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U.S. Oil, Natural Gas Producers Applaud Legislation To Lift Offshore Drilling Ban

Washington, D.C. (May 10, 2006)

The Independent Petroleum Association of America – representing the companies that drill 90 percent of the nation's oil and natural gas wells – praised passage of an amendment today that would lift the congressional moratoria on offshore natural gas exploration in the Atlantic and Pacific oceans, as well as the eastern Gulf of Mexico.

At a House Appropriations Committee meeting today, Representative John Peterson (R-PA) offered an amendment to the Fiscal Year 2007 Interior Appropriations bill that calls for the end of the 25-year old congressional Outer Continental Shelf moratoria. The amendment was approved by 37 – 25.

"American consumers are experiencing financial hardships due to record high energy costs. Rep. Peterson's amendment provides an opportunity for Congress to address a glaring deficiency in energy supply and allow for domestic producers to do their jobs and secure safe, reliable and affordable domestic natural gas for this country," said Mike Linn, chairman of the Independent Petroleum Association of America (IPAA).

Congress has included moratoria language in every Interior Appropriations bill since 1981. Since then, natural gas prices have been on a steady rise - $9 per thousand cubic feet in 2005 compared to $2 per thousand cubic feet throughout the 1990's. In fact, last year the nation's natural gas bill topped $200 billion for the first time in history. As a result of this dramatic rise in natural gas prices, consumers are emptying their wallets to pay for higher home heating bills; manufacturers are increasing costs and cutting jobs. Over the past decade, industries that rely on natural gas to manufacture their products have closed over 100 facilities and had to cut 2.9 million jobs since 2000, according to a report by the National Association of Manufacturers.

The National Petroleum Council has estimated that 40 percent of undiscovered natural gas is located under federal lands. These public resources hold the best promise for securing America's future energy needs – but bans, restrictions, bureaucratic delays and litigation prevent the responsible development of our nations energy. If the independent domestic production industry is able to develop these natural gas resources, according to the National Petroleum Council, consumers could save up to $300 billion in lower natural gas costs over the next two decades.

According to Linn, "America's independent oil and natural gas producers are committed to investing in new energy production and infrastructure. In fact, independent producers are investing 150 percent of their domestic cash flow back into domestic oil and natural gas development – even borrowing funds to enhance their already aggressive efforts to find and produce more energy here at home. We're ready to produce American energy; we just need the okay from Congress to go get it."

Even though Rep. Peterson's amendment does not address a separate presidential moratoria ban on offshore natural gas production, it does lift the congressional ban for the entire area of the Outer Continental Shelf. The amendment is a necessary step to offset the imbalance between energy supply and demand and protect this country from a national security and economic disaster.

Facts about domestic independent natural gas producers:

• Develop 90 percent of oil and natural gas wells.
• Produce 82 percent of the domestic natural gas.
• Accounted for 74 percent of deepwater discoveries in the offshore in 2005.
• Installed 89 percent of all offshore structures from 2001-2005.
• Majority are highly efficient, small business owners that risk millions in the exploration of American natural resources.

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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.