[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

OBAMA ADMINISTRATION'S DE FACTO MORATORIUM IN THE GULF: STATE,
COMMUNITY AND ECONOMIC IMPACTS

=======================================================================

OVERSIGHT HEARING

before the

COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

Wednesday, March 16, 2011

__________

Serial No. 112-11

__________

Printed for the use of the Committee on Natural Resources

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COMMITTEE ON NATURAL RESOURCES

DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann,
TN
Jon Runyan, NJ
Bill Johnson, OH

Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
Rick Healy, Democrat Chief Counsel

------

CONTENTS

----------
Page

Hearing held on Wednesday, March 16, 2011........................ 1

Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 1
Prepared statement of.................................... 3
Markey, Hon. Edward, a Representative in Congress from the
State of Massachusetts..................................... 4
Prepared statement of.................................... 5

Statement of Witnesses:
Angelle, Hon. Scott A., Secretary, Louisiana Department of
Natural Resources.......................................... 7
Prepared statement of.................................... 9
Chiasson, Chett, Executive Director, Greater Lafourche Port
Commission, Louisiana...................................... 47
Prepared statement of.................................... 49
Giberga, Samuel A., Senior Vice President and General
Counsel, Hornbeck Offshore Services, Inc., Offshore Marine
Service Association........................................ 52
Prepared statement of.................................... 54
Jones, Christopher K., Keogh, Cox & Wilson, Ltd.............. 57
Prepared statement of.................................... 59
Jones, Elizabeth Ames, Chairman, Railroad Commission of
Texas, State of Texas...................................... 13
Prepared statement of.................................... 15
Overton, Keith, Chairman, Florida Restaurant and Lodging
Association, and President & COO, TradeWinds Island Resorts 60
Prepared statement of.................................... 62
Randolph, Charlotte A., Parish President, Lafourche Parish
Government, Louisiana...................................... 44
Prepared statement of.................................... 46

OVERSIGHT HEARING ON THE ``OBAMA ADMINISTRATION'S DE FACTO MORATORIUM
IN THE GULF: STATE, COMMUNITY AND ECONOMIC IMPACTS.''

----------

Wednesday, March 16, 2011

U.S. House of Representatives

Committee on Natural Resources

Washington, D.C.

----------

The Committee met, pursuant to call, at 10:07 a.m. in Room
1324, Longworth House Office Building, The Honorable Doc
Hastings [Chairman of the Committee] presiding.
Present: Representatives Hastings, Gohmert, Bishop,
Lamborn, Fleming, McClintock, Rivera, Duncan of South Carolina,
Tipton, Gosar, Noem, Southerland, Flores, Harris, Landry,
Fleischmann, Runyan, Johnson, Markey, Kildee, DeFazio,
Napolitano, Holt, Costa, Lujan, and Sarbanes.

STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WASHINGTON

The Chairman. The Committee will come to order, and the
Chairman notes the presence of a quorum.
The Committee on Natural Resources is meeting today to hear
testimony on the Obama Administration's de facto moratorium on
the Gulf: state, community and economic impacts of that
moratorium. Under Committee Rule 4[f], opening statements are
limited to the Chairman and Ranking Member of the Committee so
that we can hear from our witnesses more quickly. However, I do
ask unanimous consent that all Members' opening statements be
part of the record. Without objection, so ordered.
The Chair now recognizes himself for an opening statement
for five minutes.
Today's hearing provides the Committee an opportunity to
hear directly from local citizens who are experiencing the
impacts of the Obama Administration's de facto moratorium in
the Gulf of Mexico. I have personally heard directly from Gulf
State members who are deeply concerned about the
Administration's refusal to issue shallow and deepwater permits
in a timely, efficient manner. These Members have shared
stories of the real economic pain being felt by their
constituents.
Rising gasoline prices only underscore the critical
importance of developing our own American energy resources, not
only in the Gulf of Mexico, but also in other promising
offshore areas and onshore Federal lands. The actions and
policies of President Obama and his Administration to block,
prevent, delay, hinder, revoke, tax, and drive up the cost of
American-made energy, in my mind, is simply mindboggling.
When it comes to an energy policy for our nation, the
President is headed 180 degrees in the wrong direction. His
policies are taking our nation toward gasoline prices over $4 a
gallon, more and more good-paying energy jobs being lost
overseas, and deeper dependence on foreign sources of energy
from hostile and volatile regions of the world.
In the Gulf, thousands of Americans who depend on offshore
energy production for their livelihood have found themselves
out of work. Rigs are sitting idle as small businesses lose
millions of dollars a day, and other rigs are leaving the Gulf
of Mexico entirely, sending American jobs overseas to Africa
and South America.
Since last April, only 37 shallow-water permits and only
two deepwater permits have been issued. For months and months
and months, permits have lingered at the Department without
action. Those who were actively drilling before the Deepwater
Horizon disaster were shut down and the Interior Department
won't allow them to get back to work. This is unacceptable. The
need to end this de facto moratorium is not only crucial to the
Gulf, but it is also a national imperative. Nearly a third of
all U.S. oil is produced in the Gulf of Mexico.
The de facto moratorium also has serious national security
implications. The Obama Administration's actions have already
caused production in the Gulf of Mexico to decline by nearly
300,000 barrels of oil per day, but incredibly the Obama
Administration has stated that OPEC can make up for this
decline. The interim safety rule issued by the Interior
Department on October 14, 2010, stated, and I quote, ``There is
sufficient spare capacity in OPEC to offset a decrease in Gulf
of Mexico deepwater production that could occur as a result of
this rule.''
The United States should not voluntarily subject itself to
the whims or happenings of unstable foreign countries. Our
national and economic security should not be left in the hands
of a less than friendly OPEC.
Today's hearing is part of a series being held as House
Republicans' ``American Energy Initiative.'' Tomorrow the
Committee will hold a hearing on how to harness our own
American energy resources to address rising gasoline prices and
create jobs. Let me state very clearly that these hearings will
lead to action by this Committee. As the Chairman, I intend to
introduce legislation to put the Gulf of Mexico back to work,
and I intend to advance that legislation through this
Committee.
The Obama Administration seems unmoved by the thousands of
lost jobs, rapidly rising gas prices, and the threat these
higher gas prices have to our economy, but this Committee will
not sit idly by.
I also intend to take legislative action to reverse
President Obama's imposition of an offshore drilling moratorium
outside of the Gulf of Mexico. When the President took office
the offshore moratorium had been entirely lifted, but over time
he has taken step after step to reinstate it. The Committee's
hearing will help guide these legislative efforts. We will
listen and then we will act.
Republicans on this Committee intend to act aggressively to
ensure that our American energy resources are harnessed to
create American jobs and help lower fuel and energy prices.
With that, I recognize the Distinguished Ranking Member
from Massachusetts for five minutes.
[The prepared statement of Chairman Hastings follows:]

Statement of The Honorable Doc Hastings, Chairman,
Committee on Natural Resources

Today's hearing provides the Committee an opportunity to hear
directly from local leaders and citizens who are experiencing and
feeling the impacts of the Obama Administration's de facto drilling
moratorium in the Gulf of Mexico.
I've personally heard directly from Gulf State Members who are
deeply concerned about the Administration's refusal to issue shallow
and deepwater permits in a timely, efficient manner. These Members have
shared stories of the real economic pain being felt by families,
businesses and communities back in their home districts.
Rising gasoline prices only underscores the critical importance of
developing our own American energy resources--not only in the Gulf of
Mexico, but also in other promising offshore areas and onshore federal
lands.
The actions and policies of President Obama and his Administration
to block, prevent, delay, hinder, revoke, tax and drive up the cost of
American-made energy is simply mindboggling.
When it comes to an energy policy for our nation, the President is
headed 180 degrees in the wrong direction. His policies are taking our
nation towards gasoline prices over $4 per gallon, more and more good-
paying energy jobs being lost overseas, and a deeper dependence on
foreign sources of energy from hostile and volatile regions of the
world.
In the Gulf, thousands of Americans who depend on offshore energy
production for their livelihood have found themselves out of work. Rigs
are sitting idle as small businesses lose millions of dollars a day and
struggle to survive. And other rigs are leaving the Gulf of Mexico
entirely--sending American jobs overseas to Africa and South America.
It is not known when, or even if, these rigs will ever return.
Since last April, only 37 shallow-water permits and only two
deepwater permits have been issued. For months and months and months,
permits have lingered at the Department without action. Those who were
actively drilling before the Deepwater Horizon disaster were shutdown
and the Interior Department won't allow them to get back to work. This
is unacceptable. A federal judge has held the Interior Department in
contempt for its inaction on permits and ordered decisions to be made.
Instead of moving forward on permits, the Administration is wasting
time and money on lawyers and appeals.
The need to end this de facto moratorium is not only crucial to the
Gulf, but is also a national imperative. Nearly a third of all U.S. oil
is produced in the Gulf of Mexico. In addition, there are hundreds of
thousands of jobs throughout the country that are directly connected to
offshore energy production.
The de facto moratorium also has serious national security
implications. The Obama Administration's actions have already caused
production in the Gulf of Mexico to decline by nearly 300,000 barrels
of oil per day. But, incredibly, the Obama Administration has stated
that OPEC can make up for this decline.
The interim safety rule issued by the Interior Department on
October 14, 2010 stated that: ``There is sufficient spare capacity in
OPEC to offset a decrease in Gulf of Mexico deepwater production that
could occur as a result of this rule.''
The Obama Administration admits their actions are making us more
reliant on foreign countries. The United States should not voluntarily
subject itself to the whims or happenings of unstable foreign
countries. Our national and economic security should not be left in the
hands of a less-than-friendly OPEC.
Today's hearing is part of a series being held as part of House
Republican's ``American Energy Initiative.'' Tomorrow, the Committee
will hold a hearing on how to harness our own American energy resources
to address rising gasoline prices and create jobs.
Let me state very clearly that these hearings will lead to action
by this Committee. As Chairman, I intend to introduce legislation to
put the Gulf of Mexico back to work--and I intend to advance that
legislation through this Committee. The Obama Administration seems
unmoved by thousands of lost jobs, rapidly rising gasoline prices, and
the threat these high prices pose to our economy--but this Committee
will not sit idly by.
I also intend to take legislative action to reverse President
Obama's imposition of an offshore drilling moratorium outside the Gulf
of Mexico. When the President took office, the offshore moratorium had
been entirely lifted, but over time he has taken step after step to
reinstate it.
The Committee's hearings will help guide these legislative efforts.
We will listen and then we will act.
Republicans on this Committee intend to act aggressively to ensure
that our American energy resources are harnessed to create jobs and
help lower prices.
______

STATEMENT OF HON. EDWARD MARKEY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MASSACHUSETTS

Mr. Markey. Thank you, Mr. Chairman, very much.
The focus of today's hearing according to the hearing
title, the de facto moratorium imposed by the Obama
Administration on new drilling in the Gulf of Mexico. This
hearing is apparently taking place in a parallel universe where
we did not suffer the worst oil spill in our nation's history
last year, a parallel universe where 11 men did not tragically
lose their lives in the disaster, a parallel universe where the
independent commission on the BP spill did not issue a scalding
indictment on the entire oil industry for lax safety and called
for reforms to improve the safety of our offshore drilling, and
a parallel universe where new drilling is not being approved as
we speak.
The BP Commission told us that we are at the bottom of the
industrialized world in terms of safety at our oil rigs. That
we learned from our testimony. It is possible to drill and to
be safe at the same time. The rest of the world is ahead of us
in that category.
There is not a de facto moratorium, only a Republican
moratorium on the facts. We are not going to have an actual
discussion about how many drilling holes there are today. We
are going to be pulled down into a rabbit hole of unreality. In
fact, I think that this hearing on the de facto moratorium
could benefit from a few facts.
The fact is that the Obama Administration is issuing new
permits in both shallow water and deepwater. Since June of last
year, the Department of the Interior issued 38 new permits in
shallow water. In deepwater, the Department issued the first
deepwater permit to Noble Energy last month, and the Department
issued a second deepwater permit on Friday to BHP Billiton. The
fact is that from October until earlier this month no oil
company was able to demonstrate that they actually had the
capability to contain or respond to a deepwater blowout. That
was the holdup in issuing new permits, not the Administration.
The fact is that domestic oil production has been
increasing overall, and in the Gulf of Mexico under the Obama
Administration. In fact, U.S. production is at its highest
level in nearly a decade right now as we conduct this hearing,
and the fact is that big oil is not an economic engine for job
creation and innovation. Between 2005 and 2009, Exxon-Mobil,
BP, Shell, and Chevron made $485 billion in profits, yet they
collectively reduced their U.S. workforce by more than 10,000
employees, even as oil production was increasing in our
country.
These companies aren't creating new jobs even as production
is increasing, and they are making those record profits. Maybe
this Committee should hold a hearing on big oil de facto
moratorium on job creation in the United States as oil
production increases, and meanwhile merely a year after the BP
spill Congress has not enacted a single reform to improve the
safety of offshore drilling. This Committee has not scheduled
any legislative action whatsoever on drilling reforms
recommended by the independent commission nor has this
Committee heard from BP or any other major integrated oil
company despite the fact that the Commission called the causes
of the BP Horizon disaster systemic.
This is not about the Obama Administration's slow walking
permits. This is about oil company recklessness, oil industry
boosterism led to complacency which led to a disaster. Are we
going to learn anything from the BP disaster? Is this Committee
going to do anything to prevent such an accident from happening
again by passing legislation that ensures that that is the
case?
The BP Commission found that ``From 2004 to 2009,
fatalities in the offshore oil and gas industry were more than
four times higher per person hours worked in U.S. waters than
in European waters, even though many of the same companies
worked in both venues.''
That is what this hearing should be about, taking action to
ensure that the lives of our workers and the livelihoods of
millions of residents in the Gulf are protected from another
disaster, and at least give them safety protections equal to
the oil drilling workers off the coasts of Europe and Norway
and other countries. This Committee should be taking action to
implement the reforms of the Commission to ensure that we are
protecting our workers, our environment, our economy; instead
we are holding a hearing in which the Majority will argue that
after having implemented zero reforms to improve the safety of
offshore drilling, we are not drilling quickly enough.
So, the Majority can talk about de factos all they want,
but we are going to talk about the facts. Thank you, Mr.
Chairman, I yield back the balance of my time.
[The prepared statement of Mr. Markey follows:]

Statement of The Honorable Edward J. Markey, Ranking Member,
House Committee on Natural Resources

Thank you.
The focus of today's hearing is, according to the hearing title,
the ``de facto moratorium'' imposed by the Obama Administration on new
drilling in the Gulf of Mexico. This hearing is apparently taking place
in a parallel universe where we did not suffer the worst oil spill in
our nation's history last year; a parallel universe where 11 men did
not tragically lose their lives in the disaster; a parallel universe
where the independent Commission on the BP spill did not issue a
scalding indictment of the entire oil industry for lax safety and call
for reforms to improve the safety of offshore drilling; and a parallel
universe where new drilling is not being approved as we speak.
There is not a ``de facto moratorium,'' only a Republican
moratorium on the facts. We're not going to have an actual discussion
about how many drilling holes there are today, we're going to be pulled
down the Republican rabbit hole of unreality.
In fact, I think that this hearing on the ``de facto moratorium''
could benefit from a few facts.
The fact is that the Obama Administration is issuing new permits in
both shallow water and in deep water. Since June of last year, the
Department of Interior has issued 38 new permits in shallow water. In
deep water, the Department issued the first deepwater permit to Noble
Energy last month. And the Department issued a second deepwater permit
on Friday to BHP Billiton.
The fact is that from October until earlier this month, no oil
company was able to demonstrate that they actually had the capability
to contain or respond to a deepwater blowout. That was the holdup in
issuing new permits. Not the Administration.
The fact is that domestic oil production has been increasing
overall and in the Gulf of Mexico under the Obama Administration. In
fact, U.S. production is at its highest level in nearly a decade.
And the fact is that Big Oil is not an economic engine for job
creation and innovation. Between 2005 and 2009, ExxonMobil, BP, Shell,
and Chevron made $485 billion in profits. Yet they collectively reduced
their U.S. workforce by more than 10,000 employees. These companies
aren't creating new jobs even as production is increasing and they are
making record profits. Maybe this Committee should hold a hearing on
``Big Oil's de facto moratorium on job creation.''
And meanwhile, nearly a year after the BP spill, Congress has not
enacted a single reform to improve the safety of offshore drilling.
This Committee has not scheduled any legislative action whatsoever on
drilling reforms recommended by the Independent Commission. Nor has
this committee heard from BP and or any other major integrated oil
company, despite the fact that the Commission called the causes of the
BP Horizon disaster ``systemic.''
This is not about the Obama Administration slow walking permits.
This is about oil company recklessness. Oil industry boosterism, led to
complacency, which led to disaster. Are we going to learn anything from
the BP disaster? Is this Committee going to do anything to prevent such
an accident from happening again?
The BP Commission found that ``[quote] From 2004 to 2009,
fatalities in the offshore oil and gas industry were more than four
times higher per person hours worked in U.S. waters than in European
waters, even though many of the same companies work in both venues.''
That is what this hearing should be about--taking action to ensure that
the lives of our workers and the livelihoods of millions of residents
in the Gulf are protected from another disaster.
This Committee should be taking action to implement the reforms of
the Commission to ensure that we are protecting our workers, our
environment and our economy. Instead, we are holding a hearing in which
the majority will argue that after having implemented ZERO reforms to
improve the safety of offshore drilling, we are not drilling quickly
enough.
So the majority can talk about ``de factos'' all they want, we'll
stick to the facts.
______

The Chairman. I thank the gentleman and I thank him very
much for seeing how succinct the two of us are on this issue.
[Laughter.]
The Chairman. I would like to call up the first panel of
witnesses today. Mr. Scott Angelle who is Secretary of the
Louisiana Department of Natural Resources, and Mrs. Elizabeth
Ames Jones, the Chairman of the Railroad Commission of Texas.
Thank both of you very, very much for being here. Like all
witnesses, your full testimony will appear in the record, but I
ask you to confine your oral remarks to five minutes.
The microphones in front of you require you to press the
button so that we can all be heard, and if you haven't been
here before the timing lights in front of you have a green
light, a yellow light, and a red light. The green light will
stay on for four minutes. After four minutes the yellow light
goes on, and when the red light goes on it means that the five
minutes is up, and obviously we will allow you to finish your
thoughts.
So, with that, Secretary Angelle, thank you very, very much
for being here, and you may begin.

STATEMENT OF HON. SCOTT A. ANGELLE, SECRETARY, LOUISIANA
DEPARTMENT OF NATURAL RESOURCES

Mr. Angelle. Thank you, sir. Good morning, Mr. Chairman,
and Mr. Ranking Member, and the Distinguished Members of the
House Committee on Natural Resources. For those of you who have
a hard time understanding the dialect of Congressman Landry,
you are in for a real treat today.
[Laughter.]
I thank you for the opportunity to testify this morning. I
thank you for your public service and your continued efforts as
we work together to meet perhaps the nation's biggest policy
challenge of this generation, striking a balance of what I
refer to as the three E's--energy, environment and the economy.
I come here today not casting blame, but seeking solutions for
the American people. I bring goodies to you from Governor
Jindal and the people of Louisiana who have been working since
last April to restore our way of life while never ever
forgetting the families of the 11 great Americans who lost
their lives exploring for the energy to fuel America. Let us
all continue to keep them in our prayers.
In Louisiana, we have a long and distinguished history of
fueling America. This eighteenth great state of the union is
the epicenter of oil and natural gas exploration, production,
distribution, transportation, refining, processing, and
importing for the Nation. Our state ranks first in the Nation
in OCS crude oil and natural gas production, mineral revenue
for the Federal Government and foreign oil import volume. When
it comes to contributing to the energy security, there is no
more important piece of real estate in all of America and every
American is connected to the Louisiana at the gas pump.
The impacts of the reaction to the Deepwater Horizon
tragedy continues to unfold in Louisiana under the imposition
of the government's ``one size fits all'' policy on deepwater
drilling. The moratorium was an overreach and deemed arbitrary
and capricious by the courts. In addition, five of the seven
experts the Department of the Interior chose to review its
safety study publicly opposed the moratorium.
Though the moratorium was lifted over five months ago,
deepwater exploration remains at a standstill and even shallow
water activity remains crippled. We continue to feel the burden
of regulatory uncertainty which has led to the freezing of
investment and expenditures and consequently a drag on our
economy. We understand that it cannot be business as usual. We
support that it cannot be business as usual, but we also
believe that we can have regulation without strangulation.
The economic fallout has already begun as we can see in the
recent Seahawk Drilling bankruptcy and the unstable futures of
its nearly 500 employees. A Greater New Orleans Economic
Alliance survey tells us that the owners R&D Enterprises of
Harvey, a provider of specialized offshore equipment, is living
off its savings since losing its entire revenue stream, trying
to layoff as few employees as possible while waiting for
customers to get deepwater permits. We have recently heard from
the owner of Coastal Distributors, a small offshore supply
company in Golden Meadow, that he will have to shut down in May
if conditions do not change. Several companies have reached out
to us through the Gulf Economic Survival Team, including the AC
Company of south Louisiana, and Offshore Instrumentation Rental
and Servicing Company in Iberia Parish that has reported losing
$100,000 a month for the past four months. Offshore Towing and
Marine Towing Company from Lafourche Parish has reported to
having to cut wages for all employees and using capital to
manage overhead.
In addition, private conversations with impacted service
companies have indicated they are avoiding layoffs by burning
through cash reserves, hoping to hold onto employees through
this regulatory uncertainty. Many employers are being pushed to
the edge of a financial cliff while grasping for hope that the
issuance of drilling permits will no longer be considered a
rare and newsworthy event in America.
Yet, as with anything and with everything, uncertainty
cannot continue indefinitely without consequences. This is even
true in government as many have recently acknowledged the
consequences of an uncertain Federal budget process with action
through continuing resolutions only certain for weeks at a
time.
A 2010 IHS study of the offshore industry revealed an
annual impact of more than $69 billion, affecting more then
380,000 jobs. In addition to the drilling rig employees, we
have impacted labor workforce includes retail clerks, hotel
workers, auto mechanics, restaurant workers, caterers, and
waitresses.
Twenty-five deepwater drilling rigs are currently stacked
with no work. Seven have already left the Gulf of Mexico and
many more may leave if permitting continue at a slow walk. Even
prior to the instability in the Middle East and Africa, prices
of crude spiked 23 percent and gasoline prices 37 cents a
gallon by the end of 2010. Again, that is prior to the
instability in the Middle East and Africa.
I am reminded that a 50-cent increase in the price of
gasoline shocks the American economy at the tune of $1.4
billion a week. It is unfortunate that pricing impacts caused
by regulatory uncertainty in America are now comparable to
uncertainty we have come to know in other parts of the globe.
We have had six recessions in this country since 1972.
Prior to each one of them the price of oil saw a sustained
increase over the previous year. A major increase in fuel price
has almost always been a leading indicator or a driver of a
major recession or a downturn in our economy. The recent
recession is the latest evidence. We cannot have a robust
economy with full employment unless we have cheap and available
energy.
Federal Reserve Chairman Ben Bernanke testified to the U.S.
Senate Committee earlier this month that, ``Sustained rises in
the price of oil or other commodities would represent a threat
both to economic growth and to overall price stability.''
The State of Louisiana has worked to be a bridge between
the industry and the Bureau of Ocean Management, churning
through the many details to get permits issued. We formed the
Back to Work Coalition, a working group dedicated to conquering
the confusion with the permitting process. We have ironed out
kinks in the process through our meeting with Director
Bromwich, and I am thankful for the courtesies he has extended
to us.
The issuance of the first deepwater permit on February
28th, some 314 days after the Macondo event, was positive but
long overdue. Much more needs to be done with a sense of
urgency. We are approaching the end of the first quarter of
2011 and now that industry has demonstrated to the government
the capacity to comply with the most regulated standards on the
planet today is the time for us to focus on finding the
energy----
The Chairman. Mr. Secretary, can I ask you to summarize? I
know you have a long statement, and it will appear in its
entirety in the record. So if you could summarize, I sure would
appreciate it.
Mr. Angelle. Very good. Thank you, sir.
I would just finalize by saying our ability to access the
energy of every type--wind, solar, oil, coal, nuclear, natural
gas, bio-diesel--impacts every sector of our American economy,
and at my very core I believe fundamentally that if we can
solve some of America's energy issues we can solve our
automobile industry issues, we can solve our housing issues,
and we can solve some of our employment issues.
Thank you very much for the opportunity, sir.
[The prepared statement of Mr. Angelle follows:]

Statement of The Honorable Scott A. Angelle, Secretary,
Louisiana Department of Natural Resources

Good morning Chairman Hastings, Ranking Member Markey, and the
distinguished members of the House Committee on Natural Resources. I
thank you for your public service and your willingness to serve the
nation in these challenging times. I appreciate the opportunity to
testify this morning on a subject matter in which I strongly believe--
the role of a viable domestic energy industry in supporting our
nation's economy. Thank you for your continued efforts as we all work
together to meet one of the nation's biggest challenges for this
generation of Americans--the balance of what I call the three E's--
energy, environment, and the economy. We live in a country where
energy, environment and economic policy are interrelated, and decisions
made without accounting for each can upset the balance of all.
I bring greetings to you from Governor Bobby Jindal and the men and
women of Louisiana who have been working, day in and day out, since
last April to restore our way of life, while never forgetting the
families of the 11 great Americans who lost their lives finding the
fuel to energize America in the Deepwater Horizon tragedy. Let us all
continue to keep them in our prayers.
The impacts of the reaction to that tragedy continue to unfold in
Louisiana as the months have passed under the imposition of the
government's ``one size fits all'' policy on deepwater drilling for oil
and natural gas in the waters of the Gulf of Mexico. The deepwater
drilling moratorium was lifted in October, over five months ago, but
deepwater exploration remains at a near-standstill and even shallow
water activity remains crippled. We continue to feel the burden of
regulatory uncertainty, which has led to the freezing of investment and
expenditures, and consequently a drag on our economy.
In Louisiana, we have a long and distinguished history of fueling
America. This 18th great state of the union is the epicenter for crude
oil and natural gas exploration, production, distribution, refining and
processing for the nation, as well as for imports of foreign crude oil
and Liquefied Natural Gas. When it comes to contributing to America's
energy security, there is no more important piece of real estate in all
of America than Louisiana.
We rank:
1st in OCS crude oil production
1st in OCS natural gas production
1st in OCS revenue generated for the federal
government
1st in mineral revenues from any source to the
federal government
1st in foreign import oil volume
3rd in crude oil proved reserves
3rd in total energy from all sources
1st in natural gas processing capacity
2nd in petroleum refining capacity
2nd in primary petrochemical production
Because of our willingness to host the activities that many states
simply refuse to do, every American is tied to Louisiana and the Gulf
of Mexico through the gas pump. About a third of our nation's domestic
production comes from the Gulf, and nearly 90% of that Gulf oil comes
from deepwater wells.
The 2010 Dun & Bradstreet study noted that more than 2,800 small
businesses in the state of Louisiana, and more than 35,000 workers are
directly involved in the oil and gas exploration industry. For the Gulf
Coast, those figures rise to more than 16,000 companies and 153,000
employees.
The impacts on those companies and their employees have already
begun, as we have seen with recent bankruptcy declaration by Seahawk
Drilling and the suddenly unstable futures of its nearly 500 employees.
And Seahawk may not be the last, as can be seen from a recent
survey of companies conducted by the Greater New Orleans Inc. Economic
Alliance (GNO Inc.), two of whom asked not to be named for fear of
further weakening their businesses -
The owners of R & D Enterprises of Harvey, which
provides specialized equipment to the offshore exploration
industry, reported that they are living off savings since the
company has lost 100 percent of its revenue stream and are
trying to hang on to employees while waiting for customers to
get permits.
The owners of what I will call the Offshore Solutions
company, a Jefferson Parish company providing offshore
equipment and specialized products, said the company lost all
of its clients, and has tried to sell some of its equipment to
cover costs, but has not been able to. The company has applied
for Small Business Administration loans, but received none, and
the owners have used their entire savings to pay monthly
overhead.
The owners of what I will call Transport Management,
a Lafourche Parish company providing fuel and chemicals to
offshore operations, reported they have stopped taking their
salaries to help cut costs, and have cut back on hours for
staff to remain afloat.
Each of those companies has also reported laying off employees.
Workers inside and outside the energy industry will bear the brunt
of the continued slowdown and its cascading impact. Those workers and
companies are in turn the customers and income sources for other
companies, companies that will also feel the blow of lost income due
the sudden, dramatic and ongoing fall in Gulf exploration. A 2010 IHS
study on the economic role of offshore energy activity showed that
industry to have an annual impact of more than $69 billion, affecting
more than 380,000 jobs--counting direct and indirect impacts.
These are not just the men and women who work the drilling rigs--
but also the service industries: the welders, the fabricators, the
diesel mechanics, the pipefitters, the boat captains, the forklift
operators, the dock workers, the service technicians, the plumbers, the
sandblasters, the warehousemen, the carpenters, the janitors, the crane
operators, the pump mechanics and the electricians. The effects do not
end there. Also affected are also the hotel workers, the retail clerks,
the auto mechanics, the restaurant workers, the caterers and the
waitresses. The job losses and reduced spending of workers and
companies will affect banks and real estate. The chain reaction will go
on to impact local government revenues, rolling on to school teachers,
police officers and other vital services.
In addition, private conversations with impacted service companies
have indicated they are avoiding layoffs by burning through cash
reserves to ``hold on'' to employees through this regulatory
uncertainty. Many of these same impacted companies well remember the
tough economic times that were followed by massive layoffs in the oil
and gas industry during the 1980s, when the industry witnessed a mass
exodus of key personnel that proved difficult to replace when economic
conditions rebounded. To avoid a replay of this, many of these
companies are sacrificing their balance sheets to maintain trained
employees in spite of a looming financial cliff with a hope that the
issuance of a drilling permit will no longer be considered rare and
newsworthy in America. It is worth noting that a vast number of the
jobs to which I am referring are through family owned, ``mom and pop''
companies where a culture of ``taking care'' of employees is more
prevalent than in larger, Fortune 500 companies.
The original moratorium, which the United States federal court
system called arbitrary and capricious, the second moratorium, the
regulatory uncertainty, and the continued slowing of exploration
resulted in a spike in crude oil prices from $74 per barrel to $91 per
barrel and gasoline prices from $2.77 a gallon to $3.14 a gallon. This
is all as of December 31, 2010 and prior to the recent geo-political
issues of the Middle East and Africa. A 50 cent increase in the price
of gasoline shocks the American economy and costs consumers around $1.4
billion per week.
Simply put, the misdirected public policy, while perhaps well-
intended, results primarily in an economic sanction on middle-class
Americans. In addition, it is worth noting the local governments most
impacted by this oil spill and the Louisiana Seafood Research and
Promotion Board all indicated they opposed the moratorium, and the
slow-walking of the return to Gulf exploration extends the impact to
our state.
In this unique slice of America, we have demonstrated we can fuel
America and at the same time provide the nation with over 20 percent of
the nation's commercial fisheries catch. We understand it cannot be
business as usual, but the moratorium was an overreach, and extending
the time until a full return to Gulf exploration only extends the
economic damage.
This is in a time when our American families are already struggling
to make ends meet, a time when our country can not afford to lose jobs.
We cannot threaten more jobs when this nation has already invested
nearly $800 billion in stimulus funding to boost the economy and create
jobs; when we still have an unemployment rate of nearly 9 percent.
Seven deepwater rigs have already left the Gulf since the original
moratorium was declared, and more may leave if permitting continues at
a pace too slow to support keeping them in the Gulf.
The Shell company recently shared with us that it has maintained
its fleet of offshore rigs in the Gulf, despite their having been
mostly inactive, and reported an estimated $400 million loss as a
result of the inability to secure permits. In the company's statement,
Shell noted that while exploration and production opportunities in the
Gulf are exciting and of considerable value, as a business accountable
to its shareholders, Shell will not be able to sustain holding its
fleet in the Gulf indefinitely without being able to drill. Shell told
us that if that company, or other operators, have to relocate drilling
rigs, vessels, or personnel to areas more favorable to the economic
development of oil and gas, the economy of the Gulf Coast will suffer.
The longer the slowdown goes on, the more chance that deepwater
rigs will be increasingly committed to other parts of the world,
robbing the American workers who have worked so hard to gain the skills
to do the tough work of fueling America. And, if those rigs leave our
waters, we can't be sure when or if they would return.
The active drilling rig count has never recovered since the
moratorium--with roughly half or fewer rigs drilling at any given time
since it was declared. That is especially critical in the deep waters
of the Gulf. The GNO Inc. study also indicated that each deepwater rig
has an estimated economic impact of $5 million a month to local and
state economies while operating.
The impact that begins on the Gulf Coast will spread the longer the
slowdown continues. Shutting down new drilling threatens our ability to
sustain the production we need to fuel this nation. We have seen how
quickly a drop in Gulf production can hurt our economy. Looking back to
2005, Louisiana was devastated by Hurricanes Katrina and Rita--storms
that interrupted production from the Gulf of Mexico. In the week after
Katrina, the national average of the price of a gallon of gasoline
spiked 46 cents.
The effects of the reduction in Gulf activity does not strike as
swiftly as a hurricane, but the longer drilling is slowed, the more
domestic production will suffer as existing wells play out with fewer
new wells to replace them.
More than 330 new wells began drilling in the Gulf OCS in 2009 and
all of the resulting production helped America rely less on foreign
imports to fuel our nation. In 2010, that number fell to just 258--and
162 of those new wells--63 percent--were started in the first five
months of the year, before the moratorium.
Currently, U.S. Energy Information Administration (EIA) figures
show that the Gulf of Mexico OCS produced about 1.7 million barrels of
oil a day in the months before the moratorium. Their most recent
estimates show that production has dropped off by about 210,000 barrels
a day--1.49 million barrels as of last month. And that figure is
projected to fall off another 280,000 barrels a day on average for the
year 2012. If those projections hold, that would mean a drop of almost
a third in Gulf production. EIA projections prior to the moratorium
showed an expectation that Gulf oil production would average about 1.76
million barrels a day for 2012--averaging close to 2 million barrels a
day from 2013 through most of the next decade.
In Louisiana, that production has a second critical meaning--a
share of production from OCS leases was promised to coastal producing
states in the Gulf of Mexico Energy Security Act of 2006 to help fund
the preservation of the coast that protects so much of our nation's
energy supply infrastructure--from pipelines to shipping to support
companies. The expected reduction in Gulf production would mean a
dilution of that funding, leaving more of our nation's critical supply
at risk to the effects of coastal erosion and storms.
Not only the production, but the mere concern for viable Gulf of
Mexico production, has a very real impact on the speculation of crude
oil. As previously mentioned, we witnessed crude oil increase from $74
on May 26, 2010 to over $90 by the end of 2010, which resulted in 37-
cent increase in the cost of a gallon of gasoline. Again, this was
before the recent unrest in the Middle East and Africa.
With regards to our nation's energy policy, it is concerning that
what happens in the Suez Canal and the Mediterranean Sea may be more
important than our own Gulf of Mexico.
Consider the recent unrest in the Middle East--it began in Egypt,
where about 2.2 million barrels of oil help supply the world market
through pipeline and Suez Canal shipping. The flow of oil was never
actually threatened, but fear and uncertainty alone drove the price of
oil up nearly $10 a barrel in two days.
And more recently, the cutoff of much of Libya's 1.9 million
barrels a day of oil due to the insurgency drove the world price back
to nearly $120 a barrel--and our domestic trading price reached $100
for the first time since 2008. The oil delivered from or through those
two nations is roughly the same amount as where our Gulf production was
this time last year, and each of them supplies a world market, not just
one country--yet the economic foundations of all nations have been
shaken by their uncertain futures.
It is unfortunate the pricing impacts caused by regulatory
uncertainty in America are now comparable to what we have come to know
in other parts of the globe.
That is not only the view of our state. Federal Reserve Chairman
Ben Bernanke testified to Congress just a few weeks ago that sustained
rises in the price of oil are a threat to economic growth and to
overall price stability in this country.
Because we all need to be able to travel to work, to buy groceries,
to do all the things we need to do in a nation built around the
automobile, increases in the price of gasoline hit the least of our
brothers the hardest. That is particularly true in poorer rural areas
of our nation, where public services, jobs and essentials such as food
and medical care are not accessible without a vehicle. A recent CNN
survey showed that while Mississippi, the most impoverished state in
the union, does not lead the nation in price per gallon of gasoline--
the people of that state pay the highest percentage of their income for
transportation fuel--13.2 percent as of the end of February. Louisiana,
for all the energy we produce and deliver, ranks third on that same
list at 12.19 percent.
We have had six recessions in this country since 1972. Prior to
each one of them, the price of oil saw a sustained increase over the
previous year. A major increase in fuel prices has almost always been
an indicator or a driver of a major recession or downturn in our
economy.
Oil reached $147 a barrel in July 2008, more than double what it
had been the previous July, and we all saw what can happen when fuel
prices spike too high, too fast. The reaction to the cost of oil and
gas in 2008 fed the storm that swept up our national economy, and
crippled our car manufacturers, our banks, and our housing markets. We
cannot have a robust economy without cheap and available energy.
Again, a substantial interruption of production will mean a greater
reliance on foreign sources of energy, and greater exposure to
increases in price. EIA figures show that while new discoveries will
increase oil production in the lower 48 states in the next two years--
overall domestic production is projected to decrease by 5 percent by
2012. Along with the projected increase in consumption--we would need
to increase our reliance on imported oil by 160 million barrels a year.
In the past five years, through increases in production and reducing
consumption, we have steadily been reducing the net percentage of
imported oil we use in this nation. But now, at a time of greater
uncertainty in world oil supplies than we have seen in years, the EIA
predicts we will reverse that trend and lean more heavily on oil
imports.
When it comes to offshore drilling safety, we recognize that it
should not and cannot be business as usual, that taking a time out to
huddle was appropriate. But we also believe that we can have regulation
without strangulation.
The state of Louisiana has worked to be a bridge between the
industry and the Bureau of Ocean Energy Management, Regulation and
Enforcement churning through the many details and working our ground
game hard to get this thing right. Back in December, we formed the Back
to Work Coalition--a working group dedicated to conquering the
confusion with the permitting process and getting folks back to work on
the rigs of the Gulf.
It has not been easy, but we have hammered out a few yards at a
time, grinding out progress in our meetings with Director Bromwich and
his staff in Washington D.C. Since December, the Back to Work Coalition
has hosted two conference calls and traveled to DC six times to meet
with Director Bromwich on the permitting process. I am thankful for the
courtesies extended to me by Director Bromwich.
The issuance of the first deepwater drilling permit on February 28,
2011, some 314 days after the Macondo event, was positive but long
overdue. However, we are approaching the end of the first quarter of
2011 and now that industry has demonstrated to the government the
capacity to comply with the toughest drilling standards on the planet,
today is the time for us, as a nation, to focus on finding the energy
to fuel America. The best way I know we can do that is to return to the
pre-moratorium rate of permitting.
Offshore drilling has existed in the Gulf waters for almost 60
years, and deepwater drilling began in the 1970s. Nearly 50,000 wells
have been drilled in the Gulf, 3,200 of those in deepwater, and with
the exception of the Macondo event, this has been a very safe province
in which to operate.
While the necessary work of finding the fuel this nation needs is
going on with a renewed focus on safety, as it should, industry and
government can work together to meet new standards while still
maintaining the production our nation needs. If we have a sense of
urgency to get this done, I am confident the United States of America
has the resources to make it happen.
The daily losses of production in the Gulf affect much more than
the oil industry. Access to affordable energy impacts every sector of
our economy, every state in our nation and every American family. The
de facto sanctions on drilling in the Gulf of Mexico are sanctions on
energy security, on economic development and on American jobs.
______

The Chairman. Secretary Angelle, thank you very much for
your testimony, and now I would like to recognize the
Chairwoman of the Railroad Commission of Texas. Mrs. Jones, you
are recognized for five minutes. Thank you for being here.

STATEMENT OF MS. ELIZABETH AMES JONES, CHAIRMAN, RAILROAD
COMMISSION OF TEXAS

Ms. Jones. Thank you, Mr. Chairman. I would like to thank
you and Ranking Member Markey and Members for the opportunity
to testify today. I have submitted a more comprehensive written
statement, but I will just hit on some of the high points.
As you all know, Americans are faced yet again with another
round of increasing oil prices and the accompanying household
budget crunches that come with higher gasoline prices and then
the increase in the cost of everything else, like groceries.
Being on the brink of recovery from this recession, this is the
worst possible time for Americans to have to put another notch
in their belts as energy costs go up.
I would like to share my perspective on the Department of
the Interior's permit moratorium for drilling in the Gulf of
Mexico. To give you some background, the Railroad Commission of
Texas, of which I am Chairman, regulates the drilling of oil
and natural gas, and our rules and regulations have been
formulated over 100 years. Our jurisdiction extends to three
leagues offshore, and that is a little over 10 miles.
Texas is the top energy-producing state in the country for
both natural gas and oil. Over 30 percent of all the natural
gas and about 20 percent of all the oil on shore in America
comes from Texas. That is almost 350 million barrels of oil a
year, and 7.7 trillion cubic feet of natural gas. You may have
heard of the largest natural gas play that is going on in the
country. It is called the Barnett Shale. The latest technology
that is perfected over the Barnett Shale has made other natural
gas shale plays possible across this country, and that is great
for America.
But our country's energy security will rely on oil for
generations to come, and what is on my mind today is the oil
that is under the Gulf of Mexico, the American jobs that it
takes to drill it, the American families and businesses that
need it, and the Federal coffers that could surely use the
royalties and revenues and lease bonuses now more than ever. I
believe we have a moral duty to Americans to develop these
resources and I would like to share with you what is happening
on the front lines of energy production today.
It may be an inconvenient truth but there is still a de
facto moratorium against serious offshore drilling in the
waters that surround the United States, including the Gulf of
Mexico, but also Alaska, and that is just the reality. That is
a fact. A rose by any other name would smell as sweet. You can
call it what you like, but there is still a work stoppage, an
embargo, if you will, on American companies working in America.
Since last fall when the moratorium was lifted in name only,
only two deepwater permits have been issued. Somebody is
putting lipstick on a pig. These permits were for the re-entry
of wells that had already been partially drilled. They were
not, I repeat, not new wells.
Statistics on a page simply don't reflect the lives that
have been changed by this embargo. Last summer a study
determined that approximately 98 percent of the more than
15,000 businesses in the Gulf states impacted by the moratorium
are considered small; 85 percent of that figure has less than
10 employees, which goes to some of the comments that Secretary
Angelle made. These businesses employ over 153,000 people. They
include jobs in the support industries. That is the
infrastructure it takes to drill each and every well.
Who is typically drilling these wells? Let us think about
it. They are good, solid American companies, independents that
find more oil onshore and offshore than the majors like BP.
Those are the ones who are most affected. These independents
cannot just pick up and move someplace overseas to drill in
other countries' deepwater, and certainly the workers on the
road from the support services cannot move to places like South
America where we can help them to help them drill for their
oil.
We, in Texas, have lost approximately 2,500 jobs, 622
million in gross domestic product, 153 million in wages. It
doesn't take a rocket scientist to figure out that the more
time it takes to issue a permit the more likely these numbers
were double or even triple. With the instability in the Middle
East and the current monetary policy, I might add, the last
thing the market needs is less supply. EIA's projected decline
in production is a fact that is not lost on investors in the
oil market. A one year delay could result in half a million per
day per cut in world supply in the future years because, as you
know, it takes many years from the idea to the drill bit going
down the hole.
The talk of tapping into the strategic petroleum reserve is
nonsensical when we have a reserve that is strategically placed
with a lot more oil in it than the 727 million barrels that are
being stored in the SPR. The Outer Continental Shelf is
estimated to have close to 100 billion barrels of oil. We need
to use it when we need it, and we need it now.
It is disingenuous to claim that issuing one or two
deepwater permits for wells already drilled constitutes a lift
in the moratorium. Dozens of permits are still in limbo for
previously permitted wells, and we don't have a clear path
forward on the thousands of leases that are waiting to be
drilled. This would never be acceptable to the voters and
taxpayers of Texas if the Railroad Commission were in the
captain's chair, and it is not acceptable to the super majority
of Americans who support oil and gas production.
As an elected official serving on the Railroad Commission,
we can be voted out of office if we don't deliver. But when
regulators are not accountable to the people, then Congress
must provide the statutory direction and oversight, and I urge
you to do so. Analysis has found that the Gulf of Mexico
offshore activities could generate as much as 300 billion
government revenues alone in the next 10 years. These are
revenues that could be utilized to invest in our children's
future. You and your colleagues could provide the same benefits
for America as we do for Texans by insisting on regulatory
certainty, partnered with environmental protections, and a
culture that truly understands and appreciate the use of our
nation's----
The Chairman. Chairman Jones, could I ask you----
Ms. Jones. Thank you for your time and attention.
[The prepared statement of Ms. Jones follows:]

Statement of Elizabeth Ames Jones, Chairman,
Railroad Commission of Texas

I would like to thank Chairman Hastings and Ranking Member Markey
and the members of the House Natural Resources Committee for the
opportunity to testify today. Americans are faced yet again with
another round of increasing oil prices and the accompanying household
budget crunches that come with higher gasoline prices and then the
inevitable increases in the cost of everything else, like groceries.
Being on the brink of recovery from the recession, this is the worst
time for economy-weary Americans to have to put another notch in their
belts. Our country is rich in energy resources and only bad policy
decisions force Americans to shoulder the burden of higher energy costs
as we try to dig out of the recession.
I appreciate the chance to discuss how the Department of Interior's
moratorium on drilling for oil and natural gas in the Gulf of Mexico
has affected Texas, the entire Gulf States' region and for all intents
and purposes, all of America. I am Chairman of the Railroad Commission
of Texas. The Railroad Commission (RRC) has been regulating the energy
that comes from below the ground in Texas for over 100 years. Our
jurisdiction extends to 3 leagues offshore or a little over 10 miles.
Texas has a bifurcated system for handling the mineral interests of the
state. If a company wants to drill a well in the bay, i.e., state
waters, it goes to a lease sale offered by the Texas General Land
Office. Then the RRC permits the well and oversees the technical aspect
of it while the Land Office takes the money for the state. It is the
same onshore too if state lands are involved. We also oversee surface
mining of coal, we regulate the propane industry, but our largest
division is oil and natural gas. Texas is the top energy producing
state in the country for both natural gas and oil. I might as well
mention that over 30% of all the natural gas and about 20% of all the
oil that comes out of the ground onshore in America comes from Texas.
That's about 350 million barrels of oil and 7.7 trillion cubic feet of
gas a year. The rules and regulations have been formulated, through
rulemaking and statute, over the last one hundred years. The largest
natural gas play in the country is in Texas, called the Barnett Shale.
That is where the new technology has been perfected that makes all the
other shale gas plays possible. The Barnett Shale's standing as the
largest shale play has become challenged by other big shale plays like
the Haynesville and the Fayetteville Shale plays in Louisiana and
Arkansas and that is great for America. The Bakken Shale play in North
Dakota and the Eagle Ford Shale in deep South Texas are producing large
amounts of oil and have arrested the decline in the US onshore oil
production. What may be the largest natural gas shale play in the
country, the Marcellus, is located in Pennsylvania and New York, and
there will be other new shale plays discovered around the country. The
drilling programs onshore in these places are bringing economic relief
and increasing jobs to communities that have been hit hard.
There is an exciting future for clean burning natural gas if we
will only start using it in a meaningful way... But even if we did make
the most of the huge reserves of natural gas in this country, we are
still going to need oil for generations to come. What is on my mind
today is the oil that is under the Gulf of Mexico, the American jobs
that it takes to drill and produce that oil, the American families and
businesses that need it, and the federal coffers that could surely use
the royalties and lease bonuses--now more than ever. My contention is
that we have a moral duty to Americans to develop these resources and
it is critically important that you who were sent here to represent the
best interests of your constituents have some information about what is
going on back on the front lines of energy production.
Basically, there is still a de facto moratorium against serious
offshore drilling in the waters that surround the United States, the
offshore Gulf of Mexico, offshore Alaska, wherever there is a potential
oil and gas offshore resource awaiting the drill bit. That's simply the
reality. ``A rose by any other name would smell as sweet.'' One can
call it what one likes, but basically there is still a work stoppage,
an embargo if you will, on American companies working in America. Only
one deep water permit has been issued since the moratorium was
supposedly lifted. That permit to Noble Energy, the operator, was for a
re-entry of a well that had already been drilled.
The statistics on a page don't truly reflect the lives that have
been changed as companies lay off crews and send rigs overseas. Dun and
Bradstreet did a study last summer and determined that of over 15,000
businesses in the five Gulf States impacted by a moratorium,
approximately 98% of these businesses are considered small businesses.
Six hundred and sixty seven of them are classified as minority-owned,
woman-owned, or veteran-owned and 97% are US-owned. These businesses
employ over 153,000 employees with over 95% of them in Texas and
Louisiana. These are the support businesses, the infrastructure if you
will, that it takes to get an offshore well drilled. We are taking a
great leap backward. Who is typically drilling these wells? Good solid
American companies, large independents that find more oil and gas
onshore and offshore than the majors like BP. They are the ones most
affected. They can't pick up and go to Brazil to drill in their deep
water and certainly the engineers, workers on the rigs, and the support
services can't move to South America to help them recover their oil.
Louisiana State University's economist, Joseph Mason,
conservatively reported late this past summer that due to the
moratorium the Gulf Coast States would lose over 8,100 jobs, $2.1
billion in economic output, and $487 million in wages during the
initial months after the moratorium. In a similar time period, Texas'
share of that loss is almost 2,500 jobs, $622 million in gross domestic
product, and $153 million in wages. Mr. Mason stated that the actual
numbers would be larger over an extended amount of time. It doesn't
take a rocket scientist to figure out that the more time it takes to
issue permits the more likely these numbers could double and even
triple.
These numbers don't even touch on the loss of energy at a time we
need it the most to increase supply to help stabilize prices. With the
instability in the Middle East and the current monetary policy, the
last thing the market needs is less supply. The permitorium in the Gulf
of Mexico is affecting 30% of the domestic oil production and 13% of
the natural gas. A one-year delay could result in a 500,000 barrel per
day cut in world supply between 2013 and 2017. Not to mention the cost
increase to get it out of the ground if new, unnecessary regulatory
requirements are put in place.
It simply doesn't have to be this way. The talk of tapping the
Strategic Petroleum Reserve is nonsensical when we have a reserve that
is strategically placed with a lot more oil in it than the 727 million
barrels that are being stored there.
Now I would like to discuss my experience as an elected steward of
a state's energy resources. Specifically, I would like to show you how
we create a culture of safety and productivity. Though it has evolved
to address the modern day petroleum industry, we have cracked the code
and I think that as you contemplate the future energy needs of the
country, it wouldn't hurt to look to the states, who have a vested
interest in making sure their energy resources are responsibly
produced. Our mission is to serve Texas by our stewardship of natural
resources and the environment, our concern for personal and community
health and safety, and our support of enhanced development and economic
vitality for the benefit of Texans. As a part of our charter, among our
main functions related to oil and gas exploration is the protection of
the environment, our duty to protect public health and safety, the
correlative rights of mineral interest owners, and to prevent waste of
natural resources. As a disclaimer, I want you to know that safety and
public health, as they should be, are our number one concern. I want to
highlight that one of our statutory duties is that we must prevent
waste of natural resources. Most people think of waste as a by-product
that must be disposed of. We manage the disposal of oil field waste
too, but this definition as it relates to our mission is contrary to
that. It is that our program must produce our natural resources for the
economic benefit of individual Texans and the state as a whole or else
the hydrocarbons are wasted. This charter forces us to permit wells in
a timely manner so that royalty owners get their money. One of the most
prominent royalty owners in Texas is the state itself. These monies are
used to fund education and our rainy day fund, which is a bright star
in the fiscal profile of Texas.
Allow me to compare that charter to the Bureau of Ocean, Energy,
Management, Regulation, and Enforcement's (BOEMRE) mission, which is to
manage the ocean energy and mineral resources under the outer
continental shelf (OCS) and other offshore waters of our country and to
enhance the public and trust benefits, promote responsible use, and
realize fair value. While these charges are admirable, the charge to
manage mineral resources, rather than to prevent the waste of mineral
resources, results in two very different approaches and outlooks. Our
charter encourages us to work with citizens and industry to utilize
every bit of minerals we have so that our schools stay funded and our
budget stays balanced while individual Texans also get to reap the
benefits of responsible energy production. BOEMRE's mission does not
provide this opportunity. Its tone undervalues the need to take
advantage of natural resources for the economic benefit of those who
own them, the American people. Maybe there needs to be a cultural shift
in ideology as it relates to how Americans view the mineral gifts that
God and nature has bestowed upon them as blessings.
In Texas, our permitting process is comprehensive and efficient due
to several reasons, one of which is that my fellow commissioners and I
are statewide elected officials. If our stewardship is not acceptable
to the people of Texas, then we will be voted out of office. One of the
most sensitive charges of our position is ensuring regulatory certainty
and a fair and efficient permit process. It is our responsibility to
clearly draw the lines of the playing field and the rules of the game,
and it is private industry's responsibility to abide by those rules.
Once an application meets our standards then it is our
responsibility to issue that permit in a timely manner. In fiscal year
2010, we processed over 21,000 applications. Due to continuing activity
within the 3 shale plays, the Haynesville, Eagle Ford, and Barnett, we
expect to match or exceed that count for fiscal year 2011. When fully
staffed, our permitting division employs 11 people. A performance
standard of 100 reviews per day has been initiated. We have received
approximately 500 applications per week for the last 2 months. Our
processing time is posted at the bottom of our website's home page. The
approval performance is updated weekly. Our goal is to process
expedited requests within 1 day and standard applications within 3
days.
I read a report from the Louisiana Oil and Gas Association on March
7th that before the Macondo blowout, BOEMRE permits were issued at a
rate of approximately 10 per week. Subsequent to the lifting of the
moratorium in October, BOEMRE has issued only one deepwater permit.
This would never be acceptable to the voters and taxpayers in Texas.
Some may criticize our swift manner of permit issuance claiming
that we lack a focus on environmental mitigation. Since 2005, only
0.0004% of our wells have experienced a blowout. The most recent total
of wells we have in Texas is 394,600. Industry best practices and know-
how on deck accounts for that low number. Any injuries related to
drilling on the platform fall under the jurisdiction of the
Occupational Safety and Health Administration (OSHA). To address
environmental issues related to the drilling of the past, the Oil Field
Clean Up fund was instituted in 1991 to remediate sites and plug
abandoned/orphaned wells. This environmental program is our shining
star in the Lone Star State. Few regulatory regimes globally can boast
as much, and many call us for direction when establishing their own
programs.
Our enforcement, penalties and compliance structure is quite
different from the federal way of business. We do not like the idea of
speed traps in the market place created to punish companies in order to
drive up revenue in low budget cycles; thus, our focus is on
compliance. Penalties from enforcement actions do not go into the
Commission's operating budget; those revenues go into the state's
general treasury and our environmental clean up fund. That restriction
allows us to focus on what is most important: the development of our
natural resources while working with industry participants to ensure
compliance with safety and environmental protection standards.
In conclusion, I would like to reiterate the economic facts. The
OCS was conservatively estimated by the former Minerals Management
Service to have undiscovered, technically recoverable resources of over
419 trillion cubic feet of natural gas and 86 billion barrels of oil.
In 2009, the OCS was producing 27% of the entire US oil production.
Further studies reveal that offshore activity in the Gulf of Mexico in
2009 generated almost $70 billion of economic value and nearly 400,000
jobs. These are good-paying jobs. According to the 2007 Bureau of Labor
Statistics, oil and gas wages averaged $93,575 per year. That is twice
the annual pay of all other jobs in the US.
IHS Global Insight analysis states that the Gulf of Mexico offshore
activities could generate as much as $300 billion in governmental
revenues alone in the next 10 years. These are revenues that could be
utilized to invest in our future, as we invest them in Texas. Over 30
school districts' budgets in our state are more than 70% funded by oil
and gas revenues. We do it right in Texas. By offering regulatory
certainty, partnered with environmental protections and a culture that
truly understands what it means to appreciate and utilize our region's
mineral assets, we provide an economic engine that creates value and
prosperity for all Texans. I respectfully urge you and your colleagues
to provide the same for Americans everywhere across our nation.
Thank you for your time and attention. I look forward to addressing
your questions.
______

The Chairman. Thank you very much. My timing was perfect
there, too, I guess.
Ms. Jones. Yes.
The Chairman. Thank both of you very much for your
testimony. I know it is very difficult to try to condense all
that is leading up to where we are today and why we have this
hearing in five minutes. I fully understand that, but your full
record, as I mentioned, will be in the record.
Ms. Jones. Thank you.
The Chairman. I want to ask each of you to respond to this
question. Since the Deepwater Horizon spill, can you explain to
the Committee what you have done in your respective states as
far as changes to oil and gas operations in state waters since
the Deepwater Horizon spill? Secretary Angelle.
Mr. Angelle. Thank you, sir. Yes, Louisiana is governed
somewhat unique in that area, and we have, if we would, a
department within a Department of Natural Resources, so there
is a statutory firewall between myself and the Commission of
Conservation, so I will attempt to give you what I know the
Commission has in fact done.
They commissioned a study done by LSU to come up with
perhaps proposed rules and regulation changes to require
additional cementing and casing situations, additional
reporting requirements, additional BOP, blowout preventive
requirements, all things, again, that would lead to a safer
situation. But I would also remind the Committee that in
Louisiana in our state waters the deepest water we have is 248
feet, so all of our blowout preventers are in fact on the
surface and not on the ocean floor, so much very different
situation than you would have offshore. We have taken those
steps through LSU to come up with a variety of tweaks, if you
would, to make the province safer although, again, we didn't
recognize a problem before.
The Chairman. And let me ask if you would just briefly
answer, have you shut down operations while these changes are
made?
Mr. Angelle. No, sir.
The Chairman. Chairman Jones.
Ms. Jones. Mr. Chairman, we go out to, our jurisdiction
goes out to 10 miles.
The Chairman. Right.
Ms. Jones. And we have not shut down operations. We are
always revisiting our rules and regulations regarding the
offshore. We really have about a thousand wells at this time
offshore. Some are in the bay. The majority are in the bay
wells. Those are some shallow permits. And we have not
shutdown. The people of Texas would insist by now if we had, we
would be back up and started. The people of Texas benefit from
the royalties and the hydrocarbons that are developed from
those offshore out to 10 mile, that development and it is
critical that we would be on the fast track if we had, but we
have had a good safety record offshore.
The Chairman. Thank you. One last question, and again to
both of you. If you had one change that you could make to
Federal permitting on the OCS, what would that be?
Mr. Angelle. I do believe that the well-by-well assessment,
environmental assessment, which is a new requirement that has
been placed upon the Nation by the Bureau of Ocean and Energy,
is not a necessary requirement.
It is my understanding that prior to a lease/sale being
authorized by the government a very exhaustive environmental
impact study is done at the 35,000 foot level, and it has been
the policy of this nation between Presidents of different
parties that well permits were therefore categorically excluded
from the environmental assessment because of the overriding
environmental assessment that was--I am sorry--the overriding
EIS that was done at the 35,000 foot level. This will be a
very, very cumbersome and very slow process that must be done
by in-house government employees, and I am very, very concerned
that that process.
Let me remind the Committee that the first environmental
assessment on a well-by-well basis has not yet been completed.
The well permits that have already been issued are for wells
that were exempted from the EA process. There are a total of 57
wells that have been exempted from this EA process by the
director. However, not one well yet has been permitted
requiring the new EA requirement. I think it is duplicative and
not necessary.
The Chairman. Chairman Jones.
Ms. Jones. Chairman, there are so many things that I could
suggest that I don't have the time.
The Chairman. I know, I only gave you one. That is not
fair.
Ms. Jones. I think right out the gate they have to
establish a timeline for issuing permits and live up to that
timeline, and if it takes your oversight to do that I hope you
will engage in that immediately.
The regulatory certainty is very, very important. As these
companies make long-term capital investments, they have to know
what they are actually looking at, and that is not the case
right now, and that is why so many are being held in limbo
right now. So, regulatory certainty which will come if there is
a timeline for these permits to be issued.
I would like to suggest also that they call a permit a
permit, and moving a piece of paper back and forth, back to the
operator to fill out and to give new information, to come back
and not recognize that as an application for an amended permit
or anything is dishonest actually. They are proclaiming that
there are not that many permits out there, but there are many,
many in the queue that have not been actually technically
called permits yet.
Those are but three of the things that the agency could do
to improve the situation as it is, but hopefully we will
continue to have this conversation and I can continue to submit
suggestions, if you will, that more or less track what we do at
the Railroad Commission.
The Chairman. We look forward to that. We look forward to
those suggestions.
My time has expired. The gentleman from Massachusetts is
recognized for questioning.
Mr. Markey. Thank you, Mr. Chairman, very much.
One of the problems is that it was cookie cutter
environmental impact statements produced by the oil companies
pursuant to the categorical exclusions that the Department of
the Interior routinely granted during the Bush Administration
that led to absurdity such as plans requiring the evacuation of
walruses from the Gulf of Mexico in the event of an accident,
even though walruses hadn't lived there for two million years.
So, you know, we have just got to be realistic here about what
kind of job the oil companies were doing. They were absolutely
irresponsible, and their irresponsibility is something that
goes to their safety record.
Secretary Angelle, on page 225 of the independent
commission said that from 2004 to 2009 fatalities in the
offshore oil and gas industry were more than four times higher
per person hours worked in the United States waters than in
European waters even though they were the same companies. So
give that it is four times more deadly to work offshore in U.S.
waters, and that the Commission found that the safety problems
were systemic and not a single new safety measure has been
enacted into law since the BP disaster, don't you think we need
to ensure that these rigs are operating safely in order to
protect the lives of workers on these rigs and the livelihoods
of all Gulf residents so that we increase the level of safety
up to international standards rather than having the lowest in
the industrialized world? Don't you think the safety
recommendations of the BP Commission should be implemented?
Mr. Angelle. I am not familiar with all of those safety
recommendation, Mr. Ranking Member.
Mr. Markey. You have not analyzed the safety records?
Mr. Angelle. I have not, sir. I would say that----
Mr. Markey. Given your job don't you think you should have
looked at those safety record recommendations?
Mr. Angelle. Actually, I have not analyzed all of those
recommendations, sir.
Mr. Markey. Could you analyze them and give a set of
responses to the safety recommendations back to the Committee?
Mr. Angelle. Sir, I have not analyzed all of those
recommendations. I will tell you that in my comments I
indicated that it should not be business as usual, and we
support it not be business as usual. Certainly understand that
and----
Mr. Markey. Does that include implementing the safety
recommendations of the BP Commission?
Mr. Angelle. I am not aware of all of those safety
recommendations of the BP Commission.
Mr. Markey. Are you aware of any of the safety
recommendations of the BP Commission?
Mr. Angelle. I am aware of some of the safety
recommendations, yes, sir.
Mr. Markey. Are there any of those safety recommendations
that you recommend be implemented?
Mr. Angelle. Yes, sir.
Mr. Markey. Can you tell us what those are?
Mr. Angelle. I would just simply say that generally I
believe that, you know, repetitive safety measure of blowout
preventers and those kind of things are very, very important. I
certainly understand containment issues being very, very
important. But I would say again that having the new
regulations that have been promulgated we are not at a point
where the industry has demonstrated to the government the
ability----
Mr. Markey. Even though you are not familiar with the
safety recommendations of the BP Commission, you are ready to
say that it is safe and people should go out there. Is that
what you----
Mr. Angelle. No, that is not what I said, sir. I said that
it is my understanding that the Bureau of Ocean and Energy has
promulgated new rules and regulations, and the industry has
demonstrated the ability to comply with those, and now is the
time to begin issuing permits inasmuch as industry has
completed--has begun to comply with those recommendations.
Mr. Markey. And they issued those recommendations last
month, so the way to go. Are you satisfied with the
recommendations that were promulgated by the Department of the
Interior?
Mr. Angelle. It is not for me to be satisfied. It is for
me, as I said earlier, sir, I come here not seeking blame, but
to bring about a solution. The industry has demonstrated the
ability to comply with those regulations, and we need a sense
of urgency issuing permits. I am not looking backwards. I am
looking forward.
Mr. Markey. I am, too. I am trying to look forward. In your
testimony you state that seven deepwater rigs have already left
the Gulf since the original moratorium was declared, but
according to the Department of the Interior at least four of
these seven rigs are scheduled to return to the Gulf in 2011,
and five new rigs have already arrived or are scheduled to.
Overall, there are 125 rigs in the Gulf of Mexico compared to
122 one year ago.
Doesn't that misrepresent what is actually happening in the
Gulf to only mention the rigs that have left without mentioning
the new ones that have come in?
Mr. Angelle. Well, I would say whatever new ones have come
in they are not working. They are just inventory, they are
stack coal, and it is just like having automobiles on a lot.
You have a lot of automobiles on the lot, but if you are not
selling them, you are not creating economic activity, sir.
Mr. Markey. All right. But we have the new regulations.
They are ready to go, and the Obama Administration is now
issuing new leases, and the rigs are returning. Obviously these
companies are capitalists so they are returning and new ones
are arriving, so it represents a confidence in the oil industry
in what is happening or else they would not be returning and
they would not be adding new rigs. Don't you think that is an
economic conclusion?
Mr. Angelle. Again, I would say with all due respect the
Obama Administration is not issuing new leases. In fact, the
lease sales that were scheduled for this year have in fact been
canceled. What I would say is that certainly we had a policy
break-through on February the 28th when the first deepwater
permit had been issued 314 days after the Macondo event.
Mr. Markey. I do not think, sir, that oil companies are
sending the rigs back just to idle. I do not think they are
sending new rigs in just to idle. That is not how oil companies
operate. They are sending them back because there are new
opportunities for them as the new regulations have been
promulgated.
Thank you, Mr. Chairman.
The Chairman. The time of the gentleman has expired. The
Chair recognizes the gentleman from Texas, Mr. Gohmert.
Mr. Gohmert. Thank you so much, Mr. Chairman, and from what
I understand the rigs are being returned for repair, and so
that is the purpose of that just so we know.
It is interesting to get a big picture look at this
administration and prior administrations' policies. We know
that during the Clinton Administration, they had an attorney
that actually intentionally removed language from the standard
lease that would have provided billions of dollars to the U.S.
Treasury, but it was removed by the Clinton Administration
attorney at Interior to the benefit of British Petroleum,
friends like that.
We also know that that attorney went to work for a company
called British Petroleum, and it was a big announcement in 2009
when the Obama Administration hired that attorney back to work
for their Interior Department to help with offshore leases. So
very convenient, and we know that President Obama has talked
about ``a cozy relationship'' between government and big oil
companies, apparently with one in particular called British
Petroleum.
We know that British Petroleum was negotiating in coming
out in support of the Administration's grab and trade bill, and
they were negotiating a time for them to come make that public
so we would have a big energy company out there supporting this
Administration's grab and trade bill, and that was going on,
the negotiations were going on the very day that the Deepwater
Horizon blew. So, you can understand how the Administration
might not want to jump on BP if it was going to be a small deal
out in the Gulf, and it might help explain their delay in
actually coming out there and doing something about that
disastrous blow in the spill.
I am also glad to hear we share concerns about safety
violations because it has been a great concern of mine, that we
would have an Administration that would allow a company like
British Petroleum to have nearly 800 safety violations while
other oil companies would have one or two, and yet they allowed
that company to keep having safety violation after safety
violation, and from what my friend from Massachusetts points
out, apparently BP didn't have such a cozy relationship with
those overseeing European waters, so they were not allowed to
keep having those type of safety violations, and I am glad my
friend from Massachusetts pointed that out.
Now, Obama Administration sends two-party teams, two teams
out to inspect offshore rigs, we found out, and they are the
only group that was unionized, so they could negotiate how many
hours they might work when they are out there standing between
us and disaster, and we know from the director of BLM that
their safety valve, their check and balance was to send two
people at the same time so they watch each other and they would
report each other if they were not really on top of any type of
safety violation, and then we find out that the last two-man
team that this Administration sent to the Deepwater Horizon was
a father and son unionized team.
So, it is interesting to hear about safety concerns. I am
glad that some are finally concerned about that. The Obama
Administration's biggest financial supporter, George Soros, we
know has his biggest investment in Brazilian drilling, and we
also know that this Administration authorized a $2 billion loan
for Brazilian drilling in their offshore area, and that a
moratorium in our Gulf of Mexico directly benefitted this
Obama's biggest financial supporter.
So, let me get to my question, and please convey my hello
to my friend Bobby Jindal, that we served together here in
Congress. I think a lot of him. But I know Chairman Jones very
well, and I would like to ask, do you know who the only recent
offshore drilling permit was issued to that was actually a new
permit?
Ms. Jones. There has not been a permit for a new well
issued.
Mr. Gohmert. Who is it that they talk about being then?
Ms. Jones. The recent one that the operator is Nobel
Energy, the majority interest in that well is BP. The second--
--
Mr. Gohmert. Well, let me ask you, what does the Obama
drilling moratorium do to independent drilling companies?
Ms. Jones. I have, as you do, a constituent of mine, a
Texan, an independent, a solid company who in fact is awaiting
two amended permits only to put on his new state-of-the-art
safety rig. This independent has invested a billion dollars in
the state-of-the-art drilling rig, and to only change his
already--his permit that he was already given to complete two
weeks, he just wants to change and put on a rig that is even
more reliable safety-wise than the other one that he was using,
and that permit is in limbo. He cannot get it to complete two
other deepwater wells that he drilled.
The point I am trying to make here is a solid American
company, an independent who made a tremendous capital
investment in a rig that is built in America and a rig that he
could have bought and had shipped over here for half the cost
if he had chosen to buy one in China, but he made a deliberate
decision to keep it all American made, and he has been
precluded from even using that new state-of-the-art American-
made rig, and he has recently laid off 100 people. He postponed
it until after Christmas, and these are the lives that are
being affected.
And so I don't know about the facts that Ranking Member
Markey was mentioning.
The Chairman. The time of the gentleman has expired.
Mr. Gohmert. OK.
The Chairman. I appreciate that.
Mr. Gohmert. Thank you, Chairman.
Ms. Jones. Thank you, Congressman.
The Chairman. The gentleman from Michigan, Mr. Kildee is
recognized.
Mr. Kildee. Thank you very much, Mr. Chairman.
Mr. Secretary, the Administration implemented the safety
precautions after the Deepwater Horizon disaster. It requires
companies to show that they can contain a deepwater blowout.
Two companies have met those standards and received permits
thus far.
You say that there is not drilling going on. However, the
Administration will give out more permits if companies simply
meet these new minimum safety standards. Do you disagree that
companies should be held to this higher standard to prevent
another disaster from happening, or do you believe these safety
precautions really should be significantly modified?
Mr. Angelle. I do believe that some of the changes that
have been made with regards containment assets being required
and available, if you would, on the first day rather than the
60th day as we saw with the BP event. I believe those changes
represent some positive public policy.
However, I would say that now that we have--the industry
has met that standard and has proven to Secretary Salazar who
he himself visited and touched and witnessed some of that
equipment, that has been perhaps three to four weeks since that
happened, and we still only have two permits that have been
issued.
So, I am not here to argue whether or not the regulations
that were imposed are regulations that should not have been
imposed, I am here to say that for America we need the
bureaucracy to go to work seven days a week to be able to issue
the permits in an industry that works 365 days a year.
Mr. Kildee. I appreciate the distinction you made there.
You know, having the Gulf of Mexico reserves is kind of a mixed
blessing, but it is a blessing, but we have to be very careful,
and I think you would agree with that, very careful in dealing
with a mixed blessing to make sure that we have the safety
precautions to make sure that blessing doesn't turn into a
curse. I think we could all agree upon that. The question may
be you are not objecting so much to the new standards, you are
objecting to the slowness of implementing them by giving
permits to go ahead and start drilling again. Am I correct in--
--
Mr. Angelle. I am concerned that some of the drilling
standards, and particularly something that I have worked very
closely with Dr. Bromwich on, what is called the interim final
rule which by rule took the word ``should'' and turned it into
``must'' in 14,000 situations; by reference adopted 80
different API documents that were not meant for ``must'', they
were meant for ``should'', and they were designed that way, and
with one stroke of the pen to grasp 80 documents and make them
instead of recommended practice required practices was what was
a concern.
I have been working with Dr. Bromwich on that issue. We
have brought about a great deal of evidence about this perhaps
setting the safety goals actually backwards instead of moving
forward.
So, again, Louisiana understands that it should not be
business as usually and it cannot be business as usual, but we,
again, as I was saying earlier, we can have regulation without
strangulation, and we are currently existing in strangulation
right now.
Mr. Kildee. Thank you very much for your testimony.
Mr. Angelle. Thank you, sir.
The Chairman. The gentleman yields back?
Mr. Kildee. I yield back.
The Chairman. The Chair recognizes the gentleman from
Colorado, Mr. Lamborn.
Mr. Lamborn. Thank you, Mr. Chairman. Thank you both for
being here.
Secretary Angelle, in your testimony you mentioned the
impact of the de facto moratorium not only on people working
directly in the oil and gas industry, but also those in the
services industry that support oil and gas. Some in Congress or
in the Administration who profess to be on the side of the
working man turn around and support energy policies of this
Administration which put men and women out of work in the Gulf
and elsewhere.
Would you be able to guess the number of jobs that have
been lost as a result of the lack of production in the Gulf?
Mr. Angelle. All I can say, sir, is in excess of certainly
several thousand jobs, and there is a cascading impact. The
moratorium is not hurting the stockholders of BP or Exxon or
Chevron. It is hurting the every day men and women of America
in the service companies and the cascading impact on hotel
workers and on automobile mechanics and on just regular retail
folks who get up every day, the middle class of America who try
to pay the bills.
There is no question that this moratorium is impacting what
I refer to as the Cheramies, and the Collies and the Boudreaus
and the Thibodeaus, all very, very prominent families in south
Louisiana.
Mr. Lamborn. And when you say that are you focusing only on
Louisiana or are you including the other states close by?
Mr. Angelle. Obviously I believe that the impact cascades.
I think that as we all know in economics a dollar spent
somewhere in America trickles down to other places. And so when
folks in Louisiana are either unemployed or underemployed it
means perhaps that it is one less vacation they can take to
Disney World in Florida. It means that it is one less
restaurant they get to go to. It is one less ball game they get
to go to. So certainly the impact is more profound in Louisiana
as Louisiana is the epicenter of OCS production in America, but
I would dare say that it does include neighboring states as
well, sir.
Mr. Lamborn. Well, and we are going to have a hearing
tomorrow on the rising prices of gasoline, which is one of the
indirect effects of lack of production, but thank you for
answering that question about the direct impact.
Madam Chairman, some who are ignorant of how offshore oil
and gas leases work claim that when leases are not drilled on
that the oil or gas company paying for the lease is somehow
derelict in its duties. Is that how offshore leasing works?
Ms. Jones. It is no more how offshore works than it is how
onshore leasing works, and that is a wonderful question,
Congressman, and I appreciate your bringing that up to help
educate people how the industry works to get hydrocarbon out of
the ground, whether it is oil or natural gas.
You know, geologists will look at seismic and make
suggestions to companies. Most of them are independent
companies that drill for and discover over 80 percent of all
the oil and natural gas onshore and off, and they will put
together drilling packages, and they will go to these lease
sales. They will buy the leases. Just because you have invested
in a lease doesn't even mean that oil or natural gas may be
found there. In fact, people have to understand that dry holes
are still drilled, even with the latest technology, and so
these are risks that companies make, and they put their money
and capital and human capital on the line, and just because
there is a lease in existence, for which they are paying a
rental price I might add, does not mean they may even drill
there because they may determine after the shoot seismic that
there are not hydrocarbons there, and there is no way the
Federal Government in Washington, D.C. can make them drill
there. That would be an unconscionable act of the Federal
Government.
Mr. Lamborn. Well, I am glad you are pointing that out
because I think there are some, frankly, who do not understand
that, and on top of all of that the litigation climate----
Ms. Jones. Yes.
Mr. Lamborn.--can you comment on that, how that might slow
down production or exploration?
Ms. Jones. There are so many roadblocks in the way today in
this environment of getting crude out of the ground, and one of
those is the--absolutely, the litigation climate that takes
advantage of torts that are created even in statute to micro
manage industry and put one more little roadblock, one more
``must'', to change a ``should'' to a ``must'' here and there.
You think it has got a very little effect until you get a
plaintiff's lawyer involved who then wants to put a hurtle or a
roadblock to Americans reaping the benefits of a production of
they hydrocarbons.
And it is yet another roadblock that is based on regulatory
statutory language that is taken advantage of by the trial bar,
I am afraid to say.
Mr. Lamborn. OK, thank you both.
Ms. Jones. Thank you, Congressman.
The Chairman. The time of the gentleman has expired. The
gentleman from New Jersey, Mr. Holt.
Mr. Holt. Thank you, Mr. Chairman.
Of course a reason for this moratorium is to make sure that
the practices are carried out safely in environmentally
acceptable ways. Mr. Angelle, Secretary Angelle, evidently you
did not come to the hearing today prepared to comment on the
safety recommendations of the BP Commission. Let me ask Ms.
Jones if you have for us your analysis of these recommendations
and how they--you know, one by one, whether they should be
applied, whether they should be modified because that is really
what we----
Ms. Jones. Thank you, Congressman Holt, and I would like to
preface this and saying that there is nobody in this room,
certainly who I know, would be in any way trying to imply that
we should encourage or be part of a culture of being less safe,
and, of course, as a state regulatory, the Railroad Commission
of Texas, I am concerned over--I have seen some of the----
Mr. Holt. So, you have, ma'am, recommendations for us?
Ms. Jones. Yes, I believe that----
Mr. Holt. Could you present those to us, if not orally now,
in writing?
Ms. Jones. I would have talked to many people out there. If
the recommendations are not making us any safer, they should
not be made. It is my understanding that there are some in
there, as Secretary spoke, the ``should'' to ``must''. There
are 14,000 of arbitrary ``should'' that were changed to
``must''----
Mr. Holt. Can I ask the witnesses----
Ms. Jones. And that makes no sense at all.
Mr. Holt. Can I ask the witnesses sometime in the next
couple of weeks to present--this report has been out for a
month. There are specific recommendations in it. Could you look
at those recommendations, get back to us in writing on which
ones make sense, and if they don't make sense, how they might
be modified?
Ms. Jones. I would be happy to.
Mr. Holt. And if you would do that, and for now, for the
moment could you name a single one that you think should be in?
Ms. Jones. I like the remote controlled blowout preventer
actually. I think that is a very good idea, and most of the
companies are already doing that. BP did not have that on the
well. But I would like to suggest that maybe the states ought
to regulate their offshore because OSHA, of course a Federal
agency, and another Federal agency were in the oversight
position of the BP well. It would not be----
Mr. Holt. It would be helpful to us if you would let us
know what your states are doing to implement new regulations.
Ms. Jones. I would certainly be worried if I were----
Mr. Holt. Mr. Angelle, you had commented that you had
thought a good containment mechanism was a good recommendation.
Would it not make sense to make sure that that is in place
before the moratorium is lifted, that the industry actually has
available and in place good containment mechanisms?
Mr. Angelle. Yes. And it is my understanding that that
containment is in place, sir.
Mr. Holt. OK. So you would support a moratorium until that
was in place, and if it is in place, then----
Mr. Angelle. Yes, I am a little confused. I thought I was
coming here, sir, to testify about the issuance of permits in
the deepwater drilling area. We seem to be now talking about
recommendations that were out for the last month. I understand
that rules and regulations----
Mr. Holt. The reason for the moratorium, sir, of course, is
to see that the practices are in keeping with health and
safety.
Mr. Angelle. I get that and understand that, sir, but I
think what I am trying to get across is that the Federal
Government instituted a set of rules, OK. They established a
goal line that was here and moved the goal line further down
the field. I get that and understand that. And in my testimony
I so indicated that I supported it could not be business as
usual.
What I am here to say and my testimony clearly said that
government has demonstrated the ability to comply with the
toughest standards now in the planet. It is time now to get the
bureaucracy to issue the permits that the industry has
demonstrated that.
Mr. Holt. With respect, where you have been for the last
year? This was an enormous accident. Lives were lost, and
industry was turned on its ear. The report that came out was a
blistering indictment of the safety practices. You know, in
addition to the documented accidents there have been 79
documented, this is reported in the report, 79 near misses of
loss of control. This is something that we really as a nation
have to get our hands on. This is not just a bureaucratic
slowdown. This is a necessary step to see that this industry is
operating properly. And as Mr. Markey said, it is much more
dangerous to do this in the United States than it is to do it
in Europe for the same companies. We have to get on top of
this.
Thank you, Mr. Chairman.
The Chairman. The time of the gentleman has expired. The
Chair will remind Members that the first Committee hearing we
had was precisely on the recommendations of the President's
Commission dealing with safety records. The purpose of this
hearing is to try to ascertain from people that live in the
impacted area, the state, the community and the economic
impacts of the de facto moratorium that we have been
describing, and the witnesses in their written statements have
responded to our request on the subject matter. I would like to
remind Members that our first hearing was on precisely the
President's Commission.
The Chair now recognizes the gentleman from Louisiana, Mr.
Fleming.
Mr. Fleming. I thank the Chairman. I would also follow up
to say that obviously Administration is comfortable with the
regulations because there has been two permits issued, so I
think that really ends that debate. But I want to lay the
foundation for, I think, some important questions.
I asked Secretary Salazar, I actually laid the case for
Secretary Salazar in this room on March 3rd the fact that oil
production is going down, number of rigs are going down, and
this was his answer. ``When you look at the production in the
Gulf of Mexico, even within the midst of the national crisis of
the Deepwater Horizon, the production has remained at an all-
time high, and we expect that it will continue as we bring new
production on line.''
The President has said this, and you heard just moments ago
the gentleman from Massachusetts make the same claim, and then
you also heard him talk about that he brings the facts here and
that we are in parallel universes and all that, yet he fails to
stipulate not one fact, not one number, or even an authority
for that, so let me do that.
In the first quarter of 2010, 1.7 million barrels of oil
was produced each day in the Gulf of Mexico. By the fourth
quarter of 2010, production had fallen to 1.59 million barrels
of oil per day, and this comes from the Energy Information
Administration, very well respected.
They also go on to say that the Gulf of Mexico production
is going to, or the production in the Gulf of Mexico will drop
by 240,000 barrels per day in 2011, and another 200,000 barrels
per day in 2012.
And then there is domestic production, and that is going
down, I won't even get into that, but I have all kinds of
numbers to back that up.
Then the President goes on to say, for heaven sakes, we
only have 2 percent of the oil in the world and we use 25
percent. Well, again Congressional Research Service, very well
respected, says the United States combined recoverable oil and
natural gas and coal resources is the largest in the world
outranking Saudi Arabia, China, and Iran. It goes on to say
that while there have been previously some estimates of 19.1
billion barrels of oil that we have that God put in storage
here rather than our strategic reserve, there are actually, in
fact, 145.5 billion barrels of recoverable oil. Total
recoverable energy reserves to the United States combining oil,
natural gas, and coal is 1.3 trillion barrels of oil
equivalent, the largest in the world.
The USGS estimates that our oil shale reserves could be
greater than 1.5 trillion barrels of oil. This is five times
larger that Saudi Arabia's proven reserves.
Now I want to shift just for a moment. We have a quote from
Secretary Chu just prior to being Secretary in 2008, he says,
``Somehow we have to figure out how to boost the price of
gasoline to the levels in Europe.'' President Obama in 2008
said, ``Under my plan of cap and trade electricity rates would
necessarily skyrocket.'' And then in 2008, President Obama
asks, ``So could these high prices help us?'', or that was a
question to the President, and Obama responded, ``I think that
I would have preferred a gradual adjustment.''
My point in all of this is that I think a much bigger
picture here is what is our administration doing in terms of
actually deliberately allowing, if not driving, oil prices,
gasoline prices up to fit a larger ideological belief, and I
would love to have your reaction to that.
Mr. Angelle. Thank you, sir. Certainly I am concerned about
the Administration's certainly disdain for hydrocarbons. The
President made it very clear in his State of the Union Address
that oil was perhaps a commodity of the past, and I am
paraphrasing, and I would simply say that if we are going to
pronounce something to be of the past I sure would like to know
what is the replacement today before we are taking hydrocarbons
out of the picture.
You know, I have a great deal of concern that when I look
at the natural gas reserves that we have in this nation, and I
am reminded of the fact that the previous Federal Reserve
Chairman testified to the U.S. Congress in 2003 that we did not
have enough natural gas in 2003 to fuel our economy; that we
needed to import natural gas from other countries, and some
five or six years later we now found ourselves on a 100-year
supply of natural gas.
And so it seems to me, and I am aware, sir, in your
particular district where there is a fueling station that was
built by a very progressive city, Bossier City, and right now
you can buy natural gas for $1.85 gasoline equivalent, and when
I compare that buck 85 to 3.50 for unleaded gasoline, and I
know that a 50 cent increase in the price of gasoline shocks
the American economy at the tune of $1.4 billion a week, I
think that we could actually make some serious improvements in
an energy policy that would have a positive impact on the
economic policy for all of us, and certainly give almost every
American a pay raise, if you would, by making fuel cheaper at
the pump.
I am concerned that there is not enough of a move to that
kind of innovation because I believe that it does perhaps play
into the hands of stifling the alternative and renewable agenda
that may be more, you know, prominent.
Mr. Fleming. Yes.
The Chairman. The time of the gentleman has expired. The
gentleman from New Mexico, Mr. Lujan.
Mr. Lujan. Thank you very much, Mr. Chairman, and I want to
thank the witnesses for taking the time to come and visit with
us today on drilling in the Gulf and the impacts that bad
actors have on the drilling industry and local economies. I
think one thing that we have heard from industry experts as
well as most advocates is that when there are bad actors in the
industry that they should follow the rules just like everybody
else, and when those rules are being broken they are going to
impact everybody and they are going to give everyone a scar,
and no one is going to forget that scar for some time. It is
real ugly like the scar that we now have in the Gulf.
You know, some things are easier said that things are
better there, but, you know, lives and families have been
impacted there for generations to come; not to forget the
families that lost loved ones. This is real, and I certainly
hope we understand the seriousness of this as we deliberate
this, as we talk about the future of energy in the country, and
we make sure that we are making decisions so we can stop
sending hundreds of billions of dollars to other nations. The
suggestion of natural gas is something that we are going to be
working on to see what we can do to diversify fuel sources for
our vehicles.
But nonetheless we are here to talk about what is happening
in the Gulf, what is happening in the Gulf, and how we can make
sure that what happened in the Gulf never happens again. I just
want to make clear what everybody already know, that the BP oil
spill has changed the Gulf forever. It has changed local
economies forever. It has changed tourism in the Gulf Coast
forever. It has changed wildlife habitat forever, and it has
changed the nature of drilling in the Gulf forever.
This is a significant point because as we discuss the
moratorium today we must also recognize that the spill is the
exact reason that the moratorium was put in place. I recognize
that a big part of Gulf economies like Houston and other areas
are connected to drilling, but in our first hearing of this
Committee in the 112th Congress we examined the BP spill and
how we could make policy changes to make drilling safer. I
certainly appreciate the Commissioner's response that no one is
trying to say that drilling should not be safer, and despite
recommendations to implement policy measures that would make
drilling safer from a nonpartisan commission established to
investigate this spill, that the new majority has continued to
ignore that there is a problem with the way some of these oil
companies do business, and I will repeat that--the way that
some of these oil companies do business.
The unnecessary risk taken by BP in terms of safety is the
root cause of what is hindering domestic oil production on our
shores. Ignoring that there is a problem is, in fact, hindering
our ability to drill on the Outer Continental Shelf in the Gulf
despite whether we want to recognize it or not.
In 2005, Commissioner, you will remember what happened in
Texas. Fifteen lives were lost. In 2007, there was an
independent bipartisan commission that gave recommendations to
BP to make changes to that refinery so that we would never see
something like that happen again. Many of those changes we are
still waiting for. It is not right. People that are going to
make a lot of money in this country should play by the rules.
Look, we need to get people to work. There is no doubt
about it, and I appreciate very much, Lieutenant Governor, when
we talk about how if someone is not making a dollar that is one
less dollar to take their family to Walt Disney World or one
less dollar to take a family to a ball game. Where I come from
that is one less dollar to buy a gallon of milk and one less
dollar to buy a loaf of bread.
This problem is very real, and we have to make sure we get
our hands around this. The truth is big oil companies have not
done a good job of maintaining public confidence and being good
stewards of public waters that they drill in. As a result of
the spill, we have seen the lack of willingness to take the
necessary precautions on their own to ensure drilling can be
done safety with the minimized risk and putting the lives of
their employees at risk.
The nature of this situation is such that because of this
terrible track record companies like BP and Halliburton have
occurred over the last decade, repeating safety violations,
repeating spills, placing profits over consumer protections,
placing profits over the people and over the environment. These
factors are what prompted the Administration's moratorium in
the Gulf. Not because the President woke up one morning and
decided to pick on oil companies, or because we don't agree
that the economy is impacted in Gulf states, and has a direct
tie to drilling.
I represent a district that has the largest natural gas
production in the State of New Mexico and number two in oil
production. I understand that this is very real. Let us call it
like it is though, and after the worst oil spill in the United
States history the Administration took time by imposing a
moratorium to reevaluate its regulatory enforcement, which many
people here agreed, here in Congress and asked for this in the
report, let us wait for this report before we see what happens.
Then after these changes took place at MMS, we said, hold
on, wait a minute here. Maybe things are not as bad as we are
saying they are.
We have now seen the moratorium lifted and the permitting
process begin again, and Mr. Chairman, I look forward to a
second round of questions here so that we can put a few of the
facts that we are seeing that are coming out of the
Administration that I think that none of us would be able to
disagree with.
So, thank you again, Mr. Chairman, for letting us be here
today.
The Chairman. The time of the gentleman has expired. The
gentleman from California, Mr. McClintock.
Mr. McClintock. The gentleman from New Mexico seems to
argue that that one bad actor, BP, required the imposition of
the moratorium. In other words, one bad actor required shutting
down everyone of the good actors that are out there with
excellent safety records, employing thousands and thousands of
American workers to produce American resources. The gentleman
reminds me a little of the old Flip Wilson routine, ``The devil
made me do it.''
Mr. Lujan. Mr. Chairman, will the gentleman yield?
Mr. McClintock. For a moment.
Mr. Lujan. Mr. McClintock, I appreciate that, Mr. Chairman,
very much. What I am suggesting that as a result of the BP
spill it seemed unanimous even with industry experts that not
one of those oil companies that is in the Gulf had an adequate
plan to be able to cap the problem that we had. What we are
trying to do is----
Mr. McClintock. I would like to reclaim my time because he
has already had his.
On that very point, what we know is that the blowout
preventer failed catastrophically. Had the blowout preventer
not failed, we would not have had the catastrophic oil spill in
the Gulf.
When the Challenger exploded, all we knew at the time there
was a catastrophic failure of the launch vehicle. We
commissioned the Rogers Commission. They meticulously recovered
every part of the wreckage they could from deep under water.
They reassembled it. With a panel of expert engineers
determined the cause of that explosion. They corrected the
cause, and went on with the program.
We received the Commission's report just last month right
here in this very room. I was shocked to learn, and I wonder if
you would be shocked to learn that that Commission was
responsible for determining the cause of the disaster, again we
know the blowout preventer failed. Why did the blowout
preventer fail? They did not bother to inspect the blowout
preventer. They did not even bother to look at the blowout
preventer, and yet we are told that their recommendations ought
to be controlling in this matter. What are your thoughts?
Mr. Angelle. Again, not having analyzed the
recommendations, certainly the blowout preventer did fail and
certainly that would have been the most important piece of
evidence to look at, in my mind. Again, there is no evidence of
a systemic failure on the parts of oil and gas companies to
explore for hydrocarbons in the Gulf of Mexico. In fact, there
have been over 50,000 wells that have been drilled, over 3,500
of them in deepwater, over a thousand of them in water deeper
than the Macondo Well, and again a ``one size fits all'' to
make the good actors pay for the sins of the bad actors, this
was not only a blowout preventer, but certainly an indication
that the responsible party made some poor management decisions.
We see it all the time in every industry. We see it with
regards to the automobile industries with some manufacturers
making poor management decisions on certain safety features. We
certainly see it in the airline industry, and to have a ``one
size fits all'' is not the America that I grew up in.
Mr. McClintock. The Secretary of the Interior sat right
where you are sitting a couple of weeks ago, admitted that they
still don't know the cause of the catastrophic failure of the
blowout preventer, which I find absolutely stunning, and a
result of the policies that they have adopted without that
crucial determination has meant thousand of workers unemployed,
billions of dollars lost to the economy, billions more lost in
royalty revenues to a Federal Government that is teetering on
the brink of bankruptcy.
What would you recommend Congress do to correct the folly
of the Administration?
Mr. Angelle. Well, my number one recommendation would be
that, again, the environmental assessment rule, again prior to
the Macondo event the rule of the land was that when an
environmental impact study was done prior to a lease/sale being
authorized by the government a categorical exclusion was given
for the individual well-by-well permits. OK? Meaning that the
massive EIS took care and contemplated the drilling of the
individual wells, and that was a categorical exclusion that was
given and provided, and it has been the policy between
different presidents of different parties for a long time in
this country.
We now have an executive decision to require environmental
assessments to be done on a well-by-well basis. Fifty-seven
wells have been exempt from that requirement, but moving
forward we will now enter into a program in the Nation where
each well permit will require individual environmental
assessments. That to me is duplicative and time consuming and
it will not reveal anything that that an EIS doesn't reveal at
a 35,000 foot level already. Thank you.
The Chairman. The time of the gentleman has expired. The
gentleman from Maryland, Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. Thank you all for
your testimony.
Mr. Lamborn had mentioned that there are people in
Washington that profess to be on the side of working people,
and I will include myself in that, I know you do. I think we
all addressed to the concerns of working people across the
country, no less so in the Gulf, and I understand your concern
about the direct and indirect impact that the moratorium may
have had, did have on the livelihood of certain people, I would
say much more so BP's oil spill had that effect. You have made
the case that the continuing situation is having a direct
impact on workers, correct?
I just wanted to point out because this is useful
information and this is something you can take back, which is
good news, is as you know BP has set aside $100 million
initially to help the rig workers that have been directly
affected. The information I have is that of that 100 million
there has been only now 5 million distributed, but that is
because there has only been 352 applications received.
Now, in light of that the fund has recently been expanded
in terms of its coverage. It will now reach those indirectly
affected, and that can include people who work for companies
that supply the rigs with everything from industrial equipment
to food and toiletries and things of this nature. So, it is
being expanded more broadly, and I would hope that there would
be more applications now coming forward and there would be
relief. The relief can be hardship grants of 3,000 all the way
up to $30,000. So, I encourage you to encourage others to make
applications if they can demonstrate that they have been
affected negatively, and, frankly, if there is not enough money
to cover those applications that come forward out of the
existing fund then BP, who is the perpetrator here, they
started this whole thing, they ought to be made to pay, and you
can, I think, rest assured that Members on both sides of the
aisle will push them to do so. So, I just wanted to make that
point.
I don't really understand the argument that this is a de
facto moratorium. I mean, yes, there was an official formal
moratorium in place. The Secretary of the Interior, Secretary
Salazar lifted that on October 12, 2010, but that didn't mean
that everybody should come rushing back into the space created
without being able to demonstrate that they met safety
standards.
You indicated a moment ago that you resist and consider
almost un-American the notion of ``one size fits all,'' and I
agree with you, and what we saw with the Gulf oil spill
response plans when we went in and looked at them in the wake
of the disaster in the Gulf was that they very much were ``one
size fits all,'' a cookie cutter kind of approach to safety,
and as a result of this disaster and the response on the part
of the government and the agencies involved, and in concert
with the recommendations that have been made by the Commission,
there is a recognition now that when companies come forward and
want to do this kind of production they need to have a plan
that is specific to the enterprise they are seeking. In other
words, let us get away from ``one size fits all'' when it comes
to safety.
Now two companies have become successful recently. They
have been issued permits based on being able to demonstrate
that they have a safety plan that is workable and is specific
to what they are trying to do, and as other companies come
forward with similar specific plans I think you can expect that
those permits will be forthcoming, and that is how it ought to
be, but we shouldn't sacrifice the safety dimension of this,
and I thin using this phrase ``de facto moratorium'' is not
helpful, it is not constructive. There is no moratorium in
place anymore. There is enhanced scrutiny of the safety
dimension with respect to drilling offshore, and I think that
that is appropriate.
Has my time expired?
The Chairman. Your time has expired.
Mr. Sarbanes. I yield back. Thank you very much.
The Chairman. The gentleman from Texas, Mr. Flores is
recognized.
Mr. Flores. Thank you, Secretary Angelle, and Chairman
Jones for joining us today.
The opening remarks I found to be fascinating about a
parallel universe, and there really is a parallel universe. You
have the real world where people that know when they go to fill
their tank up that the oil that produced that gasoline comes
from hard working Americans and companies that have spent
trillions of dollars of investment in getting that oil out of
the ground and refined, and into peoples' tanks.
Now, when you live here in fantasy land, in Washington,
D.C., a lot of people think it comes from the gas pump when you
put your credit card in it. So there is a parallel universe and
I am glad to have people from the real world here that
understands what actually happens.
I also appreciate your comments on strategic reserves. The
strategic reserves this country has are not in the strategic
petroleum reserves, they are under the ground owned by the
taxpayers offshore and on public lands, and the quicker that we
get our arms around this and recognize this, and the value of
those assets to the taxpayer and to our economy and to our
educational systems the better off we will be.
Now, I want to provide my condolences to everybody who was
impacted by the Macondo incident, particularly the families
that lost their loved ones, but I don't think that it is
appropriate to shut down an entire industry just because of one
accident, and I believe that has happened. We do have a de
facto moratorium. The statistics prove it. The matrixes are
there, it is very clear because we are not issuing permits.
By the way, and I want to say that I have introduced two
pieces of legislation to try to address this issue. Number one
is a lease extensive act to give those operators who through no
fault of their own were adversely impacted by this moratorium
and extend those leases for a year, and today we are going to
introduce legislation to remove the bureaucratic overreach from
the permitting process, and also to codify the timelines of the
permitting process, pretty similar to what you were talking
about, Chairman Jones. Those will be hopefully considered soon
and will help this process.
Chairman Jones, you talked a little bit right at the end of
your testimony about the difference between permits and pushing
paperwork, and I think that there is an implication coming from
the Administration that people are not interested in drilling
in the Gulf of Mexico anymore because the volume of permits are
down. I think somebody is playing hiding something here in
terms of what a permit is. Can you help clarify that for the
benefit of the Committee? What is a permit and what is actually
happening there in terms of these matrixes?
Ms. Jones. I don't know, Congressman, if you actually said
hide and go seek, but I think that is what I heard you say and
that is what is going on at this time. And so the reality is
there is a moratorium regardless of--if you don't want to call
it a de facto moratorium, there is a permatorium, and they are
using--the agency is using tools, they are returning the
paperwork back to the companies forcing them for more
information. One of our operators in Texas actually, he said
there is just no more information I can give them. I can't help
but think that if these people are so intelligent as we expect
them to be that they don't know what they are doing, and so
what is going on is an attempt to slow down the process to get
the hydrocarbons out of the ground.
I will go back to this one particular, and there are many
stories like it, what is going on, and that is why I am here to
bring the message of what is really happening, not what you
think is happening in fantasy land up here in Washington,
Congressman, and I appreciate your sensitivity to what is going
on in the field, and that is that the permits for old already
permitted wells are not being let and our country is worse off
for it, and our energy security, and the lives of Americans,
the quality of life who depend on energy security and what it
can do for our country, we are not reaping the benefits of the
responsible production of the oil that is in the Gulf of
Mexico.
I would suggest that, the tragedy, the sadness, the tragedy
that took place, there will be another tragedy if American
cannot be energy secure in the coming decades.
Mr. Flores. Mr. Chairman, how much time do I have left?
The Chairman. You have 15 seconds.
Mr. Flores. Can you give me five second answers, each of
you, on the impact, financial impact on your states of the loss
of revenue from the moratorium?
Mr. Angelle. We are experiencing a $1.5 billion budget
deficit in Louisiana, partially because of the lack of activity
in the Gulf of Mexico and the revenue that would present to the
state.
Mr. Flores. Chairman Jones.
Ms. Jones. Houston is home to many of the companies that
are drilling in the Outer Continental Shelf, the headquarters
are in Harris County. At this point they are letting people go.
We are seeing an approximate 2,500 jobs lost, 622 million in
our GDP, and 153 million in wages. There is no state, no
country that can afford these kind of losses for much longer.
Mr. Flores. Thank you.
The Chairman. The time of the gentleman has expired. The
gentlelady from California, Mrs. Napolitano.
Mrs. Napolitano. Thank you, Mr. Chairman.
I would like to take a little bit of a different tact on my
question to Chairwoman Elizabeth Jones, and dealing with a
report of June 2010, updated in 2011, revealing the drinking
water in the Town of Dish, Texas, was contaminated and
attributed to drilling activities. Tragic, contaminated
aquifer, victims had to be compensated, arsenic 10 times the
acceptable level, lead at 21 times the acceptable level,
chromium more than double the limit.
What has the Railroad Commission done to work out this
issue, and could the contamination be avoided, and what lessons
have been learned?
Ms. Jones. The Railroad Commission has no record of
groundwater contamination from oil and gas activities in the
State of Texas, and we have made that very clear to all of the
Federal agencies who care to know the facts, and I would
suggest that the engineering firm that had done those test in
Dish and the mayor who I understand has moved from Dish, do not
have the requirements and the education, academic standing that
many of the other engineering firms who have that, so the
Railroad Commission, while we do not oversee the air quality,
we do oversee from the ground below, and there are no record of
any groundwater contamination.
Mrs. Napolitano. That is something else we need to look
into.
Ms. Jones. Well, come on down.
Mrs. Napolitano. It also stated that RRC permits wells and
oversees technical aspects, and you produce the largest amount
of oil in the U.S. In 2010, you received 21,000 applications,
500 per week for the last two months, so you may see
approximately 26,000 for 2011 proposing the same rate. Your
process expedited requests within one day and standard
applications in three days. How many applications out of the
21,000 in 2010 were approved that you know of?
And with contamination issues that affect water supply and
lives at risk, is it safe to approve permits giving a more
rigorous oversight approach, and increase evaluation time of
those? And do you feel your review process is adequate to
determine all potential impacts for the citizens?
Ms. Jones. I would suggest that the Federal Government
could look to a state like Texas who has hundreds of years of
oversight of oil and natural gas operations underground and in
fact----
Mrs. Napolitano. Would you answer the question about the
applications?
Ms. Jones. It is incumbent upon us to let these permits,
and these are permits to drill a well, and we have a lot of oil
and natural gas in Texas, and a new shale play in south Texas.
Mrs. Napolitano. Would you answer the question?
Ms. Jones. Well, I will. I am so excited to say that, yes,
we are getting a lot of permit requests from companies who want
to drill for our hydrocarbons, and that is the first permit,
the P-5, if you will, and I think that in fact the Federal
Government could look at what we are doing in Texas to reap the
benefits of the hydrocarbons that are under our ground, and we
do have no record of groundwater contamination from oil and
natural gas activities, but we do have a record of economic
security in those counties where there is a lot of natural gas,
and the public and the schoolchildren of Texas and our general
revenue are benefitting greatly.
Mrs. Napolitano. Thank you. Given your answers, and I am
running out of time, and I am very concerned because I am the
Ranking Member on water and power, so that is a great issue
with me.
Ms. Jones. I understand.
Mrs. Napolitano. And I have an issue with hydraulic
fracturing given the contamination of the water it produces and
it is left to the citizens to clean up, or at the expense of
the taxpayer, if you will, and I am wondering if you could
suggest how the citizens can protect themselves from those
impacts.
Ms. Jones. Well, with all due respect, the cleanup is not
left with the taxpayers or the citizens because we have no
record of groundwater contamination. Hydraulic fracturing goes
on thousands and thousands and thousands of feet below the
water table. It would be geologically impossible for the frac
water to migrate up to the water table, and so these are myths
that must be put to rest around the country, and there is a
certain fraction who would in fact like to cripple the natural
gas and oil----
Mrs. Napolitano. I am not asking for any information in
regard to anybody else. I am concerned about Texas.
Ms. Jones. Yes.
Mrs. Napolitano. I am a Texas by birth, and while you may
say that you go very much thousands of feet, the water that is
brought up sometimes has chemicals in it that are left in ponds
and to settle and not cleaned up. That is one of my concerns.
Ms. Jones. We have very, very strong rules about pit
lining, and when water is kept in a pit, or rather, water
before it is disposed back underground in an injection well
that is permitted by us at a very specific pressure, and with
extra casing and cement. Nobody in Texas has to go to bed at
night wondering whether or not their groundwater is going to be
contaminated. Our rules are very stringent, I might add.
Mrs. Napolitano. Right. Even with a strong rule there are
sometimes things that happen in the aquifers that might be
intersected somewhere along the line.
Ms. Jones. Well, I will look forward to--if you have a
friend who has a claim or has a concern, I hope they will call
me directly, but I will say that the oil field cleanup fund is
something we are very proud of in Texas, and in fact the
industry pays into it. We have one of the most--the biggest
fund moneywise oil field cleanup funds to take care of the
issues of the past because it is not our grandparents Railroad
Commission anymore, and the focus of our generation is to make
sure that we leave the land better than we found it----
Mrs. Napolitano. I hope so. Thank you, ma'am.
Ms. Jones.--Railroad Commission, too. Thank you, madam.
The Chairman. The time of the gentlelady has expired. The
gentleman from Louisiana, Mr. Landry.
Mr. Landry. Thank you, Mr. Chairman. I want to apologize. I
had to go to a markup and vote, and I wasn't able, Mr.
Secretary, to hear the remarks of the gentleman from
Massachusetts made. You can assure him that your congressman
has read that report though. So if he asks you again just defer
it over to me. I will be more than happy to talk to him about
it.
I was curious, did the Oil Spill Commission give you an
opportunity to testify in front of them?
Mr. Angelle. I testified in front of the Commission in the
time period that I was serving as the Interim Lieutenant
Governor----
Mr. Landry. OK.
The Chairman.--on a matter affecting tourism and fisheries.
I did not have an opportunity to testify, to my recollection,
to the Commission on matters affecting oil and gas inasmuch as
during the time that they were investigating I was pulling a
duty as Lieutenant Governor, as you know, in Louisiana.
Mr. Landry. OK. I just wanted them to understand that you
didn't have any--you were not able to give any technical
testimony to the Commission. See, they can't hide from the
rising gasoline prices, that is the problem here, and they
don't want to admit that the production in the Gulf of Mexico
is actually projected to decline rather than increase, and they
also point back to the BP fund that was set up to help offshore
workers, but what they don't understand is that as they use the
banner to try to keep jobs in the United States, that some of
those offshore workers have actually left the country with the
rigs that are moving out of the Gulf of Mexico. Wouldn't you
agree with that?
Mr. Angelle. Right. Certainly there are many folks, when we
talk about seven or eight rigs actually leaving the country, in
a lot of cases men and women from south Louisiana are actually
working 30 and 30 hitches where they are actually flying to
other parts of the globe to be employed.
Mr. Landry. Right. They would much rather that paycheck
than the unemployment check that they would like to give them.
Mr. Angelle. Well, certainly I think our Governor has made
it very clear, and I am sure this applies to every state in the
Union, our people want to work. Our people don't want a check.
Mr. Landry. That is correct. Thank you.
And I want to address this de facto moratorium that they
seem to not want to believe in. Do you have any--I hate to put
you on the spot, but do you know of the backlog at BOEM on the
amount of permits that are currently pending both from shallow
water and deepwater?
Mr. Angelle. I don't have that number specific in front of
me. My last conversation certainly indicated well over 30 or 40
permits that were pending. Again, that would be my best
recollection from a meeting that I probably had several weeks
ago.
Part of the problem with this issue just real quickly is
that, quite frankly, you know, I think the Bureau of Ocean and
Energy is a group of good men and women who are trying to do
what they can but, quite frankly the regulator has a duty to
explain to the regulated community what the rules mean and what
they are and how they interpret, and that has been a
fundamental problem that has caused a very, very significant
time slow down is that, you know, we continue--at one time we
were continuing to have, well, we have to get that question
answered by the Solicitor General.
I mean, for a time period every question we were asking we
had to get an answer from the Solicitor General, and I
understand that this is a complex, complicated situation, but
the regulator has a duty to make sure that its staff can answer
questions of the regulated community. My question is if the
Solicitor General decided to take two weeks vacation, what was
going to be the next thing we do?
Mr. Landry. And I apologize for putting you on the spot. I
will tell you, and I know it is really not your job as
Secretary of Natural Resources in Louisiana, your jurisdiction
is within the state, but the backlog is actually 270 shallow-
water permits and 52 deepwater permits. Would you call that a
robust energy policy?
Mr. Angelle. Well, it certainly indicates to me that we
have a capital market that is willing to invest dollars. We
have a labor force that is capable of drilling, but we can't
get the license and the permission to begin drilling.
Mr. Landry. Thank you so much.
Mr. Angelle. Thank you, sir.
The Chairman. The gentleman yields back his time. The
gentleman from Florida, Mr. Southerland.
Mr. Southerland. Thank you very much, and I appreciate you
coming today and telling your side of the story.
You know, a few weeks ago Secretary Salazar came and I
personally was bothered by the report that had been delivered
to us a month prior because the findings that were determined
by the 400-page report stated that--or did not state that the
government bore any responsibility after issuing 720 citations
and refusing to rescind the Jones Act. It seems like the
disaster, which is obviously being felt by my region, I live in
Panama City, Florida, but there was no recognition, OK, that
the government in any way was an accessory to this crime, OK,
and I find that rather bothersome.
I know that our Ranking Member talked about a parallel
universe, and so in using his own words I don't know what
universe that he may be in, but I know the universe that I am
in has 12 percent unemployment. The universe that I am in, OK,
has $14 trillion of Federal debt. That universe I am in is not
leading the world perhaps going forward in our self-reliance
upon energy. The parallel universe that I live in is seeing
hurt and pain, and the family budgets in this country having to
learn to do more with less. The parallel universe that I live
in, OK, is suffering right now by what I believe is manmade
problematic ideas that only furthers this pain, and I would say
I consider that immoral. I know that is pretty much a statement
but I wanted to make a point.
In August 20th of 2008, the now President Obama made a
statement that high oil prices will help us move into a
different direction, OK, and I am just quoting his words. So
apparently he believes that high oil prices, OK, are an answer
for us to move in a different direction. I am just quoting his
own words. With that being his statement, is the policy of this
Administration aiding and pushing forward higher oil prices
because he does believe that we need to go in a different
direction and that high oil prices are a tool to make that
happen? Is what you are seeing now by this Administration a
reflection of his own public statement? And that is for both of
you.
Mr. Angelle. Again, I would say, Congressman, and
especially coming from Panama City, a place that I visit every
year with my family, and thank you for the great hospitality.
Mr. Southerland. And we do have direct flights from
Baltimore to Panama City now, I just want you to know. Invite
everyone.
Mr. Angelle. Great hospitality there. You know, in Florida,
70 million people visit every year, and I am reminded that if
there is one place in the Union that needs cheap and available
energy it is the State of Florida. When I think of what made
Florida, certainly air conditioning and----
Mr. Southerland. Hear, hear. I live with five women so we
have to have that.
Mr. Angelle. Absolutely. I have five sisters and three
daughters, so I am with you.
[Laughter.]
Mr. Angelle. But having said that, and certainly the
Eisenhower Interstate System is all roads lead to Florida. When
I think of the automobile industry, after World War II the
automobile industry and the union workers, and I can say that
because I am a son and a grandson of a Ford dealer, it was made
by cheap and available energy.
Mr. Southerland. Right.
Mr. Angelle. What separates the middle class in this
country from other areas is that we have cheap and available
energy and we can be mobile, and a middle class person can get
on a plane from New Orleans, Louisiana, and be in New York for
$250.
Mr. Southerland. Right.
Mr. Angelle. And a middle class can do that, and when cheap
energy threatens it, so, yes, I am concerned that there is a
concern that oil is bad. I mean, again with all due respect to
the Office of the President, the President made very clear in
his State of the Union Address that oil is a commodity of the
past, and again, as I said earlier, show me a better way, and I
want to sign up for it.
Mr. Southerland. Ms. Jones.
Ms. Jones. Congressman, thank you so much for that astute
observation, and one can't help but think if that were the goal
that one was trying to achieve you could not have put in place
a better plan to achieve it and to stifle the energy production
right here. It is in our own back yards, and that is offshore
as we have been talking about, and it is onshore, and it is
offshore Alaska as well, the Beaufort Sea. So it is around the
country, and I think whether--I cannot speak to the intent, but
I can speak to the outcome, and the outcome is that, yes, in
fact, these policies are aiding and abetting this crisis and
energy costs that we have now.
I don't know why somebody wouldn't be proud of the role
that American energy has played in the lives of people for
decades, and in fact it should be remembered and perhaps many
in the Administration don't remember or recall unless one was
studying one's history that the allies floated to victory in
World War II on a sea of American energy, and I might add that
came from the east Texas oil field at the time, but that is
just the beginning of the fields of natural gas and oil that we
are going to need for decades to come so that we can float to
victory again, and I appreciate so much your realization and
recognition of the truth. Thank you.
Mr. Southerland. Thank you, Madam Chair. I yield back.
The Chairman. The gentleman's time has expired.
Mr. Southerland. I was trying to be proper.
The Chairman. That was very timely, too.
The gentleman from South Carolina, Mr. Duncan, is
recognized.
Mr. Duncan of South Carolina. Thank you, Mr. Chairman, and
it is great to hear a southern accent up here on the Hill, and
I want to thank you guys for coming.
In the post-Katrina years, actually within that year, I
visited Louisiana and New Orleans, and actually went offshore.
I don't know how many Members of this Committee other than Mr.
Landry, Mr. Flores, have actually been to a deepwater
production platform and a deepwater drilling platform. I have,
so I have seen it for myself. I have seen the refining capacity
in St. Bernard Parish, and my heart still goes out to the folks
in Louisiana for the Katrina Hurricane.
So, when I visited Lafayette, Louisiana, back in the late
nineties, I was amazed at the amount of industry that is tied
in with offshore energy production, whether it is the service
industry, offshore service industry, or the welders for the
pipes, just everything you can imagine is tied to that, and
Congressman Landry has been very gracious to explain to us some
of the impacts that you are sharing with us today on the
Louisiana economy, on all the gulf states' economy, not just
with the direct drilling, but also the trickle down to the guys
that are servicing that industry, so I understand impacts and I
appreciate you sharing that with the Committee. I also
understand the long historic issues that the lady from Texas
has shared.
So what I want to talk about this afternoon, or it is still
morning, I guess, is offshore drilling provides one-third of
the U.S. energy and oil production, and it is concerting to me
that I saw $4.69 a gallon gasoline in Georgetown last night. I
hope it is not that high in South Carolina in my great state,
but $4.69. It is tremendous.
I remember the fall of 2008, late summer 2008, diesel, I
drive a diesel truck, it was $4.85 a gallon. I know what $4.85
a gallon fuel did to my business. I can only imagine what the
rising fuel prices are doing to businesses all across this
great land, and I realize that that impact will have a
significant negative impact on the recovery.
I believe in American energy resources, I believe in
solving our energy independence through offshore/onshore
deepwater GOM, deepwater Alaska, onshore on Federal lands,
natural gas production, fracking, everything we can do to meet
our energy independence in this country and lessen or
dependence on foreign oil is very, very important.
Mr. McClintock was very clear, I think, on talking bout
this report, and the fact that they sat in here and told us
that they did not examine the blowout preventers. Those blowout
preventers were laying on a dock in Louisiana, and they said
that it wasn't in the scope of their commission and that is for
someone else to do.
Well, if that was the number one attributable cause to the
Deepwater Horizon accident, why in the world aren't they
looking at that? And I think there was an intent in this
report, in this Commission to come to a conclusion, and I think
that is wrong for the American people.
I want to address the de facto moratorium comments my
colleague across the way said. On April 26, 2010, Interior
Secretary Ken Salazar instructed the MMS to physically inspect
all deepwater rigs within two weeks, followed by a physical
inspections of all deepwater platforms. MMS did that and they
found no problems with any of the exploration rigs similar to
the Deepwater Horizon or any of the deepwater production
platforms.
You said there is not a de facto moratorium when in fact
this Administration is currently being held in contempt of
court for slow walking permits, and is currently trying to
appeal the Federal judge's ruling. There is a de facto
moratorium, and it is affecting energy production, and it is
definitely affecting the economies in Louisiana.
So, as this de facto moratorium continues to be the
practice of choice by this Administration while we continue to
rely heavily on foreign supply or countries that did not have
concern for America's best interest, and I ask you this
question. What are the long-term consequences for the economy
and for gas prices if this de facto moratorium is not lifted
and new permits are issued?
And let me just preface that with saying I served under the
last administration on the Department of the Interior's MMS
five-year planning subcommittee that looked at oil and natural
gas leases on the OCS. I understand it is a very convoluted
process of public hearings, and if these leases expire and no
leases are being issued, and I don't know what the next five-
year plan is, if they have to go through the same process that
I experienced, we are say out in the future before any leases
are offered in this country.
And so what kind of impact is this going to have on the
American economy?
Mr. Angelle. Certainly I am concerned, Congressman, and
thank you for your concern for the people of Louisiana
following Katrina, and we owe a great deal of gratitude to
every American for sharing their treasure with us to rebuild a
great American city.
Certainly we cannot take the Gulf of Mexico providence and
put it on the sidelines and expect to have a robust economy in
this country. Again, since 1972, we have had six recessions,
each one of them have been preceded by a spike in energy
prices. There is absolutely no question that we are married to
the automobile in this country. There is absolutely no question
that it hits the least of our brothers the hardest. Even though
the State of Mississippi does not have the highest gasoline
prices, they are the most impoverished state in the Union and
they pay 13.2 percent of the average Mississippian's income
goes to pay for the cost of gasoline, so the cost of fuel just
absolutely cripples folks on the lower end trying to get to the
middle class.
Mr. Duncan of South Carolina. Thank you, Mr. Chairman.
The Chairman. The time of the gentleman has expired. The
gentleman from Florida, Mr. Rivera.
Mr. Rivera. Thank you, Mr. Chairman. My questions have been
asked and answered.
The Chairman. Well, I am not sure how to respond to that.
[Laughter.]
The Chairman. Let me just say because I think you asked the
question, the gentleman from South Carolina asked a question of
both witnesses, is that correct?
If the gentleman from Florida would yield his time for the
purpose of a response to that question, that would allow
Chairwoman Jones to answer.
Mr. Rivera. Certainly.
Ms. Jones. The long-term consequences are very dire to what
has been in place now, and I would like to bring attention to--
thank you, Congressman, for giving me this opportunity as well
to follow up, and that is that the leases are not--there are no
lease/sales being planned. One has been canceled. The
production that you are seeing today has been planned five to
seven years ago. You just can't turn on the spigot and have it
come out. And so if we are not having lease/sales so that oil
finders can go in and drill and produce that oil, we are going
to see a tremendous deficit in the five years to come. Five
hundred thousand barrels a day that could be taken out of our
supply.
So, we have as Americans, all of us, an invested interest
in making sure that statutory requirements that you might, and
I hope you come up with to ensure that the permits a let in a
timely and reasonable way so that there is certainty out there
so oil finders, independent companies, not all majors, which I
think people continue to think that this is all a major company
working, but I think it is important to know that we will be
suffering a severe hardship, not just in the jobs and revenues
lost today but in the energy lost in the next five years. Thank
you.
The Chairman. Thank you very much, and I want to thank both
of you for appearing on this panel. As sometimes happens, there
are question that come up again, and if you are asked a
question in writing we would ask you to respond back to the
Committee as quickly as you possibly can.
So once again, Secretary Angelle and Chairman Jones, thank
you very much for taking the time to come up here to respond to
what your inquiry was as to the economic impacts you are
feeling on the Gulf. Thank you very much and you are dismissed.
Mr. Lujan. Mr. Chairman, we are not going to have a second
round of questioning?
The Chairman. The reason not is because in the interest of
time we have another panel and the next votes are anticipated
to be in the 1:50 to 1:30 time zone, so we want to try to get
the second panel in fairness to them because they, too,
traveled. Thank you once again.
At this time I would like to call up the second panel of
witnesses, and if you would seat yourself in this order I would
certainly appreciate it: Ms. Charlotte Randolph, the President
of the Lafourche Parish Government in Louisiana; Mr. Chett
Chiasson, Executive Director, Greater Lafourche Port Commission
in Louisiana; Mr. Samuel Giberga, General Counsel, Hornbeck
Offshore Services, Offshore Marine Services Association; Mr.
Christopher Jones from Keogh, Cox & Wilson, Limited; and Mr.
Keith Overton, Chairman of the Florida Restaurant and Lodging
Association, and President and Chief Operating Officer of
TradeWinds Island Resorts.
[Pause.]
The Chairman. Thank you very much for coming and thank you
for your patience with the first panel. Once again to go over
the ground rules, your full statement will appear in the record
and I ask you, because the pressures of vote are coming, to
keep your oral remarks limited to five minutes if that is
possible. Obviously, I know you have a lot to say in a short
period of time, and I certainly respect that.
Once again, the timing lights are such where the green
light is four minutes. Once the yellow light goes on you have
30 seconds, and when the red light goes on it means five
minutes have expired.
So with that, thank you all very much for being here, and I
would like to first recognize Ms. Charlotte Randolph, the
President of the Lafourche Parish Government. Did I say that
correctly? Good. Well, if Jeff said I said it correctly, then I
know I said it correctly. So you are recognized for five
minutes, and press the button on the microphone so we can all
hear you.

STATEMENT OF MS. CHARLOTTE A. RANDOLPH, PRESIDENT, LAFOURCHE
PARISH GOVERNMENT, STATE OF LOUISIANA

Ms. Randolph. Thank you, Mr. Chairman and Members of the
Committee. I particularly want to thank Mr. Markey for
returning.
We have watched you since the moratorium was issued and
certainly know that you are not a--well, that you are a
proponent of the moratorium, and for various reasons, and so I
appreciate the opportunity to express to you what is going on
in reality in Louisiana right now.
I represent a parish that is in the epicenter of the oil
spill and also at the epicenter of the oil and gas industry,
and one of the quotes that Secretary Salazar often attributes
to me is that we are standing knee-deep in oil and asking for
more, but it is a reality. So if I may, I would like to offer
my statement now.
That characterizing of what happened in the Gulf of Mexico
and beyond as simply an oil spill doesn't begin to describe the
tragic magnitude of this event. Eleven men died, thousands of
wildlife were sickened or killed, fishing waters were tainted,
and miles upon miles of beaches from Florida to Texas were
stained. Two words cannot sum up this disaster.
But those of us who have lived with this disaster for 329
days have witnessed a semblance of recovery. BP's early
commitment enabled many to recapture what they were losing in
earnings in 2010, but the cleanup workforce has been reduced to
a skeleton crew, and we approach the next fishing season with
trepidation.
But that is not where the money is. The number of full-time
fishermen has diminished over time. While fishing still defines
our culture, we are traditionally harvesters of our natural
resources. The oil and gas industry has been the mainstay of
our economy for over 80 years. All of the top 10 taxpayers in
Lafourche Parish are located at Port Fourchon that services all
33 rigs singled out in the initial moratorium. This bill has
decimated the fishing industry. A continued de facto moratorium
will essentially end life as we know it in our parish.
Up to 40 percent of our tax base could be lost by 2012 as a
result of the drilling ban. At hearings last year, testimony by
rig owners indicated that without work their equipment would
leave the Gulf. The Lafourche Parish Government's 2011 budget
is based on anticipated property tax losses of 18 percent,
allowing for only one capital project.
In March of last year, in 2010, our unemployment rate was
4.4 percent. Some employees have been transferred to locations
in other states and countries. Families are now making
decisions as to whether the husband and family and father will
live elsewhere with the rest of the family staying behind to
finish schooling or to work. At least for now the paychecks are
coming home.
The residual effects of this policy is quantifiable in that
while most have retained their job, some may begin to lose
benefits. Perhaps the best example lies in our parish
hospitals. Two are acute care, one is a major regional medical
center which just completed a major $90 million expansion cash.
The men and women who work in oil and gas not only are paid
significant salaries, but are also covered by excellent health
and retirement benefits. Expensive hospitalization policies
could now be targeted for reduction in coverage which results
in a more uninsured people putting a greater strain on our area
hospitals. Reduction in coverage results in higher deductibles,
reducing expendable income. As we are all acutely aware,
private insurance covers a patient more extensively. Government
policies don't cover near what privates do.
Follow me here for the ripply effect ensures. If medical
centers and clinics are not paid adequately, current staffing
is reduced. More people are out of work, less people carrying
health insurance. Unemployed and underemployed people do not
shop, do not buy cars. Employment levels at grocery stores and
car dealers are thus impacted. The final result, a reduction in
sales taxes. Schools, law enforcement and public services
suffer. Roads and bridges deteriorate, less senior citizens are
fed through the Meals on Wheels Program.
Too often in this country we vilify major corporations,
forgetting that it is the individual men and women who are the
company. Mr. Markey, there is no Mr. Chevron, but there is a
Mr. Cheramie whose grandfather converted his fishing boat to a
vessel that would serve the oil and gas industry. Mrs. Cheramie
is a teacher whose retirement is invested in port oil and gas
stock. Their children attend schools funded by property taxes
paid for by oil and gas. They guy their cars at Golden Motors,
and groceries at Frank's Super Valu, and eat out at B&E
Seafood. The parish estate and the Federal treasury lose
contributing taxpayers. It is a vicious cycle that only
immediate action by the Bureau can rectify.
My time is almost up, so I will sum it up. The President's
promise for a greener nation should not cause unemployment and
higher energy prices. That is change for which no one
bargained. Let us go back to work to fuel America. Thank you.
[The prepared statement of Ms. Randolph follows:]

Statement of Charlotte A. Randolph, Parish President,
Lafourche Parish Government

Good morning Chairman Hastings and members of the House Committee
on Natural Resources. Thank you for the opportunity to represent
Lafourche Parish on this very important national issue.
Characterizing what happened in the Gulf of Mexico on April 20,
2010 and beyond, as simply an ``oil spill'' does not begin to describe
the tragic magnitude of the event.
Eleven men died in the explosion, thousands of wildlife were
sickened or killed, fishing waters were tainted and miles upon miles of
beaches from Florida to Texas were stained. Two words can't sum up this
disaster.
Those of us who have lived with this disaster for 329 days have
witnessed a semblance of recovery. BP's early commitment enabled many
to recapture what they were losing in earnings in 2010. But the cleanup
workforce has been reduced to a skeleton crew and we approach the next
fishing season with trepidation.
But that's not where the money is. The number of full-time
fishermen has diminished over time. While fishing still defines our
culture: we are traditionally harvesters of our natural resources--the
oil and gas industry has been the mainstay of our economy for almost 80
years.
All of the top 10 taxpayers in Lafourche Parish are located at Port
Fourchon, which services all 33 rigs singled out in the initial
moratorium. The spill has decimated the fishing industry; a continued
de facto moratorium will essentially end life as we know it in our
parish.
Up to 40% of our tax base could be lost by 2012 as a result of the
drilling ban. At hearings last year, testimony by rig owners indicated
that without work, their equipment would leave the Gulf for other
opportunities elsewhere in the world. The Lafourche Parish government
2011 budget is based on anticipated property tax losses of 18 percent,
allowing for only one capital project.
Some employees have been transferred to locations in other states
and countries. Families are now making decisions as to whether the
husband and father will live elsewhere, with the rest of the family
staying behind to finish schooling or to work. At least for now the
paychecks are coming home. These are the fortunate ones; the rest will
be terminated.
The residual effect of this policy is quantifiable in that while
most have retained their jobs, some may begin to lose benefits. Perhaps
the best example lies in our parish hospitals. Two are acute care, one
is a major regional medical center which just completed a major $90
million expansion--cash.
The men and women who work in oil and gas not only are paid
significant salaries, but are also covered by excellent health and
retirement benefits.
Expensive hospitalization policies could now be targeted for
reduction in coverage, which results in more uninsured people, putting
a greater strain on our area hospitals. Reduction in coverage results
in higher deductibles, reducing expendable income. As we are all
acutely aware, private insurance covers a patient more extensively.
Government policies do not cover near what private insurers do.
Follow me here, for the ripple effect ensues. If medical centers
and clinics are not paid adequately, current staffing is reduced. More
people out of work, less people carrying health insurance. Unemployed
and under employed people do not shop and do not buy cars. Employment
levels at grocery stores and at car dealers are thus impacted.
The final result? A reduction in sales taxes. Schools, law
enforcement and public services suffer. Roads and bridges deteriorate.
Less senior citizens are fed through the Meals on Wheels program.
Too often in this country we vilify major corporations, forgetting
that it is individual men and women who are the company. There is no
Mr. Chevron, but there is Mr. Cheramie, whose grandfather converted his
fishing boat to a vessel that would serve the oil and gas industry.
Mrs. Cheramie is a teacher, whose retirement is invested in part in oil
and gas stock. Their children attend schools funded by property taxes
paid by oil and gas. They buy their cars at Golden Motors in Cut Off,
buy groceries at Frank's Supervalu and eat out at B & E Seafood.
The parish, the state and the federal treasury lose contributing
taxpayers. It is a vicious cycle that only immediate action by BOEMRE
can rectify.
Next week I will be Norway to present my perspective of the Macando
disaster. In that region is an ongoing debate about whether to allow
and encourage oil and gas exploration. The proponents see an
opportunity for increased revenue, jobs and investment. The opponents
are very concerned about the pristine environment. Sound familiar?
I will tell them that it has been 40 years since a major flow of
oil was unleashed into the environment. I will say that we have happily
coexisted for many years. Recreational fishing is great near the energy
platforms. We sheltered Katrina evacuees in a community center powered
by a generator donated by BP. Many, many people have lived a good life
working for oil and gas. And they have taken great pride in that the
work they do fuels the corn farmer in Nebraska and the boats in Los
Angeles' harbor.
I have no doubt that creative, innovative, enterprising Americans
will one day fuel this nation on alternative energy. It could happen
with the energy industry we now know. But this won't happen for another
30 years, at least. Until then, America cannot rely on Egypt, Libya or
Saudi Arabia. Americans are relying on us. Right now.
The President's promise for a greener nation should not cause
unemployment and higher energy prices. That's change for which no one
bargained.
Finally, statistics indicate that an oil tanker has a four times
greater chance of spilling its cargo than an oil well has of blowing
out. 3000 tankers a month from around the world carrying up to 3
million barrels of oil travel the Gulf past the Florida Keys, up the
Mississippi River, all the way to the Port of Houston daily. The only
superport in American waters is located 18 miles off of our coast. With
the Gulf of Mexico shut down, the demand for foreign oil will only
increase, and so will the danger of a spill. With the unrest in the
Middle East continuing, does that not make those of us who live along
the Gulf Coast more susceptible to a potential attack on an enemy's
ship? Does inaction by BOEMRE put American lives in danger?
Let us go back to work to fuel America.
______

Mr. Lamborn [presiding]. Thank you for your testimony. Next
we have on the panel Mr. Chett Chiasson, Executive Director,
Greater Lafourche Port Commission, State of Louisiana. I hope I
pronounced all that correctly, Thank you.

STATEMENT OF MR. CHETT CHIASSON, EXECUTIVE DIRECTOR, GREATER
LAFOURCHE PORT COMMISSION, STATE OF LOUISIANA

Mr. Chiasson. Thank you, Mr. Chairman and Ranking Member,
Members of the Committee. I appreciate the opportunity to
appear before you today.
As you said, my name is Chett Chiasson, the Executive
Director of the Greater Lafourche Port Commission, otherwise
known as Port Fourchon. I have a more detailed written
testimony which I have submitted to the Committee for the
record, and I will summarize my remarks now.
Port Fourchon is located on the Gulf of Mexico near the
mouth of Bijou Lafourche, and it is the only Louisiana port
directly on the Gulf of Mexico. Port Fourchon is an inter-modal
offshore supply port. More than 250 companies utilize Port
Fourchon in carrying equipment, supplies, and personnel to
offshore locations. Port Fourchon tenants provide services to
90 percent of all deepwater rigs in the Gulf of Mexico and
roughly 45 percent of all shallow-water rigs in the Gulf. In
sum, Port Fourchon plays a vital role in 18 percent of the
nation's oil supply.
A recent study conducted by Dr. Loren Scott, former Chair
of the LSU Economics Department, finds that more than $63
billion in total value of oil and gas are associated with Port
Fourchon. With the Chairman's permission, I would like to
submit that study for the record.
Mr. Lamborn. If there is no objection, so ordered.
Mr. Chiasson. Thank you.
Among other things the study contemplates the economic
impact to the Nation of a three-week disruption of activities
at Port Fourchon. Port Fourchon itself and the oil and gas rigs
and platforms it services were impacted to varying degrees by
Hurricanes Katrina, Rita, Gustav and Ike. Our port and our
community, and the offshore industry know how to recover
quickly, but never did we consider that the interruption of our
operations and the economic impact it would have would be at
the hands of our own government.
Before I discuss this impact though let me speak for a
moment on the BP spill itself. First and foremost, our
community and our industry lost 11 lives on April 20th. This
was a tragedy that should not have occurred. As a community and
as an industry, we applaud the government's attempt to ensure a
safer work environment.
With respect to the effects of the oil spill, Port Fourchon
was not at all spared. Fourchon Beach remains closed due to
continued oil spill response efforts. We engaged in significant
response efforts to protect our own property. To date, our
response costs over $550,000, which BP has reimbursed. Our port
continues incurring increased operational cost. Our community
continues to be pensive over what additional oil may turn up in
the future or with the long-term impact on our natural
resources and commercial fisheries may be from this spill. I
urge you to maintain a focus on these issues in the coming
years.
From the very beginning our community opposed President
Obama's moratorium. We did so not with callous disregard for
human lives or for our environment, but because the energy
industry is an integral part of our lives. One does not need to
be employed in this industry to be reliant on it. There is no
better place than Lafourche Parish to observe the co-existence
of energy activities on the one hand, and commercial fishing or
recreation on the other, which brings me back to Port Fourchon.
Soon after the moratorium was initiated the Port Commission
was forced to reduce the basic rent charged by our tenants by
30 percent and suspend annual escalation anticipating this
severe economic impact that would come. This resulted in a loss
of revenues to the port to date of nearly $2.4 million. This
loss of revenue reduces the basic services and capital
construction that the Port Commission can provide to create
jobs and economic development. Our fears of lost business in
Port Fourchon is becoming a reality.
What is even more concerting to me though is the long-term
impact that this moratorium and the delay permitting process
will have. When President Obama enacted his moratorium,
Secretary Salazar strongly assured this Committee that BP would
pay all legitimate claims, which included those economic
damages arising from the moratorium, a statement that was
backed by the President. Unfortunately, those commitments have
not come to be. BP's fund administered in part by Mr. Feinberg
and in part by BP itself is denying claims which it finds to be
caused by the moratorium.
Port Fourchon recently submitted a claim to BP for
compensation of lost revenues which was denied by BP for being
a moratorium-related damage. With the Chairman's permission I
would like to submit this letter for the record as well.
Mr. Lamborn. No objection, so ordered.
Mr. Chiasson. Thank you.
BP was responsible for the spill but the President is
responsible for the moratorium and responsible for the
continued slow pace in the permitting process. Therefore the
government should be held accountable for damages caused to
numerous companies, ports, local and state governments
throughout the country who have been impacted by this
moratorium. Some mechanism, if not the OPA Fund, then some
other means must be identified to compensate the severe
economic impact that has occurred as a result of this
moratorium and continues delays in permitting.
But just as important as addressing past harms is to avoid
any future harm. This can only happen with the permitting
process once again functioning properly. If I may just conclude
my remarks now.
It is now time to get the critical projects back on
schedule that created the economic activity which fuels our
economy and the energy resources which literally fuel our
nation. It is now time to end the government-induced harm to
our local and national economies in order to get people back to
work.
I appreciate this opportunity. Thank you.
[The prepared statement of Mr. Chiasson follows:]

Statement of Chett Chiasson, Executive Director,
Greater Lafourche Port Commission

Good morning Mr. Chairman and Members of the Committee. I
appreciate the opportunity to appear before you today. My name is Chett
Chiasson, and I am the Executive Director of the Greater Lafourche Port
Commission, otherwise known as Port Fourchon.
With this testimony, I hope to impress upon you several points: the
importance of Port Fourchon to the offshore oil and gas industry; the
contribution that Port Fourchon therefore makes to the national
economy; the impact that the Deepwater Horizon incident had on our
Port; and the impact that the President's moratorium on offshore
drilling has had and continues to have on our Port as a result of the
continued delays in the permitting process.
By way of background, The Greater Lafourche Port Commission, a
political subdivision of the state of Louisiana, facilitates the
economic growth of the communities in which it operates by maximizing
the flow of trade and commerce. We do this to grow our economy and
preserve our environment and heritage. The Port Commission exercises
jurisdiction over the Tenth Ward of Lafourche Parish, south of the
Intracoastal Waterway, including Port Fourchon and the South Lafourche
Leonard Miller, Jr. Airport. The Port Commission has been in existence
since 1960 and the 9 member Board of Commissioners is the only elected
Port Commission in the State of Louisiana. Port Fourchon is located on
the Gulf of Mexico near the mouth of Bayou Lafourche and it is the only
Louisiana port directly on the Gulf of Mexico. Although 675 million
barrels of crude oil per year are transported via pipelines through the
Port, Port Fourchon does not handle any bulk oil and gas per se.
Rather, we are an intermodal offshore supply port--more than 250
companies utilize Port Fourchon in servicing offshore rigs in the Gulf
of Mexico, carrying equipment, supplies and personnel to offshore
locations. In terms of service, Port Fourchon's tenants provide
services to 90 percent of all deepwater rigs in the Gulf of Mexico and
roughly 45 percent of all shallow-water rigs in the Gulf. 70% of all
Gulf oil now comes from deepwater Gulf of Mexico operations. In sum,
Port Fourchon plays a vital role in 18% of the nation's oil supply.
In a recent study conducted by Dr. Loren C. Scott, former Chair of
the LSU Economics Department, of the economic impact to the nation of
Port Fourchon, Dr. Scott finds that more than $63 billion in total
value of oil and gas are associated with Port Fourchon. With the
Chairman's permission, I would like to submit this study to the
Committee for the Record. The Port commissioned Dr. Scott to conduct
this economic study as a means of documenting the importance of Port
Fourchon to the Nation. The study contemplates the economic impact to
the Nation of a three-week disruption of activities at the Port. We did
this to demonstrate to Congress and to Executive Branch Departments the
significance of our Port, as a means of justifying federal
participation for a variety of infrastructure development needs, such
as modernizing Louisiana Highway One which connects the Port to the
rest of the world, or for seaport security funding, or for additional
hurricane protection. Indeed, in back to back years, Port Fourchon
itself and the oil and gas rigs it services were impacted to varying
degrees by Hurricanes Katrina, Rita, Ike and Gustav. All of these were
significant storm events. We live with these every year. Our port, our
community and the offshore industry know how to recover, and in these
and many more similar events, we recovered quickly. But never did we
consider that the interruption of our operations and the impact it
would have would be at the hands of our own government. Before I
discuss this impact though, let me speak for a moment on the BP spill
itself.
First and foremost, our community and our industry lost eleven
lives on April 20th. This was a tragedy that should not have occurred.
And for as significant as the environmental damage from this incident
was on our community, the loss of eleven lives impacted us in a much
deeper way, albeit and unfortunately with much less media coverage than
the spill itself or even the impacts of the subsequent moratorium. As a
community and as an industry, we applaud the government's attempt to
ensure a safer work environment. With respect to the effects of the oil
spill, the impact was seen at least as far west as Terrebone Parish,
and as far east as Pensacola, Florida. Lafourche Parish was not at all
spared. And Port Fourchon was not at all spared. Our beaches were
fouled, and our marshes were severely damaged in many places by the
oil. To date, Fourchon Beach remains closed to pedestrians and vehicles
due to continued oil spill response efforts. Port Fourchon engaged in
significant response efforts to protect our own property. We incurred
significant costs for our own cleanup response, and in providing
additional governmental services. To date, our response costs are over
$550,000. Our Port continues to incur increased operational costs; our
community continues to be pensive over what additional oil may turn up
in the future, or what the long term impact on our natural resources
and commercial fisheries may be from this spill. And to the extent that
worker safety and the environmental impacts of this spill are within
this Committee's jurisdiction, I urge you to maintain a focus on these
issues in the coming years. But as Parish President Randolph states in
her testimony today, there is no better place than Lafourche Parish to
observe the coexistence of energy activities on the one hand, and
commercial fishing or recreation on the other. This coexistence is for
a variety of reasons--perhaps it's due to our heritage; perhaps it's
because we are a close-nit community. But mostly, it's because it's
what we have. We have been blessed with abundant marshes and beaches
which serve as nurseries to support commercial and recreational fishing
and other activities. And we have been blessed with abundant fossil
resources beneath our marshes and off our coastlines. We have been
blessed with the heritage of earning a living off the land and the
water. Today, the resources available to us help to feed our Nation
with our seafood, and fuel our Nation with the energy we help to
produce. And so the coexistence which occurs in our part of the country
is not limited there; it is reflected across the entire Nation. The
average citizen of this country is not aware of where the shrimp that
they are eating comes from any more than from where the gasoline that
fuels their cars come. And, at least perhaps until the BP spill last
year, they did not realize that there is a good chance they come from
the same place. Which brings me back to Lafourche Parish and Port
Fourchon.
Mr. Chairman, I indicated that my Port, our community and our
industry have proven our ability to respond to and recover from any
natural disaster set upon us. But never did we imagine the type of
sustained and substantial economic impact that has resulted from the
President's moratorium, the length of time in developing new permitting
requirements, and the delay in issuing new permits by BOEMRE. Soon
after the moratorium was initiated, the Port Commission was forced to
reduce the basic rent charged to our tenants by 30% and suspend annual
escalation, anticipating the severe economic impact that would come.
This has resulted in a loss of revenues to the Port to date of nearly
$2.4 million. This loss of revenue reduces the basic services and
capital construction that the Port Commission can provide to create
jobs and economic development. Our fears of loss of tenant business in
Port Fourchon are becoming reality. Just last week I had a tenant come
to me literally crying, saying if something does not change soon, he
will be lucky to keep his doors open until May. This is a small, family
owned supply business that employs four people. Not too devastating in
and of itself, but the problem is that there are several businesses in
Port Fourchon that will realize the same fate, without a dramatic
increase in the number of permits being issued by BOEMRE.
What is more concerning to me as the Port Director and as a citizen
of South Louisiana is the long term impact that this moratorium and
delayed permitting process will have. I can count the cost of
responding to the oil spill; I can document the reduction in rents that
my Port Commission had to approve last year in order to help business
facing significant economic distress. But what I cannot predict is the
continued harm in the future caused by the delay in the government's
actions.
When President Obama enacted his moratorium, assurances were made
by the Administration that BP would pay for the economic consequences
caused by the moratorium. Secretary Salazar strongly assured this
Committee and the Senate Committee on Energy and Natural Resources that
BP would pay all ``legitimate claims'', which included those arising
from the moratorium. Then Press Secretary Robert Gibbs, speaking on
behalf of President Obama, confirmed that assurance in a public
statement.
Unfortunately, those commitments have apparently not been
remembered.
BP's Fund, administered in part by Mr. Feinberg and
in part by BP itself, is denying claims which it finds to be
caused by the Moratorium. Port Fourchon recently submitted a
claim to BP for compensation of loss revenues, which was denied
by BP for being a moratorium-related damage. With the
Chairman's permission, I would like to submit this letter for
the record.
The Oil Spill Liability Trust Fund is also denying
claims on that same basis;
Finally, our counsel advises us that BP is likely to
defend against any action to obtain restitution from it by
arguing that the moratorium is an unforeseeable ``supervening
cause'' which excuses BP from liability.
The law provides the Administration with powerful tools to provide
injured parties with prompt and adequate compensation for spill related
injuries or to require the Responsible Parties to do so. Although
Secretary Salazar, when he appeared before this Committee last May,
gave assurances that these tools would be used, those assurances are
yet to be fulfilled. As a result of these failures, the Government's
actions to date have, on balance, impeded, rather than facilitated the
ability of injured parties to obtain the compensation to which they are
entitled.
BP was responsible for the spill, but the President is responsible
for the moratorium and responsible for the continued slow pace in the
permitting process. Therefore the government should be held accountable
for damages caused to numerous companies, ports, local and state
governments throughout the country who have been impacted by this
moratorium. Some mechanism--if not the OPA Fund then some other means--
must be identified to compensate the severe economic impact that has
occurred as a result of this moratorium and continued delays in
permitting. But just as important as addressing past harms is to avoid
any future harm. This can only happen with the permitting process once
again functioning properly.
As Secretary Angelle indicated in his testimony, the oil industry
has worked steadfast with the government in developing a robust
regulatory environment to ensure increased safety for our workers in
the offshore industry, and protection of our natural resources. I am
confident that industry has fulfilled its obligation to a new
regulatory regime, several times over. Our industry and our community
embrace increased safety measures. We never again want to see such an
incident that occurred on April 20th of last year, and I am confident
that as a result of industry and government working together since the
spill, we never again will. But it is now time to get the critical
projects back on schedule that create the economic activity which fuels
our economy, and the energy resources which literally fuel our Nation.
And it is now time to end the government-induced harm to our local and
National economies.
______

Mr. Lamborn. Thank you for your testimony, and for all of
you we know you have come a long ways today, and we appreciate
that.
Our next panelist is, and I hope I pronounce this correctly
Mr. Samuel Giberga, General Counsel, Hornbeck Offshore
Services, Offshore Marine Service Association, and the floor is
yours.

STATEMENT OF MR. SAMUEL A. GIBERGA, SENIOR VICE PRESIDENT AND
GENERAL COUNSEL, HORNBECK OFFSHORE SERVICES

Mr. Giberga. Thank you, Mr. Chairman. It is Giberga.
Mr. Chairman and Members of the Committee, on behalf of
Hornbeck Offshore Services, the second largest deepwater supply
company in the Gulf of Mexico, and the Offshore Marine Services
Association, I appreciate this opportunity to address this
Committee on the devastating impacts resulting from the
decisions made by the Obama Administration to shut down oil and
gas drilling activities in the Gulf of Mexico.
Mr. Chairman, I am simply here to ask you for your help. We
have fought this Administration in the Federal courts. We have
fought this Administration in Congress and in the media, and
yet in defiance of Federal court orders and repeated bipartisan
requests from Congress, this Administration continues to pursue
a destructive policy, a policy that has been struck down by a
Federal court, and has led to the Department of the Interior
being held in contempt.
Their strategy is cynical, but so far amazingly successful.
Secretary Salazar tells your Committee that he is in favor of a
robust oil and gas industry in this country, but then
aggressively blocks the issuance of drilling permits. He tells
your Committee that rigs are not leaving the Gulf of Mexico,
but at least 12 rigs have left; seven deepwater, five shallow
water, and more expected to follow, and one drilling company
has been forced into bankruptcy.
He tells your Committee that oil and gas production in the
Gulf of Mexico is at an all-time high, but the fact is, as a
result of the Administration's policies, production in the Gulf
has already fallen by 300,000 barrels per day, and it is going
to get a lot worse. The Energy Information Administration is
now forecasting a drop of 600,000 barrels a day by July of next
year. So this Administration publicly paints a rosy scenario in
hopes that nobody will take notice that an entire industry is
being dismantled rig by rig, vessel by vessel, worker by
worker.
To understand the real agenda, we only need to be reminded
of Secretary Steven Chu's statement, and I quote for you, Mr.
Chairman, ``Somehow we need to figure out how to boost the
price of gasoline to the levels in Europe.''
Well, Mr. Chairman, I guess we are well on our way. Mr.
Chairman, we need your help to make sure that the American
people understand the outrageous behavior of this
Administration. We need your help to make the Administration
understand that we are a nation of laws, and three co-equal
branches of government. We need your help to make sure that the
Administration realizes that the oil and gas resources in the
Gulf of Mexico are the real strategic petroleum reserve of our
nation.
The Administration turns a blind eye to the risks brought
by sky-rocketing oil prices, instead pursues an extremist
policy designed to weaken our industry and ultimately undermine
our commitment to developing oil and gas resources in a safe
and environmentally sound manner. Mr. Chairman, we cannot let
that happen.
Contrary to the Administration's statements, a de facto
moratorium is alive and well in this nation. Since its
implementation in May 2010, there have been only two permits
issues to resume the drilling of deepwater wells and shallow
water activity has been drastically curtailed. At least 8,000
jobs have already been lost and more layoffs are being made
each week.
At Hornbeck Offshore, we have felt these losses directly.
We have reduced our payroll, laid off workers for the first
time in our company's history, and deferred spending on
important capital projects. We are moving assets out of the
Gulf of Mexico into foreign markets in order to keep our
vessels working.
Mr. Chairman, it is clear that terrible mistakes were made
concerning the Deepwater Horizon well and lessons need to be
learned. I, sir, have read the Presidential commission's report
cover to cover. I was shocked by its blanket and unsupported
conclusion of an systemic failure. I have also read Mr. Fred
Bartlit's report. Mr. Bartlit was the chief counsel to that
commission, and he concluded something different. He did not
conclude that there was a systemic problem. He concluded, and I
quote, ``the event was the result of an over-arching failure of
management by BP.''
We also have to recognize that since the 1950s over 40,000
wells have been safely drilled in the Gulf of Mexico. We do not
get better, sir, by not working. In fact, by not working we
lose crucial assets and, more importantly, experienced
personnel who have the necessary know-how to work safely. Mr.
Chairman, Secretary Salazar will tell you that by not working
we are somehow safer. We know that a safe Gulf is a working
Gulf.
When the Administration's offshore drilling moratorium was
first announced, Hornbeck quickly concluded that a punitive
industry-wide shutdown was unprecedented in this nation. The
Administration justified its actions upon the erroneous premise
that the Deepwater Horizon event proved the existence of a
systemic industry-wide problem. In June of last year, Hornbeck
filed suit against the Department of the Interior challenging
the unlawful moratorium and its faulty premise.
In the course of that litigation Hornbeck learned that the
Administration's own experts for the National Academy of
Engineers did not peer review the six-month drilling moratorium
contrary to Secretary Salazar's announcement. This
misrepresentation became an central issue in the Hornbeck case
and led to Judge Martin Feldman's injunction. Secretary Salazar
immediately defined the court's order by imposing a mirror
image moratorium. Judge Feldman later took the extraordinary
step of holding the Federal Government in contempt for
violating his order. He identified conduct at the highest
levels of the Federal Government to have deliberately defying
of a co-equal branch of the government. Sir, as a lawyer and as
a citizen I found this conduct to be extremely disappointing
and troubling.
Mr. Chairman, our employees do not want an unemployment
check or a bail-out. We simply want to go back to work. We urge
you to use all options at your disposal to compel this
Administration to reverse its dangerous energy policies and
restore oil and gas production in the Gulf of Mexico.
Mr. Chairman, thank you very much for the opportunity to
address your committee this morning.
[The prepared statement of Mr. Giberga follows:]

Statement of Samuel A. Giberga, Senior Vice President and
General Counsel, Hornbeck Offshore Services, Inc.

Mr. Chairman and Members of the Committee:
As the Senior Vice President and General Counsel of Hornbeck
Offshore Services, Inc. (Hornbeck), and on behalf of the member
companies of the Offshore Marine Service Association (OMSA), I
appreciate the opportunity you have provided today to address the
devastating short and long-term impacts resulting from the decisions
made by the Obama Administration to shut down oil and gas production
activities in the Gulf of Mexico.
Mr. Chairman, on behalf of the employees of my company and
thousands of others who make their living in the offshore oil and gas
industry, I am simply here to ask for your help. We have fought this
Administration in the Federal courts. We have fought this
Administration in Congress. We have fought this Administration in the
media. And, yet as we sit here today, in defiance of Federal court
orders and repeated bipartisan requests from Congress, this
Administration continues to pursue a destructive policy--a policy that
has been struck down by a Federal court and has led to the Department
of the Interior being held in contempt. Their strategy is cynical, but
so far, amazingly successful. Secretary of the Interior Ken Salazar
tells your Committee that he is in favor of a ``robust'' oil and gas
industry in this country--but then aggressively blocks the issuance of
drilling permits. Secretary Salazar tells your Committee that drilling
rigs are not leaving the Gulf of Mexico--but at least 12 rigs have left
and more are expected to follow, and one drilling company has been
forced into bankruptcy. Secretary Salazar tells your Committee that oil
and gas production in the Gulf of Mexico is at an all-time high--but
the fact is that, as a result of Administration policies, production in
the Gulf has fallen by over 300,000 barrels per day. So, for public
consumption, this Administration paints a rosy scenario and hopes that
nobody will take notice that an entire industry is being dismantled,
rig by rig, vessel by vessel, employee by employee.
Mr. Chairman, I can assure you that we have noticed. And, we need
your help before it is too late. We need your help to make sure the
American people understand the outrageous and illegal behavior of this
Administration as it pursues an extreme philosophy despite the
country's need for domestic oil and gas resources. We need your help to
make the Administration realize that the oil and gas resources in the
Gulf of Mexico are the real strategic petroleum reserve of our Nation.
We need your help to take whatever steps are necessary to stop this
Administration before it completely destroys our industry while putting
our national and economic security at great risk. Those risks are
readily evident--all one has to do is turn on the television to any
news broadcast. The price of oil has skyrocketed to over $100 per
barrel. The price of gas at the pump is rapidly approaching $4.00 per
gallon. The Middle East and North Africa remain in turmoil. And what is
our Administration's response? It turns a blind eye to these risks. It
pursues an extremist policy designed to eliminate our industry. Mr.
Chairman, we cannot let that happen.
Hornbeck Offshore Services is one of the many proud participants in
that offshore industry. The Hornbeck story is not unlike that of many
companies that have been formed over the last 50 years to serve the
needs of the offshore oil and gas industry. Todd Hornbeck, the founder
of the company, was 27 years old when he started Hornbeck in 1997.
After gaining experience through working with his father's offshore
service company, Mr. Hornbeck formed our company in order to provide
support services to meet the needs in the next expanding phase of
offshore drilling--in the deepwater regions of the Gulf of Mexico.
Today, Hornbeck is the second largest deepwater supply vessel company
in the Gulf of Mexico with a fleet of new generation offshore supply
vessels operating off the United States and other locations around the
world. Additionally, Hornbeck owns and operates the two largest supply
vessels and two of the most advanced deepwater construction vessels in
the world. These four vessels alone represent nearly a $500 million
capital investment by Hornbeck, and were vital components in the
operational response to the DEEPWATER HORIZON incident. Hornbeck
directly and indirectly employs thousands of workers and mariners, has
spent billions of dollars in U.S. shipyards, and like many other
companies in our industry, has invested millions of dollars to ensure
safe and environmentally sound operations. Indeed, Hornbeck has
consistently added jobs within the company since its founding in 1997,
and had planned to increase company employment in 2010 and 2011. With
the de facto moratorium in place, not only has Hornbeck been unable to
add any jobs in the last year, but it has been forced for the first
time to reduce its workforce as a result of the significant slowdown in
offshore drilling activity in the Gulf.
The DEEPWATER HORIZON incident and the current (and completely
avoidable) offshore energy crisis in the Gulf of Mexico are
unprecedented events for our country and for companies like Hornbeck
that strive each day to work in a safe and environmentally sound manner
in the offshore industry. We understand that changes must be made, but
the Administration's response to the Gulf oil spill has been
unreasonable, unwarranted, unfair, and unlawful. The resulting de facto
moratorium on drilling activities in the Gulf threatens the livelihood
of hundreds of thousands of American workers and significantly
undermines critical energy, security, economic and other national
policy interests.
The Administration repeatedly tells us that the offshore drilling
moratorium has been lifted and that there is no de facto moratorium. On
the contrary, the moratorium on offshore drilling is alive and well.
Since its implementation in May 2010, there has only been one permit
issued to resume the drilling of a deepwater well, and shallow water
activity has been drastically curtailed. As a result, the
Administration's policies have already taken a terrible economic toll
on the Gulf Coast. This industry supports 150,000 high-paying jobs. At
least 8,000 jobs have already been lost and more layoffs are being made
each week. Seahawk Drilling, the second largest shallow water drilling
company in the Gulf of Mexico, declared bankruptcy a few weeks ago for
one overriding reason--a lack of drilling permits. Bear in mind, Mr.
Chairman, that Seahawk only drills in the shallow waters of the Gulf
and had absolutely nothing to do with the DEEPWATER HORIZON spill. Yet,
the Administration has forced that company and its 1,000 employees out
of business. We fear that more bankruptcies will follow if the
Administration does not immediately change course.
And yet, the Administration continues to ignore the truth. Mr.
Chairman, your Committee observed that first-hand when Secretary
Salazar testified that Gulf of Mexico production has ``remained at an
all time high''. Hornbeck was pleased that your Committee quickly
corrected the Secretary and advised the public that Department of
Energy data tells a drastically different story about declining
production in the Gulf. Without a change in the Administration's
policies, production levels will continue to plummet, rendering
Americans even more vulnerable than they are today to political
instability in the Middle East and higher fuel prices at the pump.
It is clear that terrible mistakes were made concerning the
DEEPWATER HORIZON well. And lessons must be learned from those
mistakes. But that does not mean that the industry has been ``lucky''
up to this point after drilling thousands of wells in the Gulf of
Mexico without a significant environmental incident. The
characterization of our industry as having been ``lucky'' is one that I
want to refute because it was made by Michael Bromwich, the Director of
the Bureau of Ocean Energy Management, Regulation and Enforcement
(formerly the Minerals Management Service) and the principal regulator
of offshore oil and gas exploration and production activities. The
truth is this--our industry has an impressive safety record and it has
worked hard and diligently to attain that record. Since the 1950's,
over 40,000 wells have been drilled in the Gulf of Mexico, with only
one DEEPWATER HORIZON-type event. The extrapolation of this single
event into an industry-wide failure is breathtaking in its lack of
regard for the facts and vital economic, energy, security and other
national priorities.
When the Administration's offshore drilling moratorium was first
announced in May 2010, Hornbeck quickly reached three basic
conclusions:
Notwithstanding the stated six-month period for the
moratorium, the halt in offshore drilling activities was likely
to extend well beyond that time period.
The moratorium policy, if left unchecked, could
cripple the web of physical and human capital required to
support safe deepwater offshore exploration and production
operations. In other words, a working Gulf is a safe Gulf.
Without the work, people and assets would soon leave the
region, rendering the offshore industry less capable in its
pursuit of safe and environmentally-sound deepwater operations.
And, most importantly, the moratorium was not legal.
The Administration's actions were based upon the erroneous
premise that the DEEPWATER HORIZON event itself proved the
existence of a systemic, industry-wide problem. Hornbeck knew
that was not the case.
Hornbeck and other service companies take seriously their
obligations to work in a safe and environmentally sound manner. We
dedicate significant financial and personnel resources to industry
safety and training. Consequently, we intuitively understood that the
Administration's premise for its industry-wide shutdown was wrong.
Hornbeck concluded, together with other offshore industry companies,
that there was no choice but to sue the Federal government. With the
Gulf of Mexico as the company's principal operating theater, the
government's actions threatened the very viability of Hornbeck, and
could lead to the dismantling of an industry that employs hundreds of
thousands of people and upon which the Nation depends for its energy
security. Thus on June 7, 2010, Hornbeck filed suit against the
Department of the Interior (DOI) seeking an injunction to bar the
enforcement of the moratorium. We did not take this step lightly. But,
we felt an obligation to our country, our industry, and our employees
to stand up and fight this injustice.
In the course of this litigation, Hornbeck uncovered information
calling into question the Federal government's good faith in the
imposition of the offshore drilling moratorium. We learned that some
experts from the National Academy of Engineers claimed, contrary to
reports from the Administration, that they had not peer reviewed or
recommended the six-month moratorium announced by DOI. The experts
further informed Hornbeck that the suspension of ongoing drilling
operations could actually compromise safety. They were extremely
embarrassed that their views were being misrepresented to the American
public as having been in support of a drilling moratorium.
This distortion by the Administration became a central fact in the
Federal litigation brought by Hornbeck. In his decision striking down
the moratorium on June 22, 2010, Federal Judge Martin Feldman, of the
U.S. District Court for the Eastern District of Louisiana, expressed
his apprehension about the integrity of the Administration's review and
``misleading text in the Executive Summary [of its report] that
seem[ed] to assert that all the experts agree[d] with the Secretary's
recommendation'' to impose the drilling moratorium. Not only was a peer
review of the moratorium decision not obtained, but the Administration
at its highest levels appeared to have misrepresented to the public
that expert peer review of the decision had in fact occurred. These
facts caused Judge Feldman to question the ``probity'' of the process
followed by DOI in issuing a moratorium that was, in essence, an
industry-wide shutdown. Notably, in a subsequent investigation by the
DOI Inspector General on this point, Secretary Salazar's counselor
explained to investigators that ``[t]he decision to invoke the
moratorium on current deepwater drilling projects was a policy decision
made by Secretary Salazar and President Obama. . .the moratorium was
never peer reviewed by the experts''.
Additionally, based upon a review of the administrative record,
Judge Feldman determined that the Administration ``failed to cogently
reflect the decision to issue a blanket, generic, indeed punitive,
moratorium with the facts developed during the thirty-day review'', and
that Hornbeck and the other parties had ``established a likelihood of
successfully showing that the Administration acted arbitrarily and
capriciously in issuing the moratorium.'' With the moratorium struck
down, Hornbeck expected an immediate resumption of at least some
offshore drilling activities while the industry and its governmental
oversight agencies worked to learn from the mistakes of the DEEPWATER
HORIZON incident. Unfortunately, the Administration's response to Judge
Feldman's ruling did just the opposite. Notwithstanding the fact that
Judge Feldman enjoined the enforcement of the blanket, generic and
punitive moratorium, Secretary Salazar set about almost immediately to
defy the Court's order.
Within hours of Judge Feldman's ruling, the Secretary issued a
written statement announcing his intention to issue a second
moratorium. In testimony before a Senate hearing the very next day, the
Secretary characterized the enjoined moratorium as the ``moratorium in
place'' and he promised that DOI would impose shortly a new moratorium.
And in fact, the second moratorium was issued by Secretary Salazar on
July 12, 2010. All the while, DOI subjected Hornbeck and the other
litigants in the Hornbeck case to considerable expense through its
posturing and other litigation tactics that have since been criticized
by the courts.
While Hornbeck did not participate in a legal challenge to the
second moratorium, Ensco plc (Ensco) did. It is important to note that
the Administration's ultimate decision to lift the second moratorium in
October 2010 occurred the same day that parties were to submit
additional briefing before Judge Feldman. Judge Feldman remarked during
the Ensco case that the Administration's conduct in the Hornbeck matter
could well be contemptuous. Later on February 2, 2011, finding that the
``second moratorium disabled precisely the same rigs and deepwater
drilling rigs and activities in the Gulf of Mexico as did the first
one'', Judge Feldman took the highly extraordinary step of holding the
Federal government in contempt for having defied his order in the
Hornbeck case. This ruling is notable in that it identifies conduct, at
the highest levels of the Federal government, to have been deliberately
defiant and dismissive of a co-equal branch of the government. In a
Nation of laws, even the President must accept the rulings of a Federal
court.
Against that backdrop, and with the issuance of new DOI safety,
equipment and other requirements within weeks of the DEEPWATER HORIZON
incident, offshore drilling operators have had significant difficulties
in deciphering the steps needed to receive a drilling permit. The DOI
notices and regulations, none of which have been implemented with
public input, contain enormous areas of ambiguity that operators have
legitimately claimed cannot be met.
At a time when significant regulatory, environmental compliance,
and other hurdles have been placed in the path of the resumption of
offshore drilling activity, instability within foreign countries in
North Africa and the Middle East further threatens the national and
economic security of our country. Our Nation should be using every
opportunity to safely develop its oil and gas resources to ensure that
we are not dependent upon foreign oil and the tangled obligations that
go with it. That said, in one of the most astounding pronouncements
from the Administration, DOI in October of last year specifically
stated that:
Currently, there is sufficient spare capacity in OPEC to offset
a decrease in [Gulf of Mexico] deepwater production that could
occur as a result of this rule.. . .However, more of the oil
for domestic consumption may be purchased from overseas markets
because the cost of OCS oil and gas production will rise
relative to other sources of supply.
75 Fed. Reg. 63366 (Oct. 14, 2010).
The Administration so much as admits that it prefers to rely on
foreign markets, even those hostile to United States interests, rather
than to encourage and incentivize domestic resource development and
production.
Hornbeck and other industry participants recognize that there will
be changes in the post-DEEPWATER HORIZON world. That said, the industry
needs to be a participant in a meaningful dialogue about those changes
and how best to achieve the shared goal of a safer deepwater oil and
gas industry. Instead, there has been nothing more than one-way,
uninformed pronouncements from the Administration with little or no
regard for the enormous economic and national security contributions
made by this industry. Even when faced with multiple losses in the
Federal courts and a contempt citation, this Administration has
remained ``dug-in'' to a policy that is harming our Nation on a daily
basis.
Mr. Chairman, through this hearing and your continuing oversight,
Hornbeck very much appreciates your efforts to illuminate these major
issues confronting the offshore industry. The discussion must include
the costs to the economy and the Nation in losing a key component of
the energy industry. And, we need to discuss all relevant costs,
including those associated with greater dependence on foreign oil. We
need to consider, as the industry is dismembered rig by rig, the loss
of human capital and expertise that truly jeopardizes any advancement
of safety in the Gulf. We need to talk about the ability to deliver
economic and self-sustaining prosperity to the Nation without
tripling--or more--the cost of energy.
Mr. Chairman, our employees do not want an unemployment check. We
are not asking for a bailout. We simply want to go back to work. We
urge you and the Committee to continue to use every opportunity and all
options at your disposal to compel this Administration to reverse its
dangerous energy policies and restore oil and gas production in the
Gulf of Mexico.
Mr. Chairman, thank you for allowing me to appear before you today.
______

Mr. Lamborn. OK, thank you for your testimony. In a moment
Representative Landry will be taking the Chair unless the
Chairman--he is back now. So, thanks for the offer to help,
Representative Landry.
So our next person on the panel will be Mr. Christopher
Jones of Keogh, Cox and Wilson, Ltd. Thank you for being here
today.

STATEMENT OF MR. CHRISTOPHER K. JONES,
KEOGH, COX & WILSON, LTD

Mr. Jones. Chairman Hastings, Ranking Member Markey and
other Members of the Committee, thank you for the opportunity
to appear before you today.
My name is Chris Jones and I am not here to talk about the
timely extent of the moratorium. That is for you to debate and
discuss. Instead, I am here to describe the profound impact my
brother's death while working on a rig engaged in deepwater
drilling has had on our family. My brother is Gordon Jones. He
is my only brother. He was tragically killed aboard the
Deepwater Horizon while earning his living as a mud engineer
for M-I SWACO, a contractor for BP.
Gordon had nothing to do with this disaster. He was simply
doing his job and making his way through his shift so he could
get back home to his family. Instead he never saw his family
again. We can thank poor and likely grossly negligent decisions
by many people in companies for that. Besides his extended
family, Gordon is survived by a wife and two young sons.
Stafford will turn three on Monday, Max will have his first
birthday on May 14th. Gordon's wife Michelle was eight months
pregnant with Max when she learned she would never see her
husband, the father of her two sons, and best friend again.
This is a picture of what Gordon left behind. This photograph
was taken in the hospital shortly after Max's birth.
In the past year Michelle has faced some extremely
difficult occasions, Gordon and Michelle's anniversary, Max's
birth, Gordon's birthday, Thanksgiving and Christmas were all
celebrated without Gordon. Truly it does not feel like it has
been a year. It feels more like 10 years. I promise you that
spending one day in my shoes or in Michelle's shoes will give
you an entirely different perspective on the topic of worker
safety.
Just the other day as I was driving Stafford and one of my
sons to my house, Stafford as a matter of fact told me that his
daddy is in heaven. It broke my heart.
No one denies that my brother's death and the death of the
other 10 men could and should have been prevented. I understand
that accidents happen. But companies engaged in oil exploration
should do everything in their power to prevent accidents that
have such horrible consequences. In the case of the Deepwater
Horizon, they did not.
I am here today because I committed to Michelle, Stafford
and Max and to my family that I would do anything and
everything to support them and try and make sure that no one
would have to endure this pain again. No one should have to
needlessly risk their lives to earn a living. No one should be
allowed to risk the lives of hardworking men and women under
their supervision and care in hopes of doing the job faster or
cheaper. Gordon and the other workers killed that day took
safety very seriously and trusted their coworkers. Had every
company engaged in operation of that rig taken safety as
seriously as they did there would have been no blowout.
I find it interesting how hard the oil industry is working
to get back into the Gulf. BP and others want to put this
disaster behind them. Meanwhile no one with BP has bothered to
place a single phone call to anyone in my family, not once. I
don't expect a profuse apology for widowing my brother's wife
or killing the father of my nephews, I don't expect them to
accept responsibility for Gordon's death because that would
likely be asking too much. All we expected is for someone from
BP to call and tell us they were sorry for our loss. Maybe they
were too busy hiring public relation firms and producing
commercials. Clearly they were too busy moving forward trying
to continue drilling and making more money while we were left
to pick up the pieces.
As many of you know, despite our best efforts we have been
unable to get Congress to pass a bill that would allow these
families to recover damages against those at fault by changing
laws passed almost 100 years ago. The House of Representatives
commendably tried to do that when it passed the SPILL Act last
year. The Senate almost passed its own version. However, a
single senator prevented its passage by unanimous consent. I
would hope that BP was not responsible for convincing that
senator to block that bill, but I don't know that.
What I definitely know they were not doing over the past
year was trying to comfort these families, including mine. At
the very least BP could join our efforts to change the law, the
law that would allow this family to move on with their lives;
at the very least BP and others could work with Congress to
improve workers' safety so this never happens again.
Now, I am from Louisiana and I have lived in Louisiana all
my life. No one needs to tell me the importance of the oil
industry to my state. While I have very little knowledge about
the business, I know it supports the livelihoods of thousands
of people in Louisiana and other Gulf states, and I understand
the criticism of the moratorium. However, as Gordon's brother
and uncle to two little boys who won't even remember their
father, I plead with you to consider the repercussions of not
ensuring the safety of these workers before allowing BP and
others to keep doing business as usual.
Please don't forget the men and women who work on these
rigs and the family they leave behind. They need and deserve
those jobs. They just shouldn't be forced to choose between
providing for their families and working on a rig where safety,
not speed, is what is most important. Please remember Gordon,
Michelle, Stafford and Max and the families of the other
victims. Hopefully that thought effectively challenges you to
encourage and support worker safety reforms that are
desperately needed and might have saved my brother's life.
Thank you. I am more than happy to answer any questions
that you may have.
[The prepared statement of Mr. Jones follows:]

Statement of Christopher K. Jones, Brother of Gordon Lewis Jones,
Who Died Aboard the Deepwater Horizon

The Effect of--A Brother's Statement

Chairman Hastings, Ranking Member Markey, and other members of the
Committee, thank you for the opportunity to appear before you today.
My name is Chris Jones and I am not here to talk about the timing
or extent of a moratorium. That is for you to debate and discuss.
Instead, I am here to describe the profound impact my brother's death,
while working on a rig engaged in deepwater drilling, has had on our
family.
My brother is Gordon Jones. He is my only brother. He was
tragically killed aboard the Deepwater Horizon while earning his living
as a mud engineer for MI SWACO, a contractor for BP. Gordon had nothing
to do with this disaster. He was simply doing his job and making his
way through his shift so he could get back home to his family. Instead,
he never saw his family again. We can thank poor, and likely grossly
negligent, decisions by many people and companies for that.
Besides his extended family, Gordon is survived by a wife and two
young sons. Stafford will turn three on Monday. Max will have his first
birthday on May 14th. Gordon's wife, Michelle, was eight months
pregnant with Max when she learned she would never see her husband, the
father of her two sons, and best friend again. This is a picture of
what Gordon left behind.
This photograph was taken in the hospital shortly after Max's
birth.
In the past year, Michelle has faced some extremely difficult
occasions: Gordon and Michelle's anniversary, Max's birth, Gordon's
birthday, Thanksgiving and Christmas were all celebrated without
Gordon. Truly, it does not feel like it has been a year, it feels more
like ten years. I promise you that spending one day in my shoes, or in
Michelle's shoes, will give you an entirely different perspective on
the topic of worker safety. Just the other day, as I was driving
Stafford and one of my sons to my house, Stafford matter of factly told
me that his Daddy is in Heaven. It broke my heart.
No one denies that my brother's death, and the death of the other
ten men, could and should have been prevented. I understand that
accidents happen. But companies engaged in oil exploration should do
everything in their power to prevent accidents that have such horrible
consequences. In the case of the Deepwater Horizon, they did not.
I am here today because I committed to Michelle, Stafford and Max,
and to my family, that I would do anything and everything to support
them and try and make sure no one would have to endure this pain again.
No one should have to needlessly risk their lives to earn a living. No
one should be allowed to risk the lives of hard working men and women
under their supervision and care in hopes of doing the job faster or
cheaper. Gordon and the others workers killed that day took safety very
seriously and trusted their co-workers. Had every company engaged in
the operation of that rig taken safety as seriously as they did, there
would have been no blowout.
I find it interesting how hard the oil industry is working to get
back into the Gulf. BP and others want to put this disaster behind
them. Meanwhile, no one with BP has bothered to place a single phone
call to anyone in my family. Not once. I don't expect a profuse apology
for widowing by brother's wife or killing the father of my nephews. I
don't expect them to accept responsibility for Gordon's death, because
that would likely be asking too much. All we expected was for someone
from BP to call and tell us they were sorry for our loss. Maybe they
were too busy hiring public relations firms and producing commercials.
Clearly, they were too busy moving forward, trying to continue drilling
and making more money, while we were left to pick up the pieces.
As many of you know, despite our best efforts, we have been unable
to get Congress to pass a bill that would allow these families to
recover damages against those at fault by changing laws passed almost
one hundred years ago. The House of Representatives commendably tried
to do that when it passed the SPILL Act last year. The Senate almost
passed its own version. However, a single Senator prevented its passage
by unanimous consent. I would hope that BP was not responsible for
convincing that Senator to block that bill. But I don't know that.
What I definitely know they were not doing over the past year was
trying to comfort these families, including mine. At the very least, BP
could join our efforts to change the law. A law that would allow this
family to move on with their lives. At the very least, BP and others
could work with Congress to improve worker safety so this never happens
again.
Now, I am from Louisiana and have lived in Louisiana all my life.
No one needs to explain to me the importance of the oil industry to my
state. While I have very little knowledge about the business, I know it
supports the likelihoods of thousands of people in Louisiana and other
Gulf states. And I understand the criticism of the moratorium. However,
as Gordon's brother and uncle to two little boys who won't even
remember their father, I plead with you to consider the repercussions
of not ensuring the safety of these workers before allowing BP and
others to keep doing business as usual.
Please don't forget the men and women who work on those rigs and
the families they leave behind. They need and deserve those jobs. They
just shouldn't be forced to choose between providing for their families
and working on a rig where safety, not speed, is what is most
important. Please remember Gordon, Michelle, Stafford and Max and the
families of the other victims. Hopefully, that thought effectively
challenges you to encourage and support worker safety reforms that are
desperately needed and might have saved my brother's life.
Thank you. I am more than happy to answer any questions you may
have.
______

The Chairman. Thank you very much for your testimony. Mr.
Overton is recognized.

STATEMENT OF MR. KEITH OVERTON, PRESIDENT AND CHIEF OPERATING
OFFICER, TRADEWINDS ISLAND RESORTS

Mr. Overton. This is tough testimony to follow. It makes my
testimony seem a bit insignificant. Nonetheless, you asked me
to come here to tell you about the economic impacts to Florida,
and I would like to do that.
TradeWinds is the largest beachfront resort on the west
coast of Florida, situated just west of Tampa for reference. As
Chairman of the Board for Florida Restaurant & Lodging
Association in 2010, I witnessed Florida's tourism industry
face its toughest challenge since the terrorist attacks of 2001
when the Deepwater Horizon well blew.
Additionally, as a member of Visit Florida's Board of
Directors, which in Florida is the marketing agency for the
State, I saw firsthand how difficult it was to combat the
negative perceptions that Florida faced throughout that crisis.
Florida's brand was damaged more than any other time in
history. Visitors prior to the oil spill had distinct
impressions of Florida that included warm sunshine, blue
waters, sugary white sand beaches, fresh seafood and a natural
environment like no other, and that certainly is true of
Representative Southerland's great city of Panama City.
Florida has spent billions over the years to create this
imagery in the minds of its repeat and new visitors. Tourism to
Florida means a lot. It is big business to us. We hosted 80
million visitors in 2009, and captured nearly 17 million
vacations by Floridians within the State of Florida.
Collectively, our visitors spent over $60 billion on travel
last year alone generating nearly $4 billion sales tax
collection, and what that means is more than one-fifth of
Florida's sales tax dollars are paid by our visitors. It also
means jobs. Nearly a million Floridians are directly employed
in travel and tourism within our state.
By now you know about the billions in damages that have
occurred to Florida's tourism industry and that we have
suffered. The question becomes when are we going to be made
whole. It is great that we are moving on and we are talking
about how to continue our economy and stimulate growth and
demand in offshore oil drilling, but we have forgotten that
Florida's number one engine is still trying to recover and we
have not been paid for the losses that have already been
sustained.
I would like to compliment in this hearing Ken Feinberg and
the Gulf Coast Claims Facility for getting our industry's
emergency claims paid in recent months. This process certainly
wasn't perfect, but he has done a good job and most claimants
have been paid at least their emergency losses to date, and it
is certainly no secret that none of our business owners feel
like the new protocol that was released by Mr. Feinberg is fair
to anyone, and that we are going to need to look at how we can
establish a different methodology to make our industry whole so
that we can recover as everybody else here today is talking
about with respect to their industry.
I asked Mr. Feinberg this question just last week, and I
would ask each of you to ponder the same question. What would
this money do in the hands of the business owners instead of
the Gulf Coast Claims Facility?
One, it would create more jobs, lots of jobs. It would
allow us to staff at higher levels and operate with normal
buying frequency an expenditure ratios. It would provide for
much needed capital improvements, creating more jobs. It would
provide for redevelopment and the new development in many cases
that needs to be done, again creating more jobs. We could give
your employees pay raises again. Many of them could afford
health insurance again. It could possibly pay more dividends to
our investors how might come off the side lines and reinvest in
the stock market, and all of this is because of one oil spill;
one we were told that would never happen.
Mr. Sarbanes mentioned earlier the importance of the
release of the funds and I wanted to just make that point. I
appreciate the opportunity to do that but there are other needs
that our state faces today, three of them to be exact. All of
our tourism industry businesses, hotels pay bed taxes. Those
bed tax dollars are now depleted as a result of revenues that
have fallen within Florida, further giving us the inability to
market our state effectively. The fishing industry and seafood
industries and our wildlife are critical to tourism in
Florida's economy, and I urge this Committee to influence or
obtain appropriate funding to restore and maintain the Gulf of
Mexico fisheries and wildlife. Whether these funds come from
the Gulf Coast Claims Facilities or not, NOAA and other key
agencies continue to be underfunded in this regard.
We must continue to spend money on the marketing efforts of
Florida, both domestically and internationally. Each time the
media covers a new report published by someone in the
scientific or academic communities the rest of the world is
again reminded about the uncertainties surrounding the well
being of the Gulf of Mexico, its fisheries, and other natural
resources. Visit Florida still needs money to advertise our
brand as negative perceptions are simply not gone yet despite
the television commercials you see.
I will close by saying this. We all understand the need for
less dependency on foreign oil. The risks of more drilling in
the Gulf of Mexico need to be seriously considered, and I know
you are doing that here today. Estimates that I continue to
read about how at most a $500 million economic impact from
drilling in close proximity to Florida. These same studies also
suggest that the drilling really won't affect gas prices at the
pump in the near term. We have seen what devastation once slip
up can bring to Florida's tourism industry, a $60 billion
economic impact to Florida.
When you consider all of the other segments of Florida's
commerce, such as fishing, seafood and real estate, it just
doesn't make sense. Drilling exploration off of Florida's
shores changes our brand and our image forever. Thank you very
much.
[The prepared statement of Mr. Overton follows:]

Statement of Keith Overton, CHA, President and Chief Operating Officer,
TradeWinds Island Resorts, and Immediate Past Chairman of the Board,
Florida Restaurant and Lodging Association

Good Afternoon Chairman Hastings, Ranking Member Markey and
Committee Members:
My name is Keith Overton. I am the President of TradeWinds Island
Resorts located on St. Pete Beach, Florida. TradeWinds is the largest
beachfront resort on the west coast of Florida situated just west of
Tampa.
As Chairman of the Board for the Florida Restaurant & Lodging
Association in 2010, I witnessed Florida's tourism industry face its
toughest challenge since the terrorist attacks of 2001 when the BP Deep
Water Horizon oil well blew and much of the Gulf of Mexico was taken
over by uncontrolled crude oil. Additionally, as a member of Visit
Florida's Board of Directors, Florida's advertising and marketing
agency, I saw first-hand how difficult it was to combat the negative
perceptions that Florida faced throughout that crisis.
Florida's brand was damaged more than any other time in history.
Visitors prior to the oil spill had impressions of Florida that
included warm sunshine, blue waters, sugary white sand beaches, fresh
seafood and a natural environment like no other.
Florida has spent $billions over the years to create this imaginary
in the minds of its repeat and new visitors.
Tourism in Florida is big business.
We hosted over 80 million visitors in 2009;
We captured nearly 17 million vacations taken by
Floridians;
Collectively our visitors spent over $60 billion on
travel last year;
Generating nearly $4 billion in sales tax
collections;
What that means is more than 1/5 of Florida's sales
tax dollars are paid by our visitors;
And it also means jobs;
Nearly a million Floridians are directly employed in
travel and tourism.
By now you are fully aware of the $billions in damages that
Florida's tourism industry has suffered. The question now is, ``when
will our industry be made whole on these losses?''
I would like to compliment Ken Feinberg and the Gulf Coast Claims
Facility for getting our industry's emergency claims paid in recent
months. While this process was not perfect, almost all of Florida's
emergency claims have now been paid to affected tourism businesses.
It's no secret that virtually no industry business owner feels that
Mr. Feinberg's recent protocol for long-term settlements is fair as it
relates to covering our losses into the future. However, based on my
recent discussions with Mr. Feinberg, I am very hopeful that he will
consider our modeling and forecasting which speaks to our future losses
from our perspective, and make the necessary adjustments to his
formula. However, I should also point out that failure to modify this
methodology (two times the eight months of losses in 2010 equals the
long-term claim value) will only result in law suits and a considerable
delay in the eventual deployment of these funds.
You should know that I believe Mr. Feinberg and his team continue
to work hard toward a mutual resolve. I asked Mr. Feinberg this
question just last week, and I would ask each of you to ponder this
same question;
``What would this money do in the hands of the business owners,
instead of the GCCF?''
It would create jobs, lots of jobs!
It would allow us to staff at higher levels and
operate with normal buying frequency and expenditure ratios.
It would provide for much needed capital
improvements, subsequently creating more jobs.
It would provide for redevelopment and new
development in many cases, subsequently creating even more
jobs.
We could give our employees pays raises again.
It would allow many of our employees to afford health
insurance again.
It will flow into the hands of our purveyors and
vendors, resulting in even more of all the above.
We could possibly pay dividends to our investors at
levels which might give them the confidence to come off the
sidelines and invest in the market again.
There are three other key needs you should be aware of:
1. All of our tourism-based businesses in Florida rely on
``bed tax'' dollars collected on hotel sales by our counties
for marketing and advertising. Without these dollars it is
impossible to compete with other states and other destinations
domestically and abroad. Our revenue losses extrapolate to
significantly reduced bed tax collections and we must make each
county whole based on their respective losses. This is critical
to our recovery process.
2. The fishing & seafood industries and our wildlife are
critical to tourism and Florida's economy. I urge this
committee to influence or obtain appropriate funding to restore
and maintain the Gulf of Mexico fisheries and wildlife. Whether
these funds come from the GCCF or not, NOAA and other key
agencies continue to be underfunded in this regard.
3. We must continue to spend money on marketing efforts both
domestically and internationally. Each time the media covers a
new report published by someone from the scientific or academia
communities, the rest of the world is reminded again about the
uncertainties surrounding the well-being of the Gulf Mexico,
its fisheries, and other natural resources.
Visit Florida still needs more money to advertise our brand as the
negative perceptions are simply not gone. I plan to provide you with a
follow-up survey to the original Y-Partnership study which was produced
in June just after the oil spill. I think the magnitude of the damage
to Florida's brand will be made clear in these findings (see the
original survey attached).
Lastly, while we all understand the need for less dependency on
foreign oil, the risks of more drilling in the Gulf of Mexico need to
be seriously considered. Estimates that I continue to read about show
at most a ``possible'' $500 million economic impact as a result of
drilling close in proximity to Florida's shores. These same studies
also suggest that near-shore drilling in Florida will have little
impact on gasoline prices paid at the pump.
We've seen what devastation one slip-up can bring to Florida's
tourism industry, a $60 billion economic impact to Florida. When you
also consider all other segments of Florida's commerce such as fishing,
seafood, and real estate, it just doesn't make sense. Drilling
exploration off Florida's shores changes our brand and image forever, a
brand and image we have spent $billions to establish over the years.
Thank you very much for the opportunity to speak with you.
NOTE: The report entitled ``VISIT FLORIDA: Gulf Oil Spill Research
Report'' dated June 18, 2010, submitted for the record has been
retained in the Committee's official files.
______

The Chairman. The time of the gentleman has expired.
Let me just start with questions here, and the purpose of
this hearing as we mentioned several times at the outset was
the economic impacts and that is why we called those of you
from the affected areas as to the impact of this de facto
moratorium, and you all alluded to this a little bit. Let me be
a little bit more specific.
Director Bromwich has said that the Bureau will never get
back to the previous pace of permitting for the Gulf of Mexico.
So if the Department continues, which obviously I would
interpret as a slow down in the future prospectively, what
impact would that have on you directly? And I want to ask Ms.
Randolph, Mr. Chiasson and Mr. Giberga on that because you all
represent parish port and economic company, and I know I have
brutalized your name again, so I apologize for that. Ms.
Randolph?
Ms. Randolph. Mr. Chairman, the most difficult part of
appearing here today was the ability to quantify for you,
numbers for you what we anticipate. A continued permatorium
will certainly affect us in a way that we may not be able to
operate in the future. We are a parish of about 95,000 people.
We are heavily dependent on the industry. The President
promised me personally that he would send an economic team to
the area to study the long-term impacts of this. That study has
been conducted and concluded, I can get that report to you.
There have been many suggestions about transitioning to other
industries. But the here and now is that if we don't pick up
the pace all the ancillary businesses, not the major oil
companies, but the ancillary businesses which can't follow
these oil companies to other parts of the world will go under,
and therefore our tax base will be decimated.
The Chairman. Thank you very much. Mr. Chiasson.
Mr. Chiasson. Thank you, Mr. Chairman. Let me make this
statement. The term ``uncertainty'' is what we have used
throughout this entire time, and it is uncertainty of what is
going to happen with this industry and I think it is key to
this answer.
If the industry knows what the pace of permits will be,
which we don't know now, if we know what that pace is going to
be we can plan, the industry can plan, but this uncertainty
that we have been seeing, the industry cannot plan. They don't
know what to do. And alluding back to what Parish President
Randolph said, and what Secretary Angelle said about one of our
tenants in Port Fourchon, Coastal Distributors, that is just
one example of a business who cannot wait. They will shut their
doors in May if there is no difference in the amount of
business that they can see, and right now it looks like they
are going to have to shut their business down in May. A small
business, obviously, but something that we are going to
continue to see in Port Fourchon if we don't get permits moving
in the Gulf of Mexico.
The Chairman. Mr. Giberga.
Mr. Giberga. Yes, Mr. Chairman, absolutely. There is no
question that in our business and all the ancillary businesses
that support us the issuance of drilling permits is the number
one demand driver for our services. Without drilling permits
there is no need for a drilling rig. If there is not a need for
a drilling rig, there is not a need for our vessels. If there
is not a need for our vessels, there is not a need for our
mariners, there is not a need for the shipyards to support us
and all the various ancillary shore-side support services,
including Mr. Chiasson's port. I don't need his port anymore,
so I will reduce and curtail my investment there.
So there is absolutely no question that a, and as Mr.
Bromwich has and you have correctly quoted him, you know, he
has said that he does not see us getting back to a level that
existed prior to Macondo, and that is one of the reasons that
some of us call it a de facto moratorium. Some of us call it a
permatorium, you know, but we see it, unfortunately, from this
Administration's vantage as a permanent feature in terms of our
ability to execute the necessary work that is required in order
to exploit the resources that are on the OCS.
So there is no question in our mind that we will have to
deploy our vessels to foreign locations. That means that we
will have to let go more of our mariners, that means mariners
that live in north Florida and support the industries that are
there, and I just want to observe that interestingly a large
number of our mariners actually do live in north Florida, so it
is not just unique to Louisiana. This is a regional problem and
we will all be affected by it, and so I think we have to think
of it in that manner.
The Chairman. Thank you very much. The gentleman from
Massachusetts, Mr. Markey.
Mr. Markey. Thank you Mr. Chairman. Thank you, Mr. Jones,
for being here, and our hearts go out to your family.
Let me ask each one of you this: The BP Deepwater
Commission reported back to this Committee that from 2004 to
2009 fatalities in the offshore oil and gas industry in the
United States were four times higher per person hours worked in
the United States waters than in European waters, even though
many of the same companies work in both venues.
We can just go across, would you support legislation that
raised the safety standards in the United States to those of
the other countries in the world which were mentioned in the BP
Commission? We will just go right across, if we could begin
with you, Mr. Overton.
Mr. Overton. I have not read the report.
Mr. Markey. Do you think the United States should have
safety standards----
Mr. Overton. I do.
Mr. Markey.--as high as the rest of the world?
Mr. Overton. Absolutely.
Mr. Markey. Thank you. Mr. Jones.
Mr. Jones. Of course, and maybe if only one of those
recommendations as to worker safety maybe my brother would
still be here today if those had been implemented.
Mr. Markey. Mr. Giberga, do you think that we should have
safety standards in our country equal to the other countries in
the world that are drilling offshore?
Mr. Giberga. Sir, I think that we are all responsible for
ensuring that we are operating safely but what I do say is that
while those safety standards are being developed and while we
are passing the regulations that we need to pass in order to
effect them we don't have to shut our entire industry down.
Mr. Markey. Should we, Mr. Giberga, have safety standards
equal to the standards that the European, the same standards
that the companies abide by in European waters that result in
four times less fatalities there, yes or no?
Mr. Giberga. Sir, we should have----
Mr. Markey. Yes or no, please. Do you support it or not?
Mr. Giberga. Sir, we should have the best safety
standards----
Mr. Markey. In the world.
Mr. Giberga.--in the world and as far as I am concerned I
would also note for you, sir----
Mr. Markey. That is all I need to know. Let me go to you,
Mr. Chiasson. Do you believe that we should have safety
standards equal to the European standards so that we don't have
four times the fatalities as people working in the rigs because
it is BP, Exxon-Mobil, same people, do you believe we should do
that?
Mr. Chiasson. Yes sir, I do.
Mr. Markey. You do. Thank you.
Ms. Randolph, do you believe that we should pass
regulations and laws that ensure that we have the same safety
as the same companies abide by off European waters?
Ms. Randolph. Yes, I do.
Mr. Markey. So if this Congress does not pass that kind of
legislation would your constituents be unhappy, Ms. Randolph?
Ms. Randolph. Actually, we have seen most NTLs and
everything associated with the Department of the Interior.
Mr. Markey. There have been no new laws passed since the
accident.
Ms. Randolph. That is correct.
Mr. Markey. Would you want new laws and regulations put on
the books, Ms. Randolph, to protect your constituents that
ensure that they run no higher risk than the same workers
working for the same companies off European shores, would you
want that for your workers?
Ms. Randolph. I would rather see laws than the fiats that
we are having right now.
Mr. Markey. So you would like to see safety laws passed
that ensure that we protect those workers?
Ms. Randolph. Yes, I would like to see it debated in the
halls of Congress, not issued by the EPA.
Mr. Markey. We have already had a debate. We are waiting
for the--I am trying to just have you say that you do want--
that you want safety laws at least as strong as the Europeans
get for the workers because we lost so many lives and so many
injuries, so many families. What do you support, Ms. Randolph,
please?
Ms. Randolph. Actually we have people who live in Lafourche
Parish who work throughout the world, Mr. Markey.
Mr. Markey. Thank you.
Mr. Randolph. And they have been in Egypt.
Mr. Markey. Does it bother you that they are more at risk
in the Gulf of Mexico----
Ms. Randolph. In Egypt----
Mr. Markey.--than they are off of the coast of Europe in
terms of the same company and the same safety standards?
Ms. Randolph. Actually I am traveling to Norway tomorrow to
experience what is out there. I do know that the people who
work in the Gulf of Mexico are many of my friends' family
members and neighbors.
Mr. Markey. Yes.
Ms. Randolph. And safety is paramount for them.
Mr. Markey. So you want the highest standards.
Ms. Randolph. Yes, sir.
Mr. Markey. So if Europe has the best standards and the
same companies are abiding by the European standards, and there
are four times fewer fatalities, wouldn't you want those
standards?
Ms. Randolph. Yes.
Mr. Markey. OK, great.
Ms. Randolph. But I don't want the same standards as in
Nigeria.
Mr. Markey. Thank you. I appreciate that. That is what I am
saying. I am saying the highest standards, not the lowest. We
are down with Nigeria in terms of accidents, unfortunately. We
are not up with Norway and the other countries, so a big debate
is going on here, and the oil companies are blocking--the same
oil companies that say they want to drill are blocking our
ability to improve safety standards. They are the ones stopping
the legislation.
What would you say, Ms. Randolph, to the oil companies
blocking safety legislation from moving even as they are in
here trying to get more drilling? Do you want the safety to go
along with it? Do you want that legislation to pass, Ms.
Randolph?
Ms. Randolph. Sir, in order for the permits to be issued
the have to comply with the safety regulations.
Mr. Markey. No, safety has not been improved from--the
recommendations have not been implemented. Do you want those
recommendations to be made statutory to protect the workers?
Ms. Randolph. They have been issued by the Bureau of Ocean
and Energy.
Mr. Markey. I just want you to send a message to the oil
industry: make yourself as safe as Europe is, the same
companies. Why do people have to die at four times the rate?
Can you say that to them here? They need to hear it.
Mr. Giberga. Mr. Markey----
Mr. Markey. No, no, I am not asking you the question. I am
not asking you a question.
Mr. Giberga. I would say something.
Mr. Markey. Thank you so much.
Ms. Randolph. I think what is happening here, sir, is that
we probably have three times the amount of drilling going on
here, and so it is difficult to actually compare.
Mr. Markey. What is your message, Mr. Jones, to them? Can
you tell us from the workers' perspective?
Mr. Jones. And again, in my statement I did not say
anything about the moratorium, but it has been a year and
nothing has been passed as to improving safety regulations or
doing anything to increase the protections to the people that
are working on these rigs. There is no incentive for them to do
anything different than what was done a year ago on April 20th
of 2010.
The Chairman. The time of the gentleman has expired. I
would just say that, and I am sure that we all want to hear
responses to Mr. Markey's questions. If you did not have a
chance to respond as he asked, obviously a written response
would be very welcome by this Committee.
So, the Chair recognizes the gentleman from Florida, Mr.
Southerland.
Mr. Southerland. I appreciate the Ranking Member. I am not,
I will tell you, never have been more enamored by European
nations really in any way when compared to the greatness and
the exceptionalism of this great nation, and I think we are a
shining City on a Hill, and I am not afraid nor apologetic by
recognizing that, so that kind of bothers me that in that
parallel universe that the Ranking Member very well, I mean,
noted that they are so admired.
I would like to ask, though, since, you know, we were
polling, would each of you like a competent Federal Government
that would have the courage and the intestinal fortitude of
standing up and saying that they bore and bear, should bear
some responsibility in preventing this accident after issuing
720 citations and refusing to rescind the Jones Act, and at
least keeping the massive expansion of this accident from
spreading? Would each of you like a Federal Government that had
the intestinal fortitude that would admit when it is wrong and
that it bears some responsibility in its incompetence to track
and elephant in the snow, OK, to prevent this? Would you like a
Federal Government that would do that?
Mr. Overton. Yes to both questions.
Mr. Southerland. Thank you.
Mr. Jones. I want anyone and everyone who is responsible
for my brother's death to be held responsible.
Mr. Southerland. Including the Federal Government?
Mr. Jones. Everyone.
Mr. Southerland. Including the Federal Government?
Mr. Jones. Everyone.
Mr. Southerland. That would include----
Mr. Jones. If that is the case, then yes.
Mr. Southerland. Yes, very good.
Mr. Giberga. Yes, sir, we absolutely need a Federal
Government that regulates effectively.
Mr. Southerland. Very good.
Mr. Chiasson. I agree as well, and to mention some of the
safety plans that were in place, I believe MMS approved some of
those plans.
Mr. Southerland. Sure.
Mr. Chiasson. So that is a----
Mr. Southerland. Right, but they don't want to talk about
that.
Mr. Chiasson. Right.
Mr. Southerland. In the 400-page report that was issued to
us with nine findings not one of the nine findings, not one
gave any recognition that the Federal Government bore any
responsibility. The only recommendations were to give more
money, more expansion, more involvement because of this
parallel universe where we raise Europe as the shining model,
and I didn't ask--Ms. Randolph, do you want a Federal
Government that is competent?
Ms. Randolph. Yes, I do, and I agree with Mr. Jones that
anyone and everyone responsible for his brother's death should
be made accountable for it.
Mr. Southerland. And I agree. Let me say this. Mr. Jones,
you are a great brother. I am a funeral director by trade, and
I will tell you it bothers me greatly that you have not
received a phone call, that you have not received a personal
visit. That is immoral. And so I want to make sure that the
tenor of my questions recognize that there is a common decency
that makes this nation great, and it bothers me, my heart hurts
for you and your family and these children, so I want you to
know that you have my deepest sympathies. That doesn't help, I
understand that, but I want to recognize the bravery of you
coming to this broken place, standing here for your brother and
standing here for your family. I thank you. And it doesn't
matter what side of the aisle that any of us sit on, we must
not lose the fact that this was real people, real families
trying to provide for their family to provide a better future.
And so I would not want you to misinterpret my question. I am
not callous. I am not hard, and I thank you for being here
today.
Mr. Jones. Thank you for your comments, and I certainly
understand what we are here about. I am here to give a
different perspective.
Mr. Southerland. I understand, and God bless you and your
family, and please relay my deepest sympathies to your family.
Mr. Jones. Thank you.
Mr. Southerland. Thank you. Mr. Chair, I yield back.
The Chairman. The gentleman yields back. The gentleman from
New Jersey, Mr. Holt.
Mr. Holt. I thank the Chair. I join my colleague in
expressing personal sympathy of Members of this Committee to
you and your family, and to all of the others whose lives were
lost in the Deepwater Horizon, and sympathy to those whose
lives and economic well being were shattered by this. That is
what we are talking about: how we can have the best possible
industry operating at the best possible standards.
Sure, America is great. We all don't wait just for the 4th
of July to say so, but it is not a point of pride to be able to
quote from the report that says from 2004 to 2009, fatalities,
these are people, working people that the gentleman was talking
about, fatalities in the offshore oil and gas industry were
more than four times higher than per person hours worked in
U.S. waters than in European waters. They go on to say this is
not necessary. It depends on the differing cultures and
regulatory systems.
It is really in tribute to, in memory of those who died
that we want to insist on the highest standards and to follow
on what Mr. Markey said, somebody needs to send a message, and
you can send it as we can send it to these industries, to these
companies, that we can't go on like this. It is not worthy of
America, it is not worthy of those hard working men whose lives
were lost.
The Deepwater Horizon accident was not an exception, it was
not an anomaly. I have here in front of me from the Bureau of
Ocean Management Regulation and Enforcement, 79 events over the
last decade, loss of well control, blowout injuries, fatality,
fatal; blowout, fall; riser disconnect and blowout; loss of
well control. I mean, this is off the Louisiana coast, off the
Louisiana coast, off the Texas coast, off the Louisiana coast;
Mississippi. Any one of these 79 events might have been the
Deepwater Horizon event.
Now, the Chairman, I am not sure how much time remains, two
minutes, so let me quickly change course a little bit and talk
about what the Chairman said was the point of today's hearing,
which is, loss of revenue. Let me first turn to you, Mr.
Overton.
Have you seen the numbers? What I have seen is that there
has been $23 billion in lost tourism, some hundreds of millions
yet to be tallied in loss of fishing revenues. Are those
numbers approximately right?
Mr. Overton. They are.
Mr. Holt. How does this compare with the lost oil revenues?
Has the oil pumping continued so that oil is still being
extracted from the Gulf is it not?
Mr. Overton. It is.
Mr. Holt. Can you put these losses in perspective, the
economic losses in tourism and fishing?
Mr. Overton. Well, I can't do that quantifiably, but what I
can say is that our losses have stifled the state's economy
more so than any other episode that has happened in the state's
history. We were already $7 billion behind where we needed to
be. So the oil industry seems to be doing just fine. BP seems
to be recovering in its stock price. Yet we are still left with
the facts of not being recovered.
Mr. Holt. Now I gather a lot of these small businesses
can't just turn off and turn on again. Some of them have gone
away.
Mr. Overton. Yes, they have, unfortunately.
Mr. Holt. And would you say this is a direct result of the
laxness, whatever the source of it is, that led to the
Deepwater Horizon accident?
Mr. Overton. There is no question.
Mr. Holt. Thank you, Mr. Chairman, and I thank the
witnesses.
The Chairman. The gentleman's time has expired. the
gentleman from Texas, Mr. Flores.
Mr. Flores. Thank you, Mr. Chairman. I want to thank each
of the witnesses for appearing here today and I would like to
start with you, Mr. Jones.
Your description of the loss of your brother Gordon brings
back painful memories about the loss of my brother back in 1978
from a drilling accident, and so my heart has a natural empathy
with you, so I am sorry for what happened to your family, and I
think it does reenforce the importance of strong, sound safety
regulations in this business, and that everybody that
participates in this business use those regulations.
I think the Oil Spill Commission report, it started out by
saying that there were a few bad actors in the Gulf of Mexico,
but then it unfairly went on and painted the rest of the
industry with a broad brush that said we had a systemic
industry problems. I don't know what I can do, but I will see
if I can get BP to give you a call, because they owe that to
you.
Now, I would like to go on. Ms. Randolph and Mr. Chiasson,
I am sorry for what has happened to your communities. As a
person who used to operate across the Louisiana Gulf Coast and
had a district headquarters in Morgan City, operated in
Terrebonne and St. Mary and Lafourche Parish, I know what is
happening to you all.
Mr. Giberga, did I get that right?
Mr. Giberga. Sure did.
Mr. Flores. I have a question for you. You were trying to
respond to Mr. Markey's comments about, and I think the two of
you were, too, about the fact there has been an allegation that
nothing has changed. There have been no new regulations. But as
I understand it there has been a fair number of notices to
leaseholders, NTLs as they are called in the business.
Why don't you walk through what the real story is here in
terms of improved safety responsiveness?
Mr. Giberga. Thank you, Congressman.
There have been a number of--there were a number of
recommendations that were issued early on following the
disaster. Many of those were implemented as interim regulations
and then final regulations, and the industry has engaged, I
think, in an unprecedented attempt in order to not only try to
understand these regulations, many of which were extremely
complex, but do everything it could to immediately come into
compliance with them.
I will try to keep this short. I appreciate that. The point
I was trying to get to was that the allegations there has been
no change in the safety standards in the Gulf of Mexico is
patently false, is that correct?
Mr. Giberga. Well, it is absolutely false, sir.
Mr. Flores. That is what I thought.
Mr. Giberga. If it were true, then I have no idea what the
BOEM has been doing for the last several months.
Mr. Flores. They have issued----
Mr. Giberga. They have been doing nothing but regulations.
Mr. Flores.--hundreds of pages of new regulations on the
Gulf of Mexico, and supposedly after all these regulations were
issued and the moratorium was lifted people began to comply
with the new permitting process, and they have begun to comply
with that new permitting process, however very few permits are
being issued.
You have sued, your company has sued the Federal
Government, and you have--the Judge has found the Secretary of
the Interior to be in contempt of court because of a deliberate
slow down in the issue of permits. Tell us what your
perspective is on what is really happening.
Commissioner Jones of the Railroad Commission a few minutes
ago talked about the fact that there are allegations that
nobody want to drill in the Gulf of Mexico anymore; that there
are no permits, but that there are a slow down in the number of
permits that are being requested. Why don't you tell us what is
really happening from your perspective.
Mr. Giberga. Well, from our perspective and, of course, we
are in the supply industry side of this, so we support offshore
drilling efforts. From our perspective what we are seeing is a
drastic reduction in activity on the OCS. Even though there was
no moratorium that was ever issued in the shallow water, for
instance, there has been a radical reduction in shallow water
activity. Well, if there was no moratorium in the shallow
water, where did all of that activity go?
Mr. Flores. Right.
Mr. Giberga. It has been bottled up in a bureaucratic
morass that has prevented those activities from advancing even
though----
Mr. Flores. I think we are getting your points. I have one
more question I need to ask Mr. Overton.
Your industry has been adversely impacted by the spill.
What will the impact of $4, $4.50 gasoline prices add to the
pain that you are currently feeling?
Mr. Overton. Oh, there is no question that we don't want
that either, and it is a tough situation for us to be in
because clearly our visitors that come to Florida by vehicle,
and even through the cost of an airline ticket will be impacted
by the oil prices. But I would tell you that I don't think it
is nearly as significant as the losses we have sustained over
the past, you know, nine months now, eight months now. We don't
want either, we don't want a loss to occur as a result of the
oil spill, and we want gas prices to be low, and we are not
against offshore oil drilling Our industry is not against
becoming interdependent from foreign oil. We want that. But we
also want to do it in a way that it makes sense to the commerce
of Florida.
Mr. Flores. Again, I want to thank Mr. Jones again. You
have my condolences for your entire family.
The Chairman. The time of the gentleman has expired. The
gentleman from Louisiana, Mr. Landry.
Mr. Landry. Mr. Jones, I want to pass on my deepest
condolences to your family as well. I, like Mr. Flores and
yourself, have experienced a loss of loved ones, people that I
knew, I grew up with people whose fathers had tragically been
killed in oil and gas accidents, and I am looking at the Oil
Spill Commission's report, and looking at how we can better
protect those men and women on those platforms. I am actually
in the process of drafting some legislation in regards to that.
So, you have my commitment to work on the safety of the people
up on the platforms.
Ms. Randolph, could you tell me, would you say that
Lafourche Parish is a good example of America in the aspect of
the amount of people who--middle class people there, indigents,
some minimum wage earners. Tell the Committee the level of
health care that you all have in Lafourche Parish.
Ms. Randolph. Lafourche Parish is 100 miles long and we
have three medical facilities. One that is actually a regional
facility. The level of care within our community is, I would
qualify as excellent simply because with more resources than
the health community can bring in additional specialists,
additional assistance in providing better health care. It is a
cascading effect.
Mr. Landry. And you wouldn't say that many people in
Lafourche Parish regardless of whether they have insurance or
don't have insurance don't have access to that quality care.
Ms. Randolph. That is correct. They all have access to this
care.
Mr. Landry. And what is the driving point that brought that
first-class quality health care to Lafourche Parish?
Mr. Randolph. Certainly a successful energy industry and we
are grateful to those who make certain that we do it correctly
and there has to be oversight, better oversight than what MMS
was doing at the time. We are grateful for those people.
Mr. Landry. So as they cripple our oil and gas industry
they cripple our health care system in Lafourche Parish.
Ms. Randolph. That is correct. I mean, it has that type of
effect.
Mr. Landry. OK. One other question. During Hurricane
Katrina, Lafourche Parish was a recipient of a lot of evacuees
from Hurricane Katrina, is that correct?
Ms. Randolph. That is correct. Many of the residents of New
Orleans and Saint Bernard Parish escaped to Lafourche Parish,
and one of the community centers where we house them was
powered by a generator donated by BP.
Mr. Landry. Oh, that is what I wanted to ask. I am glad
you--that was my next question because I am sure that this
influx of evacuees certainly put a strain on the resources of
the parish government.
Ms. Randolph. That is correct.
Mr. Landry. And that is what I wanted to ask you. If there
were any third party or if there were any corporate companies
or businesses who came to that aid who helped you, and I guess
you--so what you are saying is the oil and gas industry
basically helped those people in a time of need even when your
resources were strained.
Ms. Randolph. When we needed a major generator at Port
Fourchon in order to pump the gas to get to the other
generators at the companies in order for them to recover,
another oil and gas company provided us with that. It has been
a good relationship.
Mr. Landry. And so, again, if they cripple our industry and
they drive those people off of our shores, you got anybody else
to turn to if we have another Katrina-like event?
Ms. Randolph. Not at the present time.
Mr. Landry. OK. All right. Thank you.
One other question just real quick again. Could your
tourism industry take $6 gas for the next 24 months?
Mr. Overton. That would be devastating.
Mr. Landry. More devastating than what you currently
experience?
Mr. Overton. I don't know how to answer that for all of
Florida, but certainly it would be for certain areas of
Florida, yes.
Mr. Landry. Thank you.
The Chairman. The time of the gentleman is about to expire
in one second. It has now expired.
Thank you very much. I want to thank the panel for coming--
the gentleman from New Jersey.
Mr. Holt. If I may, I would like to have a minute or two
for a comment.
The Chairman. OK, I will conclude. I will recognize the
gentleman for a couple of minutes.
Mr. Holt. Thank you. First of all, I just want to say in
general hearings are more useful, policy hearings are more
useful if we are dealing with the facts. I mean, we just heard
about a crippled industry. You know, oil profits have never
been higher, but even more to the point, oil production from
the Continental Shelf, Outer Continental Shelf has increased by
more than a third in the last three years. It has reached an
all-time high in 2010, and onshore it has increased by five
percent also.
Furthermore, as for permits, there is no permatorium. Let
us be clear. Here are the facts. According to Department of the
Interior records, and Mr. Giberga, I am not sure where you were
getting your numbers, but these are the official numbers. In
2009, so this is before the moratorium, before the blowout, the
Department of the Interior averaged fewer than eight shallow-
water permits per months. Since October of last year, so 2010,
through the most recent month, so through February the
Department is averaging six shallow-water permits. Well, six is
not very much different from eight. Thirty-eight total since
June of 2010, so six per month.
Moreover, even before the spill the number of shallow-water
permits had been declining. They declined by about 30 percent
during the last three years of the previous administration, the
Bush Administration. So, right now there are 16 shallow-water
permits pending, of which 11 were submitted in the month of
March where we are right now, since March 1st, so the industry
seems to think that permits are picking up.
Let us deal with the facts here. Thank you, Mr. Chairman.
The Chairman. Well, I thank the gentleman.
Ms. Randolph. Please let us deal with the facts.
The Chairman. I thank the gentleman. We have had over a
three-hour hearing, and we invited people that are impacted,
and their testimony overwhelmingly, overwhelmingly was that
there is an impact on their community notwithstanding the
statistics that the gentleman from New Jersey cited. In fact,
the panel before this, the Chairwoman of the Railroad
Commission, stated a similar observation, and one of my
colleagues here talked about this being fantasy land and how we
come up with thoughts. Perhaps this is an example of that
because the people we invited up here are testifying that this
is how this has impacted them period.
I want to make one other observation. There has been some
discussion here about--in fact a lot of discussion about the
President's report. I have said over and over that Congress out
to react after we get the facts, and the issue of the BOP was
brought up several times. We don't know what happened with the
BOP because the Commission did not look at the BOP, as Mr.
McClintock said, and there is an investigation going on by the
Coast Guard and by BOEM right now.
Now, I just want to point out for the record that report is
not due until July of this year on the BOP. How can we
completely tie the knot here unless we know what the facts are?
And so when this report comes out we will respond in kind. But
to suggest that we should just react because it is the nice
thing to react I think once more quantifies that sometimes what
we do here doesn't meet reality.
So, I just want to once again thank the witnesses for
coming, for traveling this far. Your testimony is very, very
much appreciated. There may be Members that would like to ask
you further questions or follow up, or I will offer you. If you
feel that a position that you had or a point that you had made
wasn't as good as you felt it could have been, please feel free
to elaborate.
With that if there is no further business before the
Committee, the Committee will stand adjourned.
[Whereupon, at 1:12 p.m., the Committee was adjourned.]