Issues » Comments on Rules and Regulations

IPAA's Comments on MMS' Federal Crude Valuation Rule

Independent Producers Dismayed at Political Rhetoric Over U.S. Offshore Oil and Gas Development

Statement by IPAA Offshore Committee Chairman Robert S. Boswell, president and chief executive officer, Forest Oil Corp., Denver, regarding the statement made by Vice President and presidential Candidate Al Gore Oct. 21 on offshore drilling moratoria in California and Florida:

"Current political bantering about further restrictions relative to offshore oil and gas exploration may be politically expedient but clearly is not in the nation’s best interest nor consistent with the "National Energy Strategy" developed by the federal government. Both Vice President Gore and George W. Bush have advocated moratoriums with respect to offshore drilling in highly prospective areas off of the United States coasts.

"Clearly, these leading presidential candidates need to be informed about the "state of the union" with respect to the country’s energy situation. It is disconcerting that their staffs have not apprised them of some very basic facts. Currently, the oil and gas industry represents less than 2 percent of the overall economy, yet supplies over 60 percent of the country’s energy needs. Today, the U.S. imports over 50 percent of its crude oil requirements and 15 percent of its natural gas and is vulnerable to supply disruptions due to factors beyond our control and from certain areas of the world that have not be politically stable nor friendly to the interests of our country. These candidates appear to be taking a tack aimed at people’s fear of harm to the environment from offshore drilling. However, what they are supporting is far more harmful to the environment than opening up the offshore for increased drilling.

"As a point of fact, a 1985 National Academy of Sciences study showed that 44 percent of the oil in the sea comes from marine transportation (oil imports on ocean going vessels) as opposed to only two percent from offshore oil and gas exploration and production. Not developing our own offshore oil and gas resources not only increases our dependence on unreliable sources of energy to fuel our economy but also is 22 times more polluting than producing our own offshore oil and gas/ resources.

"Also, a May 1998 study from the nonprofit H. John Heinz III Center for Science, Economics and the Environment said that there have been few significant spills from oil production in state and federal waters, and that the volume of oil spilled has declined fairly steadily over the years (Minerals Management Service, 1997). There has not been a spill larger than 1,000 barrels from oil and gas platforms on the Outer Continental Shelf since 1980; in fact, natural seeps introduce approximately 100 times more oil into U.S. marine

waters than do spills from offshore development and production activities." (Our Ocean Future Themes and Issues Concerning the Nation’s Stake in the Oceans Developed for Discussion during 1998, the Year of the Ocean). The study was undertaken in collaboration with the Clinton administration, which never acted upon it.

"More importantly, these perceived populist political positions fly in the face of the nation’s best interests and are totally inconsistent with the national goals of "clean, reliable, low cost" energy. What is needed today is a leader who is willing to understand the facts and take positions based on the nation’s best interest as opposed to his own personal best interests. Clearly, if we are going to meet the nation’s energy goals, we need to encourage the development of our indigenous resources by opening up promising areas for exploration and development, by decreasing the cost of regulatory compliance, and by developing environmental compliance standards based on scientific evidence rather than radical conjecture. Further, we need to enhance the economics of exploration and development in this country or risk exporting the oil and gas industry’s expertise and capital to other parts of the world where their activities are welcomed.

"Today, our nation is marching into a situation were we may be victims of energy supply deficits and higher energy costs unnecessarily. Unfortunately, certain of our political leaders seem to be leading the parade. A cold winter this year could cause energy supply disruptions, not because of lack of resources, but simply because the nation is not aware of how dependent it is upon foreign oil deliveries, and those leaders who should know are advocating policies which will further defer the development of these resources.

"It is a shame that some form of disruption may be the only thing that raises the public’s consciousness, and it will be interesting to see which direction these leaders point fingers as to blame. While oil and gas production is no longer a large portion of the economy, it is a critical commodity which underpins the health of the economy and the high quality of life enjoyed by all Americans. It is incumbent on our leaders to become informed about our national energy position and to advocate policies which will enable us to accomplish our national goals.