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API Chief Says Offshore Policy Needs Clarity

Cavaney said that if drilling is not permitted closer in, the industry would have to use ultra-deep water rigs, which would force companies to hire outside of the U.S. for expertise, potentially letting an opportunity to boost U.S. employment go unfulfilled.
by Staff Writers
Washington DC (SPX) Oct 21, 2008
U.S. oil companies will need clarity from the next president and Congress quickly as to whether the recent lapse of the moratorium on offshore oil and gas drilling that opened more of the Outer Continental Shelf (OCS) to exploration is something other than a "temporary aberration," American Petroleum Institute President Red Cavaney has said.

"We need some signal that the moratorium is not a temporary measure but a permanent measure," Cavaney said at a Platts Energy Podium event in Washington. "Many companies want to see a positive, proactive signal."

Cavaney, who plans to step down Nov. 1 as president of API to work in the Washington office of ConocoPhillips, said the new Congress will likely take up the exploration issue again when it returns in January, after an effort this fall failed on disagreements over the size and scope of OCS territory to be opened.

About 18 billion barrels of crude oil and 700 trillion cubic feet of natural gas are estimated to lie offshore in the U.S. in restricted areas, according to the U.S. Energy Information Administration.

While President George W. Bush in July lifted the presidential moratorium on offshore oil and gas drilling that had been in place since 1990, congressional Democrats and Republicans were unable to agree on a legislative package that would have opened up more drilling in the OCS.

Nevertheless, Democrats were forced to let the congressional moratorium, which has to be renewed every year, expire in order to avoid a showdown with Republicans who demanded an up-or-down vote on offshore oil drilling.

Cavaney said that key provisions of the new legislation must include drilling rights that are less than 50 miles offshore. Earlier legislation proposed by the so-called "Gang of 10" in the Senate only permitted oil drilling no closer than 100 miles from shore.

"The majority of the undiscovered, exploitable oil and natural gas is within 50 miles or less" offshore, Cavaney said.

Cavaney said that if drilling is not permitted closer in, the industry would have to use ultra-deep water rigs, which would force companies to hire outside of the U.S. for expertise, potentially letting an opportunity to boost U.S. employment go unfulfilled.

Drilling out beyond 100 miles would also preclude states from sharing revenue from oil production, Cavaney said. Inshore exploration "would provide states the ability to put gas processing plants right offshore and provide jobs," he said.

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Contact sought with kidnappers of Chinese in Sudan
Khartoum (AFP) Oct 20, 2008
Sudanese and Chinese authorities were seeking on Monday to contact the kidnappers of nine Chinese oil workers snatched near Sudan's disputed oil district of Abyei.

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