Veterans and Offshore Drilling - Vets4Energy

Veterans and Offshore Drilling Why care, what it entails, and is it safe.

Meeting begins at 3:00 PM Eastern

Offshore Oil and Natural Gas Briefing Erik Milito Director, Upstream & Industry Operations American Petroleum Institute 2

The U.S. will require 12 percent more energy in 2040 and more than 60 percent of it will be met by oil and natural gas 2012

3.3% 3.7% 3.5%

2.8% 6.0%

2040

Quadrillion BTU

1974

31.9%

Source: EIA

Most energy analysts agree that sustaining even modest economic growth worldwide for the next several decades will require massive new investments in oil and natural gas

US Natural Gas Marketed Production

World Dry Gas Production in 2012 was 118 Tcf. The US accounts for over 20% of World natural gas production.

Top 10 Natural Gas Producing Countries - 2012

U.S. Crude Oil Production Has Skyrocketed Jan 2010 to Jan 2014 +2.6 million barrels per day +50%

Peaked in 1970

Source: EIA 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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US Crude Oil Net Imports and Production Crude Oil Net Imports 12

U.S. Crude Oil Production

Millions Barrels per Day

10

8

6

4

2

0 2006

2007

2008

2009

Source: EIA Short Term Energy Outlook - December 10, 2013

2010

2011

2012

2013

2014 Projected

Projected Economic Benefits of Expanded Atlantic Access National Economic Impacts Job Creation by 2035

280,000

Total Increase in Capital Investment

$194 Billion

Total Increase in GDP/Year by 2035

$23 Billion

Energy Production by 2035

1.34 MMBOE/D

Cumulative Government Revenue

$51 Billion

Cumulative State Government Revenue

$19 Billion

Bonus Bids Lease

Date

Area

Leases Awarded

Bonus Bids

233

Aug 28, 2013

Western Gulf

53

$102 million

227

Mar, 20, 2013

Central Gulf

320

$1.2 billion

229

Nov 28, 2012

Western Gulf

116

$133 million

222

June 20, 2012

Central Gulf

454

$1.7 billion

218

Dec 14, 2011

Western Gulf

191

$337 million

213

March 17, 2010

Central Gulf

446

$920 million

210

August 19, 2009

Western Gulf

155

$111 million

208

March 18, 2009

Central Gulf

328

$690 million

207

August 20, 2008

Western Gulf

319

$487 million

206

March 19, 2008

Central Gulf

615

$3.677 billion

224

March 19, 2008

Eastern Gulf

36

$64.7 million

193

February 6, 2008

Alaska- Chukchi

486

$2.662 billion

205

October 3, 2007

Central Gulf

682

$2.813 billion

204

August 22, 2007

Western Gulf

274

$287.1 million

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Royalties and Rentals Oil Royalties

Natural Gas Royalties

Rentals

2001 $

2,062,099,728.48

$

3,968,160,116.67

$

188,455,045.00

2002 $

1,632,638,228.21

$

2,114,977,575.45

$

153,303,576.33

2003 $

1,243,694,450.82

$

3,165,079,394.48

$

245,963,858.75

2004 $

1,194,196,781.74

$

3,301,702,291.61

$

214,303,045.22

2005 $

2,118,772,810.28

$

3,247,098,867.72

$

223,544,134.53

2006 $

3,271,073,374.50

$

3,160,028,663.49

$

224,006,816.08

2007 $

3,661,800,666.66

$

2,592,331,832.61

$

200,993,254.55

2008 $

4,885,461,310.24

$

3,067,191,883.14

$

237,074,433.14

2009 $

3,091,723,788.99

$

1,290,806,313.38

$

233,146,675.43

2010 $

2,983,660,809.16

$

595,177,485.15

$

245,645,026.79

2011 $

5,102,402,377.22

$

875,239,840.35

$

223,243,632.40

2012 $

5,216,309,404.25

$

483,634,710.08

$

228,022,724.29 12

Potential Upstream Oil and Natural Gas Job Openings by Occupation, 2010-2030

*Includes baseline projected growth and replacement requirements Source: IHS Global Insight, “Employment Outlook for African Americans and Latinos in the Upstream Oil and Natural Gas Industry,” November 2012.

1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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Oil and gas industry jobs pay well (average annual wages)

Source: U.S. Quarterly Census of Employment and Wages, 2011.

1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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Outer Continental Shelf Lands Act • • • • •

Data Collection 5-Year Leasing Program Lease Sales Safety and Environmental Regulation Revenue System • Bonus Bids • Rentals • Royalties 15

5-year OCS Leasing Plan Development

 January 2015 – Department of the Interior released the Draft Proposed Program for 2017-2022.  2015-2016:  Opportunities for public comment  Written Comment in the Record  Hearings Throughout the Country

Safe and Environmentally Responsible Operations

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Government Regulations  BSEE Final Drilling Safety Rule • Establishes new casing installation requirements; • Establishes new cementing requirements; • Requires independent third party verification of blind-shear ram capability; • Requires independent third party verification of subsea BOP stack compatibility; • Requires new casing and cementing integrity tests; • Establishes new requirements for subsea secondary BOP intervention; • Requires function testing for subsea secondary BOP intervention; • Requires documentation for BOP inspections and maintenance; • Requires a Registered Professional Engineer to certify casing and cementing requirements; and • Establishes new requirements for specific well control training to include deepwater operations.

 Safety and Environmental Management Systems 18

Government Regulations The United States Coast Guard  Rulemaking on operations and equipment on MODUs  Voluntary Incident reporting for MODU dynamic positioning systems  Rulemaking on testing and training requirements for lifesaving and firefighting equipment on MODUS and floating production facilities.  Memorandum of Agreement with BSEE on MODUs and SEMS/SMS  Proposed reorganization of its management of offshore inspections to provide for a single point of responsibility  New proposed SEMS Rule for entities under USCG jurisdiction

Center for Offshore Safety

Our Mission... Promote the highest level of safety for offshore drilling, completions, & operations by effective leadership, communication, teamwork, utilization of disciplined safety management systems & independent third-party auditing & certification.

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Industry Standards 4th Edition Std 53 Blowout Prevention Equipment Systems for Drilling Operations 2nd Edition Std 65-2 Isolating Potential Flow Zones During Well Construction 1st Edition RP 96 Deepwater Well Design and Construction 1st Edition Bul 97 Well Construction Interface Document Guidelines 1st Edition RP 17W Recommended Practice for Subsea Capping Stacks 1st Edition API Spec Q2 Specification for Quality Management System Requirements for Service Supply Organizations for the Petroleum and Natural Gas Industries 4th Edition API Spec 16A Specification for Drill-through Equipment 2nd Edition API RP 17H Remotely Operated Tools and Interfaces on Subsea Production Systems

Subsea Well Control & Containment

Containment Companies (MWCC/HWCG) Must provide flexible & adaptable systems to contain the well subsea & provide subsea production capability via subsea equipment, risers, & containment vessels that will safely capture, store and offload the oil

Oil Spill Preparedness and Response Oil Spill Response Organizations (OSROs) Oil Spill Response Tools: •Oil spill response plans •Oil sensing and tracking •Dispersant use and application •In situ burning •Mechanical recovery capabilities •Shoreline protection and cleanup 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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Coexistence of Military and Oil and Gas  Long history of collaboration between government agencies and industry  Memorandum of Agreement in place  Drilling Window Program in place  Previous activity in military training areas  Lease stipulations and hold harmless clauses

Next Steps Needed Department of the Interior • Approval of Seismic Surveys • 2017-2022 Leasing Program that Includes the Atlantic and the Eastern Gulf of Mexico Congress • Pass Revenue Sharing Legislation • Pass Legislation That Creates Opportunities for the Atlantic and Eastern Gulf of Mexico 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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National Security General Martin Dempsey, Chairman of the Joint Chiefs of Staff: “An energy independent [U.S.] and net exporter of energy as a nation has the potential to change the security environment around the world – notably in Europe and in the Middle East. And so, as we look at our strategies for the future, I think we’ve got to pay more and particular attention to energy as an instrument of national power. And because it will very soon in the next few years potentially become one of our more prominent tools.” 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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Veterans and Offshore Drilling Capt. James McCormick, USA (ret.) Program Director, Vets4Energy www.Vets4Energy.com Facebook.com/Vets4Energy