With 2017’s challenges behind us, the offshore industry looks ahead to 2018

In 2017, the oil and gas industry weathered unprecedented challenges. Hurricane Harvey and Tropical Storm Nate wreaked havoc in the Gulf of Mexico, while the offshore sector continued to shed jobs and consolidate. All the while, commodity prices hovered around $50/bbl 

throughout the year. Despite these challenges, the U.S. continues to lead the world in oil and gas production as we enter 2018, thanks, in part, to the hard work and innovation of the U.S. oil and gas industry. 

GOM vulnerabilities. In addition to causing widespread damage and human suffering, the 2017 hurricane season exposed the vulnerabilities and strengths of American energy security. While some onshore energy facilities suffered catastrophic flood damage following Harvey, there were no reported deaths or injuries among offshore workers, and no reported spills or damage to offshore facilities, as a result of either Harvey or Nate. While this is a testament to how well the offshore industry prepares for, and responds to, hurricanes, these natural disasters also expose the vulnerability of America’s offshore energy security. 

The fact is that the vast majority of our offshore energy eggs are located in one basket: the Gulf of Mexico, where energy companies produce about 1.7 MMbopd and 3.2 Bcfgd. Every year, hurricanes have the potential to strike at this heart of the U.S. offshore energy industry and temporarily weaken our nation’s energy security. In 2017, the Bureau of Safety and Environmental Enforcement (BSEE) estimated that 24.5% of oil production and 26% of natural gas output from the Gulf of Mexico was temporarily shut in, as a result of Harvey. Likewise, 92% of oil production and 77% of gas output from the Gulf of Mexico was temporarily curtailed, as a result of Nate. 

While the success of the offshore energy industry makes the U.S. the world’s leader in the production of oil and natural gas, storms like Harvey and Nate reveal just how precarious that position is. By geographically concentrating our nation’s offshore energy production, the U.S. is rolling the dice when it comes to natural disasters. In fact, today nearly 94% of the OCS is off-limits to oil and gas E&P, due largely to short sighted federal policy decisions.  

The Trump difference. Fortunately, President Trump has made good on his election promises regarding energy, thus far. In its first year, the Trump administration began implementing its America First Offshore Energy Strategy to increase access to the Outer Continental Shelf (OCS) and unravel harmful regulations that place onerous and ineffective restrictions on the industry. President Trump issued an Executive Order, rescinding former President Obama’s offshore leasing withdrawals. Additionally, Interior Secretary Ryan Zinke issued a Secretarial Order, reversing the premature blanket denial of Atlantic seismic survey permit applications. 

Since existing resource estimates for the Atlantic OCS are based on data collected from seismic surveys conducted more than 30 years ago, new surveys using modern technology are needed to provide an up-to-date and scientifically accurate picture of the offshore oil and gas resources off our Atlantic seaboard. Despite the claims of anti-energy groups, such surveys have been conducted safely around the world for decades. Even the top scientist at an agency that regulates the offshore energy industry said there has been zero evidence of seismic surveys harming marine life. 

New surveys of the Atlantic OCS will also help inform the development of an offshore leasing program to replace Obama’s 2017-2022 program, which took the entire Atlantic OCS and much of the Arctic OCS off the table. The administration is currently in the second stage of developing a new, national five-year OCS leasing program for 2019-2024, which is the most expansive U.S. offshore energy proposal in history. 

Congress also has been busy in working to strengthen America’s energy future. The bipartisan SECURE American Energy Act, introduced in the fall of 2017, is a forward-thinking bill, with the potential to unlock American energy dominance for the next generation by cutting red tape, and providing a stable regulatory environment. 

Looking ahead. Regardless of party affiliation, Americans want the jobs, economic growth and energy security that a robust domestic energy program provides. Today, production from the U.S. Gulf of Mexico, the hub of our offshore energy industry, accounts for 19% of domestic oil output and 5% of domestic gas production; generates billions of dollars in revenue for state and local governments and U.S. taxpayers; and supports hundreds of thousands of jobs. And, with the right government policies—particularly regarding access to offshore areas—industry has the potential to unlock additional sources of energy, create tens of thousands of new jobs and bring in billions of dollars in new government revenue. 

Decentralizing offshore energy sources by opening and exploring new offshore areas signals a victory for American energy security, jobs and our economy by ensuring that oil and natural gas production continues offshore, even if hurricanes or other natural disasters cause temporary disruptions.