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Hearing of the Energy and Power Subcommittee of the House Energy and Commerce Committee - "The American Energy Initiative"


Location: Washington, DC

Today's hearing is the first in a series entitled "The American Energy Initiative". Over the next weeks and months, we will closely examine domestic energy resources of all stripes that will diversify our energy portfolio, strengthen our national security, create jobs, and, perhaps most importantly, make energy more affordable for all Americans.

In that context, I want to reiterate my support for a greater commitment to achieving energy independence through utilizing all of our domestic fuels -- both traditional and alternative. The goal is that all of our domestic resources will play a vital role in achieving this. As a Representative from a coal producing state, I am particularly interested, for example, in supporting the development of advanced coal technologies and alternative fuels, as that provides an opportunity to create American jobs, cut our dependence on foreign oil and substantially reduce emissions. And I look forward to addressing these issues in the coming months as the committee continues to look at using all of our domestic sources to achieve energy independence and reduce the price of gas for American consumers.

Today's hearing specifically will focus on the Gulf of Mexico's relation to energy production, energy security, oil prices, and jobs. Over the past several years, 30 percent of our total domestic oil production has come from the Gulf. Recent world events and market conditions have caused a sudden surge in oil prices. It is in this context that we must thoroughly evaluate this nation's current energy policy by asking the following questions:

1) Are we doing enough to capitalize on all of our domestic resources?
2) How can increased domestic production influence prices and offset imports?
3) What role does oil and gas production in the Gulf play in our economic recovery?

New offshore exploration has taken a severe hit since the Deepwater Horizon blowout and spill. Without a doubt, the Deepwater Horizon spill was a very serious environmental disaster. The human and ecological tolls are still being absorbed.

But out of the disaster created by Transocean and BP arrived an economic disaster in the form of a moratorium on deepwater exploration issued by the Obama Administration. Even since it was lifted in October, the Department of Interior has only issued two permits to drill in the deepwater Gulf. A federal district court judge has called the Administration's actions "unreasonable" and "unjustified". Even former President Clinton just last week characterized it as "ridiculous".

Deepwater leases have become increasingly important to our domestic supply over the past two decades. Companies are not drilling there because it is easy or cheap. They go to the deepwater for the same reason Willie Sutton would -- because that's where the oil is.

While production from shallower regions has steadily declined, ultra-deep production has grown at an annual rate of 15 percent since 2002. It is projected to continue this trajectory for the next several years. In fact, PFC Energy projects that by 2020, over 50 percent of the Gulf's production will come from ultra-deep waters. This projection, however, was made prior to the Administration's moratorium.

And it is at this point that we need to clarify many of the claims the Administration wants to make in the face of high gasoline prices. While overall domestic oil production is, in fact, meeting its highest level since 2003, it is folly to believe the lack of deepwater exploration has no consequences now and will not for the foreseeable future. EIA's 2007 Energy Outlook projected 2010 Gulf production would be 16 percent higher than it actually reached. And with relatively fast production declines from wells in the Gulf, constant exploration is an absolute necessity for stable production to occur. Because of the Administration's actions, it will take years for Gulf production to make its way back to normal levels.

As we will hear from our witnesses, the Gulf has an important role to play in the global oil market. It also provides thousands upon thousands of jobs for not only households in the Gulf region, but the several industries across the nation that rely on business generated by robust Gulf exploration and production.

The Administration is holding these jobs hostage. And the American people realized it -- a recent Rasmussen Poll indicates 76 percent of Americans believe we do not do enough to develop our own oil and gas resources. When it comes to domestic energy production, the Administration is on the wrong side of the public's wishes.

We also cannot fail to mention how important a secure source of energy is given today's global political climate. The 400,000 barrels a day we currently neglect to pump in the Gulf are simply made-up by imports from such places as Nigeria, Libya, Saudi Arabia, and Venezuela.

So today we want to have a discussion on how important the Gulf is to this nation's economy and security. We appreciate our witnesses' appearance here today and look forward to their testimony.

With that I yield the balance of my time to the gentleman from Louisiana, Mr. Scalise.

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