Issues » Archived Testimony

Testimony Of Tom Young On Behalf Of
the Independent Petroleum Association of America

Committee on Energy and Natural Resources U.S. Senate

July 12, 2001

Mr. Chairman, members of the committee, I am Tom Young, Vice President - Business Development of Mariner Energy, Inc., a Houston-based independent oil and gas exploration company with principal operations in the Gulf of Mexico. Today, I am representing Mariner Energy and testifying on behalf of the Independent Petroleum Association of America.

Who are America's natural gas and oil producers? We vary in size, from family-owned enterprises operating in a single state, to large publicly traded companies with international operations. We have provided the energy to build this country into what it is today, and we continue to explore for energy to fuel our nation's future.

Our environmental record is outstanding. What concerns independents is that there seems to be a movement in Congress to lock up the most promising potential sources of natural gas and oil supplies - ANWR, most of the offshore, and many areas in the Rockies. Even with bold conservation efforts, this nation will compromise its way of life if we can only drill on lands currently accessible.

This country is faced with choices. We must achieve balance while sustaining our economy and protecting our environment. The first step, implement the executive order requiring energy accountability. The second step, complete a public land inventory to determine what lands potentially contain energy and are truly accessible. Is it 95%? Is it 40%? I can report that on the ground, the answer is much less than 95%. This inventory will put an end to this debate.

Some have objected to expanding access to federal lands as a policy of "Draining America first." I respectfully disagree. Blocking access to federal lands is a policy of "Draining American wallets first." A vote against land access is a vote for higher energy prices.

The onshore permitting and planning processes must also be improved and properly funded. IPAA supports the provisions included in S.388 which expand state involvement and establish approval timeframes for reviewing permits, the S. 597 requirement to fund the accelerated completion of environmental documents, and the executive order accelerating energy-related approvals in an environmentally sound manner.

We can't discuss offshore without discussing sale 181. What can I tell you about sale 181 that you didn't hear yesterday on the floor of the Senate? Well, I can give you a real life example of the impact that shrinking the original sale 181 area has on a small independent.

All changes and delays in sale 181 have been driven by politics. Yes, the much smaller sale area proposed by the Administration may eventually increase energy supply. However, due to the extremely deep-water depths and distance from infrastructure, the area now remaining is off limits to most independents.

I refer to you to a map of a portion of the Central and Eastern Gulf of Mexico planning areas. The reduced Sale Area sacrifices an estimated 1 to 2 TCF of natural gas potential, in the northern excluded portions alone. The revised Sale Area excluded all tracts in less than 6,500' water depths. At these water depths, this is the playing ground of extremely large companies. The impact of this reduction was particularly harsh on my company, which spent millions of dollars acquiring data in area that cannot be developed.

By taking 2 TCF of natural gas potential out of the sale, the nation also eliminates an environmentally safe energy supply. When making political decisions, we need to have an energy plan, like the Administration's energy plan, that is agreed to by Congress. A more robust sale 181 and MMS' next five year OCS leasing plan for 2002 to 2007, including a broader area containing shallower waters in the Eastern Gulf of Mexico are essential. The federal government and governments of affected states must attempt to find a more rational balance. Otherwise investment dollars will flow overseas.

If most independents in the offshore are confined to the western and central gulf, then we must be given incentives to develop an already developed area, including

• A renewal of the Deepwater Royalty Relief Act as advocated by Senator Johnston and,
• Expansion of royalty and lease term incentives for different types of targets in shallower waters.

We agree with the Administration's plan to review incentive proposals and ask that this be expanded to the onshore.

While on the topic of royalties, we cannot ignore the importance of royalty in-kind. It provides certainty to both the producer and government and gives the government opportunities for helping low-income families.

In conclusion, independents are beginning to wonder whether the opponents to drilling will ever say yes to exploration in any new areas. It is a time for more reasoned decisions. When did it become acceptable to place our nation's security and future in the control of those who control foreign energy supplies? Instead, shouldn't we be asking what we can do to reduce our dependence, and secure our nation's economy and safety? America's independents have the answers to these questions, but need the support of federal and state governments to allow us to safely and efficiently explore and develop our nation's energy reserves.

Thank you again for allowing me to appear before you today. I would be glad to answer any questions you may have.