WORLD OIL SPECIAL REPORT

America needs leadership on energy

J. Michael Talbert, Chairman, National Ocean Industries Association, and President and CEO, Transocean Sedco Forex, Houston

As I sat down to gather my thoughts for this article, I looked over what the preceding NOIA chairman wrote for this column last year and realized just how much has changed in that time. Just one year ago, our still-undecided presidential election was fueling rancorously partisan fights. California was reeling from a full-blown electricity crisis, complete with brownouts. And politicians rushed to deflect the blame for the truly spectacular regulatory bungling.

At that time, our industry was the focus of much attention, both good and bad. Most NOIA member companies were doing a brisk business, thanks to high commodity prices, a soaring world economy and surging energy demand. However, those high prices ushered in their own problems. From many quarters, we heard demagogues distort economics to fit conspiracy theories, while ignoring results of our failed policy of "no policy" on energy.

Yet, when the contentious election was finally resolved, I think that most in our industry felt a surge of optimism. Although the U.S. and world economies were beginning to soften, they still seemed poised for a quick recovery. Oil and gas prices were robust, and business conditions were on the upswing. We also had high hopes that the incoming administration’s energy policy initiative might finally allow for some increased access to promising offshore areas for E&P projects.

Today, it is clear that the "quick economic recovery" has not materialized, and we are still scanning the horizon for any signs of its approach. Oil prices have softened in response to concerns over world demand, and gas prices have plummeted from over $10/Mcf last winter to $3/Mcf today. Business conditions have steadily deteriorated for many in the industry.

Furthermore, our hopes of increased access to promising offshore areas of the Eastern Gulf of Mexico dimmed. This occurred, when the administration decided that although the nation may be in an energy crisis, this still was not a good enough reason to lease natural gas-rich OCS acreage 100 miles removed from Florida’s coast.

These problems, serious as they are, pale in comparison to the profound changes that our nation has undergone since September 11. Last year, most of us took "life and liberty" for granted, and focused our efforts on the "pursuit of happiness." We are no longer so naive. The horrific terrorist attacks reminded us that living in a country where we are free to "pursue happiness" is a luxury, not an entitlement. We now need to do what is necessary to preserve that luxury.

Our national security has been compromised, making our energy security even more vital. Our industry must keep ships running, rigs drilling, and platforms producing safely and efficiently. It is up to us in the offshore sector to ensure that our part of America’s economy remains strong, and that we continue to provide the energy necessary to fuel growth and prosperity.

"We continue to advocate a five-year OCS plan that gives officials flexibility to cope with energy demand spikes by expanding our access to offshore hydrocarbons."   – J. Michael Talbert

America’s victory in the face of attack will not be engineered by one person, or by a thousand people. America’s victory will be the sum of all our efforts. I am proud to be part of an industry whose efforts are so vital to our common cause. More than ever before, an abundant, reliable, U.S. energy supply is critical to our security and economic growth. Our elected leaders need to look beyond short-term provincial concerns and pull together to make the tough policy choices necessary to make energy security a reality.

NOIA is asking both Congress and the President to take meaningful steps toward this end. We continue to advocate a five-year OCS leasing plan that gives the administration flexibility to cope with energy demand spikes by expanding our access to our offshore hydrocarbons. Despite the fact that we have plentiful amounts of natural gas in this country, we will not be able to come close to meeting future long-term demand, unless we enhance industry access to the submerged OCS lands.

Furthermore, we are asking Congress to make serious, far-reaching investment in our nation’s aging energy infrastructure. This includes taking security measures that will better guard against foreign attack, but it also means investing in the roads, pipelines and other areas of infrastructure necessary to move energy supplies to consumers and businesses that rely upon them.

Another important concern that needs to be addressed, both legislatively and by the Executive Branch, is the Coastal Zone Management Act. This act was passed with the laudable intention of creating a national program that would encourage states to manage and balance competing uses of, and impacts to, coastal resources. However, anti-development interests within various states have used the law to stall or halt offshore development and to enmesh offshore lessees in a never-ending loop of permit approvals. NOIA is asking legislators to review CZMA and remove aspects of it that clearly overreach and obfuscate its original intent.

Our leaders are aware of most of these issues. Vice President Dick Cheney and his Energy Taskforce compiled an excellent roadmap that lays outs a series of bold, intelligent energy policy initiatives. However, they require determined, forthright action. We call on the President and Congress to swiftly implement recommendations made by the Vice President’s Report on National Energy Policy.

It is crucial to expand access to U.S. energy supplies. We also believe that it is critical to examine the ways in which well-meant laws and regulations have been misused to delay or halt production, both offshore and on. And we think it is critical to start investing seriously in America’s energy infrastructure and security.

The administration and many in Congress understand the importance of these goals. Now it is up to us to demonstrate that the American people will support them in this effort. We need to ensure that these issues do not become fuel for demagogues.