Obama Stalls Deepwater Drilling Despite Lifting of Moratorium

Obama Stalls Deepwater Drilling Despite Lifting of Moratorium
by Sen. David Vitter 10/20/2011

This week marks one year since the Obama administration lifted its formal moratorium on deepwater drilling, but thanks to the Interior Department’s frustrating approach to energy development, much of the Gulf of Mexico is still suffering the effects of a permitting logjam.

On Tuesday, I joined Rep. Jeff Landry (R.-La.) at a meeting with Bureau of Safety and Environmental Enforcement (BSEE) Director Michael Bromwich and other officials from the Interior Department to discuss the unacceptably slow pace of permits for offshore energy exploration and production in the Gulf.

We were hoping for a productive discussion about how we can work together to remove the Interior Department’s bureaucratic roadblocks and allow our Gulf Coast energy industry to get back to work. Unfortunately, we just got the same old company line: They’re working on extending leases and granting permits on a ‘case-by-case’ basis.

This just adds to our frustration, especially as we’ve seen 14 rigs leave the Gulf of Mexico. Three years ago, the federal government brought in $10 billion in revenues by selling offshore drilling leases. But the Obama administration has achieved quite a feat with its energy policy: In just three years, lease-sales revenue has plummeted from $10 billion to a grand total of zero dollars.

It’s pretty simple, actually. The Obama administration decided in fiscal 2011 that it just didn’t need to do any leasing on the Outer Continental Shelf—even though there are vast unexplored oil and gas reserves in the Gulf of Mexico and elsewhere just waiting to be developed.

Revenue can’t be generated from lease sales that don’t happen, and jobs can’t be created on leases that private industry can’t acquire. We’re in a severe fiscal crisis, and we’re facing significant economic challenges related to job creation, yet the administration continues to neglect our offshore resources.

I recently sent a letter—which was signed by my Republican colleagues Senators Richard Shelby (Ala.), Kay Bailey Hutchison (Tex.) and John Cornyn​ (Tex.)—to Interior Secretary Ken Salazar and the BSEE's Bromwich, who also heads the Bureau of Ocean Energy Management, Regulation and Enforcement, urging them to provide the status of all anticipated lease sales for the next fiscal year, as well as current planning areas under review for inclusion in the next five-year plan. This kind of accountability is absolutely crucial to reversing the energy policies that have killed thousands of good jobs in the states we represent.

Not surprisingly, the financial scope of these bad policies reaches far beyond Washington, D.C. Under the Gulf of Mexico Energy Security Act, energy-producing states along the Gulf Coast receive a share of revenues from certain lease sales. But if there are no lease sales, then there are no revenues. This puts further strain on states that are already struggling to make ends meet.

Even worse, the 100% fall-off in lease-sale revenue from 2008 to 2011 will have long-term economic effects that include lost jobs, lost royalties and lost rental fees—which certainly won’t help our economy recover.

The administration’s attitude toward permitting also creates tremendous uncertainty for companies that want to invest in energy exploration. If companies continue to face challenges in obtaining permits, future lease-sales revenue will suffer. No company wants to own a lease if there is not a reasonable expectation that its exploration plan or permits will be approved. A recent HIS Global Insight study concluded that fixing the permitting process would result in 230,000 new or retained American jobs, more than $44 billion more in gross domestic product (GDP), nearly $12 billion in tax and royalty revenues for federal and state governments, and a reduction of $15 billion in payments to foreign governments for imported oil.

In fact, recent reports indicate that as many as 20 deepwater drilling rigs could leave the Gulf of Mexico because of the Interior Department’s slow pace on issuing permits. Much of the backlog is due to the administration’s voiding of drilling permits and its extended moratorium, and it’s unacceptable that permits are not being issued at a reasonable pace.

Good-paying jobs can be created without federal loan guarantees or government grants. If the permitting process is reliable, these companies are ready and willing to invest in energy exploration.

And because lease-sale revenues and royalties from energy production are a significant source of revenue to the federal treasury, increasing Gulf Coast energy exploration is crucial to addressing our nation’s fiscal crisis.

It won’t be easy to balance the federal budget, rein in the trillion-dollar deficits of the Obama administration, and put Americans back to work, but a few simple changes can help. The President can start by allowing energy producers to buy the leases they want, and by giving them the permits they need to develop the resources that fuel our economy.

It’s not complicated. As the President is fond of saying, “It’s just math.”