IPAA independent petroleum association of america, america's oil and gas producers

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Nicole Daigle / Brendan Bradley
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For Immediate Release
August 20, 2010


Misguided Obama Moratorium Creating “Potentially Large Economic Consequences” for Independent Oil, Natural Gas Producers

Offshore ban "translates directly into significant job losses"

WASHINGTON - Most Americans, as well as Floridians and even Canadian leaders, understand that offshore oil and natural gas development can and must be done safely. Unfortunately, the Obama Administration's efforts to thwart responsible offshore domestic energy production continues to have a negative and growing economic ripple effect throughout the struggling Gulf Coast region. At the same time, these misguided actions are creating a host of unintended consequences for America's independent oil and natural gas producers who play "an important role in the nation's energy supply chain."

The de facto moratorium in place on shallow-water energy development is already leading to the loss of jobs, and homegrown energy supplies. The Houston Chronicle reports yesterday that "So far, permitting delays have idled 14 of the 46 available jackups in the Gulf and forced offshore companies to cut several hundred jobs. Each rig employs about 100 workers and supports many additional indirect jobs at supply boat companies, oil field services companies and other businesses."

While the Obama Administration continues to needlessly create regulatory roadblocks - which will add no environmental benefit - to offshore energy development, the Independent Petroleum Association of America (IPAA) - the voice of those responsible for drilling 90 percent of the nation's oil and natural gas wells - continues to fight for more access to homegrown, job-creating resources that will help deliver stable energy supplies to American consumers, and drive down our dependence on unstable region's of the world to fuel our economy:

"Smaller operators, in particular, could find it difficult to comply, said one executive. Bruce H. Vincent, chairman of the Independent Petroleum Association of America who is also president of Swift Energy, a mid-cap oil company based in Houston, said this week's announcements were a case of the government 'trying to create a series of bureaucratic hurdles to the industry being able to develop the leaseholds they had been granted'. 'It means the moratorium [on deepwater drilling] in the Gulf of Mexico will continue unofficially,' he added." (Financial Times, 8/18/10) 

"Energy lobbyists said they feared the department would eliminate exclusions that were warranted and thereby stretch out the review process needlessly. 'We have been supportive of categorical exclusions when they're appropriate,' said Dan Naatz, vice president for federal resources at the Independent Petroleum Association of America. 'Our concern is--and we've seen this since Deepwater Horizon--is this broad sweep of activities going to create further delay.' (Dow Jones, 8/16/10)


Congressman Gene Green (D-Texas), a member of the powerful U.S. House Energy & Commerce Committee, understands that "Any kind of moratorium impacts our whole energy industry here. What we're trying to do is to move away from relying on fuel from nations who are not friendly to us, and shallow water helps us do that. Shallow-water drilling is also mostly natural gas, and we need the natural gas to be the bridge fuel to lead us to a low-carbon future."

The Houston Chronicle editorializes this today under the headline "Shallow-water drillers are in the middle of the moratorium battle. They shouldn't be.":

If you're looking for the definition of caught in the middle, consider the case of shallow-water oil and gas drillers in the Gulf of Mexico in the roiling PR wake of the BP spill. They really are caught in the middle, and that has potentially large economic consequences for the Houston region. 

This is an industry that has been operating quietly and safely since the Truman administration - 1949 to be precise. Over those 60-plus years, more than 46,000 wells have been drilled without incident in depths of less than 1,000 feet across the Gulf. 

The current scenario also raises questions about the long-term viability of the 280 or so small, independent companies that do this vital work in the Gulf. These mom-and-pop operations form the backbone of the shallow-water drilling industry. 

They do not deserve to be caught in the middle as decisions are made about deepwater drilling. Being caught in the middle poses a threat to the survival of an industry that plays an important role in the nation's energy supply chain. For Houston, their survival is a jobs preservation issue of the first magnitude.

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IPAA is the national trade association representing oil and natural gas producers that drill 90 percent of the nation's oil and natural gas wells. These companies account for 68 percent of America's oil production and 82 percent of its natural gas production.