New attitude in D.C. points toward increased E&P access on U.S. OCS, Luthi says

By Alex Endress, News Editor, World Oil on 10/25/2017

LAFAYETTE, La. -- Winds of change are afoot in the U.S. government’s energy-regulating bodies, and consequently, new access to the U.S. outer continental shelf (OCS) is on the horizon for oil and gas companies.

As it stands today, 94% of the U.S. OCS is closed to oil and gas exploration, due to government regulation, which equates to an estimate of 46 Bbbl of oil and 125 Tcfg, according to the National Ocean Industries Association (NOIA), a lobbying organization for the U.S. offshore industry. However, through executive action, President Trump recently opened up new areas on the OCS for development and seismic study, and earlier this week, U.S. Secretary of the Interior Ryan Zinke announced the largest oil and gas lease sale ever proposed in the U.S. The sale would total 76.9 million acres in the U.S. Gulf of Mexico—offshore Texas, Louisiana, Mississippi, Alabama and Florida. Such activities exemplify a new attitude on oil and gas development in the U.S. federal government—one that will thrust the U.S. toward a future with prolific oil and natural gas production, said NOIA President Randall Luthi. He expressed his views while delivering a keynote speech at the 2017 Louisiana Gulf Coast Oil Exposition (LAGCOE) on Oct. 25 in Lafayette, La.

“Access is vital, access is key to our survival, and access means more energy produced at home, which means more revenues for federal and state governments and, most importantly, more jobs,” Luthi said, remarking that NOIA’s goal to increase access to offshore development has been consistent for 45 years. He said that while NOIA is working to open up acreage that is currently closed to E&P activities, it is also working to lessen regulation that prevents efficient development on areas that are already open.

One of the top areas that NOIA would like to increase access to is the Arctic, Luthi said. “Many groups that are opposed to fossil fuels will tell you that the Arctic cannot be developed safely, but Norway has already been doing this for 20 years,” he said. “I believe the U.S. and Canada can safely develop the Arctic as well, and frankly, particularly in the Arctic, the U.S. is going to be left behind, if these policies don’t change, and as we look for more and more ways to provide energy.” Though low commodity prices could render Arctic oil and gas development cost-prohibitive, Luthi said that the decision by companies and local Arctic communities to operate in the region should be market-based, instead of politically-based.

Luthi said that the U.S. needs to continue exploring new areas of untapped resources, and inventing new ways to reach these resources as energy demand, and demand for oil and gas, is expected to grow. This is due to ongoing development in Asian countries, namely China and India, that will continue to insist upon higher standards of living, he said, citing research from the International Energy Agency (IEA). The IEA predicts consumption of petroleum and other liquid fuels will grow by 20 MMbpd from 2015 to 2040, amounting to 113 MMbpd of consumption in 2040, with transportation accounting for most of this growth, although non-combustion growth will also play a large role, Luthi noted. “Onshore and offshore resources, both traditional and non-traditional, should all be a part of that vital mix, as the United States prepares to fuel the world.”

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