Domestic energy security requires policymakers to recognize that our economy is dependent upon a plentiful supply of petroleum as we continue to promote alternative energy sources. Unfortunately, drilling in the Gulf of Mexico has been hampered by regulatory hurdles and total U.S. production is estimated to decline by 13 percent in 2011. Absent a significant change in domestic energy policy, rising gas and diesel prices will continue to threaten our economic recovery.”

Added Holt: “CEA looks forward to working with President Barack Obama and the new Congress as well as consumers, producers, small businesses, agriculture and manufacturing groups, among others, to seize on this important moment by leveraging America’s wealth of natural resources and promoting a balanced approach to improve the direction of our national energy policy.”

Among the objectives CEA encourages Congress to achieve:

• Increase access to energy development on the Outer Continental Shelf
• Incentivize efforts to create and expand alternative and renewable fuel sources
• Expand exploration and production of traditional and unconventional energy resources
• Promote a comprehensive U.S. program aimed at maintaining U.S. intellectual competitiveness through supported education of skilled scientists, engineers and trade professionals

Resources:

• Briefing Book: Recommendations for a Balanced Energy Policy
• Comments from CEA President David Holt: click HERE for audio, and HERE for video
• Op-ed: Holt: Affordable energy needed for economic resurgence

CEA President David Holt on CEA 112th Congress Policy Recommendations

For comments from CEA President David Holt on developing a balanced energy strategy, click here for video, and click here for audio.

CEA 112th Congress Policy Recommendations

Download the CEA 112th Congress Policy Recommendations here

Affordable energy needed for economic resurgence

Affordable energy needed for economic resurgence
By DAVID HOLT

HOUSTON CHRONICLE
Jan. 20, 2011, 9:28PM

So important was the matter of ensuring the U.S. government had ample and unrestricted access to helium in the future that lawmakers got together in 1920 to pass what is regarded as the first real energy bill in Congress. That legislation, known as the Mineral Leasing Act, expanded the definition of minerals available for development on federal lands to include things like coal, oil, natural gas and potash. But Congress drew the line at helium, reserving “the ownership of and the right to extract helium from all [natural] gas produced from lands leased” under the act.

The reason? Helium was to be the great lifting agent for the military’s aerostat fleet of the 20th century, with Congress even establishing a National Helium Reserve in 1925 to guarantee future supply. Needless to say, Congress turned out to be wrong about the role helium would play in securing our nation’s future. But with more than 14 million Americans out of work and gasoline prices hurtling toward $4 a gallon, Congress can’t afford to be wrong about our nation’s energy policy any longer.

Earlier this week, Consumer Energy Alliance delivered a briefing book to Congress that identifies dozens of straightforward, common-sense recommendations for getting our nation’s current and future economic outlook back on track — using affordable energy as a means of creating new jobs, sending revenues back to the states, and protecting the environment and responding to climate change while we’re at it. To be sure, saying you support an “all of the above” energy policy has become more than a little cliché on Capitol Hill. But that doesn’t make it any less valid an approach.

Believe it or not, it wasn’t that long ago that energy policy was considered more of a regional issue in Congress than a political one. More than anything, it was your physical location that determined your position on nuclear energy, oil and natural gas development, biofuels, wind, solar and geothermal. To some extent, and on some issues, those geographical considerations remain.

But with world energy demand expected to rise by 49 percent over the next two decades, and U.S. demand slated to increase by 14 percent, no one who’s serious about addressing these needs can possibly conclude that our current path is sustainable. When it comes to energy, the plain truth of the matter is this: We need it all, we need it now, and we need it to be delivered in a way that’s both responsible and affordable. And we can’t afford to settle for anything less – not if we have any expectation of meeting these historic challenges in the future.

The good news is, for the first time in a long time, just about everyone agrees that our country is blessed with an extraordinary natural resource base. The combination of horizontal drilling and hydraulic fracturing – and the application of these two common technologies to shale beds deep underground – has helped us unlock hundreds of trillions of cubic feet of clean-burning, American natural gas, enough gas to meet the country’s demand for the next 90 to 100 years. At the same time, nearly 10,000 megawatts of generating capacity for wind was installed in 2009 – establishing it as a viable means of affordable, zero-emissions power. And although still only a small contributor to the grid, solar energy installations increased 24-fold over the past decade.

But just because our nation has a wealth of resources at its disposal doesn’t mean those resources will be produced. Abundance is nice, but it doesn’t amount to much without a real plan to deliver access.

Unfortunately, the ongoing inability for offshore energy producers in the Gulf of Mexico to secure basic permits from federal regulators is just the latest example of how a bad or confusing policy from Washington often leads to bad or unintended policy outcomes outside the Beltway. Estimates suggest that total U.S. oil production will decline by 13 percent in 2011, in large part owing to the continued “permitorium” in the Gulf. Anyone who doesn’t think this will have an impact on the price we pay at the pump is whistling past the graveyard. And anyone who doesn’t think that rising gas prices will soften and perhaps even delay our nation’s economic recovery – well, they’re out to lunch on this too.

Helium is the second most abundant element in the universe, but as Congress (to its credit) understood way back in 1920 – the mere existence of a resource does not alone guarantee its supply. Fast-forward 91 years. Once again, Congress finds itself with a clear opportunity to act, at a time when genuine action has never been required more. This time, though, it’s the future of the American economy that’s at stake – not just the hot-air balloon. How and whether lawmakers decide to seize on this moment will be critical. They can start by picking up a copy of our report.

Holt is the president of Consumer Energy Alliance, which is based in Houston.

http://www.chron.com/disp/story.mpl/editorial/outlook/7390741.html

“No work and no revenue” and the Worst May Be Yet to Come

No work and no revenue. That’s how the owner of R & D Enterprises describes business in the wake of last year’s Deepwater Horizon blast and the subsequent deepwater drilling moratorium. R & D provides equipment to drilling rigs and has, over the past several months, lost 100% of its revenue stream.

R & D is one of the Gulf-based businesses highlighted in Greater New Orleans Inc.’s study into the Deepwater Horizon and its aftermath. Last week, Greater New Orleans released the second part of a three part study and one of its most striking findings was that, months after the drilling moratorium officially ended, the region is braced for the worst of the economic impact.

CEA has repeatedly cautioned that even short-term changes in the regulatory process can have a long-term impact and this new study confirms those concerns. The moratorium that was imposed on certain types of drilling in the Gulf last year was always supposed to be temporary, but as Greater New Orleans notes, “deepwater permit issuance in the Gulf of Mexico has not significantly improved in the past three months.” Only two deepwater permits have been issued since the moratorium was lifted. Meanwhile, drilling in the Gulf’s shallower waters is also down modestly, even though that region was never covered by the moratorium.

But the reason the region may not yet have felt the brunt of the economic impact is that many Gulf businesses, like R & D enterprises, have managed to hold on so far by adopting temporary emergency measures like restructuring their businesses and their expense structures. As the study points out, these actions “are not feasible long-term solutions.” It warns that without a resumption of more consistent drilling activity, regional businesses “will be forced to begin significant lay-offs.”

Lest anyone assume that last year’s drilling disruption has been resolved, this new report from Greater New Orleans reminds us that the Gulf region remains in a state of limbo, with no clear picture of how much business the oil and gas industry will be able to generate going forward. And when such a critical part of the region’s economy is in limbo, the people of the region face an equally uncertain future.

Puzzling, Political, and Not Especially Productive

The National Oil Spill Commission’s long-awaited report on the Deepwater Horizon arrived this week, offering an odd assortment of findings and recommendations that reach far beyond last year’s tragedy in the Gulf, while failing to present clear recommendations for moving forward in a region that is vital to our national energy and economic security.

One newspaper actually used the word puzzling to describe the report, for the way it suggests that the industry’s problems are systemic without providing any supporting evidence. And, as CEA President David Holt noted, such sweeping statements can cause real damage. The report questions the future of drilling operations in Alaska, notwithstanding the stellar safety record in that region.

“This commission had an opportunity, and some might even say a mandate, to move the current energy debate past politics and toward a reasonable consensus,” on safe offshore drilling operations going forward, Holt told a group of policymakers in Washington.

Instead, the political tone of the report often reads like a chapter out of an anti-drilling diatribe. It could threaten to choke off economic activity in the Gulf, as well as in key U.S. oil-producing regions far from the Gulf.   More specifically, CEA is concerned about the unsupported recommendations that appear to call for an open-ended delay to development of Alaska’s abundant offshore resources.  As we saw last week when the Trans-Alaska Pipeline shutdown raised international oil prices by $4/barrel, shutting down Alaska’s oil & natural gas development impacts consumers everywhere!

CEA has always supported a thorough investigation of the events surrounding last year’s tragic accident in the Macondo Prospect oil field, to be followed up by a constructive set of recommendations for moving forward with safe exploration and drilling in the Gulf. That was our position last April and it remains our position today. We don’t believe that the Deepwater Horizon tragedy should be forgotten and we maintain that oil rig safety should be non-negotiable. But we also know that we all must move beyond political rhetoric before we can agree on an effective national energy strategy.

It is also very apparent to anyone paying attention that the oil & natural gas industry has thoughtfully and comprehensively responded to the tragedy by working closely with federal officials to determine ways to improve operations, safety and environmental protection.  A lot of lessons and been learned, and, more importantly, a lot of improvements have already been implemented.

Clearly, our need for a strong and steady supply of domestic energy is not going to go away. Today, the country is challenged not just to produce more of the energy it uses but to put millions of unemployed Americans back to work. And as we noted last week, our very fragile economic recovery is being threatened by high and rising oil prices that are harder to control when so much of that oil is imported.

The National Ocean Industries Association (NOIA) has also highlighted some of the more perplexing parts of the Oil Spill Commission’s report, particularly its suggestion that problems are systemic throughout the industry.

“Over 43,000 wells have been drilled in the Gulf of Mexico without a Macondo-like accident,” notes NOIA, a CEA affiliate. “Over 14,000 wells have been drilled in the deepwater Gulf without a Macondo-like accident. This is not because the industry has been lucky. Nor does this disaster-free record show a culture of complacency. (Last year’s) accident cannot be taken lightly, but it should not be used as a dam to halt energy security and reliability.”

Oil industry blasts spill commission report

Fuel Fix – Tuesday, January 11, 2011

Oil and gas leaders are fighting back against the presidential spill commission’s recommendation for major changes in the way the industry and federal regulators prioritize offshore safety…

…Randall Luthi, the president of the National Ocean Industries Association, said the commission gave short shrift to “industry efforts to correct and improve the system, particularly since April 20, 2010.” He noted the work of joint industry task forces to assess what went wrong and suggest changes to well design standards and safety devices. Luthi also noted the collaboration by some oil companies on a Marine Well Containment Corp., that is developing equipment that could be dispatched immediately to control a runaway well. Luthi added:

“We object to the commission’s insistence on there being a ‘systemic’ problem throughout the industry. This is not supported by the facts. Over 43,000 wells have been drilled in the Gulf of Mexico without a Macondo-like accident. Over 14,000 wells have been drilled in the deep-water Gulf without a Macondo-like accident. This is not because the industry has been lucky. Nor does this disaster-free record show a culture of complacency. The April 20 accident cannot be taken lightly, but it should not be used as a dam to halt efforts for energy security and reliability.”

Bruce Vincent, the president of Houston-based Swift Energy Co., and the head of the Independent Petroleum Association of America, took aim at the commission’s recommendation to boost a current $75 million ceiling on the economic and natural resource damages oil companies can be forced to pay for oil spills. Is that is lifted entirely, it could effectively block smaller and independent operators from drilling offshore.

Proposals for $10 billion, $20 billion and unlimited liability caps “would empower multinational and foreign oil companies while creating an impossible financial challenge to America’s independent producers who compete with these corporations in the offshore,” Vincent said. He added:

“Unrealistic liability proposals would not achieve any of our national security, domestic energy or economic priorities, namely to provide for more American-produced energy, jobs and fewer oil imports. It’s vitally important that such policies must not create an unworkable regulatory framework for our industry, including smaller independent producers, to effectively and safely deliver job-creating, taxpayer-owned energy to American consumers while ensuring environmental safeguards.”

David Holt, the president of the Consumer Energy Alliance, said the commission failed to “move the current energy debate past politics and toward a reasonable consensus on the best and safest way to allow Americans continued access to the energy resources they own offshore.”

To read the full article, click here.

Oil panel comes up dry on offshore drilling

The Washington Times – Tuesday, January 11, 2011

With gasoline prices at unusually high levels for this time of year, a report from a presidential commission Tuesday did little to break the political deadlock over offshore drilling, prompting some observers to warn that the United States is headed toward another gas-price crunch this summer.

The nationwide average price of regular gas over the weekend rose to $3.08 a gallon while crude-oil prices have surged to more than $90 a barrel — levels seen in only one previous winter, in 2007-08. Gasoline prices then ran up dramatically in the 2008 spring-summer driving season and reached an all-time high of more than $4, prompting public outrage and demands that the government open offshore drilling for the first time in 30 years.

But despite the threat of much higher gas prices again this summer, the momentum for increased drilling has been effectively snuffed out by the disastrous Macondo oil spill in the Gulf of Mexico last year. The Obama administration has withdrawn most of its proposals to expand drilling off U.S. coasts and has imposed more layers of regulation that have stifled new development even in the well-pocked Gulf of Mexico.

Tuesday’s report from a commission appointed by President Obama to investigate the oil spill blamed it on “complacency” within the industry and the government bureaucracy that regulates drilling, and mostly ratified the administration’s moves toward heavier regulation.

That prescription keeps the White House and most Democrats in Congress on a collision course with the oil industry and conservatives in the Republican-led House, who warn against regulatory overreaction and say it will lead to higher oil and gas prices.

David Holt, president of the Consumer Energy Alliance, an activist group pushing for more drilling, said the commission failed to help break the gridlock over the critical issue of dwindling energy supplies in the U.S.

“This commission had an opportunity, and some might even say a mandate, to move the current energy debate past politics and toward a reasonable consensus on the best and safest way to allow Americans continued access to the energy resources they own offshore,” he said.

But the recommendations for tighter regulation will have the effect of “shutting down” drilling, rather than enabling producers to access oil reserves in a safer way, he said.

“Consumers should be very concerned that the price of oil crossed the $90 threshold in the month of January,” said Richard Moskowitz, vice president of the American Trucking Associations, also expressing disappointment with the report. “Absent a rational change in domestic energy policy, we are concerned that the price of oil will continue to climb and have a dramatic and negative effect on our already struggling economy.”

To read the full article, click here.

Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling

Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

Highlights of Key Recommendations

Below are highlights of the Commission’s key recommendations to improve the safety of offshore oil and gas drilling and mitigate the impacts of any future spills.  Analysis and related materials providing further explanation and support for these recommendations can be found in the Commission’s final report, Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling, and on the Commission’s website at www.oilspillcommission.gov.

Safety and Environmental Protection

  • Congress should create an independent safety agency within the Department of the Interior to oversee all aspects of offshore drilling safety. 
  • Interior should fully exercise its existing statutory authority in the drafting of leasing provisions to ensure that the offshore energy industry pays the costs of its regulatory oversight the way that other regulated industries, such as the telecommunications industry, pays the costs of its oversight by government.  Congress should support Interior’s efforts in this regard and provide the Department with supplemental authority as necessary. The costs of regulatory authority include the new independent safety agency, but also extend to the budgets of other regulatory agencies that  oversee the offshore energy industry, including oil spill response planning, whose expenses should be paid for by industry rather than by the American taxpayer. 
  • Interior should toughen its baseline of prescriptive safety regulations applicable to offshore drilling to address the increased challenges presented by drilling in deeper waters and less well known geologic areas, and by the changing nature of the oil and gas industry.  Interior should also supplement those regulations with a risk-based performance approach, similar to the “safety case” approach used in the North Sea, that requires all offshore drilling companies to demonstrate that they have thoroughly evaluated all of the risks associated with drilling a particular well or other operation, and are prepared to address any and all risks pertaining to that well or operation.
  • Congress and Interior should enhance environmental protection by creating a distinct environmental science office within Interior headed by a chief scientist with well-specified responsibilities regarding environmental review and protection. 
  • Congress should amend the Outer Continental Shelf Lands Act to provide the National Oceanic and Atmospheric Administration with a more formal consultation role relating to environmental protection in Interior leasing decisions.
  • Interior, in consultation with the Council on Environmental Quality, should revise and strengthen its NEPA practices and procedures consistent with that statute’s requirements.
  • The oil and gas industry must adopt a culture of safety.  Much as the aviation, chemical, and nuclear power industries have done in response to disasters, the oil and gas industry must move towards developing a notion of safety as a collective responsibility. Industry should establish a “Safety Institute.”  Similar to organizations in other high-risk industries, such as the Institute of Nuclear Power Operations, this would be an industry-created, self-policing entity aimed at developing, adopting, and enforcing standards of excellence to ensure continuous improvement in safety and operational integrity offshore.
  • Congress should increase its own awareness of the risks of offshore energy exploration and development.  The House and Senate should each assign responsibility for the oversight of drilling safety and environmental protection to a specific  committee, and require that committee to hold an annual oversight hearing to consider the state of technology, application of process safety, and environmental protection.

Response and Containment

  • The President should seek significantly increased funding for the key regulatory agencies that oversee oil spill response and planning, including Interior, Coast Guard, and NOAA. 
  • The President should require the creation of an interagency review process for oil spill response plans.  Oil spill response plans should become publicly available once they are finalized.
  • Interior, the Coast Guard, and the Department of Energy and its national laboratories should develop in-house expertise to effectively oversee containment operations in the immediate aftermath of a well blowout and to accurately estimate flow rates following a blowout.
  • Interior should require, as a permit condition for operating on the outer continental shelf, that companies design wells that anticipate the potential need for containment should a blowout occur, and that they demonstrate they have immediate access to containment technologies that are rapidly deployable and effective in deepwater.  Like oil spill response plans, these too should be subject to interagency review.
  • The oil and gas industry should create and maintain readily deployable resources for rescue, response, and containment and should ensure such resources are available in the immediate aftermath of a well blowout.
  • EPA should amend or issue guidance on the National Contingency Plan to establish distinct procedures for a Spill of National Significance, to increase state and local elected officials’ involvement in spill response planning, to update dispersant testing and use protocols, and to create a mechanism for expert oversight of well containment.
  • Congress should provide mandatory funding for oil spill research and response technology at a level equal to or greater than that authorized by the Oil Pollution Act of 1990.

Compensation, Impacts, and Restoration

  • Congress should significantly increase the Oil Pollution Act’s liability cap and financial responsibility requirements for offshore facilities, taking care to balance the competing policy concerns of ensuring full compensation for victims in the event of another major spill, and retaining competent independent operators in the offshore market.
  • Congress should dedicate 80 percent of any Clean Water Act penalties from the Deepwater Horizon spill to long-term, region-wide restoration of the Gulf of Mexico.
  • Federal agencies should make better use of new tools, such as coastal and marine spatial planning, to improve environmental protection, management of OCS activities, and ecosystem restoration efforts in marine environments.
  • EPA should develop distinct plans and procedures to address human-health impacts during a “Spill of National Significance.”
  • Congress, federal agencies, and responsible parties should take steps to restore consumer confidence in the aftermath of a “Spill of National Significance.”

Frontier Regions: The Arctic

  • There should be an immediate, comprehensive federal research effort to provide a foundation of scientific information on the Arctic.

The countries of the Arctic should establish strong international standards related to Arctic oil and gas activities. Such standards would require cooperation and coordination of policies and resources.

CEA: Oil Spill Commission Misses Key Opportunity with Release of Its Report

Holt: “This commission had an opportunity, and some might even say a mandate, to move the current energy debate past politics and toward a reasonable consensus” on safe offshore operations in the future. “Unfortunately, too much of the report issued today appears to fall outside those parameters.”

WASHINGTON – The White House-appointed Oil Spill Commission had a unique chance to chart a new course for responsible offshore energy development in the future, but with the release of its report today, appears to have come up short in that charge. That’s the message that Consumer Energy Alliance (CEA) president David Holt delivered to policymakers and the press this afternoon upon reviewing the 398-page report released in Washington today.

“This commission had an opportunity, and some might even say a mandate, to move the current energy debate past politics and toward a reasonable consensus on the best and safest way to allow Americans continued access to the energy resources they own offshore,” said CEA president David Holt, who is based in Houston but traveled to Washington today to speak on the report. “Part of that mandate called on the commission to take a hard look at the facts, and produce a set of recommendations aimed at improving the way we access energy offshore – not for the purpose of shutting those activities down, but for the purpose of making them safer. Unfortunately, too much of the report issued today appears to fall outside those parameters.”

Although the report includes commonsense recommendations for setting aside spill-related funds for long-term restoration of the Gulf Coast, its wetlands, and its ecosystem, the document also strays into the political – at times reading more like a statement of national energy policy than a technical examination of the Macondo incident and its aftermath. Most notably, the report includes an entire section questioning whether offshore energy development can take place safely and responsibly in Alaska and the Arctic, minimizing the fact that such activities have been pursued safely for generations – and today remain a key contributor to America’s domestic energy supply and security. At its core, the report focuses on what went wrong last April; it does not discuss what steps industry has taken to further reduce the risk of such an event occurring in the future.

“The current slowdown in the issuance of offshore drilling permits and the reduced flow of North Slope energy from Alaska compromises our domestic energy security and puts energy-dependent industries such as trucking in a precarious position,” said Richard Moskowitz, vice president and regulatory affairs counsel for the American Trucking Associations, and chairman of CEA’s board. “Consumers should be very concerned that the price of oil crossed the $90 threshold in the month of January.  Absent a rational change in domestic energy policy, we are concerned that the price of oil will continue to climb and have a dramatic and negative effect on our already struggling economy.” 

Added Holt: “At a time when more than 14 million Americans are out of work, and nearly every state in the country is struggling under a budget outlook that presages severe cuts in essential services – or worse – there has perhaps never been a more important time to leverage America’s abundant natural resource base into jobs, revenues and security for the future. There’s probably never been a more obvious time as well.”

NOTE: In an editorial published this week, the New Orleans Times-Picayune characterized the commission’s early-release findings and related conclusions as “puzzling” and “hard to reconcile” given the actual “evidence in the report.” Added the Times-Pic: “Some critics are already asking whether the commission’s conclusion was influenced by the politics of the national debate over drilling.” Click here to access the piece.

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