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2011-04-28 digital edition

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2011-04-28 / General Stories

Safely Accessing American Energy to Create Jobs & Lower Gas Prices

By U.S. Senator Kay Bailey Hutchison

One year ago, the Deepwater Horizon rig exploded, tragically killing 11 people and causing the massive oil spill off the Gulf Coast that has had sweeping economic and environmental consequences.

Since the oil spill, lessons have been learned from the accident. The oil and gas industry have put in place new advanced environmental safeguards, helping to ensure a safer and stronger energy future. Today, we are able to produce domestic energy more safely than ever before.

Nevertheless, the administration’s energy policies have failed to keep up with this progress. In the aftermath of the accident, the administration put a 10-month freeze on deepwater drilling permits, until they awarded their first permit in late February 2011. To date, only 10 deepwater permits have been issued. The shallow water moratorium was “officially” lifted on May 20, 2010, but now almost one year later, only 49 new drilling permits have been issued. Prior to the oil spill, approximately 10 shallow water permits were issued per month.

With gasoline reaching $4 a gallon in many parts of Texas and around the country, as well as the ongoing uncertainty in the Middle East, there is no justification for the government’s permitting delays that have prevented thousands of Gulf Coast energy workers from going back to work and opening new supplies that will bring down gas prices.

We are beginning to see the impact the Obama Administration’s policies are having on domestic energy production. According to the U.S. Energy Information Administration, offshore oil production, most of which comes from the Gulf, is expected to average 1.55 million barrels a day this year, down 13 percent from 2010.

As a result of the drilling moratoria and the slower permitting process, essentially a de-facto moratorium for both deep and shallow water drilling, this year there is an estimated loss of 375,000 barrels of oil a day. To put this number in perspective, that is roughly a third of the production that has been currently cut off in Libya because of the political turmoil in that country.

While bureaucratic permitting delays are certainly hurting energy production in the short term, the administration’s policies are also adversely affecting the leaseholders who were exploring for energy resources at the time of the oil spill. During the moratorium, the leaseholders in the Gulf had to pay “rent” while time ticked away on their leases. Now, despite the official ban on drilling being lifted, these leaseholders have not been given back the time they lost on their leases through no fault of their own.

Companies in the Gulf invest millions of dollars on a single lease, typically spending nearly a decade in the exploration phase, and they must follow a strict timeline in order to eventually produce oil. Any time lost on a lease can jeopardize energy production and the success of an entire project.

To address this issue, I introduced the Lease Extension and Secure Energy (LEASE) Act of 2011 which will grant a one year extension on all exploration leases in the Gulf that were impacted by the administration’s drilling moratoria. By fairly restoring the time lost, leaseholders will be able to use the full length of their lease, providing the certainty needed to protect and create jobs and produce energy domestically.

With the many bureaucratic hurdles the administration has put in place, from permitting delays to their failure to restore the time leaseholders lost during the moratorium, it is not surprising that we are seeing companies leave the Gulf to drill for oil overseas, taking jobs and tax revenue with them. Offshore energy producers are vital to America’s economic growth and energy security, and our national energy policies need to start reflecting that reality.

We cannot afford to wait another day to leverage fully our vast domestic energy resources. It’s time to put energy workers in the Gulf Coast back to work and to bring down soaring energy costs for American families and businesses.

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