The offshore industry: A success that Washington should back

BILL CHILES, Chairman, National Ocean Industries Association, and President & CEO, Bristow Inc.

With the 2012 elections now more than a month behind us, it is nice to watch football, go to family outings, and listen to the radio without a constant barrage of politics consuming every area of our lives. The way I see it, nothing much changed. We ended up with the same President, basically the same makeup in Congress, and people everywhere ready to tune out the entire process. While some may argue about who the big winners were in the election, I would argue that energy has to be among them.

It was refreshing to see candidates competing to own the mantle of who was more pro-energy, including who would better promote additional oil and natural gas. Many Democrats and Republicans were elected with expectations of support for new offshore oil and natural gas, while also supporting the construction of the Keystone XL Pipeline. This is due to poll after poll showing that Americans support expansion of traditional and non-traditional energy resources nationwide, both onshore and offshore. This election, voters agreed—American energy is the future for jobs, security and prosperity.

Skeptics will argue that my enthusiasm in calling energy a winner in the election will surely die alongside the rhetoric and promises of a politician standing on a stump. However, the outlook for energy will keep improving, as long as our energy policy matches the rhetoric. Take recent predictions from the International Energy Agency that America will be the world’s largest oil producer around 2020. Ten years ago, the thought of the U.S. becoming the major energy player in North America would’ve gotten you labeled as a lunatic. But here we are today, with a forecast that recognizes the advancements in technology, from fracing to offshore deepwater drilling capabilities, that will continue to move America forward.

Offshore outlook. With a status-quo Congress and the re-election of the President, many will ask, what changes? For the offshore industry, the answer is that we see through the glass darkly. The good news is that the Gulf of Mexico is coming back, and 2013 looks like it will be better than 2012. The bad news is that the administration’s 2012-2017, Five Year Plan includes no new access, and limiting industry to the offshore areas that we have been working in for decades. We will continue to have bipartisan support for offshore access in Virginia and South Carolina. To picture how the federal government will affect the offshore industry, we need to look at the last four years.

Inspection fees were greatly increased over the last two years to fund many of the activities of the Bureau of Safety and Environmental Enforcement (BSEE), and it appears these fees will stay in place. It looks like BSEE will continue to ramp up its inspection program, and we can expect the number of inspectors to increase. We are seeing regulations, that were pushed to the back burner until after the election, slowly begin to eke out of federal agencies. There will be continued calls, to remove some of the tax deductions that have been used by the oil and gas industry, to raise revenue as the “fiscal cliff” dominates the national conversation. Regardless of increased regulations or lack of access, the oil and gas industry has a case to be made that the President cannot ignore—we create jobs.

Job creation. The President will have to continue to improve the economy and unemployment, if he doesn’t want a mutiny in the mid-term elections two years from now. If the President were to look for the source of new jobs, he needs to look no further than the oil and gas industry. The final Department of Labor jobs report that came out before the election in November showed that the industry, as a whole, accounted directly for 195,000 additional employees in September 2012, an 8.3% increase from September 2011.

A recent study by IHS Global Insight forecasts that the U.S. oil and gas rush is supporting 1.7 million jobs, and due to the boom in unconventional oil and natural gas development, that number is expected to hit 2.5 million by 2015 and nearly 3.5 million in 2035. In September 2012, national unemployment was 7.8%, while Louisiana was 7% and Texas was 6.8%, showing the impact of the offshore industry in a regional setting. The strength of the offshore industry becomes more apparent, when you look at the Houma area in Louisiana, including Bayou Cane and Thibodaux, where unemployment was 4.9% in August 2012, down from 5.3% one year earlier. These are high-quality employment opportunities that will pay fine wages.

The Gulf is coming back, production is up, and we are ready to move into high gear in 2013. The offshore oil and gas industry is a proven source of revenue and job creation in an economic climate that is in desperate need of more success stories. If the forecast for the offshore industry is slightly positive, with access constrained to the Western and Central Gulf of Mexico and a small area offshore Alaska, imagine what we could do with access to more of the 85% of the OCS still off-limits. Instead of waiting until 2025 or 2030 to become a world energy leader, let’s open offshore access to willing states and get there in the next five years.

America chose a divided government once again, giving our lawmakers the challenge to work together in a balanced, bi-partisan approach. Now is the perfect time for Washington to put its (our) money where its mouth is. I implore lawmakers to think of what the offshore industry could do for the rest of the country, find ways to open access to more of the OCS and forge a reasonable compromise to steer clear of the looming fiscal cliff, and not chart a course based on just removing well-earned tax deductions, which are vital to industry in a recovery. The offshore industry is the success story that Washington should back, instead of punish.