Wednesday, January 12, 2011

Congress weighs in on Obama spill commission’s final report

Members of Congress wasted no time in offering their assessments of the final report which US President Barack Obama’s independent oil spill investigation commission issued on Jan. 11. Others will come at two upcoming hearings by the Senate Energy and Natural Resources Committee the morning of Jan. 26 and the House Natural Resources Committee that afternoon.

Initial responses were generally predictable. Sen. Mary L. Landrieu (D-La.), a Natural Resources committee member, said that she agrees with the commission’s recommendation to raise the $75 million liability cap, but warned that it should not go so high that small independent companies go out of business. She also applauded the idea of increasing the US Bureau of Offshore Energy Management, Regulation, and Enforcement’s budget and workforce.

But she disagreed with the notion that BOEMRE should have 90, instead of 30, days to approve offshore drilling permit applications. “We have successfully drilled more than 58,000 wells using a 30-day approval window, and if we strengthen BOEMRE’s ability to oversee drilling, it should not be necessary to add another 60 days to the approval process. It is not a matter of how long the review period is, it is about the effectiveness of the review,” Landrieu maintained.

Sen. Bill Nelson (D-Fla.) said that the commission’s report confirmed many of his “longstanding concerns about a lack of industry safeguards, poor regulatory oversight and our limited response capabilities. So I’m going to keep pushing for raising the liability limits to make sure polluters, not the taxpayers, foot the bill; and, to fix the ways we prevent and respond to spills. I’m also going to try to persuade enough of my colleagues in Congress to join with me. And I’m going to continue to fight any industry effort to place oil rigs off Florida’s coast.”

“The report and recommendations released today underscore the significant safety and environmental risks associated with offshore drilling, and spotlight the systemic lapses that led to the tragic Deepwater Horizon spill,” Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) said. “Some steps have already been taken to improve safety, but this report makes clear that more needs to be done to prevent a disaster like this from ever happening again. I am committed to working with my colleagues in the Senate to move forward on legislation that addresses the commission’s recommendations, ensures that oil companies are held accountable, and protects jobs, coastal communities and the environment.” She said that the committee also will hold a hearing with commission members in the coming weeks.

On the House side of the Capitol, Rep. Doc Hastings (R-Wash.), the Natural Resources Committee’s new chairman, said that he has emphasized, from the outset, the importance of having all the facts surrounding the Apr. 20 Macondo well accident, which killed 11 people, and subsequent massive crude oil spill so that Congress, the federal government, and the oil and gas industry could make smart, educated, and effective reforms. “Several of the recommendations put forward deserve real consideration and will be more closely examined during our committee hearings,” he said. “Reforms should accomplish our shared goals of improving safety, allowing drilling to move forward in a timely manner, and putting people back to work. Proposals that prolong the de facto moratorium in the Gulf, cost American jobs, or delay future energy production will be viewed skeptically in both the House and Senate.”

Rep. Nick J. Rahall (D-W.Va.), the committee’s ranking minority member, noted that the commission’s report contained several recommendations identical to many in legislation he sponsored last summer when he was chairman. He said that H.R. 3535, the Consolidated Land, Energy, and Aquatic Resources (CLEAR) Act, would have increased oil rig safety to prevent the next oil spill and protect workers, cracked down on ethical lapses, required businesses to be responsible for their actions, and reduced the federal deficit by $5.3 billion over the next five years. The House passed the bill by 209 to 193 votes in July, but Senate Republicans blocked the bill in the last Congress, Rahall said.

Rep. Lois Capps (D-Calif.), another Natural Resources committee member, endorsed the commission’s findings and said that “it’s imperative we all work together to implement [its] recommendations, especially ensuring federal agencies have the proper training, personnel and funding needed to do their critical oversight and enforcement jobs properly.” She said that the recommendations include a number of other key reforms, some of which were included in legislation the House passed last year, including “changing the law so that polluters, and not taxpayers nor victims, are responsible for the economic and environmental damages from an oil spill; giving [the National Oceanic and Atmospheric Administration] an enhanced role in offshore oil and gas leasing decisions; and separating scientists responsible for environmental review of projects from the leasing process to ensure the integrity of these reviews.”

House Energy and Commerce Committee leaders also responded. Chairman Fred Upton (R-Mich.) said that he was disappointed that, “even after completing its final report, the commission has left unanswered the fundamental question of what went wrong. Rather than clearly identifying the root cause of this unprecedented disaster, the commission’s report is limited to general assertions about the enforcement agencies and industry as a whole. Neither this nor any investigation should be used as political justification for a pre-determined agenda to limit affordable energy options for America. Without clear and specific evidence of what went wrong with this isolated well, unlike the tens of thousands that have never experienced similar failures, we will not learn the lessons needed to ensure a disaster like this will never happen again.”

Rep. Ed Whitfield (R-Ky.), who chairs the committee’s Energy and Power Subcommittee, said that he would continue to review the commission’s report, and monitor cleanup and recovery efforts to make sure that its recommendations and current regulations are protecting the environment without shutting down responsible exploration in the gulf. “We must strike the appropriate balance between protecting our environment and not tying the hands of responsible development. A ‘one size fits all’ moratorium on off shore exploration is not that balance,” he declared.

As the commission issued its final report, the US Energy Information Administration said in its latest short-term energy outlook that global crude oil markets will tighten over the next two years as consumption grows by an average 1.5 million bbl/day annually and growth in supplies outside the Organization of Petroleum Exporting Countries increases less than 100,000 b/d yearly. It said that it expects domestic crude oil production, which grew by 150,000 b/d in 2010 to 5.51 million b/d, to decline by 20,000 b/d in 2011 and 130,000 b/d in 2012. The 2011 forecast includes declines of 50,000 b/d in Alaska and 220,000 b/d in federal Gulf of Mexico production, which are almost offset by a projected 250,000 b/d increase in non-gulf production in the Lower 48 states, it said. In 2012, EIA said that it expects Lower 48 non-gulf output to grow by 70,000 b/d, Alaskan production to fall by 20,000 b/d, and output in the gulf to decrease by 180,000 b/d.


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