The Dewatering Hole

“Green” is no longer the magic bullet to solve our energy concerns, according to Dr. Joseph A. Stanislaw, an independent senior advisor to Deloitte LLP and founder of the advisory firm The JAStanislaw Group, LLC. Instead, says Stanislaw, a “transition from green to clean” can power the next phase of development of the world’s energy and economic sectors.

Stanislaw makes this argument in a new white paper titled, “Clean Energy 1.0: Moving beyond green to create sustainable jobs and a long-term energy strategy,” which focuses on the three interconnected mandates that are driving the evolution of clean energy in the United States: protecting the environment, creating enduring jobs and enhancing national security.

Stanislaw, who is the co-founder and former president and CEO of Cambridge Energy Research Associates, begins his white paper with historical context: “Just two years ago, when oil was levitating towards $100 a barrel and Russia was playing politics with pipelines — green energy was the holy grail of energy security. Then, when concern over climate change reached a fever pitch, it became the silver bullet to solve global warming. And, finally, when the ‘Great Recession’ struck, green energy was the panacea for unemployment and falling wages.”

This metamorphosis, he says, is part of a necessary maturing of the debate around energy because clean energy technologies must “evolve from their current 1.0 stage to a 2.0 stage and beyond.” He draws an analogy between clean energy and the high-tech industry: “Right now, clean energy is where the mobile-phone industry was in 1983, when Motorola released its two-pound, $4,000 DynaTac 8000x, or where the computing world stood that same year, when Windows 1.0 was launched.”

Stanislaw goes on to explain that the past two years alone have shown us that green energy is “no longer the magic bullet.” Clean energy, he says, can now take its “pivotal but mortal place in an array of energy forms and technologies that will power the world in the 21st century.” He claims that the ‘transition from green to clean’ will power the next phase of development of the world economy, as we race to create technologies that help us better produce energy and reduce its use.

The white paper points out that the stage is now set for a smart, long-term American energy strategy—for numerous reasons:
•    Energy is now top of mind: The federal stimulus bill has helped kick-start a massive investment in clean energy technologies and has shifted America’s psychology on energy.
•    Steering a new strategic course: Our recent immersion in clean energy has allowed us to better understand—through experimentation and debate—what our long-term energy strategy might be.
•    Clean beats green: We have come to understand that what matters most is not green energy but clean energy—whether it comes from the wind, clean coal, natural gas or nuclear. And, best of all, is Americans’ greater understanding of using less energy overall.
•    Energy is jobs policy: Policymakers have learned that energy policy cannot be separated from jobs policy—and that sustainable jobs matter most.
•    Energy improves the bottom line: The recession has underscored the pocketbook benefits of efficiency and clean energy for individuals and corporations, in addition to their positive impact on the climate change and national security. “Efficiency and clean energy are now firmly embedded in the consciousness of Americans,” says Stanislaw.
•    The public wants to go clean: Americans continue to insist that corporations “go clean,” thus shaping product development and capital allocation. “Americans should encourage policymakers to follow suit,” according to Stanislaw.

He advocates several steps to help move the United States along the clean-development continuum. First, he stresses developing a federal framework. “The absence of a federal framework is now an enormous handicap,” he says. “The federal government should not avoid mandating renewable power consumption nationwide. Whether the target is 20 percent of American energy coming from renewable sources by 2020, or something more modest, a mandate is important. Policymakers should not try to pick winners, but they should set targets.”

Stanislaw also stresses the need to reduce and manage energy demand instead of just producing clean energy. “Energy efficiency is perhaps the biggest untapped market for entrepreneurs, investors, and policymakers. It meets all the demands of those seeking to reduce emissions and increase national security, while having the potential to contribute mightily to the creation of sustainable, well-paying jobs.”

“And finally,” says Stanislaw, “research and development must rise again.” He cites an estimate that before the stimulus bill, the Federal government budget for energy research was the same today, adjusted for inflation, as it was in 1968 — about $3 billion. “This situation is made worse by a decline in energy-related research and development expenditures in the private sector over recent decades,” he adds.

“We should reverse this trend by creating market conditions to promote investments in research, development, and market penetration in energy efficiency, in new methods of consumption, and in all forms of energy, be they traditional — oil, gas, coal, nuclear — or alternative. “

Stanislaw concludes his white paper by reiterating that this is just the early dawn of the clean energy era. “Only in the past year or two has energy become a national state of mind,” he said. “But the historic importance of this can hardly be underestimated.”

He argues that businesses and governments should respond to this new reality by creating the products and services that will help Americans manage their energy consumption. Corporations, meanwhile, should realize that in addition to their core business, each and every one of them is an energy company, too — and that managing their energy usage can be critical to their bottom line. Last, policymakers can amplify these trends by creating the rules of the game and funding the research that will position the United States at the cutting edge of the clean energy evolution.

About the Author: Dr. Joseph A. Stanislaw serves as an independent senior advisor to the Energy & Sustainability practice of Deloitte LLP. Dr. Stanislaw is founder of the advisory firm The JAStanislaw Group, LLC, specializing in strategic thinking and investment in energy and technology, and cofounder and former president and chief executive officer of Cambridge Energy Research Associates (CERA). He can be reached via the firm’s website at https://www.deloitte.com.

Download Stanislaw’s full report, “Clean Energy 1.0: Moving beyond green to create sustainable jobs and a long-term energy strategy,” here.

The economic vitality created by just one natural gas well may have steady, active job production for up to 20 years. A typical gas well will produce both gas and a certain amount of oil or condensate. Most wells require a chemical treatment program. The chemicals used address problems from scaling and paraffin build up to H2S treatments. It is quite normal to have some type of field compression for enhanced or better rates of recovery from the reservoir. Naturally, everyone is interested in measuring the amount of gas and associated oil or condensate produced as to calculate the revenue from the well’s production.

From these various functions and components it is contended here that a typical well contributes to the livelihoods of 115 people. (Click below for the full report that describes how this figure is derived.) Each of these 115 jobs directly associated with the economic job engine of a producing well supports the livelihood of three more people as these paychecks are brought home and become consumer dollars.

There are also considerable economic benefits in the form of excise taxes into the coffers of state and local governments and royalty payments to the mineral owners.

Economic models established to justify other community activity are excellent tools for the oil and gas industry to utilize in demonstrating the economic stimulus our endeavors create. At a time when every job has value, we can never lose focus on the high value jobs that the oil and gas industry supply to our nation.

–Mark Goloby

About the Author: Mark Goloby is president of TC Technologies, which delivers wireless data-monitoring tools for oil and gas production and assets needed to support production. He can be reached at tctcom1@pdq.net.

Download Mark Goloby’s full report, “The Oil and Gas Job Multiplier:” theoilandgasjobmultiplier

The first quarter of this year saw a drop in gas prices of about 30%, resulting in a shift in strategy for oil and gas companies who had been betting on an increase in the price of gas. At the beginning of the year, it seemed we were looking at prices of $6 to $7 per MMBtu. Unexpectedly, supply is high, and today the price closer to $4.

The drop in gas prices will make the economics of many current gas projects, including shale gas, marginal in terms of profitability. The situation is amplified by slow demand through the recession, well-stocked storage space and increasing international LNG capacity, so there is no quick respite in sight.

Meanwhile, the price of oil has grown to more than $80 a barrel. As a result, we are seeing an increased focus on oil and more investment in areas with oil potential (like EOG Resources’ recent announcement that it will develop 500,000 acres in oil-producing areas).

Companies with a strong focus on gas and gas shale will need to find ways to maintain cash flow through cost reduction, streamlined operations, and other ways to free cash. In addition to low prices for gas sold, the current business case to their investors is based on an estimated production for the relatively few wells drilled and some extrapolation. This means they are highly leveraged and need to ensure a strong cash flow to maintain the development pace to achieve a positive return to investors in promised time frame.

To address this, we should expect to see companies with large exposure to onshore gas like Cheasapeake Energy Corp., Petrohawk Energy Corp. and Cabot Oil & Gas Corp. sell assets to maintain operations and a renewed focus on cost-control and cash-release initiatives as well as shift focus to liquids production as much as possible. In fact, we have already seen that Petrohawk recently sold some assets, and Anadarko Petroleum Corp. recently made a deal with a Mitsui Oil & Gas Exploration company in Japan.

–Jan Erik Johansson

About the Author: Jan Erik Johansson is vice president, energy sector, for Celerant Consulting Inc. He can be reached at jan.johansson@celerantconsulting.com.

Foreign companies that perform offshore services for the oil and gas industry on the Outer Continental Shelf in the Gulf of Mexico are now on the IRS radar screen, and so are the U.S. companies that hire them. The IRS is taking the position that these foreign companies and their foreign workers have “U.S. source income” and may be engaged in a U.S. trade or business.

Therefore, the IRS contends the companies and their workers must file U.S. tax returns and pay U.S. taxes due on amounts earned from these offshore services. In addition, the IRS is likely to contend that the U.S. companies that hired the foreign companies should have withheld and remitted to the IRS 30% of the amounts they paid to the foreign companies.

The IRS has also made clear that, in addition to taxes and interest due, it intends to assert various penalties against both the foreign and the U.S. companies, as well as the foreign workers. The red flags recently raised on this issue were the IRS’s designation of Foreign Withholding as a Tier One Compliance Issue and the issuance of an Industry Directive dated October 28, 2009, which specifically targets activities on the Outer Continental Shelf in the Gulf of Mexico. Tier One Compliance Issues generally have the IRS’s highest priority and are subject to the greatest scrutiny by IRS auditors.

What Is U.S. source income? What are the broad definitions? Why are foreign-vessel owners are hearing from the IRS? Preparation Is essential. Find the full 1,200-word report by clicking below.

–Andrius R. Kontrimas and Nancy T. Bowen

About the Authors: Andrius R. Kontrimas and Nancy T. Bowen are partners with law firm Fulbright & Jaworski LLP. They can be reached at akontrimas@fulbright.com and nbowen@fulbright.com.

Click for Kontrimas and Bowen’s full report, “IRS Focuses on Foreign Companies and Offshore Services:”irsfocusonforeigncompaniesfulbrightjaworski

Communication problems are as old as human history. Bridging gaps is a continual challenge, and industry leaders need to know how to capitalize on overcoming those gaps.

Within the oil and gas industry (as well as in other industries), there are four generations of talent: Traditionalists (birth years 1925-1945), Baby Boomers (1946-1965), Generation X (1966-1980) and Generation Y (1981-2000). Since the 1990s, professional journals have alerted oil and gas leaders that the Baby Boomers, now the largest percentage of the workforce, are exiting the workforce at an alarming rate. The potential consequences include:

–Increased competition for talent. Due to the decrease in skilled talent following the retirement of the Traditionalists and Baby Boomers, competition for workers with required professional degrees and experience will increase.

–Shifting geography. Technology enables talent to work from anywhere and teleworking is becoming more commonplace; therefore, organizations will be able to source talent globally. This shift will affect organizational communication, strategy and business processes.

–Shifting generation. The corporate leaders of tomorrow will most likely be talent from Generations X and Y. Currently, organizations are balancing the activities of retiring two groups and preparing the organization for two others, while not neglecting any.

–Aging workforce. A majority of Baby Boomers are predicted to exit the workforce by 2015 and are followed by a much smaller group of talent, Generation X. In addition, the next generations of talent have different learning styles, communication preferences and work/life balance requirements than their predecessors. To recruit, retain and develop the next generation of talent, organizations must recognize and adapt to these styles.

–Lost information and tacit knowledge. As Traditionalists and Baby Boomers exit organizations, some for the last time, so will their communal know-how—their tacit knowledge—especially if it has not been adequately identified, captured, codified and stored in corporate knowledge repositories.

–Preparing and training talent. The fact that Traditionalists and Baby Boomers are retiring does not mean that they will not re-enter the workforce in some capacity, such as starting a new career, or working as a consultant or part-time employee. In some cases, organizations will be able to leverage veteran expertise in this way. As a result, organizations will need to update the skills of these workers, or train them along with other new hires. Thus, learning/training departments may simultaneously have to train several generations, each having distinctly different learning styles. This can perplex learning organizations that do not understand the needs of each generation.

–Sebastian Francis

About the Author: Sebastian Francis is senior consultant, commercial business services, for SAIC Corp. and specializes in knowledge management and organization learning within SAIC’s oil and gas practice. He can be reached at Sebastian.L.Francis@saic.com.

Click for Francis’ full report, “Better Knowledge-Sharing: Fill The Dry Knowledge Well With These Practices:” knowledgewellsebastianfrancissaic2010

Oil and gas markets have experienced significant changes during the past two years. Between crude oil moving from $146 to $33 in less than five months and gas going from nearly $14 to $3 over the course of a year, the past 18 months have been incredibly volatile to say the least. Adding insult to injury, the state of the capital markets has left many producers without access to much needed capital.

In these times of significant change and uncertainty, it is essential that oil and gas producers employ solid hedging and marketing strategies. These strategies will not only allow producers to survive the most challenging times, but will also allow them to excel in the best of times as well.

Houston-based EnRisk Partners, an energy hedging, trading and risk-management advisory firm, recently surveyed 38 U.S.-, Canada- and Australia-based small and midsize independent oil and gas producers about hedging activity in 2009.

The primary focus of energy risk management as it relates to oil and gas producers is hedging.

Consequently, this subject forms the basis of this study, which strives to analyze the current hedging practices and strategies of producers. Some of the key survey findings are:

–41% of study participants regularly hedge their production, while 29% never hedge.

–Only 13% are required to hedge by their lenders and/or investors.

–The majority of the participants that hedge on a regular basis stated that, on average, they hedge between 51% and 71% of their current PDP (proved, developed, producing) volumes.

–36% of the participants stated that their CEO or CFO makes the company’s hedging decisions.

–Swaps and collars are the most popular hedging instruments among the study participants.

–Only 34% of the participants indicated that establishing stable and predictable cash flow is the most important goal of their hedging activities.

–67% said they would characterize the success of their company’s current and past hedging initiatives as good or excellent.

—Mike Corley

Click for Corley’s full report, “2009 Crude Oil & Natural Gas Hedging Study:” enriskpartners2009hedgingstudyresults.

For more on current hedging trends in E&P, look for the upcoming article, “Hedging Horizon,” in Oil and Gas Investor’s April 2010 edition at OilandGasInvestor.com.

Booking proved undeveloped petroleum reserves has become a give-and-take exercise under new U.S. SEC regulations. Oil and gas companies are reporting both upward and downward year-end PUD revisions in the same properties.

– Based on a new “reasonable certainty” standard, companies are reporting PUD locations at distances greater than one legal offset from economically producing wells in their year-end 2009 results. That has boosted PUD reserves, especially from shale-gas locations.

– Reporting companies took PUD wells off the books if they were scheduled to be drilled more than five years from initial PUD assignment. Few exceptions were made, but more were expected in 10-Ks to be filed on or before March 15.

Cabot Oil & Gas Co. reports it made an exception for 16 Bcfe of PUD reserves delayed by “external factors.” However, it removed 120 Bcfe of PUDs that fell outside of the five-year development window by reclassifying them to probable. That was consistent with a reallocation of its capital program to develop assets in Pennsylvania and East Texas.

Across the industry, proved reserves, including PUDs, also dropped because average commodity prices for the year were lower than year-end prices. The SEC changed the rules from a one-day year-end price to an annual average to lessen the effects of volatility.

Some companies detailed the extent to which the five-year limitation decreased PUDs and multiple offsets increased them. For Bill Barrett Corp., the net effect was to boost PUDs. The company said it included additional offsetting locations, where warranted, in the Williams Fork formation in Gibson Gulch, a basin-centered, “continuous” accumulation of gas. That increased PUDs for the field by 64 Bcfe. The five-year limitation “had a nominal impact of reducing reserves by 7 Bcfe,” the company reported.

For The Williams Cos. Inc., the net effect was a “wash.” Williams reclassified 496 Bcfe of reserves from PUD to probable because of the five-year limit, while adding 454 Bcfe of PUD reserves through additional offsets.

Companies also assigned PUD locations more than one direct offset from a producer not only in shale, but also in conventional accumulations. Barrett’s Williams Fork produces from sandstone reservoirs.

–Mike Wysatta

About the Author: Mike Wysatta is business-development manager for Ryder Scott Petroleum Consultants based in Houston. He can be reached at 713-651-9191 and mike_wysatta@ryderscott.com.

Click for the PDF of Wysatta’s full report on this, including how the new SEC reserve rules were incorporated in year-end results for Newfield Exploration Co., Pioneer Natural Resources Co., EQT Corp., Petrohawk Energy Corp., Noble Energy Inc., Range Resources Corp., Bill Barrett Corp., Ultra Petroleum Corp., OAO Novatek, Rosneft, Petrobras and Chesapeake Energy Corp. and other reserve-analysis articles in the March-May 2010 issue of Ryder Scott’s Reservoir Solutions newsletter: reservoirsolutionsryderscottmarch2010.

When discussing natural gas prices, people may think of Henry Hub or another gas-trading hub. However, when discussing natural gas costs, there is no accepted measure to turn to. A simple analogy to consider is to examine the cost of a backyard do-it-yourself BBQ hamburger that you cook at home with the family. The layers are fairly simple: a bun, green lettuce, red tomato, meat, pickle, and cheese to top it off. The cost to buy these ingredients might come to $1.25.

Similarly, the cost of the natural gas hamburger includes royalties/taxes, operating costs, finding and development expenses, overhead, some profit (the return to investors) and the cost of transportation to get the gas to market. The total of these increments added to more than $7 an Mcf in 2008, far more than the price realized at the trading hubs.

A good handle on the relative cost to explore, develop, produce and market natural gas across the various gas basins in North America is important to an investor who wants to determine where to direct funding for the best return. For years, getting accurate cost data for gas from various producing basins was very challenging, if at all possible.

Based on ground-breaking research, in early 2008, Ziff Energy published the first complete, full-cycle gas analysis of 85 plays from two dozen gas basins. The next cost study of North America gas basins is currently being finalized using cost data as of late 2009 (the current low gas price/low cost environment). Economic ranking of the gas basins across North America will determine which regions producers are funding and which basins will see continued slowdown.

For mergers, acquisitions and divestitures, is it better to buy gas reserves, or is it better to explore, develop, produce and market?

The answer depends on the specific gas basin. This age-old question is being asked by boards of directors and by executive managements conducting due diligence on pending deals. Even service companies, such as drillers, pipelines and suppliers, would benefit by knowing the economic ranking of the major gas basins so they can focus their services and equipment to where producers need it most.

State and provincial governments will be better stewards of their producing communities if they understand the relative economics of basins. They will be better able to assess the impact of tax/royalty options and development issues which will impact (positively or negatively) incremental investment by operators, and therefore increase regional gas production.

Exploding growth among various shale-gas basins leads to a similar question. Which shale-gas basin is most attractive to invest in from a total cost perspective? Cost assessments of Barnett (Fort Worth), Arkoma, Haynesville, Marcellus, Appalachian and Canadian shales will be included in the upcoming study.

Graphically impressive, the new edition of the North American gas-basins study will help to explain the cost structure of all the significant conventional and unconventional gas basins.

–Bill Gwozd

About the Author: Bill Gwozd, P. Eng., is vice president, gas services, for energy-research and -consulting firm Ziff Energy Group. He can be reached at 403-234-4299 or bill.gwozd@ziffenergy.com.

What can we say about the T indices for the petroleum complex? For the Nymex heating-oil and gasoline futures markets, the T indices are within range of what had not been considered excessive for the agricultural futures markets.

For the very brief time period that we have ICE Futures Europe data, the conclusion for the ICE WTI contract is the same as that for the Nymex heating-oil and gasoline contracts.

As long as one includes options positions, the T indices for the Nymex oil futures markets are not excessive, again, provided that it is acceptable to use the historical agricultural futures markets as a guide to the adequacy (or excess) of speculation. It is also noteworthy that from the summer of 2007 to the summer of 2008 the Nymex WTI oil futures market did become more speculative (relative to hedging), even if the data for futures and options combined showed that the peak T index would not be regarded as excessive using our historical benchmarks.

Now, to be circumspect in our conclusions, we must note that if we exclude the option positions in the Nymex oil data, the futures-only data would potentially indicate excessive speculation in the U.S. oil futures markets.

We must clearly be careful about how strongly we word our conclusions. Within the closed system of the US oil futures and options markets, we find no evidence of excessive speculation, at least not when we use traditional metrics and when we include options positions with outright futures positions.

Also, if excessive speculation can be defined differently than as in our paper, then obviously we cannot say for certain that there has not been excessive speculation in the oil derivatives markets. Nor are our conclusions necessarily incontrovertible, if it is inappropriate to use the historical balance of agricultural speculation versus hedging activity to categorize this balance in the oil markets.

In addition, we have not examined whether futures-spreading activity over the past three years could have constituted excessive speculation. Finally, we cannot say there has not been excessive speculation in the oil markets through other venues.

But we can say that, based on traditional speculative metrics, the balance of outright speculators in the U.S. oil futures and options markets was not excessive relative to hedging activity in those same markets from June 13, 2006, to October 20, 2009.

–Hillary Till

About the Author: Hilary Till is a research associate for EDHEC-Risk Institute (Nice, France), a principal of Chicago-based, proprietary trading firm Premia Capital Management LLC and co-editor of the best-selling book Intelligent Commodity Investing (RiskBooks.com/IntelligentCommodity). Before co-founding Premia Capital, Till was the chief of derivatives strategies at Putnam Investments and a quantitative analyst at Harvard Management Co. She has a B.A. with General Honors in Statistics from the University of Chicago and an M.Sc. in Statistics from the London School of Economics, where she studied under a private fellowship administered by the Fulbright Commission.

Click for Till’s full report: Has There Been Excessive Speculation in the US Oil Futures Markets? What Can We (Carefully) Conclude from New CFTC Data?

December 3, 2009

President Barack Obama

The White House

1600 Pennsylvania Avenue, N.W.

Washington, D.C.  20500

Dear Mr. President:

Today at the White House, you had the chance to hear firsthand from several interested and informed parties—lawmakers, business owners, labor and academics—about the seriousness of the economic challenges facing our nation. The timing was critical, with the official number of unemployed Americans nearing 16 million, with some estimates reportedly in excess of 25 million.

As president of an independent natural gas and oil company (Swift Energy) and chairman of the Independent Petroleum Association of America, I’ve learned an important lesson: Never in human history has the safe and responsible development of available domestic energy resources failed to create value—not only for those who produce them, but for those who consume them as well. In a modern context, that value can be realized in the form of new, high-wage jobs for the American people, billions in revenue for state, local and federal governments, and a genuine means of reducing our dependence on foreign, unstable energy suppliers.

The American natural gas and oil industry continues to be one of the most powerful and dynamic forces of job creation in the nation—by some estimates, responsible for more than 9 million direct and indirect jobs in this country, and more than 7%  of total GDP. That spirit of growth and innovation is especially prevalent among our nation’s small and independent producers—men and women who, on average, employ just 12 workers apiece but still find a way to develop nine out of every 10 wells in service across the country today.

Maybe we’re just lucky with our “wildcatter” fortitude. Or maybe it has something to do with the fact that 150% of what we make (and haven’t quite made yet) is re-invested back into the work of finding and producing energy for the American people. We take this work seriously. And we stand ready and willing to put that work to use, in service of the goals and objectives identified by your jobs panel this afternoon.

Some of the most exciting work in this sector is taking place in areas across the country known as “shale plays.” Through technological advancements and industry ingenuity, massive amounts of clean-burning natural gas resources—once thought to be out of reach—are now being realized. And to your credit, Mr. President, you’ve started to take notice—releasing a position statement during your recent trip to China that hailed the United States as “a leader in shale-gas technology and developing shale-gas resources in a way that mitigates environmental risks.”

May we add “creating new jobs” to that list as well? Only a couple years back, analysts predicted that shale-gas production in Texas’ Barnett Shale would create $6.5 billion in economic output and 70,000 jobs. Nice try. In 2008, the Barnett generated more than 111,000 permanent jobs and $11 billion in economic activity—and the expectation is for those numbers to climb dramatically in the years to come.

Penn State University has conducted similar research on the enormous potential of the Marcellus Shale formation in the mid-Atlantic. Last year alone, according to Penn State, 29,000 jobs were created—and more than 50,000 jobs are expected to be created by the end of this year. The production also was responsible for $2.3 billion in economic development. And along New York’s Southern Tier, experts have predicted that natural gas production in Broome County could produce as many as 16,000 jobs and generate more than $790 million in wages, salaries and benefits.

As you can see, Mr. President, we have plenty of good news to report. We also have our share of disappointing news. For example, your budget calls for massive, job-killing tax hikes on small, independent oil and gas producers, potentially stripping $36 billion from many of these small businesses. The result would be a 20% drop in oil production and a decline in natural gas production of 12%. Countless jobs would also be lost.

We are also concerned that broad, sweeping financial regulation reforms that your Administration is advancing could harm domestic energy production. Derivatives play a critical role in ensuring that our member companies can minimize risk and exposure. Without these key financial tools in place and available to those who need them, less energy would be produced, and fewer high-wage jobs would be retained. It’s just that simple.

I am also concerned about your Administration’s decision to slow-walk the deployment of a common-sense, supply-oriented five-year offshore energy plan. Without action from the Interior Department, the more than 1 million jobs projected to be created through responsible, 21st-century offshore energy production will simply not be realized.

Economic recovery and long-term, sustainable growth demand access to affordable, reliable and secure energy supplies. We have the energy here at home to help meet our nation’s growing demands, and a capable workforce ready, willing and more than able to ensure these resources are produced safely and responsibly. We urge your Administration to move forward with common-sense solutions that encourage domestic energy production. American jobs and our national security are at stake.

Sincerely,

Bruce Vincent

Chairman, Independent Petroleum Association of America