Commentary: Developing American’s new energy future

As we take the opportunity to reflect back on 2012, it’s worth remembering this past year as the beginning of an exciting new chapter in our nation’s energy future.

For the first time in many decades, advances in technology allow us to be optimistic about our capacity to restore our nation’s energy security.

Americans across the country, and across party lines, are beginning to sense that this new U.S. energy growth could help propel significant economic expansion over the coming years.

Even President Obama himself is repeatedly voicing support for developing our domestic resources, which in addition to strengthening our energy security, creates good-paying jobs and generates a great deal of needed revenue for the U.S. Treasury. As he said during the second Presidential debate, “The most important thing we can do is to make sure we control our own energy. So here’s what I’ve done since I’ve been president. We have increased oil production to the highest levels in 16 years … Now, I want to build on that.”

While it’s true that oil production has increased overall, the rise has occurred on private lands, not on federal land or in federal waters. Ramping up the level of safe and responsible production in the federal waters of the Gulf of Mexico is critical to fostering that increase.

The Gulf is currently responsible for just under 30 percent of domestic oil production, and its substantial potential reserves could lead to even far greater production. In fact, the number of rigs out in the Gulf is on the rise, a number projected to increase considerably over the next few years thanks to promising developments in deepwater production.

Yet long-term capital investment in the Gulf ultimately requires confidence in the regulatory regime. Are we doing enough to fulfill the President’s stated objectives and encourage investment in future energy production offshore?

Individual operations begin with approval from regulators. While the number of permits being issued for Gulf operations has increased significantly over the past year, there are still insufficient approved permits in the queue to support robust rig activity.

Operators are getting permits approved “just in time” as a rig moves to its destination, and there is serious concern that those approvals could slip to “not in time,” resulting in idle rigs waiting for approved permits. Given the massive costs that active rigs incur on a daily basis – easily $1 million a day – the industry is closely watching whether the increased number of permits required to support an influx of new rigs is viable.

The industry is already contending with diminished offshore prospects resulting from the administration’s failure to speed up and expand lease sales in the Gulf of Mexico stemming from post-Macondo lease sale delays.

Moreover, despite the President’s stated commitment to enhancing production, the administration has not acted to expand access to Arctic resources, and its official “five-year plan” for offshore development did little to foster production in the Eastern Gulf of Mexico or take advantage of potential resources along the Atlantic coast.

Another important factor affecting the Gulf’s future prospects is the anticipated emergence of a National Ocean Policy, a somewhat murky new program being developed outside the scope of Congress that threatens to impose an entirely new regulatory overlay governing the offshore energy industry, among other activities.

Implementation of National Ocean Policy as currently conceived threatens to delay, or stave off entirely, the day that Gulf activity reaches its real resource potential.

Additional regulations are set to come out in the near future, with new rules affecting drilling operations, blowout preventers, oil spill response plans, and more. Depending upon the finer points in the new rules, they could either help or hinder the Gulf’s distinction as a promising place to do business.

As we head into the New Year, we should take comfort in the dynamic potential of our country’s energy resources. Ensuring that we do all we can to nurture their growth must be a top priority in 2013.


Lori LeBlanc is the Executive Director of the Gulf Economic Survival Team, an independent, grassroots organization located in Thibodaux, Louisiana. It acts as a liaison between local communities, industry and the federal government on issues affecting productivity in the Gulf.