Landrieu, oil & gas officials, call for expanded offshore drilling

U.S. Sen. Mary Landrieu, D-La., and oil and gas officials Monday challenged the government agency writing the nation’s next five-year energy exploration plan to expand offshore drilling to federal waters off the East and West coasts and offshore Alaska.

“The U.S. has a bountiful resource, much of which is untapped,” said Kent Satterlee III, manager of offshore regulatory policy for Shell Upstream Americas.

Satterlee said companies and countries in Central and South America have accelerated offshore drilling and production while the United States restricts looking for oil and gas in most of its offshore territories. He said the Bureau of Ocean Energy Management should lobby and plan for drilling off more of America’s coasts.

BOEM is now crafting the nation’s 2017-2022 energy exploration plan for the Interior Department.

“The U.S. sits on the sidelines while others explore offshore,” Satterlee said.

Satterlee and others testified at a field hearing of the Senate Energy and Natural Resources Committee, which Landrieu chairs. The hearing, held at the Cajundome in Lafayette on Monday, was the first of a series of field hearings the committee will hold across the country.

Landrieu is conducting the hearings as she campaigns for a fourth term in the Senate. She is being challenged by U.S. Rep. Bill Cassidy, a Republican from Baton Rouge. The election is Nov. 4.

Satterlee said oil and gas drillers after the BP oil spill in 2010 addressed “the root causes” of the accident. Opening up acreage in federal waters off the East and West coasts, along with Gulf of Mexico acreage on Florida’s western side, would create 1 million new jobs by 2020.

Landrieu said the current acreage available for drilling in the country’s offshore Outer Continental Shelf amounts to about 2 percent of the OCS, a vast offshore area that begins 3 miles off U.S. coasts.

Walter Cruickshank, acting director of BOEM, acknowledged that only about 35 wells have ever been drilled off the East Coast. The West Coast, he said, had just 23 offshore producing wells in the Pacific Ocean.

That’s compared to 40,000 drilled wells and 3,500 production platforms in Gulf of Mexico waters, mostly offshore Louisiana and Texas.

He said BOEM is attempting to gauge how much oil and gas lies beneath Atlantic Ocean waters by poring over seismic data.

Adam Sieminski, an administrator for the Energy Information Agency, testified that the only way to “find more oil is by drilling holes rather than relying on geologic” technology.

Sieminski said U.S. Energy Information Administration projections predict natural gas prices will be little changed by 2030, going from the current price of between $4 to $4.50 per million British thermal units, to $6 in 2030 and $7 by 2040. He said price estimates factored in billions of cubic feet per day of liquid natural gas exports set to begin in the next few years.

“Gas is still going to be a bargain,” he said.

Oil, meanwhile, is projected to cost $140 a barrel in 2030, he said.

Landrieu also lamented the dollar amount of royalty payments Louisiana, Texas and other oil and gas coastal states receive. She said landlocked oil- and gas-producing states have always received 50 percent of the royalties paid to the Department of Interior.

Gulf Coast states now receive payments amounting to about a third of the royalties, and that’s after the Gulf of Mexico Energy Security Act of 2006 increased the amount to 37 percent.

Landrieu said the Gulf of Mexico states with production a few miles off their shores should receive more.

“I believe it’s an equity issue,” she said.