How would employment numbers be affected if the United States returned to historic permitting levels for offshore drilling? During today's OnPoint, Randall Luthi, president of the National Ocean Industries Association, discusses a new report, released along with the American Petroleum Institute, focusing on the economic impacts of lifting the drilling moratorium.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me is Randall Luthi, president of the National Ocean Industries Association. Randall, thanks for being here.
Randall Luthi: Thank you for the opportunity.
Monica Trauzzi: Randall, your organization, along with the American Petroleum Institute, released a report this week focusing on job-growth numbers in the offshore-drilling sector if the U.S. returned to historic permitting levels. Why are historic permitting levels the key piece here?
Randall Luthi: The key piece of that is we've had several bad-news events. 2008 was an extremely hard economic year. A downturn in 2009 continued that. It looked like it was gonna turn around, and then of course we had the Macondo well oil spill as a result. All of that has resulted in a decreasing amount of permits, and as a result, no surprise to our members, but there's been significant job losses as well during that time.
Monica Trauzzi: So, where are we now as compared to those historic permitting levels? How many permits are going out now?
Randall Luthi: The running is still at a slow pace. Anecdotally our members are saying that we would like to see about double the amount of permits. How that shows up is in 2008 to 2010 we've lost about 60,000 jobs directly and indirectly related with the offshore oil and gas business.
Monica Trauzzi: If permits stay at the same level as they are now, will we see job growth regardless?
Randall Luthi: We'll see very little job growth, as far as we can tell by looking at the study. The study takes an assumption that the moratorium is over and that the permitting levels will increase rather rapidly. We have not seen that happen, but the study itself says that if we return to those historic levels, we would probably create about 190,000 jobs by the year 2013.
Monica Trauzzi: So we're talking about a pretty quick turnaround on these jobs. Could these jobs help us out of our current economic crisis?
Randall Luthi: It certainly would be a part of it. These jobs are related to projects that have not been permitted that are backlogged. They're on the books. They're ready to go forward. The time is right to do it. All they need are the permits and the approval to go forward.
Monica Trauzzi: The Senate Energy Natural Resources Committee is taking up several pieces of energy legislation this week. How could the spill bill that's being discussed impact prospects for offshore drilling?
Randall Luthi: Certainly the spill bill, should it be amended, could also possibly have a production piece so it would encourage future sales. That might include a revenue-sharing piece as well, all of that to encourage and give industry some confidence that they'll be able to move forward could make a difference.
Monica Trauzzi: So is that really a key piece to actually getting more permits across if there is a strong spill bill introduced and passed; then the industry will be allowed to move forward with more permits?
Randall Luthi: It could be. We just don't know. We haven't seen enough of the bill and those proposed amendments to say for sure.
Monica Trauzzi: So with all these safety concerns surrounding drilling, how big of a PR challenge is it to actually sell this increase of permits?
Randall Luthi: Well, I think it's actually relatively easy in considering where we were a year ago. Industry has made great strides improving safety and actually getting out in front of the public to tell them what has been done, what has been changed, work closely with the regulating agencies to see that safety standards are there. Safety has always been job one with the industry, but this has been a time, particularly last year, to keep emphasizing how important that is.
Monica Trauzzi: And doesn't it make sense, then, in return for that to sort of slow down the permitting process until the government feels that safety is where it should be?
Randall Luthi: I don't think anyone doubted that there would be a slowdown immediately after the spill, a pause to take time to reflect, but we're now looking well over the period of time that that should take. We believe that by working together with the federal regulators we can get the permitting process back up to speed.
Monica Trauzzi: How would you qualify the interior department's current review of Central Gulf lease sales?
Randall Luthi: As I recall, we're waiting to decide whether to move forward. They have a supplemental EIS out, and we're waiting for the same facts and figures. We wanna see how that goes as well. We believe that we could move forward with the sales, but a lot of that is somewhat out of our hands. It might even end up in litigation.
Monica Trauzzi: So you head up the Ocean Industries Association. What other industries do you represent, and do you put the same effort behind pushing those industries and technologies as you do with offshore drilling?
Randall Luthi: Absolutely. Largely our association is connected with offshore energy, so whether it be renewable and whether it be wind, right now oil and gas is mainly what's out there, but we're looking to expand as well in every area.
Monica Trauzzi: But in terms of environmental impacts, if you're talking about renewables versus offshore oil and gas drilling, is there one that you favor on environmental impacts?
Randall Luthi: Not at all. We believe energy's important to our nation that we can proceed on all fronts. Above all, we need more energy, and I think we need all forms of energy, and the outer continental shelf can play a major role in providing that to our nation.
Monica Trauzzi: So if we're talking about going back to those historic permitting levels, how does that fit into the U.S.'s overall goals for carbon reduction?
Randall Luthi: It will have an effect, I think, one way or another, as we look at those and as Congress debates those standards, whether they're going to be necessary or not.
Monica Trauzzi: We'll end it right there. Thank you for coming on the show. Nice to see you.
Randall Luthi: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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