[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




EXAMINING THE FUTURE IMPACTS OF PRESIDENT OBAMA'S OFFSHORE ENERGY PLAN

=======================================================================

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                       Wednesday, April 15, 2015

                               __________

                            Serial No. 114-2

                               __________

       Printed for the use of the Committee on Natural Resources

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                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
Louie Gohmert, TX                    Madeleine Z. Bordallo, GU
Doug Lamborn, CO                     Jim Costa, CA
Robert J. Wittman, VA                Gregorio Kilili Camacho Sablan, 
John Fleming, LA                         CNMI
Tom McClintock, CA                   Niki Tsongas, MA
Glenn Thompson, PA                   Pedro R. Pierluisi, PR
Cynthia M. Lummis, WY                Jared Huffman, CA
Dan Benishek, MI                     Raul Ruiz, CA
Jeff Duncan, SC                      Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Matt Cartwright, PA
Raul R. Labrador, ID                 Donald S. Beyer, Jr., VA
Doug LaMalfa, CA                     Norma J. Torres, CA
Bradley Byrne, AL                    Debbie Dingell, MI
Jeff Denham, CA                      Mark Takai, HI
Paul Cook, CA                        Ruben Gallego, AZ
Bruce Westerman, AR                  Lois Capps, CA
Garret Graves, LA                    Jared Polis, CO
Dan Newhouse, WA
Ryan K. Zinke, MT
Jody B. Hice, GA
Aumua Amata Coleman Radewagen, AS
Thomas MacArthur, NJ
Alexander X. Mooney, WV
Cresent Hardy, NV

                       Jason Knox, Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
             Sarah Parker, Democratic Deputy Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                       DOUG LAMBORN, CO, Chairman
            ALAN S. LOWENTHAL, CA, Ranking Democratic Member

Louie Gohmert, TX                    Mark Takai, HI
Robert J. Wittman, VA                Jim Costa, CA
John Fleming, LA                     Niki Tsongas, MA
Glenn Thompson, PA                   Matt Cartwright, PA
Cynthia M. Lummis, WY                Donald S. Beyer, Jr., VA
Dan Benishek, MI                     Ruben Gallego, AZ
Jeff Duncan, SC                      Lois Capps, CA
Paul A. Gosar, AZ                    Jared Polis, CO
Raul R. Labrador, ID                 Vacancy
Bradley Byrne, AL                    Vacancy
Paul Cook, CA                        Vacancy
Garret Graves, LA                    Vacancy
Ryan K. Zinke, MT                    Vacancy
Alexander X. Mooney, WV              Raul M. Grijalva, AZ, ex officio
Cresent Hardy, NV
Rob Bishop, UT, ex officio
                                 ------                                















                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, April 15, 2015........................     1

Statement of Members:
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     3
    Lowenthal, Hon. Alan S., a Representative in Congress from 
      the State of California....................................     4
        Prepared statement of....................................     6

Statement of Witnesses:
    Chiasson, Chett C., Executive Director, Greater Lafourche 
      Port Commission............................................    46
        Prepared statement of....................................    48
    Hobbs, Robert, Chief Executive Officer, TGS..................    39
        Prepared statement of....................................    41
        Questions submitted for the record.......................    45
    Hopper, Abigail, Director, Bureau of Ocean Energy Management, 
      U.S. Department of the Interior............................    15
        Prepared statement of....................................    16
        Questions submitted for the record.......................    19
    McCrory, Pat, Governor, State of North Carolina..............     7
        Prepared statement of....................................     9
        Questions submitted for the record.......................    14
    Shuster, Mark, Executive Vice President, Upstream Americas 
      Exploration, Shell Oil Company.............................    32
        Prepared statement of....................................    33
        Questions submitted for the record.......................    38
    Swearingen, Emilie, Commissioner, Town of Kure Beach, North 
      Carolina...................................................    50
        Prepared statement of....................................    51

Additional Materials Submitted for the Record:
    List of documents submitted for the record retained in the 
      Committee's official files.................................    63
                                     


 
OVERSIGHT HEARING ON EXAMINING THE FUTURE IMPACTS OF PRESIDENT OBAMA'S 
                          OFFSHORE ENERGY PLAN

                              ----------                              


                       Wednesday, April 15, 2015

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
room 1334, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Wittman, Fleming, Lummis, 
Cook, Mooney; Lowenthal, Costa, Beyer, and Gallego.
    Also present: Representative Hudson.
    Mr. Lamborn. The Subcommittee on Energy and Mineral 
Resources will come to order. The subcommittee is meeting today 
to hear testimony on, ``Examining the Future Impacts of 
President Obama's Offshore Energy Plan.''
    Under Committee Rule 4(f), any oral opening statements at 
hearings are limited to the Chairman and the Ranking Member and 
the Vice Chairman and a designee of the Ranking Member. This 
will allow us to hear from our witnesses sooner, and help 
Members keep to their schedules.
    I also ask unanimous consent that the gentleman from North 
Carolina, Mr. Hudson, be allowed to participate in today's 
hearing.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered.
    And I also ask unanimous consent that all other Members' 
opening statements be made part of the hearing record, if they 
are submitted to the subcommittee clerk by 5:00 p.m. today.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered.
    I now recognize myself for my opening statement.

    STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Lamborn. I would like to begin this morning's hearing 
by talking about commitment. I bring it up because the 
Administration often says it is ``committed'' to promoting oil 
and gas production on Federal lands, including the Outer 
Continental Shelf, OCS. Yet the actions of this Administration 
demonstrate otherwise.
    In fact, a recent report issued by the Congressional 
Research Service shows--and I am going to ask that a chart be 
shown on the screen--that crude production on state and private 
lands has increased by 89 percent since 2010, while production 
on Federal lands fell 10 percent over the same period.
    [Chart]
    Mr. Lamborn. I would like to submit that report for the 
record.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered.
    This does not look like commitment to more production on 
Federal lands.
    Today's hearing will focus on the draft proposed Outer 
Continental Shelf Oil and Gas Leasing Program for 2017-2022, 
also known as the 5-year plan. This plan has the lowest number 
of lease sales ever, at 14, and that is being generous, in 
assuming that all of the sales remain in the final plan.
    It includes extensive buffer zones which take valuable 
resources off the table for the next 5 years. The shining hope 
for an Atlantic sale is dimmed when we remember that an 
Atlantic sale was scheduled to take place off the coast of 
Virginia in 2011. Now the earliest it can occur under this 
draft plan is 2021, a decade later. Again, that is only if the 
one Atlantic lease sale remains in the final plan, which is not 
guaranteed. This is not a demonstration of commitment to more 
oil and gas production.
    [Slide]
    Mr. Lamborn. If you look at the slide on the screen right 
now, you will see that in 1987 President Reagan put out a draft 
plan with 42 proposed sales, 17 of which were included in the 
final plan. This is a show of commitment. If BOEM truly wanted 
to show that the United States is committed to more offshore 
production, we would be seeing a path toward streamlining the 
seismic permitting process; we would see a regulatory structure 
that enhances safety and environmental protection, but that is 
also predictable, so that companies could have a better outlook 
when planning for future equipment needs; we would see a 5-year 
plan that has more leasing in the Atlantic, that includes 
common sense ways to grow what existing production already 
exists in the Pacific, and a more aggressive agenda to grow 
production in offshore areas of Prudhoe Bay to reinvigorate the 
declining throughput of the Trans-Alaska Pipeline System.
    While the pipeline can carry over 2 million barrels of oil 
per day, this week it is flowing at just over a quarter of 
that, 560,000. This is the crude that makes its way to West 
Coast refiners, by the way. Bottom line, an aggressive offshore 
leasing strategy would clearly demonstrate a true commitment to 
OCS oil and gas production in the United States. It would also 
demonstrate a strong commitment to our Nation's long-term 
energy security, and to American jobs.
    Finally, to further foster increased exploration and 
production activity, we would see a plan for greater influence 
in the global marketplace by relinquishing decades-old export 
restrictions. That kind of commitment would reinvigorate the 
weak economy we are experiencing right now. Companies already 
trying to decide where to invest their leasing dollars would 
know that the United States is, in fact, committed to grow 
production in the Atlantic to generate new supply for East 
Coast markets. The West Coast and Alaska would know that we are 
committed to keeping TAPS flowing, Trans-Alaska pipeline; and 
foreign countries would know that the United States intends to 
be the global energy leader for many decades to come.
    I would also like to point out that leasing does not happen 
without seismic surveying. This seismic surveying is done right 
now in the Gulf of Mexico and in the Canadian Atlantic to look 
deep into the earth to show where resources exist. In fact, 
when Director Hopper was with the Maryland Energy 
Administration, she oversaw a shallow seismic survey conducted 
off the coast of Maryland in July and August of 2013, in order 
to plan for an offshore wind energy area. In a statement she 
said, and I quote, ``The data we are making available will 
reduce the risks and costs of offshore wind energy development, 
protect the marine environment, and contribute to our 
scientific understanding of the oceans off our coast.'' That is 
true for wind energy, and it is also true for oil and gas.
    The Bureau of Ocean Energy Management has confirmed 
numerous times before this committee that there is no evidence 
of seismic surveying harming marine animals, and that is why it 
is important to move forward quickly with this important 
scientific research that will benefit the leasing process.
    Leasing is the fundamental building block upon which the 
future of oil and gas production is built. Much of energy 
forecasting is out of our control, such as global supply, 
global demand, and the price fluctuations that go with that. 
But leasing is something we can control. We should remember 
that, and commit to fostering offshore oil and gas production 
through a robust offshore leasing plan.
    That is why the committee has called this important hearing 
today, and I look forward to the testimony from our witnesses.
    [The prepared statement of Mr. Lamborn follows:]
Prepared Statement of the Hon. Doug Lamborn, Chairman, Subcommittee on 
                      Energy and Mineral Resources
    I'd like to begin this morning's hearing by talking about 
commitment. I bring it up because the Administration often says it is 
``committed'' to promoting oil and gas production on Federal lands--
including the outer Continental Shelf. Yet the actions of this 
administration dictate otherwise. In fact, a recent report issued by 
the Congressional Research Service shows [chart on screens] that crude 
production on state and private lands has increased by 89 percent since 
2010, while production on Federal lands fell 10 percent over the same 
period--and I'd like to submit that report for the record.
    As you can see, if you take the actions by this administration at 
face value, it does not look like commitment to more production. 
Today's hearing will focus on the Draft Proposed Outer Continental 
Shelf (OCS) Oil and Gas Leasing Program for 2017-2022--also known as 
the 5-year plan. This plan has the lowest number of lease sales EVER at 
14, and that is being generous in assuming all of the sales remain in 
the final plan. It includes extensive buffer zones which take valuable 
resources off the table for the next 5 years. The shining hope for an 
Atlantic sale is dimmed when we remember that an Atlantic sale was 
scheduled to take place off the coast of Virginia in 2011. Now the 
earliest it can occur under this draft plan is 2021--a decade later. 
Again, that is only if the one Atlantic lease sale remains in the final 
plan.
    This is not a demonstration of commitment to more oil and gas 
production. If you look at the slide on the screens right now, you will 
see that in 1987, President Reagan put out a draft plan with 42 
proposed sales, 17 of which were included in the final plan. That is a 
show of commitment. If BOEM truly wanted to show that the United States 
is ``committed'' to more offshore production:

     We would be seeing a path forward to streamlining the 
            seismic permitting process.

     We would see a regulatory structure that enhances safety 
            and environmental protection, but that is also predictable 
            so that companies could have a better outlook when planning 
            for future equipment needs.

     We would see a 5-year plan that has more leasing in the 
            Atlantic, that includes common sense ways to grow what 
            existing production already exists in the Pacific, and a 
            more aggressive agenda to grow production in offshore areas 
            of Prudhoe Bay to reinvigorate the declining throughput of 
            the Trans-Alaska Pipeline system.

    While the pipeline can carry over 2 million barrels per day, this 
week it is flowing at just over a quarter of that (560,790)--and this 
is crude that makes its way to West Coast refiners. Bottom line: an 
aggressive offshore leasing strategy would clearly demonstrate a true 
commitment to OCS oil and gas production in the United States. It would 
also demonstrate a strong commitment to our Nation's long-term energy 
security. Finally, to further foster increased exploration and 
production activity, we would see a plan for greater influence in the 
global marketplace by relinquishing decades-old export restrictions.
    That kind of commitment would not go unnoticed. Companies already 
trying to decide where to invest their leasing dollars would know that 
the United States is, in fact, committed to grow production in the 
Atlantic to generate new supply for East Coast markets. The West Coast 
and Alaska would know that we are committed to keep TAPS flowing. And 
foreign countries would know that the United States intends to be the 
global energy leader for many decades to come.
    I also would like to point out that leasing does not happen without 
seismic surveying. This seismic surveying is done right now in the Gulf 
of Mexico and in the Canadian Atlantic to look deep into the Earth to 
show where resources exist. In fact, when Director Hopper was with the 
Maryland Energy Administration, she oversaw a shallow seismic survey 
conducted off the coast of Maryland in July and August of 2013 in order 
to plan for an offshore wind energy area. In a statement, Director 
Hopper said (and I quote): ``The data we are making available will 
reduce the risks and costs of offshore wind energy development, protect 
the marine environment, and contribute to our scientific understanding 
of the oceans off our coast.'' The same is true for oil and gas.
    This study was also conducted alongside students from the 
University of Maryland Eastern Shore--which is an excellent way to 
foster STEM (science, technology, engineering and math) education in 
our Nation by engaging students in this important work while also 
promoting offshore energy development. This is a win-win and we need 
more projects like this to increase our knowledge of ALL our Nation's 
offshore energy resources. I look forward to working alongside Director 
Hopper to encourage more projects like this that integrate our higher 
education system to promote more seismic research. The Bureau of Ocean 
Energy Management has confirmed numerous times before this committee 
that there is no evidence of seismic surveying harming marine mammals--
and that is why it is important to move forward expediently with this 
important scientific research that will benefit the leasing process.
    Leasing is the fundamental building block upon which future oil and 
gas production is built. So much of oil and gas forecasting is out of 
our control, such as global supply, global demand, and the price 
fluctuations that go along with it. But leasing is something we can 
control. We should remember that--and commit to fostering offshore oil 
and gas production through a robust offshore leasing plan. That is why 
the committee has called this important hearing today and I look 
forward to hearing the testimony from our witnesses.

                                 ______
                                 

    Mr. Lamborn. I now recognize the Ranking Member for his 
opening statement.

 STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Lowenthal. Thank you very much, Mr. Chairman. And thank 
you, Governor McCrory, and all the other witnesses that are 
here today to discuss the potential impacts of the new 5-year 
oil and gas leasing program, which is being developed by the 
Administration.
    As we have discussed in our budget hearing on the offshore 
agencies last month in this subcommittee, the draft proposed 
plan would open up nearly 100 million more acres in the Outer 
Continental Shelf for leasing and drilling, that is an area 
almost as large as my home state of California. This is in 
addition to the 220 million acres that are already available 
for leasing, which is roughly the size of Texas and Utah, 
combined.
    Predictably, many in the oil and gas industry say that this 
is not enough. They are disappointed with the 50-mile buffer 
zone off the Atlantic, that highly sensitive areas have been 
protected by the President, and that the Bureau of Ocean Energy 
Management, called BOEM, is not already spending money planning 
for a lease sale that they are now forbidden by law from 
holding.
    You know, most in the industry, quite frankly, wouldn't be 
satisfied until every acre of the Outer Continental Shelf is 
open for drilling. They always want more, but that is not our 
job. Our job is to consider the relevant statutes, and what is 
in the public interest, not simply to provide the industry what 
it wants.
    For one, I am pleased that BOEM acknowledged the 
overwhelming public opposition to new leasing off the coasts of 
California, Oregon, and Washington, and left those areas out of 
the draft 5-year program. Those of us from the West Coast, like 
the people from the Gulf of Mexico, know firsthand of the 
tremendous devastation of a massive offshore oil blowout.
    My friends on the Atlantic Coast have been spared these 
impacts, thankfully, but this 5-year program is going to force 
them to at least address this risk. I personally am not 
persuaded by claims of how much safer offshore drilling has 
become in the past few years. Those exact same claims would 
have been made prior to the Deepwater Horizon oil spill; in 
fact, they were made prior to that spill.
    All it is going to take is one instance of human error to 
unleash a catastrophic oil spill along the East Coast, 
threatening the tourism economies, the fishing economies, and 
the environment of every state along the Eastern Seaboard.
    Meanwhile, the total amount of oil under the Mid- and South 
Atlantic planning areas is only enough to meet our national 
consumption for about 5 months. So the question we have to ask 
ourselves is, is it worth it? Is it worth the risk of 
destroying the East Coast's tourism, fishing, and environment 
for 5 months' worth of oil? I don't think so.
    And even if we could ensure that there is no Deepwater 
Horizon in the Atlantic's future, there would still be 
significant impacts to the coastline--pipelines, refineries, 
and supply yards--even without spills, offshore drilling brings 
all these impacts to the coast. A Republican State Senator from 
South Carolina recently pointed out in an editorial, ``I 
suspect much of the support for offshore oil would fade away if 
citizens were confronted with the realities of the coastal 
industrialization necessary to support offshore oil.''
    I know there is a lot of pressure from the oil and gas 
industry to open up the Atlantic to their drilling rigs. But I 
don't think it makes sense. It doesn't make sense for the 
environment, it doesn't make sense for the climate, or for the 
people who live near or along the Atlantic Ocean, and depend 
upon clean ocean waters for their livelihoods.
    Thank you, Mr. Chairman, and I look forward to the 
testimony from our witnesses.
    [The prepared statement of Mr. Lowenthal follows:]
   Prepared Statement of the Hon. Alan S. Lowenthal, Ranking Member, 
              Subcommittee on Energy and Mineral Resources
    Thank you very much, Mr. Chairman. And thank you, Governor McCrory 
and the other witnesses, for being here to discuss the potential 
impacts of the new 5-year oil and gas leasing program being developed 
by the Administration.
    As we discussed in our budget hearing on the offshore agencies last 
month in this subcommittee, the draft proposed plan would open up 
nearly 100 million more acres of the Outer Continental Shelf for 
leasing and drilling--an area almost as large as the state of 
California. This is in addition to the 220 million acres that are 
already available for leasing, which is roughly the size of Texas and 
Utah combined.
    Predictably, for many in the oil and gas industry, this is not 
enough. They are disappointed with the 50-mile buffer zone off the 
Atlantic, that certain highly sensitive areas were protected by the 
President, and that the Bureau of Ocean Energy Management is not 
already spending money planning for a lease sale they are forbidden by 
law from holding.
    Most in the industry, quite frankly, wouldn't be satisfied until 
every acre of the Outer Continental Shelf is open for drilling--they 
will always want more, but it is our job to consider the relevant 
statutes and what is in the public interest, not simply to provide the 
industry whatever it wants.
    For one, I am pleased that BOEM acknowledged the overwhelming 
public opposition to new leasing off the coasts of California, Oregon, 
and Washington, and left all those areas out of the draft 5-year 
program. Those of us from the West Coast, like the people who live 
along the Gulf of Mexico, know firsthand the tremendous devastation of 
a massive offshore oil blowout.
    My friends on the Atlantic Coast have been spared these impacts, 
thankfully, but this 5-year program would force them to face that risk.
    I am not persuaded by claims of how much safer offshore drilling 
has become in the past few years. Those exact same claims would have 
been made prior to the Deepwater Horizon oil spill--in fact, they were 
made prior to that spill.
    All it would take is one instance of human error to unleash a 
catastrophic oil spill along the East Coast, threatening the tourism 
economies, the fishing economies, and the environment of every state 
along the Eastern Seaboard.
    Meanwhile, the total amount of oil under the Mid- and South 
Atlantic planning areas is only enough to meet our national consumption 
for about 5 months. So, you have to ask: is it worth it? Is it worth 
the risk of destroying the East Coast's tourism, fishing, and 
environment for 5 months worth of oil? I don't believe so.
    And even if we could ensure that there is no Deepwater Horizon in 
the Atlantic's future, there will still be significant impacts to the 
coastline. Pipelines, refineries, supply yards--even without spills, 
offshore drilling brings all these impacts to the coast. A Republican 
State Senator from South Carolina recently pointed out in an editorial, 
``I suspect much of the support for offshore oil would fade away if 
citizens were confronted with the realities of the coastal 
industrialization necessary to support offshore oil.''
    I know there is a lot of pressure from the oil and gas industry to 
open up the Atlantic Ocean to their drilling rigs. But I don't think it 
makes sense. It doesn't make sense for the environment, for the 
climate, or for the people who live along the Atlantic Ocean and depend 
on clean ocean waters for their livelihoods.
    Thank you, Mr. Chairman, and I look forward to the testimony from 
our witnesses.

                                 ______
                                 

    Mr. Lamborn. All right. We will now hear from our first 
panel witness. And, Representative Hudson, would you like to 
introduce our first witness?
    Mr. Hudson. Thank you, Mr. Chairman. I would like to thank 
you, Mr. Lowenthal, for extending me this courtesy.
    Since taking office in 2013, Governor Pat McCrory has 
championed job creation in North Carolina. His passion for 
innovation and efficiency has completely transformed our state 
into a business-friendly climate, attracting the best 
industries from around the world, and empowering our local 
businesses to grow and create jobs. We both agree that North 
Carolina is on the cusp of unlocking our own natural resources, 
creating thousands of jobs, and boosting our economy through 
offshore exploration and production.
    Governor McCrory has been a consistent leader on 
transportation, tax, and education reform, and a national 
leader for offshore energy development. He has led the way 
among coastal governors, as chairman of the bipartisan Outer 
Continental Shelf Governors Coalition.
    As co-chairman, myself, of the Atlantic Offshore Energy 
Caucus, and an advocate for getting North Carolina into the 
energy business, I am looking forward to working with the 
Governor and members of this committee to make drilling and 
coastal energy development in the Atlantic a reality.
    Over the President's regulatory hurdles, we can clearly see 
thousands of jobs, lower energy costs, and economic security on 
our horizon.
    I am looking forward to hearing from Governor McCrory on 
his ideas to make those goals a reality. And it is my pleasure 
to introduce to the committee my friend, our governor, Pat 
McCrory.

  STATEMENT OF THE HON. PAT McCRORY, GOVERNOR, STATE OF NORTH 
                            CAROLINA

    Governor McCrory. Thank you very much, Congressman. Thank 
you, Mr. Chairman, and the rest of the committee for inviting 
me to testify and provide my views on the future impacts of 
President Obama's proposed offshore energy plan. I am 
testifying on behalf of the citizens of North Carolina, who it 
is an honor to represent as the 74th governor of now the 9th 
most populous state in the United States of America.
    I also serve as chairman of the Outer Continental Shelf 
Governors Coalition, which is, as the congressman mentioned, a 
bipartisan group of coastal governors that advocate for safe, 
responsible offshore energy resource planning and development. 
Many of the positions expressed in my testimony are consistent 
with the goals and the position of this bipartisan coalition.
    I also want to thank my friend, Representative Richard 
Hudson, for his leadership in this area.
    I also want to thank the Bureau of Ocean Energy Management 
for including an Atlantic lease sale in the draft proposed 
program, and request that it remain in the final 5-year 
program. Harnessing America's offshore energy reserves in an 
environmentally safe and responsible manner will lead to 
greater energy independence and economic prosperity for North 
Carolina and the entire Nation.
    An all-of-the-above energy policy is a pillar of our energy 
vision in North Carolina. As governor, I have met extensively 
with coastal communities to discuss and explain the risk and 
potential that comes with offshore energy exploration. A recent 
study shows that, by 2035, new access to offshore energy 
resources could generate more than 55,000 jobs and $3 billion 
in annual spending within North Carolina, alone.
    Prior to any lease sale or resource development, we must 
update decades-old geological and geophysical (G&G) information 
through new seismic imaging. I encourage BOEM to complete its 
review of the permit applications for seismic surveys by the 
end of this year. No more delay; we've got to get this moving 
now.
    By necessity, North Carolina cannot support offshore energy 
development without equitable energy revenue sharing. The 
funding is vital to address the cost that states and coastal 
communities assume with offshore energy development, and the 
need for our coastal community to have further revenues to pay 
for such things as dredging and beach renourishment, which is 
crucial to our travel and tourism industry, and to our ports 
and fishing.
    The draft proposed program currently imposes a 50-mile 
buffer for the Mid- and South Atlantic planning areas. That 50-
mile buffer right now unnecessarily puts much of North 
Carolina's most accessible and undiscovered resources, frankly, 
under lock and key. Requirements are already in place to ensure 
leasing areas are established in a way that best provides 
access to the hydrocarbon reserves, the coastal environment, 
and mitigates use conflicts.
    BOEM reports the 50-mile coastal buffer zone was included 
primarily due to issues raised by the Commonwealth of Virginia, 
many of which are unique to our neighboring state to the north. 
To my knowledge, no official request has been made for a 50-
mile coastal buffer spanning the entire Mid-Atlantic planning 
area.
    The 50-mile buffer omits several promising geological 
structures off of North Carolina from the leasing area. In 
fact, based upon seismic testing collected in the 1980s, 
application of the current 50-mile buffer could put out of play 
as much as 40 percent of North Carolina's potential offshore 
resources. An expansive one-size-fits-all exclusion zone is 
not, and let me repeat that, a one-size-fits-all inclusion zone 
is not the answer for minimizing use conflicts and protecting 
marine animals and critical habitats.
    North Carolina's coastline is unique, and merits individual 
consideration when determining appropriate exclusion zones. 
Environmental analysis and results of the new G&G information 
could be the scientific basis for the establishment of any 
further buffer zones.
    Additionally, the draft program proposes only one lease 
sale in the Atlantic in 2021, near the end of the 5-year 
program. This is purportedly to allow time for infrastructure 
studies and the completion of seismic activity. However, North 
Carolina is confident that we will have ample time to prepare 
for exploration to begin by the midpoint of the 5-year program. 
Therefore, we request, as the Chairman has stated, the addition 
of multiple lease sales earlier in the 5-year program.
    Holding at least several lease sales would make Atlantic 
OCS development more economic, by providing incentive for 
Atlantic coastal states to provide the infrastructure and 
support services. It is critically important that states 
receive the certainty necessary to budget and plan for future 
infrastructure needs. Multiple lease sales would provide the 
certainty for industry to invest the resources needed to set up 
operations in the frontier area, and safe and economic oil and 
gas production relies upon an extensive amount of coastal 
infrastructure.
    States such as North Carolina are willing to make the 
significant investments right now. Onshore infrastructure such 
as roads, ports, and processing systems require substantial 
investment, and take years to develop. Therefore, I request 
BOEM to confirm the inclusion of at least one lease sale or 
more, so states can be confident that their finite resources 
are spent wisely. We also encourage consideration of multiple 
lease sales.
    I would like to thank you for this opportunity. Energy 
development is good for the country's energy independence, and 
it is good for North Carolina's jobs, and future careers. Let's 
start this process now, and stop the delays immediately.
    Thank you very much for this opportunity to give you this 
input.
    [The prepared statement of Governor McCrory follows:]
 Prepared Statement of the Hon. Pat McCrory, Governor of North Carolina
    Chairman Lamborn, Ranking Member Lowenthal and members of the House 
Energy and Mineral Resources Subcommittee, thank you for inviting me to 
testify and provide my views on the future impacts of President Obama's 
Proposed Offshore Energy Plan. I'm testifying on behalf of the citizens 
of North Carolina whom it is my honor to represent. I also serve as 
chairman of the Outer Continental Shelf (OCS) Governors Coalition, a 
bipartisan group of nine coastal governors that advocates for safe, 
responsible offshore energy-resource planning and development. Many of 
the positions expressed in my testimony are consistent with the goals 
and positions of the OCS Governors Coalition.
    I want to thank my good friend who is with us this morning, 
Representative Richard Hudson, for his powerful leadership in this 
arena. Representative Hudson is a co-chair of the Atlantic Offshore 
Energy Caucus which seeks to advance policies that explore and expand 
energy production in the Atlantic OCS as part of an ``all-of-the-
above'' national energy strategy. Representative Jeff Duncan, a 
distinguished member of this subcommittee from South Carolina, is a co-
chair of the caucus. I greatly appreciate the fine work the caucus is 
undertaking and value this important partnership.
    I want to commend the House Committee on Natural Resources for 
advancing legislation during the 113th Congress to increase new 
offshore energy production in the Atlantic and the Pacific and 
implement revenue sharing programs for all energy-producing coastal 
states.
    I'm here today to advocate for the inclusion of the Atlantic OCS in 
the 5-Year Program for oil and gas leasing, exploration and 
development, and to discuss the impacts its inclusion will have on 
North Carolina, its economy and infrastructure needs. I want to thank 
the Bureau of Ocean Energy Management (BOEM) for including a lease sale 
in the Atlantic in the Draft Proposed Program and request that it 
remain in the Final 5-Year Program.
    Harnessing America's offshore energy reserves in an expeditious, 
environmentally safe and responsible manner will lead to greater 
independence and economic prosperity for North Carolina and the entire 
Nation.
    I've consistently advocated for an ``all-of-the-above'' energy 
policy as a gubernatorial candidate and as governor. During my tenure 
as governor, I have met extensively with elected officials and other 
stakeholders in beach communities, the coastal region and throughout 
the state to discuss the risks and potential that come with offshore 
energy activities.
    I deeply respect the views of those who disagree with the positions 
I advocate. We share a passion for our clean water, fishing industry 
and the recreational use of our coastal resources. We would not be 
advocating for offshore energy development if we felt we were 
compromising these invaluable treasures. There is widespread support 
across our state for offshore leasing, exploration and development. The 
majority of North Carolinians agree that increased production of 
domestic oil and natural gas could help lower energy costs for 
consumers and strengthen America's energy security. The majority of 
North Carolinians also say that increased oil and natural gas 
production could benefit Federal and state budgets through bonuses, 
lease payments, and royalty fees.
    Many coastal elected officials have voiced their support for 
offshore energy development, including Mayor Dean Lambeth of Kure 
Beach, who sent a letter to the BOEM in support of opening the Atlantic 
OCS to oil and gas development. Coastal residents recognize the job 
creation and economic benefits offshore energy development would bring 
to the area, as well as potential revenue for beach re-nourishment and 
infrastructure needs.
    A December 2013 study by Quest Offshore reflects that by 2035, new 
access to offshore energy resources could generate more than 55,000 
jobs and $3 billion in annual spending within North Carolina.
                            seismic surveys
    Prior to any lease sale or resource development, we must update the 
decades old geological and geophysical (G&G) information. New seismic 
imaging and other G&G studies will provide a better understanding of 
the true resource potential in the Atlantic planning areas, which will 
allow industry to develop the Atlantic in a more economically and 
environmentally effective manner. Updated G&G data will provide 
industry a clear picture of the location and extent of recoverable 
energy resources, increase the likelihood that exploratory wells will 
successfully extract hydrocarbons, and improve the safety of test well 
siting.
    For seismic activity to take place, G&G companies must first 
undergo the lengthy process of obtaining a permit from the BOEM, an 
authorization from the National Marine Fisheries Service and a Federal 
consistency determination from each of the affected states. The BOEM 
has received G&G applications from eight companies to date and is 
currently undertaking thorough analysis of the proposed G&G activities.
    Last fall, the National Science Foundation conducted a 2D seismic 
survey of the seabed off North Carolina following the BOEM framework 
for research purposes. We received no reports of marine disturbances or 
use conflicts, nor any complaints during or after the seismic activity 
took place. While we are currently seeking and receiving public input 
on our consistency review of the permit applications, we are confident 
the strong mitigation measures required by the BOEM will effectively 
protect the marine ecosystem off North Carolina's shores when G&G 
activities are conducted for oil and gas resource assessment. I 
encourage the BOEM to complete its review of the permit applications 
for seismic surveys by the end of this year.
                            revenue sharing
    Offshore oil and gas should not be developed without equitable 
revenue sharing with coastal energy states. Frontier coastal states, 
like North Carolina, must provide infrastructure, expand public 
services and implement new environmental protection measures to prepare 
for offshore energy development. Coastal communities need revenue to 
offset potential impacts of offshore oil and gas activities and 
accommodate infrastructure demands such as beach nourishment, dredging, 
port expansion, road improvements, schools and environmental 
restoration. Revenue sharing is vital to address the related expenses 
that states and coastal communities assume with oil and gas 
exploration, drilling and production. It is incumbent upon me to take 
the costs and benefits into account when considering whether to support 
offshore activity in North Carolina. Considering these facts, North 
Carolina will not support offshore energy development without revenue 
sharing.
    In Fiscal Year 2014, production of the OCS generated $7.4 billion 
in government revenues from lease bonuses, rents and royalties. The 
royalties that oil and gas producers pay to drill on the OCS is one of 
the largest sources of non-tax income to the Federal Government. The 
December 2013 Quest Offshore study projects that production offshore 
North Carolina, South Carolina and Virginia could add a cumulative $16 
billion to the Federal Treasury by 2035 even if 37.5 percent of the 
revenues were shared with the state governments. North Carolina, South 
Carolina and Virginia would receive a cumulative $4 billion, $3.7 
billion and $1.9 billion, respectively.
    Last week, a bipartisan group of U.S. Senators from the four 
Atlantic planning area states sent a letter to the Senate Energy and 
Natural Resources Committee leaders urging the committee to include 
revenue sharing in future legislation. I want to stress that revenue 
sharing has strong bipartisan support. The governor of Virginia, my 
good friend Terry McAuliffe, and both of Virginia's U.S. Senators, all 
of whom are Democrats, support revenue sharing. Both of North 
Carolina's U.S. Senators, my friends and fellow-Republicans Richard 
Burr and Thom Tillis, support revenue sharing. The letter our Senators 
sent last week stated that ``coastal states deserve a portion of the 
revenue from energy production.'' Additionally, the OCS Governors 
Coalition member states of Alabama, Alaska, Louisiana, Maine, 
Mississippi, South Carolina, Texas and Virginia would strongly urge 
your support of revenue sharing legislation.
                          50-mile buffer zone
    The 50-mile buffer zone imposed for the Mid- and South Atlantic 
planning areas in Option One of the Draft Proposed Plan (DPP) 
unnecessarily puts much of North Carolina's most accessible 
undiscovered resources under lock and key. Development of the OCS oil 
and gas energy resources can occur with nominal impact to existing and 
anticipated coastal activities and marine environments. Advanced 
drilling techniques, marine well containment and spill response, 
combined with greater regulatory oversight, have made access to the 
hydrocarbon reserves in the Atlantic OCS safe, attainable and 
economical. Over the next few years, new G&G information will help 
pinpoint the most promising oil and gas resource areas located off the 
shore of North Carolina while the environmental impact statement will 
identify possible impacts of the resource development on the other uses 
of the sea and seabed, including fisheries, navigation, existing or 
proposed sealanes, potential sites of deepwater ports, and other 
anticipated uses. With a greater knowledge of the North Carolina OCS, 
the leasing areas can be established in a way that best provides access 
to the hydrocarbon reserves, preserves the coastal environment and 
mitigates use conflicts.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    .epsSeveral geologic structures with oil and gas potential are 
located within the coastal buffer of North Carolina, particularly off 
the Outer Banks. Based on historical seismic data, strict application 
of the 50-mile buffer could place as much as 40 percent of North 
Carolina's potential offshore resources out of play, including the 
promising Manteo Prospect located approximately 40 miles off the 
shoreline.
    According to a 1999 U.S. Department of the Interior report titled 
Geology and Exploration of the Manteo Prospect off North Carolina, the 
Manteo Prospect is a ``high-risk prospect with world class potential.'' 
In the early 1980s, eight oil companies including Mobil, Chevron, 
Amerada Hess, Conoco, Marathon, Oxy USA, Union and Shell, leased all 21 
blocks of the Manteo exploration unit for a combined total of more than 
$300 million, which were later canceled by the Department of the 
Interior. Mobil estimated that the Manteo Prospect may contain as much 
as 5 trillion cubic feet of dry natural gas.
    In much of North Carolina's offshore areas, the continental shelf 
drops off sharply within 50 miles from the coastline. Many areas, 
located 50 miles (80 km) or more offshore, are in deep water (+2500 
feet). Drilling in deepwater reservoirs presents many engineering 
challenges. While technological advancements and rigorous design, 
construction and maintenance standards ensure deepwater drilling can be 
performed safely, it is more expensive and complex.
    The BOEM stated in its report that the 50-mile coastal buffer zone 
was included primarily due to issues raised by the Commonwealth of 
Virginia, many of which are unique to our neighboring state to the 
north. The report states that the 50-mile buffer was imposed ``to 
minimize potential conflicts with DOD activities as well as respond to 
the governor of Virginia's comments regarding minimizing other 
multiple-use conflicts, such as renewable energy activities, commercial 
and recreational fishing, critical habitat needs for marine mammals and 
sea turtles, hard bottom environments, and other environmental 
concerns.'' The BOEM's Docket on the Request for Information on the 
2017-2022 Program shows that Governor McAuliffe, the Virginia 
Department of Mines, Minerals and Energy, the Hampton Roads Chamber of 
Commerce and the Virginia Beach City Council asked for the 50-mile 
buffer for the coast of Virginia only.
    The docket contains no comments requesting that a 50-mile coastal 
buffer be applied for the entire Mid-Atlantic planning area. Comments 
from the Ocean Foundation did call for no leasing within 50 miles of 
National Marine Sanctuaries, National Seashores, National Parks, 
National Estuarine Research Reserves, National Monuments and National 
Wildlife Refuges but a 50-mile buffer was not established for any 
nationally designated sanctuary, seashore, park, reserve, monument or 
refuge in the Gulf of Mexico or within an Alaska planning area. Only 
the Atlantic planning areas have a 50-mile buffer.
    An expansive ``one-size-fits-all'' exclusion zone in the Atlantic 
planning area is not the best mechanism for minimizing conflicts with 
existing and future maritime activities and protecting marine animals 
and critical habitats. In at least one case, for example, there are 
fewer concerns for conflicts within the 50-mile buffer. NASA indicates 
that in some instances, any major impacts from a launch are most likely 
to occur beyond the 50-mile buffer.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    .epsAs I stated in my comments on the DPP, I urge the BOEM to 
reduce the proposed coastal buffer zone off the North Carolina coast. A 
reduced buffer would keep North Carolina's coastal and ocean activities 
undisturbed, maintain the view from our 320 miles of ocean beaches and 
shoreline, protect marine life and preserve the availability of 
potential resources. The final Environmental Impact Statement and the 
results of new G&G information should be the scientific basis for the 
establishment of any further buffer areas. The BOEM must acknowledge 
that the unique geographic characteristics of each state make the 
imposition of a ``one-size-fits-all'' standard buffer zone impractical.
                         additional lease sale
    Section 18 of the Outer Continental Shelf Lands Act of 1953 directs 
the Secretary of Interior to take individual characteristics of a 
planning area into consideration to develop reasonable options for a 
schedule of proposed lease sales. For example, the Secretary must 
balance the benefits of oil and gas development in a specific planning 
area against the environmental risk and competing ocean uses. The 
potential for the Atlantic OCS to contain significant resources that 
could possibly supply petroleum products, distillate and propane into 
high demand markets for many decades factors into this decision.
    The DPP proposes 10 lease sales in the Gulf of Mexico (GOM) 
planning areas but only one lease sale each in the Chukchi Sea, 
Beaufort Sea, Cook Inlet, and the Mid-Atlantic and South-Atlantic 
planning areas. The one Atlantic sale is proposed to take place in 
2021, near the end of the 5-Year Program. The DPP states that the later 
sale date allows time for additional analysis, including collection of 
seismic and environmental information, and evaluation of infrastructure 
needs. However, much of this analysis will be complete well in advance 
of 2021. A final Environmental Impact Statement must be in place by the 
start of the 5-year program in 2017 and seismic studies are expected to 
be available in 2018 for G&G surveys conducted in 2016. North Carolina 
already has much of the general infrastructure (e.g., roads, housing, 
and medical facilities) essential to begin oil and gas exploration. 
North Carolina will have ample time to implement the remaining support 
services and spill preparedness and response capabilities necessary for 
exploration to begin by the midpoint of the 5-Year Program.
    The timing and number of lease sales in the Mid- and South Atlantic 
planning areas increase investment risk for both the oil and gas 
producers and the states. At least two lease sales, including one in 
the 2018-2019 time frame, are necessary to develop the Atlantic 
frontier OCS area in an economically responsible manner.
    Preparing for offshore energy will require significant investment. 
Benefits accrued by the states and coastal communities, including the 
increase in jobs and wages and the subsequent multiplier effects, are 
smaller during the exploration stage and grow as development and 
production allow the industry to become established. Multiple lease 
sales would provide the assurance and incentive for Atlantic coastal 
states to improve their infrastructure and support services and the 
certainty for industry to invest resources to properly setup operations 
in the frontier area. Exploratory wells drilled in the first leased 
blocks can better define the extent of the hydrocarbon reserves and 
lead to further participation and investment in a second lease sale. 
After leases are awarded, it will take many more years before industry 
can begin production. This development period provides states and 
coastal communities time to prepare for the influx of new industries 
and workforce.
                 onshore infrastructure and investment
    A significant yet underpublicized component of offshore energy 
exploration and production is the onshore coastal infrastructure 
necessary to support OCS oil and gas activities. Safe and economic oil 
and gas production relies upon an extensive amount of coastal 
infrastructure including transportation and processing systems; ports 
and service bases; emergency services and oil spill response; electric 
power infrastructure; and waste management facilities that are equipped 
to handle the different types of waste generated by the offshore 
activities.
    The BOEM outlined the energy infrastructure assets that would be 
required to support Mid-Atlantic OCS oil and gas production in a July 
2014 report entitled, ``Onshore Oil and Gas Infrastructure to Support 
Development in the Mid-Atlantic OCS Region.'' The study inventoried 
existing infrastructure in the Mid-Atlantic region and identified 
energy infrastructure assets that would need to be established or 
expanded if production were to occur off our shores. While North 
Carolina has the infrastructure in place to begin the exploration 
phase, the report concluded that a significant amount of investment 
would be needed to support oil and gas production in the Mid-Atlantic.
    It is critically important that states receive the certainty 
necessary to budget and plan for future infrastructure needs. Onshore 
infrastructure such as roads, ports and processing systems require 
substantial investment and take many years to develop. I ask that the 
Federal Government assure states that offshore oil and gas production 
will become a reality so that we can prudently invest the substantial 
capital necessary to finance projects vital to offshore oil and gas 
operations.
    States such as North Carolina are willing to make significant 
investments now, but we can't afford to potentially squander millions 
of dollars in preparation for a frontier industry that has the 
potential to be shut down at any time by the Federal Government. I 
request that the BOEM confirm the inclusion of at least one lease sale 
in the Mid-Atlantic so that states can be confident that their finite 
resources are spent wisely.
    Offshore energy production offers many benefits to Federal, state 
and local governments but also requires significant investment and 
planning to be conducted in a safe and economical manner. If we are 
serious about pursuing safe, responsible offshore energy development in 
the Atlantic, then the Obama administration must provide states the 
certainty we require to start building the regulatory and structural 
foundation on which the industry can grow. I look forward to working 
with the BOEM to responsibly open the Atlantic to oil and gas 
development.
    By unleashing the energy potential off our Atlantic coasts, we will 
move America one step closer to energy independence and create new 
opportunities for all of North Carolina. Thank you for the opportunity 
to testify on this important topic.

                                 ______
                                 

   Questions Submitted for the Record by Ranking Member Lowenthal to 
             Governor Pat McCrory, State of North Carolina
    Question 1. Governor McCrory, in February the North Carolina 
Department of Environment and Natural Resources (NCDENR) wrote to the 
Bureau of Ocean Energy Management (BOEM) requesting that no offshore 
wind lease sales be offered within 24 nautical miles of the North 
Carolina coast, citing potential visual impacts that could negatively 
impact the state's coastal tourism industry. The letter from NCDENR 
also highlighted that North Carolina's ``coastal and ocean waters are 
filled with a particularly diverse and important mix of fish and other 
organisms at various stages of their life cycle, including a variety of 
endangered and threatened sea turtles, pelagic seabirds and marine 
mammals.'' In your testimony, you requested that BOEM remove the 50-
mile buffer zone currently in the 2017-2022 Draft Proposed Program, but 
you do not specify, as NCDENR does in their letter regarding offshore 
wind lease sales, a minimum distance from the coastline where you 
believe that offshore oil and gas lease sales should not be held.

    Question 1a. Do you have a position on what would be an acceptable 
minimum buffer zone for oil and gas lease sales off the coast of North 
Carolina?

    Answer. Buffer zones should reflect the distinctive characteristics 
of the Outer Continental Shelf within the planning area and the 
environmental, economic and social aspects of energy development for 
each coastal state. Tourism is an integral aspect of North Carolina's 
economy and the social fabric of our coastal communities. At a minimum, 
a buffer zone should be established off the state's coast to protect 
its viewshed. North Carolina is home to magnificent beaches and I 
believe residents and tourists should continue to enjoy them without 
seeing drill rigs, platforms, wind turbines or flashing warning lights 
in the distance.
    I am unaware of any legitimate reason as to why the buffer zone 
needs to extend beyond the line of sight. New seismic imaging may 
reveal promising oil and gas resources that can be accessed and 
developed within the 50-mile buffer zone currently in the Bureau of 
Ocean Energy Management's Draft Proposed Program for 2017-2022.

    Question 1b. Do you believe that any oil and gas lease sale buffer 
zone should at least be as large as 24 nautical miles to be consistent 
with the request for an offshore wind lease sale buffer zone?

    Answer. I am committed to protecting the natural beauty and quality 
of North Carolina's pristine shoreline. For that reason, I believe that 
buffer zones for oil and gas lease sales should be consistent with the 
buffer zones for offshore wind lease sales.
    North Carolina's coastal region supports industries critical to the 
state's economy. Our state's barrier island and ocean beaches have 
extremely high recreational, esthetic and ecological value and attract 
millions of tourists from all over the world each year. North Carolina 
coastal attractions include more than 320 miles of sandy beaches, two 
national seashores, the Wright Brothers National Memorial, and Jockey's 
Ridge, Fort Fisher and Fort Macon State Parks. The tourism industry in 
the state's oceanfront counties generates more than $2 billion in 
annual revenue and directly supports more than 30,000 jobs within the 
coastal communities.
    Additionally, commercial and recreational saltwater fishing is a 
vital component of North Carolina's economy. In 2011, the National 
Oceanic and Atmospheric Administration found that saltwater 
recreational fishing generated $2 billion in sales and supported 18,000 
jobs in the state.

    Question 1c. Do you share the same concerns regarding offshore oil 
and gas development that NCDENR does regarding offshore wind 
development?

    Answer. As the North Carolina Department of Environment and Natural 
Resources (NC DENR) expressed on behalf of my Administration, I believe 
there are excellent opportunities to develop wind energy and oil and 
gas off North Carolina's coast, provided it is done in a way that 
maintains our valued viewsheds, protects our natural resources and 
minimizes conflicts with ongoing activities. I agree that a coastal 
buffer zone for oil and gas, similar to what NC DENR has requested for 
wind energy, is important to preserve the ocean's beauty for our 
coastal communities and tourists. It is also vital that an 
environmental assessment be performed prior to any investment in oil 
and gas or wind energy lease areas to preserve sensitive habitats and 
coastal resources.

                                 ______
                                 

    Dr. Fleming [presiding]. Thank you, Governor McCrory, for 
your very valuable testimony. At this time you are excused.
    Governor McCrory. Thank you very much.
    Dr. Fleming. We thank you for your testimony, and all of 
your great work in the beautiful state of North Carolina. And 
we will ask for Ms. Abigail Ross Hopper to step forward to join 
our panel.
    Governor McCrory. Thank you very much.
    Dr. Fleming. Thank you, Governor.
    [Pause.]
    Dr. Fleming. OK. We have today, as our second panelist, Ms. 
Abigail Ross Hopper, Director of the Bureau of Ocean Energy 
Management.
    Let me remind you, Director, of our rules. You are probably 
familiar with them. You will be under a 5-minute limit on your 
testimony. You will have a green light for 4 minutes, then 
yellow for 1 minute. When it turns red, if you would, go ahead 
and conclude your remarks. Everything in your testimony will be 
put into our record.
    At this point, the Chair now recognizes you for 5 minutes 
to give your testimony.

 STATEMENT OF ABIGAIL HOPPER, DIRECTOR, BUREAU OF OCEAN ENERGY 
          MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR

    Ms. Hopper. Thank you so very much. Good morning, members 
of the subcommittee. Good morning, I am pleased to appear 
before you today to discuss the Bureau of Ocean Energy 
Management, which I will call BOEM for the rest of our time 
together, our offshore oil and gas leasing program under the 
current Outer Continental Shelf Oil and Gas Leasing Program, as 
well as our development of the 2017-2022 program.
    The Administration is committed to promoting safe and 
responsible domestic oil and gas production, as well as 
developing offshore renewable energy as part of a comprehensive 
energy strategy to grow America's energy economy and continue 
to reduce our dependence on foreign oil.
    A brief word about our current 2012-2017 program. BOEM, to 
date, has held seven lease sales in the Gulf of Mexico, 
generating almost $3 billion in bonus payments, as well as more 
than $164 million in rentals. Eight sales remain on the current 
program lease sale schedule.
    So, as you know, BOEM's responsibilities are outlined in 
the Outer Continental Shelf Lands Act, OCSLA. The OCSLA 
prescribes the method by which the Department develops each 5-
year program.
    Publication of the 2017-2022 draft proposed program, which 
I will call the DPP for the rest of our time together, which 
occurred on January 29, 2015, is the first proposal in a three-
proposal process to develop the next program. BOEM 
simultaneously published a notice of intent to prepare a draft 
programmatic environmental impact statement, which will analyze 
the potential environmental effects of the DPP. Twenty-three 
EIS scoping meetings were held in communities on the Atlantic 
Coast, along the Gulf of Mexico, and in Alaska during this 60-
day comment period. BOEM has received well over a million 
comments.
    The second phase of the process is expected in early 2016, 
with the publication of the proposed program and the draft 
programmatic EIS. The Department will invite public comment on 
those documents, as well.
    And then the third phase, publication of the proposed final 
program and the final Environmental Impact Statement, is 
expected in late 2016.
    So, the DPP includes potential lease sales in eight 
planning areas, and includes nearly 80 percent of estimated 
undiscovered technically recoverable oil and gas resources on 
the Outer Continental Shelf. In total, the DPP schedules 14 
potential lease sales for the program: 10 sales in the Gulf, 1 
in the Atlantic, and 3 off the coast of Alaska. As I mentioned, 
there are 10 sales proposed for the Gulf of Mexico.
    In past programs, BOEM has scheduled separate, generally 
alternating annual sales in the Western and Central Gulf of 
Mexico planning areas, as well as periodic sales in the portion 
of the Eastern Gulf not under moratorium. In contrast, the DPP 
that is currently published schedules two combined regionwide 
sales per year, comprised of the Western, Central, and Eastern 
Gulf of Mexico unleased acreage not subject to moratorium. We 
are proposing this change to provide greater flexibility to 
industry, including its ability to respond to the significant 
energy reforms that are happening in Mexico. We will be taking 
feedback on that approach, and if the traditional approach is 
preferred, we can revert back to that for the final program.
    In Alaska, the DPP continues to take the balanced approach 
to development with one sale each in the Beaufort, Cook Inlet, 
and the Chukchi. The DPP also includes one lease sale in a 
portion of the Mid-Atlantic and South-Atlantic planning areas. 
The sale would be located at least 50 miles off the coast of 
Virginia, North Carolina, South Carolina, and Georgia. Data 
suggest that portions of those planning areas may contain 
significant oil and gas resource potential. However, as the 
Governor mentioned, current geological and geophysical 
information is older, based on data collected in the 1970s and 
1980s.
    So, as a result of that, in July 2014 BOEM issued a record 
of decision for the programmatic EIS for the Atlantic G&G 
activities, and we established a path forward for appropriate 
G&G survey activities to be authorized by BOEM. Several permits 
are currently under our consideration, and we will be happy to 
talk more about that permitting process this morning.
    So, Mr. Chairman, thank you very much for the opportunity 
to be here today, and I am happy to answer any questions.
    [The prepared statement of Ms. Hopper follows:]
 Prepared Statement of Abigail Ross Hopper, Director, Bureau of Ocean 
           Energy Management, U.S. Department of the Interior
    Chairman Lamborn, Ranking Member Lowenthal, and members of the 
subcommittee, I am pleased to appear before you today to discuss the 
Bureau of Ocean Energy Management's (BOEM) offshore oil and gas leasing 
under the current Outer Continental Shelf (OCS) Oil and Gas Leasing 
Program (2012-2017 Program), as well as our development of the 2017-
2022 Program. The Administration is committed to promoting safe and 
responsible domestic oil and gas production, as well as developing 
offshore renewable energy, as part of a comprehensive, all-of-the-above 
energy strategy to grow America's energy economy and continue to reduce 
our dependence on foreign oil. Ensuring safe and responsible 
development of the Nation's offshore oil and gas resources through 
leasing under the 5-Year Program is an important part of that strategy.
    The Outer Continental Shelf Lands Act (OCSLA) requires BOEM to 
propose a schedule of lease sales every 5 years. This is referred to as 
the ``5-Year Program.'' As specified by Section 18 of the OCSLA, 
preparation and approval of an Oil and Gas Leasing Program is based on 
the Secretary of the Interior's consideration of eight factors which 
include balancing of the potential for environmental damage, discovery 
of oil and gas, and adverse impact on the coastal zone, to determine 
the size, timing, and location of lease sales.
          leasing under the 2012-2017 ocs oil and gas program
    BOEM's offshore leasing activity under the current Program reflects 
the Administration's overall approach to promoting safe and 
environmentally responsible oil and gas resource development. This 
includes encouraging exploration and development in the Gulf of Mexico 
(GOM), where resources and industry interest are most extensive, and 
where mature infrastructure exists to support oil and gas activities. 
BOEM has held seven lease sales in the GOM under the current Program, 
generating almost $3 billion in bonus payments, as well as more than 
$164 million in rentals.
    Eight sales remain on the current Program lease sale schedule, with 
five sales in the GOM: Western GOM sales in 2015 and 2016, Central GOM 
in 2016 and 2017, Eastern GOM in 2016; and three off Alaska--Chukchi 
Sea, Cook Inlet, and Beaufort Sea.
             the 2017-2022 ocs oil and gas leasing program
    With the current Program ending in mid-2017, BOEM is preparing the 
2017-2022 OCS Oil and Gas Leasing Program. In June 2014, the Department 
published a Request for Information and Comments (RFI) and received 
approximately 500,000 comments. On January 29, 2015, The Department 
published the 2017-2022 OCS Oil and Gas Leasing Draft Proposed Program 
(DPP) with a 60-day comment period. BOEM simultaneously published a 
Notice of Intent to Prepare a draft Programmatic Environmental Impact 
Statement (PEIS), which will analyze the potential environmental 
effects of the Program. Twenty-three EIS scoping meetings were held in 
communities on the Atlantic coast, GOM, and Alaska during the 60-day 
comment period. BOEM received over 900,000 comments and is committed to 
integrating the critical information received during the comment period 
into the scientific, environmental and social analysis that informs our 
decisionmaking. The Department expects to publish the Proposed Program 
and Draft PEIS in early 2016; the Department will invite public comment 
on both of these documents. Publication of the Proposed Final Program 
and Final PEIS is expected in late 2016.
Draft Proposed Program
    The OCSLA prescribes the method by which the Department develops 
each 5-Year Program. Publication of the 2017-2022 DPP is the first 
proposal in a three-proposal process to develop the 2017-2022 Program. 
The 2017-2022 DPP includes potential lease sales in eight planning 
areas and includes nearly 80 percent of estimated undiscovered 
technically recoverable oil and gas resources on the U.S. OCS. In 
total, the 2017-2022 DPP schedules 14 potential lease sales for the 
2017-2022 Program in eight planning areas--10 sales in the GOM, one in 
the Atlantic and three off the coast of Alaska.
    The 5-Year Program is designed to promote the diligent development 
of U.S. offshore oil and gas resources, which remains a key component 
of our domestic energy portfolio and contributes significantly to the 
Nation's economic output. The sales proposed in the DPP involve sales 
in offshore areas that have the highest oil and gas resource potential, 
highest industry interest, and/or are off the coasts of states where 
their government officials have expressed a strong interest in 
potential energy exploration. The areas selected for the DPP and 
additional environmental review simultaneously consider potential 
environmental impacts, stakeholder concerns, and competing uses of 
ocean and coastal areas.
    The 2017-2022 DPP continues the regionally tailored leasing 
strategy set forth in the current 5-Year Program. The proposed schedule 
reflects the belief that a ``one-size-fits-all'' approach to offshore 
leasing is not appropriate. Instead, the approach is tailored to 
achieve the dual goals of promoting prompt development of the domestic 
oil and gas resources while protecting the marine, coastal and human 
environments specific to each OCS region.
Gulf of Mexico
    Of the 14 lease sales included in the 2017-2022 DPP, 10 are in the 
GOM, where infrastructure is best-established and the oil and gas 
resource potential is significant. In past programs, BOEM has scheduled 
separate, generally alternating, annual sales in the Western and 
Central GOM planning areas, as well as periodic sales in the portion of 
the Eastern GOM not under moratorium. In contrast, the 2017-2022 DPP 
schedules two combined region-wide sales per year, comprised of the 
Western, Central, and Eastern GOM unleased acreage not subject to 
moratorium. BOEM is proposing this change to provide greater 
flexibility to industry, including the ability to respond to the 
significant recent energy reforms in Mexico that have the potential to 
meaningfully change how exploration and development decisions are made 
in the GOM.
    BOEM will review feedback received on this approach, and if the 
traditional approach is preferred, BOEM can revert back to the 
traditional separate planning area model for sales in the 2017-2022 5-
Year Program.
Alaska
    In Alaska, the 2017-2022 DPP continues to take a balanced approach 
to development, utilizing the targeted leasing strategy set forth in 
the 2012-2017 Program by identifying one potential sale each in the 
Beaufort Sea (2020), Cook Inlet (2021), and Chukchi Sea (2022) Planning 
Areas. These potential sales in the three Alaska program areas are 
currently proposed to be scheduled later in the 5-year period. Holding 
the sales later in the 2017-2022 Program is expected to provide greater 
opportunity to obtain and evaluate information regarding environmental 
issues, subsistence use needs, infrastructure capabilities, and results 
from any exploration activity associated with existing leases.
    Similar to the 2012-2017 5-Year Program, BOEM will continue to use 
a scientific approach to information and stakeholder feedback to 
proactively determine, in advance of any potential sale, which specific 
areas offer the greatest resource potential while minimizing potential 
conflicts with environmental, subsistence, and multiple use 
considerations. Sales will be tailored to offer areas that have 
significant resource potential while appropriately weighing 
environmental protection, subsistence use needs, and other 
considerations.
Atlantic
    The 2017-2022 DPP includes one lease sale in a portion of the Mid-
Atlantic and South-Atlantic Planning Areas in 2021. Consistent with the 
targeted and balanced leasing approach adopted in the Arctic, the 
potential sale would be located at least 50 miles off the coasts of 
Virginia, North Carolina, South Carolina, and Georgia. Presenting this 
option in the 2017-2022 DPP allows for consideration of a targeted area 
with oil and gas resource potential, while limiting potential impacts 
on the environment and other ocean uses. Governors, congressional 
delegations and local governments from the four states listed above all 
requested that the OCS off their respective coasts be included in the 
2017-2022 DPP and indicated a desire to better understand the oil and 
gas potential of this area.
    The 50-mile coastal buffer proposed off the coasts of Virginia, 
North Carolina, South Carolina, and Georgia is intended to minimize 
multiple use conflicts, such as those from Department of Defense and 
NASA activities, renewable energy activities, commercial and 
recreational fishing, critical habitat needs for wildlife, and other 
environmental concerns. During the subsequent Section 18 and NEPA 
processes, BOEM will be collecting and analyzing additional information 
regarding the extent to which any existing conflicts can be minimized 
and what mitigation measures should be required if a lease sale does 
take place.
    Some data suggest that portions of the Mid-Atlantic and South-
Atlantic Planning Areas may contain significant oil and gas resource 
potential; however, current geological and geophysical (G&G) 
information regarding that potential is based on older data collected 
in the 1970s and 1980s. Tremendous advances in instrumentation and 
technology for the acquisition and analysis of G&G data have been made 
in the intervening decades. In recognition of these advances in G&G 
data acquisition and processing technology and the need to better 
understand the scope of existing resources and potential conflicts, 
BOEM's July 2014 Record of Decision (ROD) for the PEIS for Atlantic G&G 
activities established a path forward for appropriate G&G survey 
activities to be authorized by BOEM off the Mid-Atlantic and South-
Atlantic coast. That decision establishes safeguards governing 
potential survey activities to update the region's offshore oil and gas 
resources data.
    The ROD for Atlantic G&G activities requires the implementation of 
stringent mitigation measures and safeguards for purposes of avoiding, 
minimizing, and/or mitigating environmental impacts, including impacts 
on marine life. G&G activities in the Atlantic will increase BOEM's 
understanding of the area's resource potential and will develop a suite 
of environmental studies for the purpose of establishing an 
environmental baseline. Several permits are currently under BOEM's 
consideration for conducting G&G surveys that, if approved, will 
provide critical new information to inform potential future leasing 
decisions.
Pacific
    No lease sales in the four planning areas off the Pacific coast 
were included in the DPP for potential oil and natural gas leasing 
consideration. The exclusion of the Pacific Region is consistent with 
the long-standing interests of Pacific coast states and comments 
received on the RFI.
                               conclusion
    The 5-Year Program is an important component of the 
Administration's all-of-the-above energy strategy. The 2017-2022 DPP 
has led to a significant outpouring of public interest from a wide 
array of stakeholders. BOEM takes this input very seriously, and we are 
working hard to consider the feedback we received, and to integrate 
comments into our Proposed Program and Draft PEIS.
    Mr. Chairman, thank you again for the opportunity to be here today 
to discuss the Bureau's effort to create an oil and gas leasing program 
that will safely and responsibly reduce our dependence on foreign oil 
and create jobs through the development of these important energy 
resources. I am happy to answer any questions that you or members of 
the committee may have.

                                 ______
                                 

 Questions Submitted for the Record to Abigail Ross Hopper, Director, 
                   Bureau of Ocean Energy Management
                Questions Submitted by Chairman Lamborn
    Question 1. Will the 8 remaining sales in the 2012-2017 5-year plan 
be conducted as planned in the current leasing schedule? Can you commit 
to this committee that those three scheduled lease sales in the Arctic 
will occur on time?

    Answer. To date, the sales remain on the schedule and are in 
various phases of development in lease sale preparation and the NEPA 
process. With respect to the three lease sales scheduled offshore 
Alaska, BOEM is proceeding with preparations for these sales, although, 
as with any offshore lease sale, the decision as to whether ultimately 
to hold the sale is up to the Secretary.

    Question 2. While you cannot add new areas to the existing plan 
once finalized, can you clarify that under Outer Continental Shelf 
Lands Act (OCSLA), you have the authority to add lease sales to the 
proposed areas that are currently being scoped?

    Answer. Under the OCSLA, a final 5-Year Program may not be revised 
``significantly'' without following the same procedure as utilized to 
prepare the program, i.e., the Section 18 process. Adding areas to 
existing sales and adding new sales even in the same area have been 
found to be significant changes; therefore, the Secretary may not do 
either without initiating the Section 18 process again. Similarly, for 
a 5-Year Program still under development, where areas or lease sales 
were not previously announced for comment under Section 18 in the Draft 
Proposed Program, they cannot be considered for inclusion in the Final 
5-Year Program without reinitiating the Section 18 process.

    Question 3. This Administration has said repeatedly that it is 
committed to promoting renewable energy development both onshore and 
offshore. In the President's Fiscal Year 2016 Budget, BOEM requested an 
increase of over $1.1 million for the renewable energy program. In 
2009, President Obama and former Interior Secretary Ken Salazar 
announced the final regulations for the OCS renewable energy program.

    Question 3a. How many offshore commercial wind energy leases have 
been issued?

    Answer. Nine: three in Massachusetts, two in Rhode Island/
Massachusetts, one in Delaware, two in Maryland, and one in Virginia.
    Question 3b. Could you please list the location for each leased 
offshore wind area and the revenue generated from each lease sale?

    Answer.

    Massachusetts

     Cape Wind: lease issued non-competitively/no lease sale: 
            $353,112

     MA Wind Energy Areas (WEA) lease sale: $431,482

    Rhode Island/Massachusetts WEA lease sale: $3,089,461

    Delaware: lease issued non-competitively/no lease sale: $867,870

    Maryland WEA lease sale: $8,701,098

    Virginia WEA lease sale: $1,600,000

    Total: $13,822,041

    Question 3c. How many gigawatts are currently being produced by 
offshore wind?

    Answer. All BOEM issued leases are in the development phase and no 
construction or operations have commenced.

    Question 3d. In the 2009 announcement, the President stated a goal 
of achieving 10 gigawatts of wind capacity by 2020, how close is your 
agency to achieving that goal?

    Answer. In 2012 the President set a goal to issue permits for 10 
gigawatts of wind, solar and geothermal projects on public lands by the 
end of the year. The DOI achieved this goal ahead of schedule. In 2013, 
the President, as part of the Climate Action Plan, directed an 
additional 10 gigawatts of renewable energy projects to be permitted by 
2020.
    Onshore, the BLM has approved over 16.5 GWs of renewable energy 
projects including wind, solar and geothermal. Of these approved 
renewable energy on projects, over 5.6 GWs are wind energy projects. 
Offshore, BOEM projects that nearly 9 GW of energy could be produced by 
offshore wind from the leases issued to date.
    It is important to note that DOI is responsible only for providing 
opportunities for companies to develop resources through the permitting 
and leasing of public lands. The decision to proceed with development 
ultimately rests with industry.

                  Questions Submitted by Rep. Wittman
    Question 1. Several times since the 2017-2022 Draft 5-Year Proposed 
Program was published the Department of Interior has been quick to 
point out that there are still several more phases in the planning 
process and that the Department will further narrow or take areas out 
of the proposed plan.
    As you know, Virginia has been asking for offshore leasing and 
exploration for the last decade.
    A majority of state and congressional officials including Senators 
Mark Warner, Tim Kaine and Governor McAuliffe support energy production 
in the Atlantic Ocean.
    As the Department and BOEM begin to develop a final offshore 
leasing program for the 2017-2022 5-Year Plan, will you commit to 
taking into consideration the broad bipartisan support for offshore 
energy production in the Atlantic Ocean?

    Answer. BOEM is committed to a robust and public process for 
developing the 5-Year Program. Input from governors and states will 
continue to be an important factor as state laws, goals, and policies 
are one of the eight factors that the Secretary must consider in 
preparing a 5-year program under Section 18 of the Outer Continental 
Shelf Lands Act.

    Question 2. It is my understanding that Governor McAuliffe, in 
response to BOEM's Request for Information last summer, pointed out 
that Virginia's Lease Sale 220 was already included in a Draft Proposed 
Plan in 2006, only to be canceled in 2010.
    Now, Virginia will not see a lease sale until roughly 2021, which 
is 15 years after its original inclusion in a 5-year plan.
    Delays like this represent a missed opportunity to harness our 
domestic energy potential, create thousands of new jobs, and generate 
millions in government revenue.
    As you know, Virginia stands to gain 25,000 jobs and billions in 
economic activity from opening the Atlantic OCS to oil and gas 
development.
    Will BOEM further limit areas in the Atlantic as you continue the 
planning process for 2017-2022, as you have done in the past?

    Answer. The multi-step 5-year process, in coordination with the 
National Environmental Policy Act process, provides several more 
opportunities to analyze and make decisions on the size, timing, and 
location of potential lease sales. Whether any of those sales, 
including proposed Lease Sale 260 in the Mid- and South Atlantic, will 
be further narrowed in any way, depends on the outcome of several 
stages of analyses, public comments, and the Secretary's decision on 
what best meets the Nation's energy needs while balancing the 
potentials for environmental damage, discovery of oil and gas, and 
adverse impacts to the coastal zone.

                                 ______
                                 

    Dr. Fleming. We thank you, Ms. Hopper, Director Hopper.
    At this point, the dais will move to questions. And the 
Chair now recognizes himself for first questions.
    It has been interesting that President Obama has made a lot 
of hay in the news about the increased development of our 
natural resources, oil and gas, during his administration. And, 
technically, he is correct. Unfortunately, that increase has 
been all on the private sector, that he has no control or 
jurisdiction of. We know that that is coming from the new 
technologies, hydraulic fracturing and horizontal drilling.
    On the other hand, during his administration, there has 
actually been a 10 percent drop in Federal lands development. 
So, if you apply that to what really is under the President's 
jurisdiction, you find that it is actually going the wrong way. 
And, unfortunately, with this new drilling plan, what we are 
seeing is fewer leases than ever. You are fitting in with this, 
with your plan, suggesting that we restrict energy development, 
especially since the number of leases actually auctioned could 
only go down from here.
    How exactly do you intend to grow offshore production, or 
do you really choose to do that?
    Ms. Hopper. So I thank you very much for that question. I 
think there are two parts. One is about oil production and one 
is about lease sales. So I will answer the first one first.
    In terms of oil production, it is really the role of the 
Federal Government to make lands available for leasing. And we 
do that through the 5-year plan. Industry can determine (a) 
what acres that we offer that they are interested in leasing. 
And then, once they hold those leases, what they are interested 
in developing.
    If you look at the chart that was up earlier, you will see, 
yes, there was a drop in production following the Deepwater 
Horizon disaster 5 years ago. It has continued to climb since 
that dip: 2014 production was up over 2013 production. The 
Energy Information Administration released its estimates 
yesterday, and production on the Outer Continental Shelf is 
projected to continue to rise for the next 4 or 5 years on the 
Outer Continental Shelf.
    So, I think it tells us that the industry is, even in this 
sort of era of lower oil prices, interested in investing in 
areas in which there are known reserves----
    Dr. Fleming. Well, let me make a point here.
    Ms. Hopper. Sure.
    Dr. Fleming. Of course, the increase is really on top of a 
baseline that dropped tremendously after the BP spill. So we 
have not gotten back to the baseline. And, actually, the 
development that is happening now is based on leases that 
occurred years ago under prior administrations.
    So, what you are really doing here, by limiting the number 
of leases, is you are actually restricting and lowering the 
baseline again. So, while you may be technically correct, year 
over year, there may be increases, but you are way below the 
baseline, and it is going to be many years, if ever, that you 
get back to the baseline.
    So, I think we would be hard put to say that we are 
actually increasing production over the real baseline in out 
years, based on what this administration has been doing the 
last 5 years, and based on what your plan, going forward, is.
    Ms. Hopper. Well, I think, actually, the data will show the 
estimates from EIA show that production is, for 2015, 2016, 
2017, 2018, and 2019, projected to exceed the high that was in 
2010. So I do think the trajectory will get us up to and beyond 
where we were in 2010.
    In terms of the number of lease sales, as I described, we 
have taken a different look at how to lease the Gulf of Mexico, 
largely in part because of the reforms in Mexico, and sort of 
understanding how that is going to impact our producers here, 
on our side of the border. So, we are offering--whereas in the 
current 5-year plan we have offered the Western Gulf five 
times, we have offered the Central Gulf five times, and then 
the Eastern part, that is not subject to moratorium, twice. So, 
for a total of 12. And this plan, we are offering the Eastern--
let me finish----
    Dr. Fleming. You don't need to go through all the details.
    Ms. Hopper. No, I think it is important----
    Dr. Fleming. I have one other question, and my time is 
limited, I am sorry.
    Ms. Hopper. Sure.
    Dr. Fleming. We will hear from a witness in the next panel 
about the competitive environment for offshore leases, and how 
countries like Canada, Mexico, and Brazil are competing. Are 
the actions you are taking helping or hurting the United 
States, relative to these countries?
    Ms. Hopper. I think the actions we are taking absolutely 
help America be competitive with these other countries. I think 
the terms of our lease sale are competitive with other 
countries. The terms of our royalties and our bonus payments 
are absolutely competitive.
    Dr. Fleming. So, by restricting leases, making fewer leases 
available to companies to drill, you think that gives us an 
advantage over these countries?
    Ms. Hopper. I disagree with your characterization. I think, 
in fact, we are making more leases available. If you add those 
all together, that is 30 lease sales for the Western, Central, 
and Eastern Gulf.
    Dr. Fleming. Well, as I conclude here, I would say this is 
kind of like marking the price down in order to increase it 
later, and show that you have actually increased it.
    The truth is you have lowered the baseline, and so of 
course, you are going to show some increases over time. But you 
are well below where you were, historically.
    With that, I will recognize the Ranking Member.
    Ms. Hopper. Thank you, sir.
    Mr. Lowenthal. Thank you, Mr. Chair, and thank you, 
Director Hopper.
    I would just like to jump into this and make a statement 
also, about when the Chair mentioned how production of oil on 
Federal lands has not increased, yet on private and state lands 
has increased. I would like you to respond to the fact, or 
agree or disagree with me, that we are not comparing apples to 
apples, in the sense that if we eliminate where there has been 
a reduction in offshore drilling, which has decreased because 
of, as we know, the tremendous devastation that occurred in the 
Gulf, if we just look at Federal lands onshore, and compare 
those to state lands onshore, Federal land production of oil 
and gas since 2008 has increased by 45 percent. That is what is 
in comparison to state and private lands onshore. Is that not 
true?
    Ms. Hopper. I believe that is what the data show, sir.
    Mr. Lowenthal. But I would like to kind of move to another 
realm, and that has to do with climate change. I like the title 
of this hearing, it refers to the future impacts of offshore 
leasing programs, because I think we have a responsibility to 
look at the broader impacts of the plan, not simply the energy 
supply impacts, but also the environmental and climate impacts.
    However, BOEM's draft program does not have a lot to say 
about climate change. It describes the sensitivity that 
different parts of the OCS have to climate change. But, 
otherwise, just gives a cursory description about climate 
impact uncertainty, and appears to punt the issue to the 
Environmental Impact Statement. That would be fine, if BOEM 
followed the new draft NEPA guidance from the Council on 
Environmental Quality that instructs agencies to consider the 
downstream climate effects of their actions. That is, how much 
carbon dioxide is emitted by burning the oil and gas that would 
be produced under the 5-year program.
    But for the 2012-2017 program, BOEM doesn't do that at all. 
The final Environmental Impact Statement for that said 
consumption is not considered, because the scope of this EIS is 
limited to issues that have a bearing on the decisions for the 
proposed leasing program.
    However, given the Secretary's statement last month, that 
helping our Nation cut carbon pollution should inform our 
decisions about where we develop, how we develop, and what we 
develop, is BOEM going to include a more robust analysis of the 
potential greenhouse gas emissions from this leasing program? 
And would that include the social cost of carbon, as my 
colleagues and I are recommending?
    Ms. Hopper. Thank you for that question. Yes, I am very 
aware of the draft guidance that CEQ has put out. I would point 
out that it is still draft, so we haven't gotten our final 
direction from CEQ yet.
    You are right, in that our programmatic EIS for this 
proposed program will take a look at the greenhouse gas impacts 
of the extraction of the natural resources. And I think it is a 
conversation that we are still having with the Secretary about 
how much further beyond that we take it.
    I would agree with you, that sort of the world in which we 
lived in when we prepared the EIS for the 2012-2017 is a bit 
different than where we find ourselves today. So, I think there 
is certainly room for more conversation about that.
    Mr. Lowenthal. Thank you. I just want to now change--and I 
do hope that we really begin to address these issues.
    When you talk about the leased acreage that is offered, 
what percentage of acres that are offered for lease actually 
get bid on by the industry?
    Ms. Hopper. It is a very small percentage. Over the course 
of time, it has ranged to sort of between 9-11 percent.
    Mr. Lowenthal. And with the drop in oil price, has that 
affected this at all, in terms of percentages?
    Ms. Hopper. I do believe so, sir. In the sales that we have 
had in this current program, we are averaging about a 3 percent 
leasing of the acres that we offer. In the sale we had right 
after I was here last time, we offered 41 million acres for 
lease, and we leased just under a million.
    Mr. Lowenthal. So there is a lot of acreage out there that 
is being offered that companies aren't bidding on. Is that 
because you are offering acres that just don't have a lot of 
resources?
    Ms. Hopper. In the Gulf of Mexico, we really make all acres 
available. So, industry makes decisions about sort of where the 
prospects are and where they want to utilize their capital.
    Mr. Lowenthal. I think my time is up. I am going to 
continue to follow this line of questioning, and so I yield 
back to see if we have another.
    Dr. Fleming. All right. The gentleman yields back, and the 
Chair now recognizes Mrs. Lummis.
    Mrs. Lummis. Thank you, Mr. Chairman. I am a little unclear 
about how you are going to finish off the current 5-year plan 
before proceeding to the next 5-year plan. So, my first 
questions are going to deal with the current 5-year plan.
    Now, you have included, there are eight potential lease 
sales that remain under the current program. Correct?
    Ms. Hopper. That is correct.
    Mrs. Lummis. OK. Will the three Arctic lease sales included 
in the current 5-year plan remain on schedule?
    Ms. Hopper. To date they remain on schedule. They are in 
various phases of development. Both the Chukchi and the 
Beaufort have had the call for nominations, and information has 
gone out. We have gotten public comments, and we are assessing 
those. The Cook Inlet sale is a little bit further along. I 
believe we have finished the scoping process, but we are 
further along in the development of the Environmental Impact 
Statement.
    It will ultimately be the Secretary's decision about 
whether the sales take place. But as of today, we are on track 
to have those sales.
    Mrs. Lummis. OK. Same question about the Gulf of Mexico. Do 
you intend to conduct all five of the lease sales in the Gulf 
of Mexico that remain under the current 5-year program within 
these 5 years?
    Ms. Hopper. Certainly. Again, sort of that same caveat, 
that the Secretary makes the ultimate decision. But we at BOEM 
are proceeding forward with the environmental assessment, the 
call for information, and the evaluation of all five of those 
lease sales. Yes, ma'am.
    Mrs. Lummis. OK. Under your proposals for the 2017-2022, it 
is the lowest number of planned lease sales since at least 
1980. Why is that?
    Ms. Hopper. Well, as I was explaining to the Chair, when we 
changed the way in which we are leasing the Gulf of Mexico to 
go to a regionwide, rather than planning area leases, we 
consolidated all of those sales together. So, if you broke them 
out in a way in which we break them out now, they would add up 
to 30 instead of 10. We could probably talk all afternoon about 
the various ways to cut those numbers.
    But the sort of answer is that the Gulf of Mexico will be 
up for lease 10 times, the entire thing, 10 times during that 
proposed 5-year plan, whereas today it is 5 times for the 
Western, 5 times for the Central, and twice for the Eastern.
    So, I think I am not as concerned about the number of sales 
as I am about what is available. And what is available is the 
entire Gulf of Mexico. Similarly----
    Mrs. Lummis. OK, let me switch, can I switch to the 
Atlantic?
    Ms. Hopper. Of course.
    Mrs. Lummis. OK. Was the decision to offer only one lease 
sale in the Atlantic based in part on estimates of undiscovered 
technically recoverable resources?
    Ms. Hopper. I think the decision to offer one lease sale in 
the Atlantic is predicated on the fact that that is a frontier 
area. We have not had a lease sale there since 1983. As you 
said, we don't have a good understanding of what that resource 
is. And we thought sort of putting forward a strategic plan 
about understanding the resource, and then having a lease sale, 
was the most thoughtful and kind of considerate-of-the-process 
way to go forward.
    Mrs. Lummis. Is the data old?
    Ms. Hopper. Yes.
    Mrs. Lummis. From the Atlantic?
    Ms. Hopper. Yes, ma'am.
    Mrs. Lummis. Is it correct that most of that data was 
collected in the 1970s?
    Ms. Hopper. I believe the 1970s and the 1980s, yes.
    Mrs. Lummis. Now, one more question. I have time for one 
more.
    The second panel today will show that industry has 
expressed an interest in participating in more lease sales than 
you propose, including in the Atlantic. Considering that the 5-
year program is a ceiling on lease sales, and that you have the 
flexibility to postpone or cancel lease sales, wouldn't it make 
more sense to err on the side of more?
    Ms. Hopper. I think the draft proposed plan that we put out 
is the Secretary's and BOEM's best thought about the 
appropriate number of lease sales to have. We really looked at 
it from an acreage and a resource perspective, in that we 
didn't count the number of lease sales. That wasn't as 
important to us as the number of acres, over 300 million acres, 
as opening up the new area in the Atlantic, offering the entire 
region, the entire Gulf of Mexico numerous times. That was what 
we found persuasive.
    Mrs. Lummis. Thank you, Mr. Chairman. I yield back.
    Dr. Fleming. OK, the gentlelady yields back. The Chairman 
recognizes Mr. Gallego for 5 minutes.
    Mr. Gallego. Thank you, Mr. Chair.
    Director Hopper, this is going to fall a little, I think, 
along the questioning of Congressman Lowenthal; how many 
millions of acres of leases do we currently have that aren't 
actually producing oil right now?
    Ms. Hopper. OK. It is going to require me to do one quick 
thing of math. So we currently have----
    Mr. Gallego. Round about, yes, OK.
    Ms. Hopper [continuing]. About 24 million acres are leased 
but not currently producing.
    Mr. Gallego. Any idea how many years those acres have been 
leased and have not been producing?
    Ms. Hopper. You know, I don't have it. By statute, our 
lease terms are 10 years.
    Mr. Gallego. Ten years, OK.
    Ms. Hopper. I don't have it sort of blocked out, when each 
of those came into lease.
    Mr. Gallego. And I guess I am going to take the contrarian 
point of view from the rest of the committee here, except for 
Ranking Member Lowenthal. But, in my opinion, the demand for 
oil is going to go down, not up, in the near future. But it 
seems like, instead of trying to compensate for that, what we 
are doing is actually putting out more acres for lease, with no 
guarantee that they would actually start producing at any 
point.
    Is there any thought process to do some rollbacks in the 
future, especially considering that it seems that we are going 
to have a drop in demand, at least for the next 2 years, when 
it comes to the oil price?
    Ms. Hopper. Well, as I mentioned, the OCSLA, the Outer 
Continental Shelf Lands Act, is the statute that guides what 
BOEM does. And we have a statutory obligation to expeditiously 
make available acres for lease. So, I think it is important 
that we offer as many acres that we think balance the 
environmental, economic, and sort of human aspects of all of 
that.
    So, I think we need to continue to do that. But industry 
will, obviously, make a decision, first of all, about what they 
lease in the first place, and then what they develop. The only 
caveat I would point out about kind of producing versus not 
producing is that there is a fair amount of activity that can 
happen before something is producing. So there is geophysical 
and geotechnical surveying happening that is an important 
element of the development process. It doesn't quite get 
captured in the development category.
    Mr. Gallego. I yield back my time.
    Ms. Hopper. Thank you, sir.
    Dr. Fleming. The gentleman yields back, and Mr. Mooney is 
recognized.
    Mr. Mooney. Thank you, Mr. Chairman and Director Hopper.
    So, first question is, while I understand you cannot add 
areas to the existing plan once drafted, can you clarify, 
however, that under the Outer Continental Shelf Lands Act, that 
you do have the authority to add lease sales to the proposed 
areas that are currently being scoped?
    Ms. Hopper. I do not believe that is so. I think we cannot 
offer lease sales.
    Mr. Mooney. OK. And then, additionally, would you be able 
to, or are you able to, move up the lease sales that are 
scheduled? For instance, moving up the Atlantic lease sale to 
an earlier date than 2021, like it is scheduled now?
    Ms. Hopper. I do believe we have the discretion to change 
the timing.
    Mr. Mooney. OK. For those acres that are leased, but with 
no activity, does the Federal Government receive money for 
those acres?
    Ms. Hopper. Excuse me, yes. There are rental payments.
    Mr. Mooney. OK. As BOEM has noted in the past, there is no 
evidence of seismic surveying causing harm to marine mammals. 
In fact, the acquisition of seismic data could be beneficial in 
generating increased revenue into the Federal Treasury in the 
form of bonus bids, should the data show that more resources 
may exist in new acreage such as the Atlantic.
    So, can you explain where the seismic permits are in the 
process, and, for example, why none have yet been approved?
    Ms. Hopper. Certainly. So, I think it is important to sort 
of take a moment and understand that, as I said earlier, the 
Atlantic really is a frontier area.
    Mr. Mooney. OK.
    Ms. Hopper. I don't think it is a good analogy to say, 
``Well, everything is happening in the Gulf of Mexico 
seamlessly. Why can't you just sort of transplant that whole 
structure here, to the East Coast? ''
    So, we have taken a thoughtful and careful look, and are 
developing the regulatory pathway for those G&G permits, which 
has meant that all of the states up and down the East Coast, 
under the Coastal Zone Management Act (CZMA), have the right to 
take a look at those. NOAA said, ``Yes, you can take a look at 
those'' in November of last year. My understanding is that the 
permittees transmitted that information to the states in 
January or February. They have a 90-day period. So those should 
be coming back to NOAA soon for the CZMA review.
    We, at the BOEM side, have really taken seriously our 
obligation to engage stakeholders, as states all up and down 
the East Coast look at both seismic surveying and then perhaps, 
ultimately, oil and gas development that they may have never 
considered before. We have held public meetings in those 
states. I think there are eight of them, total. We have done 
six, we have two more left that will be done in the next week 
or so, and we have invited public comment on those permits.
    So, what is happening right now is that we are finishing up 
the public comment period. We will incorporate those into the 
environmental assessment. The Department of Defense plays a 
role in taking a look at those permits. Obviously, the ocean is 
a busy place; NASA also takes a look.
    There is a clear trajectory toward permit either approval 
or disapproval, but it sort of has an Eastern Seaboard gloss to 
it, if you will. I think that this will not always be the case. 
I think, as our citizens sort of have a better understanding of 
the process and what is out there, I think it will go more 
quickly. But we really did have to create something unique for 
the East Coast.
    Mr. Mooney. OK. Thank you, Mr. Chairman. No further 
questions.
    Dr. Fleming. The gentleman yields back. Mr. Costa is 
recognized for 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman. I guess I am 
having this feeling, as a famous American baseball player, Yogi 
Berra, once said, ``It is deja vu all over again.'' We had this 
hearing in 2007, I guess two programs ago, but it is always 
good to get updated. And the challenge, I really think, here is 
always striving to get a balanced energy program in this 
country. And I observe from administration to administration, 
going back to the previous administration and the one before 
that, that balance is oftentimes in the eye of the beholder.
    But, clearly, what has been lacking that I think maybe we 
are getting better at, is the interim and the long-term view of 
America's energy needs. When I first took office 11 years ago, 
we were importing over 60 percent of our energy needs. Today it 
is a little over 40 percent of our energy needs. That is 
significant in 11 years. And if we continue on this pattern of 
these leases that I think are available to us off the Atlantic, 
as well as off the coast of Alaska, and other energy sources, 
both domestic that are inland, I think, with a balanced 
approach, we can get to probably a little over 20 percent of 
our energy needs.
    Have you made projections, Director Hopper, in terms of the 
glide path on if these leases are utilized, the best estimates, 
in terms of, for example, what is available on the Atlantic 
leases on the areas that are shaded, coupled with those off 
Alaska, where this might put us, in a 10-year projection?
    Ms. Hopper. We have certainly done a resource 
characterization, and have estimates about how many billion 
barrels of oil equivalent are in the areas, in each of the 26 
planning areas. I have to admit, I don't have them memorized.
    But we think there are significant resources off Alaska----
    Mr. Costa. No, we know there are.
    Ms. Hopper. Right.
    Mr. Costa. Right. I mean there are significant resources 
off of California, but they are difficult to get, for a lot of 
reasons.
    Ms. Hopper. I apologize, perhaps I did not understand your 
question.
    Mr. Costa. Well, no, I am trying to understand if these 
leases are developed and utilized over the course of the next 
10 years, how much do you believe that will further reduce 
America's dependency on foreign sources of oil or gas.
    Ms. Hopper. Oh, I got it, sorry. So----
    Mr. Costa. I mean we went from 60 percent plus to a little 
over 40 percent.
    Ms. Hopper. Right.
    Mr. Costa. I am trying to figure out how long it will take, 
under what is available, for America's energy companies to 
reduce that dependency further.
    Ms. Hopper. Right. So my understanding is that yes, we have 
taken a look at that. And, in combination with the Energy 
Information Administration, they released----
    Mr. Costa. Right.
    Ms. Hopper [continuing]. Their analysis yesterday.
    Mr. Costa. No, I know you coordinate.
    Ms. Hopper. Right, right. They (a) project that the oil 
production on the Outer Continental Shelf will continue to rise 
over the next 5 years and that (b) we will be a net exporter of 
energy in the near term, and I think those two things go 
together.
    I don't have, perhaps in my huge DPP there is a technical 
analysis of exactly that, but I think, sort of on the broad 
brush, yes, the increased oil production that will happen on 
the Outer Continental Shelf under this leasing plan will 
decrease our imports of oil.
    Mr. Costa. No, and I think it is really incumbent, 
notwithstanding different political points of view, that we try 
to find a bipartisan agreement on where we go in the next 10 
years, energy companies need time to plan, invest.
    Ms. Hopper. Right.
    Mr. Costa. These are not inexpensive areas in which to 
extract energy. Clearly, it has tremendous geopolitical 
impacts, as it relates to ourselves, our involvement in the 
Middle East and elsewhere, as well as to our European allies. 
And Congress has to contemplate what we do with the exportation 
of potentially, as an example, natural gas, which would be, I 
think, a significant game-changer in Europe, with the irascible 
Putin and his own energy policy.
    So, this is all important. I think we need to continue to 
strive in the direction we are going. Some can argue we are not 
going fast enough, some can argue that it is about right, some 
will say we are going too fast. But, clearly, the direction is 
in the right point.
    Mr. Chairman, I have expired my time. But I thank you for 
continuing to provide this update.
    Ms. Hopper. Thank you, sir.
    Dr. Fleming. The gentleman yields back. Mr. Wittman is 
recognized for 5 minutes.
    Dr. Wittman. Thank you, Mr. Chairman. Director Hopper, 
thank you so much for joining us. I want to get right to the 
draft 2017-2022 proposed energy development plan issued by the 
Department of the Interior.
    There still seems to be a lot of uncertainty and caveats 
there about, the Department has still said that they are 
continuing to consider areas to be included or not included in 
that plan. As you know, in Virginia, there is broad bipartisan 
support for offshore energy development off of Virginia. 
Governor McAuliffe, Senators Kaine and Warner and the vast 
majority of the Virginia Congressional Delegation feel very 
strongly that we ought to be able to develop Lease 220 as part 
of that OCS effort.
    As you know, both the Department and BOEM, we want to make 
sure that, in the development of that plan, and with the 
finalization of that plan, that you keep in mind the broad 
bipartisan support in Virginia, and we can count on Virginia's 
area on the Outer Continental Shelf being included in the 
finalized plan for not just energy exploration, but energy 
development.
    Ms. Hopper. Right. I will give you perhaps what you will 
find is the same unsatisfactory answer that my Secretary gave 
you, which is that we can't make any guarantees at this point, 
that the statute really does lay out a deliberative process by 
which we evaluate this. But I can tell you, obviously, as you 
know, sort of the input of governors and of state leaders like 
yourself, Federal leaders like yourself, is one of the factors 
that we consider in evaluating that.
    So I will assure you that that will continue to be an 
important factor.
    Dr. Wittman. Let me ask this, too. I know that last year 
there was a request for information put out by BOEM, and 
Governor McAuliffe was very direct in asking the agency to 
consider the history of the uncertainty that is being created.
    As you know, Lease 220 was included in 2006 in the 5-year 
plan, only to be removed in 2010. Obviously, that uncertainty 
creates a lot of problems. Now, potentially, Virginia and Lease 
220 wouldn't be included in a plan until 2021, 15 years later. 
Obviously, lots of lost opportunity, lost investment. We 
believe, in Virginia, that it can create over 25,000 new jobs. 
We have a facility located there in Virginia that if, at the 
time, energy development was allowed, there was a refinery 
there on the shore that could take every bit of material, 
hydrocarbons, whatever it may be, oil or natural gas, and 
refine it. Unfortunately, that facility had to close. We still 
think that we can regenerate that facility.
    But the uncertainty there is of concern to all of us, and I 
wanted to make sure that, in the planning process, are there 
any plans to further limit what can be done there in Lease 220, 
or the decisions that are being made about the development of 
energy sources there? I know that, in sort of a back door way, 
the Department has said they will allow for exploration. The 
problem with allowing for exploration without the certainty of 
being able to develop energy resources there, you are not going 
to find people that are going to make that significant 
investment to do the exploration.
    So, is there going to be continuity in the Department's 
policy and process to make sure that not only is there 
exploration, but also certainty and development of energy 
resources there, in the OCS off of Virginia?
    Ms. Hopper. Yes. So I had the pleasure of being in Norfolk 
with your governor a couple of weeks ago----
    Dr. Wittman. Yes.
    Ms. Hopper [continuing]. Talking about offshore energy. And 
he clearly is an enthusiastic supporter of all forms. And we 
talked about this, and I understand, I really do, having 
represented private companies for a long time, that regulatory 
certainty and a clear path forward is very important. So, I 
think you will find, from our Department, a consistent method.
    As I said, it is our statutory obligation to take a very 
careful look. But, as I was talking with Congressman Mooney 
earlier about the G&G permits, this is not the Gulf of Mexico, 
this is the Eastern Seaboard, which just has a different 
character and a different familiarity. But as we sort of walk 
that path together, we will remain committed to both 
exploration and, if there are resources there, and the 
Secretary decides to hold a lease sale, then we are fully 
authorized to permit and develop it as well.
    Dr. Wittman. Well, I think there has to be that continuity 
there. Because, right now, the understanding is that 
exploration will take place sans the certainty of being able to 
develop that. And there is not a single company that is going 
to go to their shareholders and say, ``We are going to invest 
money into an area of exploration where we have no certainty 
about being able to develop.''
    So, I think that continuity is critical in the plan there, 
in making sure that when it comes to our state officials, and 
our governor, and the things that they are doing, that 
certainty is critical, not only for the state, but also here at 
the national level, as we try to put together some type of 
energy policy.
    So, I would implore you to make sure that you provide that 
certainty, timeliness in the decision, and certainty as far as 
the definition of the decision. You know, uncertainty or 
vagueness in the decision is not going to get us to the point 
of having that investment that we need.
    So, thank you, Mr. Chairman. With that, I yield back.
    Ms. Hopper. I understand, thank you.
    Dr. Fleming. The gentleman yields back. And I believe Mr. 
Lowenthal would like to be recognized for 30 seconds.
    Mr. Lowenthal. Yes, I just want to introduce into the 
record a letter from marine scientists, over 70, of which, 
interestingly enough, 7 of them, 3 from Duke University, 2 from 
University of North Carolina, 2 from East Carolina University, 
are united in their concerns over the introduction of seismic 
oil and gas exploration along the U.S., Mid-Atlantic, and 
Atlantic coasts. They think it represents a significant threat 
to marine life. I just want to introduce that into the record.
    Dr. Fleming. OK. And if there are no objections, so 
ordered.
    Well, Director Hopper, we thank you for your testimony and 
taking our questions. And we may want to submit further 
questions in writing, and would like to have a response for 
them. Thank you for your work today.
    Ms. Hopper. Thank you very much.
    Dr. Fleming. And you are excused. Thank you.
    The Chair would then like to call forward Mr. Mark Shuster, 
Executive Vice President, Upstream Americas Exploration, Shell 
Oil Company; Mr. Robert Hobbs, Chief Executive Officer, TGS; 
Mr. Chett C. Chiasson from Greater Lafourche Port Commission. 
Mr. Chiasson, am I saying that correct? I have to change to my 
Louisiana diction. But I was trying to read the recreation of 
your name there, and it is a little different. Chiasson is what 
I am used to; and, Ms. Emilie Swearingen, Commissioner, Town of 
Kure Beach, North Carolina.
    Let me remind our witnesses today that you will each have 5 
minutes to give your testimony. If for some reason you don't 
get to all of your written testimony, it will all be submitted 
in the record, so don't worry about that. You have 5 minutes, 
and you will be under a green light for 4, then the yellow 
light for 1 minute. When the red light comes on, it is time to 
wrap it up quickly.
    So we thank you, again, for being here for testimony.
    Therefore, the Chair now recognizes Mr. Shuster to testify 
for 5 minutes.

 STATEMENT OF MARK SHUSTER, EXECUTIVE VICE PRESIDENT, UPSTREAM 
            AMERICAS EXPLORATION, SHELL OIL COMPANY

    Mr. Shuster. Good morning, Chairman Lamborn, Ranking Member 
Lowenthal, and members of the committee. Thank you for the 
opportunity to testify today to examine Outer Continental 
Shelf, OCS, exploration and production, and why it is important 
for our country.
    Shell commends DOI's careful analysis in the draft proposed 
program, the DPP. The document illustrates the potentially 
enormous oil and gas resources in the OCS which deserve 
thoughtful and serious evaluation.
    There are two important changes that should be made to the 
proposed program. First, it should include more areas in the 
Eastern Gulf of Mexico. And, second, there should be more lease 
sales in the Atlantic. With these changes, the plan will 
attract the capital necessary to develop the offshore resources 
and meet the Nation's future energy needs.
    The Gulf of Mexico has been important for the United 
States, both for energy security and revenue generation. Shell 
has been operating in the Gulf of Mexico for more than six 
decades, and produces approximately 228,000 barrels of oil 
equivalent each day, Shell's share, from the basin. But 
production in the Gulf will begin to decline in the latter part 
of this decade. In light of this decline, the proposed program 
plays a critical role in determining how domestic offshore 
production will evolve, and what role it will play in 2030 and 
beyond.
    So, let me make my two points. First, the proposed program 
must include access to broad areas of the OCS. Why? Because not 
every lease has oil and gas. And, even where oil or gas is 
found, it may not be economic to produce. As an industry rule 
of thumb, it takes about 100 OCS lease blocks to get 10 
drillable prospects. And of these 10 prospects, only 1 will be 
a commercial discovery.
    The DPP does include new areas in the Mid- and South 
Atlantic region. This is good. The area holds an estimated 9 
billion barrels. The key acreage in the Eastern Gulf of Mexico, 
which also holds an estimated 9 billion barrels, was excluded 
from the plan. These Eastern Gulf areas are not only rich in 
resources, they are also adjacent to existing infrastructure. 
In order to properly study and evaluate this area, the proposed 
program should be revised to include Eastern Gulf acreage. 
Specifically, the DOI should do what it did in the 2010 plan. 
It should include the Eastern Gulf areas, contingent on 
Congress lifting the moratorium.
    Second, the government should include more lease sales in 
the proposed program, and more sales early in the 5-year 
program. Why? Because evaluation of lease prospects is a 
lengthy process. Also, it can take 10 years or more from 
drilling an exploration well to first oil production, 
especially in new areas like the Atlantic.
    Companies will invest in the OCS only if the United States 
has policies that encourage it. Access to perspective acreage 
and regular, frequent lease sales through a robust proposed 
program are critical. It is important to recognize that other 
countries with offshore oil and gas resources are actively 
inviting such investment. In this hemisphere, from Canada to 
Mexico to Brazil, countries are competing for private 
investment to develop their resources and realize the benefits 
of energy security, jobs, and economic growth.
    When companies like Shell make decisions about where to 
invest and explore, each opportunity is weighed against others. 
If the United States adopts policies that prematurely remove 
areas and limit leasing opportunities, it will diminish our 
country's competitive edge for decades to come.
    In conclusion, new OCS production affords our country with 
a bountiful opportunity. To that end, the 2017-2022 proposed 
program should include more areas in the Eastern Gulf, and 
earlier, and more frequent lease sales in the Atlantic. This 
will attract the capital needed to develop the offshore 
resources, and contribute to energy security for future 
generations. It will positively impact our country in 2030 and 
beyond. Thank you very much.
    [Slide]
    Mr. Shuster. I would also like to point out we have a 
graphic on the screen there that shows the areas that are open 
for leasing offshore along the Atlantic margins. And the only 
areas that are not shown there are the Atlantic margin and the 
Eastern Gulf of Mexico.
    [The prepared statement of Mr. Shuster follows:]
Prepared Statement of Mark Shuster, Executive Vice President, Upstream 
                Americas Exploration, Shell Oil Company
                              introduction
    Mr. Chairman and members of the subcommittee, I would like to thank 
you for having this hearing to examine the Outer Continental Shelf 
(OCS) and the role it can play in helping America meet its energy needs 
and for inviting me to participate in the hearing to give an industry 
perspective examining the future impacts of President Obama's Offshore 
Energy Plan.
    As Executive Vice President of Shell Exploration in the Americas, I 
lead a team of professionals who identify, invest in and explore for 
oil and gas resources. I have worked in the Exploration and Production 
industry for almost 30 years, and spent some of that time studying the 
U.S. Atlantic and Eastern Gulf of Mexico's resource potential. I can 
give an informed view of the these offshore areas, and also discuss why 
the Proposed Program should include more frequent and earlier lease 
sales in the U.S. Atlantic region and include more areas in the Eastern 
Gulf of Mexico that are adjacent to and on trend with existing 
infrastructure and production.
    Shell appreciates and commends BOEM's careful analysis in the Draft 
Proposed Program (DPP). It clearly demonstrates the OCS's potentially 
enormous economic and energy value to the Nation, which deserves a 
careful and serious evaluation in the ongoing 5-year planning process.
    This hearing is timely and, some might even say, urgent. Producing 
our natural resources doesn't happen overnight--we need to plan for 
production decades in advance. Today we are realizing the economic 
benefits from abundant domestic energy production that is possible 
because of decisions that were made years ago. We must continue to make 
decisions today that will allow us to continue to realize these 
benefits for generations to come.
    World energy demand will double in the next 40 years. This demand 
can only be met if all sources of energy and efficiency are accessed. 
We cannot ignore that oil and gas will play a major part in meeting 
America's energy needs for decades to come.
    As a responsible integrated energy company, Shell recognizes that 
access alone will not solve our energy challenges. We also need 
alternatives, renewables and effective mitigation technologies. 
However, the United States has vast oil and gas resources on the OCS--
much of which remains under-evaluated and inaccessible.
    Access to our natural resources will contribute to U.S. energy 
security and economic health by creating U.S. jobs, revenue, and energy 
security.
    Based on the Bureau of Ocean Energy Management's assessment, the 
Mid- and South Atlantic contains a resource potential of about 9 
billion barrels, and the Eastern Gulf of Mexico holds about the same 
amount. Innovation and technology advances have accelerated exploration 
and production in deep water areas around the world, including in the 
Gulf of Mexico, however, deep water exploration has yet to start in the 
U.S. Mid- and South Atlantic and in the Eastern Gulf of Mexico. 
Therefore, the socio-economic benefits from development of those areas 
are unrealized and will remain unrealized without a change in policy.
    A critical step to including the Eastern Gulf of Mexico in the 5-
year program is to ensure that the required Environmental Impact 
Statements cover the Eastern Gulf of Mexico as well as the planned Mid- 
and South U.S. Atlantic areas. The government must also move quickly to 
approve seismic permits so that new resource data can be collected. 
Seismic acquisition, properly mitigated, causes no harm to marine 
animals. Enacting Federal Revenue Sharing legislation which allocates 
bonus and royalty revenues to those coastal states with existing or 
planned offshore development is also an important and necessary step 
forward. This has been done successfully in the Gulf of Mexico.
    Today, deep water exploration and production in the Gulf of Mexico 
follows the principle of multi-use--that is sharing waters with fishing 
and shipping interests and others, while maintaining safety and 
environmentally sound practices. Oil and gas exploration and production 
can be conducted safely, which the industry has demonstrated over the 
last several years with support and oversight from the Bureau of Safety 
and Environmental Enforcement.
    The record clearly shows that offshore development can occur in an 
environmentally responsible way. We should demand no less.
    There are those who suggest a ``do nothing'' approach to OCS 
development is the best choice. Perhaps they have an outdated view of 
how the oil and gas industry operates today. We do not have to choose 
OCS development or the environment. We can safely access OCS resources 
and be good environmental stewards.
    I am hopeful that this hearing will advance discussions so we can 
come together around the facts, reject the myths and move forward on 
solutions that will help sustain our Nation's future energy supply 
while fueling economic growth.

    Today I will discuss three major points to highlight why new areas 
of the OCS should be made accessible for exploration.

     First, the vast U.S. oil and gas resources that can and 
            must play a critical role in meeting future energy demand 
            and in fueling the economy;

     Second, the oil and gas industry's ability to co-exist 
            with other interests in our oceans; and

     Third, the renaissance of activities by other countries to 
            secure investment in their OCS programs.

                              about shell
    Before addressing these points, let me provide some background 
information about Shell. We are an integrated oil and gas company, 
dedicated to meeting ever-growing energy needs efficiently and 
responsibly. Shell is one of the largest leaseholders in the OCS and 
one of the largest producers of oil and natural gas from Federal OCS 
leases in the United States. In the Gulf of Mexico, Shell currently 
operates seven major floating offshore facilities, (six deep-water 
tension-leg platforms and one ultra-deep-water spar platform); five 
fixed-structure facilities and platforms; numerous subsea production 
systems; as well as one of the largest contracted drilling rig fleets 
in the Gulf. We are also part owner of four producing projects in the 
Gulf operated by other oil and gas companies. Shell puts safety, 
sustainability, the global search for viable new energy sources, and 
innovative technologies at the heart of how we do business.
    We have a robust portfolio in the Americas that consists of 
offshore and onshore exploration and production, unconventional 
resource development, oil products manufacturing and distribution, 
chemicals, LNG, hydrogen and renewables, including wind and biofuels.
                          global energy demand
    The world must grapple with the reality that global energy demand 
is projected to increase by roughly 50 percent over the next 20 years 
and could double by 2050. As the global recession continues to fade and 
economies recover, demand will accelerate. A key driver of increased 
demand will be strong economic growth and an enormous, emerging middle-
class in developing nations.
    To address this demand, we will need all sources of energy--oil and 
natural gas, alternatives, renewables--and significant progress in 
efficiency. Oil and gas will be the dominant energy source for decades. 
Renewables and energy efficiency will play an ever-larger role, but 
still not large enough to meet demand independently.
    Shell is actively pursuing research and development into next-
generation biofuels. We also have a wind business in North America and 
Europe.
    Future growth for alternative energy forms will be paced by the 
speed of technological development, public and private investment 
capacity, government policies, and the affordability of energy supply. 
Still, it takes several decades to replace even 1 percent of 
conventional energy with a renewable source. The effort to tip the 
scale toward more renewable sources of energy is worthwhile; however, 
even unprecedented growth in renewables would leave an enormous energy 
gap that must be filled with reliable oil and gas energy sources.
    Governments have a role to play in enacting policies that will 
foster a viable, efficient and workable marketplace that allows 
technology and innovation to move forward. Industry--and most 
particularly the energy industry--has an important role to play as well 
in co-creating solutions to continue to improve industry standards and 
operations, and operate in an environmentally sustainable way.
              benefits of domestic oil and gas development
    The Gulf of Mexico has been a critical component of this country's 
energy supply for decades; however, oil and natural gas production in 
the Gulf will begin to decline in the latter part of this decade. In 
light of this decline, the Proposed Program plays a critical role in 
determining how domestic offshore production will evolve and what role 
it will play in 2030 and beyond.
    Shell had hoped additional new areas would be considered and 
studied in the DPP. The DOI's decision to prematurely defer areas seems 
contrary to the OCS Lands Act directive to ``make resources available 
to meet the Nation's energy needs,'' and ``to insure the extent of OCS 
resources is assessed at the earliest practicable time.'' The limited 
nature of the proposal also conflicts with the DPP's general conclusion 
that, with the advent of new safety measures adopted by government and 
industry, ``offshore oil and gas development can be conducted safely 
and responsibly.''

    This country's OCS areas can help meet future energy demand and 
drive economic growth and prosperity.

     Global demand for energy will continue to grow, and 
            existing and developing energy sources may well struggle to 
            keep up with this increased demand.

     The United States has immense oil and gas resources on the 
            Outer Continental Shelf, and it is within the government's 
            ability to further reduce imported energy with more 
            domestic supplies.

     Domestic oil and gas production provides energy security, 
            creates jobs, generates Federal revenue, and drives 
            economic stability.

    A 2011 study by Wood Mackenzie shows that developing the ``off 
limit areas'' in the United States could:

     Create more than 1 million new jobs; and

     Generate $127 billion in new government revenue by 2020.

    An estimated 9.2 million people are directly or indirectly employed 
in the domestic oil and gas industry. This makes the industry one of 
the largest employers in the Nation. The industry has some of the 
highest paying jobs in the United States, about two times the national 
average. A growing oil and gas sector has a positive impact on many 
other sectors of the economy, such as iron and steel, aviation, 
electronics, agriculture, construction, chemicals, plastics, marine 
vessels, telecommunications, manufacturing, trucking and 
transportation. Most of these industries have expressed their support 
for expanded access to the OCS.
    Every U.S. president over the last 40 years has encouraged 
Americans to become less dependent on foreign oil through conservation 
and alternative fuels. Today, breakthroughs in technologies and 
processes enable the industry to take advantage of our energy resources 
like never before, and using them to access the resources contained 
within the OCS will help our country achieve that goal.
    According to General James Jones, Former National Security Advisor 
to President Obama, ``A nation that fails to secure the energy its 
citizens and its economic engine need to keep functioning leaves itself 
vulnerable to external contingencies in a dangerous and uncertain 
world, and to the whims of foreign leaders and other actors who many 
not always have its interests at heart.''
    Domestic energy production is critical for the security and 
prosperity of the United States. Money spent on domestic energy 
circulates in the U.S. economy, and increases domestic economic 
activity and jobs. OCS activity will also help address our national 
debt, bringing in hundreds of billions in Federal revenues through 
taxes, royalties from oil and gas production and the economic activity 
that is stimulated as a result of exploration and development.
                      competing with other nations
    As the United States ponders future development of its OCS 
resources, other countries fortunate enough to be situated on the 
Atlantic coast are rapidly moving forward seizing opportunities. Most 
of them--in fact almost all of them--are actively exploring or 
preparing to explore for oil and gas off their coasts.
    In this hemisphere, from Canada to Mexico to Brazil, countries are 
competing for private investment to develop their resources and realize 
the benefits of energy security, jobs and economic growth. When 
companies like Shell make decisions about where to invest and explore, 
each opportunity is weighed against others. If the United States adopts 
policies that prematurely remove areas and limit leasing opportunities, 
the U.S. diminishes our country's competitive edge for decades to come.
    As you can imagine, the current price environment has the industry, 
including Shell, taking a very hard and strategic look at exploration 
activities and budgets. Decisions about where to explore are carefully 
weighed against other global opportunities, and restricting areas in 
the United States diminishes our country's competitive edge when 
compared to other nations. One example is in Nova Scotia, Canada, where 
about 3 years ago, offshore lease blocks were made available. Shell 
evaluated its global prospects and decided to compete for those 
licenses. We currently plan to invest $1 billion in seismic, research, 
exploration and development of the licenses. Since the U.S. Atlantic 
was not available in the U.S. leasing program, investing the dollars in 
the United States was never factored into the 15-year investment 
decision we made on the Canadian licenses.
    The Gulf of Mexico has kept the United States globally competitive 
for decades. The U.S. stands to lose a lot if we don't make new acreage 
available.
    Success in the Gulf of Mexico has been due in part to reliable and 
predictable access to new acreage over time--and the same consistency 
is needed in the Atlantic, Eastern Gulf of Mexico and other areas of 
the OCS.
                       offshore safety standards
    Shell has demonstrated, in the Gulf of Mexico and elsewhere, that 
it can produce oil and gas safely and efficiently. Advanced 
technologies continue to help us produce more with a smaller 
environmental footprint. Technology enables us to find and produce oil 
and gas farther from shore and at greater depths.
    Since 2010, new regulatory requirements have raised the bar on 
safety and industry has made substantial changes in its operations to 
meet them. There is no question the industry must be held to the 
highest standards both for protecting the environment and protecting 
the health and well-being of our workers and the communities in which 
we operate.

    Let me highlight some of the progress made by the Federal 
Government and industry:

     The Final Drilling Safety Rule is focused on minimizing 
            the likelihood of an incident and addresses barriers that 
            should be in place to prevent a hazard. Prevention is a top 
            priority.

     Responding to an incident, should one occur, has been 
            substantially enhanced with new, more stringent 
            requirements for containment capability. The Marine Well 
            Containment Company (MWCC), which Shell initially formed in 
            partnership with three other oil and gas companies, is 
            designed to do just that. The MWCC is a stand-alone 
            organization committed to improving capability for 
            containing a potential underwater well control incident in 
            the Gulf of Mexico.

     The Center for Offshore Safety has been created to promote 
            the safety of offshore operations and complements the 
            government's regulatory role. The Center will provide an 
            effective means for sharing best practices. Members will be 
            subject to independent, third-party auditing and 
            verification. The Center will operate around an existing 
            safety framework known as RP75, or ``Recommended Practice 
            for Development of a Safety and Environmental Management 
            Program for Offshore Operations and Facilities.''

     The industry has also significantly increased its 
            resources to respond to a major oil spill by adding 
            vessels, equipment and personnel.

    In addition to meeting regulatory requirements, a company must 
relentlessly foster and promote safety every single day. At Shell we 
call this Goal Zero. Everyone who works for us--both employee and 
contractor--is expected to comply with the rules; intervene when 
anything seems unsafe; and respect people, the environment and our 
neighbors. Compliance is not optional.
    We have personal safety systems and procedures with clear, firm 
rules; simple ``do's and don'ts'' covering activities with the highest 
potential safety risk. We take this very seriously in every situation--
from prohibiting our employees and contractors from using mobile phones 
in any way, shape or form, while they are driving, to obtaining 
authorization before entering a confined space. We're very clear about 
these rules and people who cannot comply with our ``Life Saving Rules'' 
do not work for Shell.
    We also have process safety systems in place to manage the safety 
and integrity of our operations and assets. Process safety is also 
managed through a variety of tools, such as well and facility design 
standards; established ``operating envelopes''; maintenance and 
inspection intervals for safety critical equipment; and effective 
Management of Change processes.
    Our approach also requires that all our drilling contractors 
develop a Safety Case to demonstrate how major risks are properly 
managed. A Safety Case shows how we identify and assess the hazards on 
the rig; how we establish barriers to prevent and control the hazards; 
and how we assign the critical activities needed to maintain the 
integrity of these barriers. Further, it guides the rig and crews in 
risk management; and requires and confirms that the staff has the 
appropriate training and meets Shell's required competencies.
                a robust regulatory process is critical
    Shell fully supports a robust permitting process. The bar for 
conducting safe and responsible operations is high in oil and gas 
exploration, and it should be. Shell fully understands and supports 
this.
    We need a regulatory framework that is clear; and a regulatory 
process that is properly funded, efficient and robust. The process 
should lead to timely decisions, not ``just-in-time'' decisions. At the 
same time, permitting for oil and gas activity must be done thoroughly 
and based on sound science. Without that, legal challenges are likely 
and can also act to block a program.
                recommendations: how do we move forward?
    There is no question the Federal Government has a critical role to 
play as a steward of our oceans. It also has a role to play in 
supporting the OCS leasing program and the sustainable development of 
our natural resources--as does the industry. To that end, Shell 
respectfully offers the following recommendations for your 
consideration:

     The U.S. Department of the Interior should include more 
            lease sales in the Proposed Program for frontier areas, 
            like the Atlantic, holding at least two lease sales--one 
            sale early in the Program and one later, will allow 
            companies to continue evaluating the resource in calculated 
            stages, which is a lengthy process. The DOI should now 
            schedule timely lease sales that will allow for prompt 
            exploration of these areas. Without that, the Nation will 
            be challenged to satisfy future energy needs and to advance 
            U.S. economic and national security interests. Decisions 
            about the 2017-2022 5-Year Program will impact this country 
            in 2030 and beyond.

     The Proposed Program must include access to broad areas of 
            the OCS because not every lease has oil and gas and even 
            where oil or gas is found, it may not be economic to 
            produce. Specifically, the DOI should do what it did in the 
            2010 plan--it should include the Eastern Gulf areas 
            contingent on Congress lifting the moratorium.

     Shell supports the proposal to offer all Gulf of Mexico 
            tracts twice a year. Such a proposal will provide 
            flexibility for both government and private industry to 
            respond to rapidly changing market conditions.

     Shell supports OCS revenue sharing for all states.

     Pursuing a serial exploration and appraisal program in a 
            frontier area requires reliable and predictable access to 
            new acreage over time. Shell encourages BOEM to issue a 
            Final Program that provides industry the necessary 
            certainty and predictability to support future OCS 
            exploration.

     Federal permitting agencies must coordinate and streamline 
            the permitting work. Multiple Federal agencies are now 
            involved in issuing multiple Federal permits for a single 
            offshore project. The regulatory process should not have 
            open-ended time frames that leave permit applicants without 
            a clear understanding of permit timelines. Rather, the 
            regulatory process should have firm timelines and clear 
            milestones marking the path to permit delivery.

                               conclusion
    Oil and gas will remain critical sources of energy for decades to 
come. Regardless of what projections you review, the country will rely 
on fossil fuels for more than 50 percent of its energy supply through 
2050 and likely beyond that point. Furthermore, there are broad and 
sustained benefits in developing our own domestic resources. By 
accessing our domestic resources, we will create jobs, power the 
economy, supply revenue to governments, and provide energy security. 
Keeping this economic value here at home, we can at the same time move 
forward with investments in the next generation of technologies and 
energy solutions that will power the future.

    Thank you. I am happy to answer any questions.

                                 ______
                                 

Question Submitted for the Record by Chairman Lamborn to Mark Shuster, 
  Executive Vice President, Upstream Americas Exploration, Shell Oil 
                                Company
    Question. The hearing delved into the promising resource potential 
that is currently off limits in the Eastern Gulf of Mexico Planning 
Area as a result of the Gulf of Mexico Energy Security Act of 2006. Can 
you provide further details, if available, on the potential economic 
and energy security benefits that would result from safe and 
responsible exploration and development in that area once the 
moratorium expires in 2022?

    Answer. Thank you Mr. Chairman for the question. The Gulf of Mexico 
has been important for the United States both for energy security and 
revenue generation. Shell has been operating in the Gulf of Mexico for 
more than six decades and produces approximately 150 million barrels of 
oil equivalent each year from the Western and Central Planning Areas. 
The EIA predicts the GOM production will increase by 265,000 barrels 
per day by the end of this year. However, the GOM production is 
expected to start declining in the latter part of this decade. As 
discussed at the hearing, being prepared for that decline means 
exploring for new resources today. Exploring and production is a long 
process. In the GOM, it takes approximately 10 years to go from a lease 
sale to production of first oil while in frontier areas like the 
Atlantic it will take longer, 15-20 years. Part of the reason for the 
different timelines is the proximity to existing infrastructure and 
certainty of the regulatory process.
    Our resource estimate for the Eastern Gulf of Mexico (EGOM) 
Planning Area is similar to that of the BOEM which in 2011 estimated 
the Barrels of Oil Equivalent of undiscovered technically recovered 
resources to be approximately 8 billion barrels. The EGOM is not only 
rich in resources, but also adjacent to existing infrastructure. This 
is important because the timeline for exploration and production of the 
EGOM will be similar to the other areas of the GOM, 10 years, instead 
of frontier areas, 15-20 years. Opening this area will also provide 
resources to fill the predicted decline, stable revenue sources to 
Federal and state governments, and economic and job security for those 
directly and indirectly working now in the GOM.
    In this hemisphere, from Canada to Mexico to Brazil, countries are 
competing for private investment to develop their resources and realize 
the benefits of energy security, jobs and economic growth. When 
companies like Shell make decisions about where to invest and explore, 
each opportunity is weighed against others. Having areas like the EGOM 
and Atlantic open for leasing will attract the capital needed to 
develop the offshore resources and contribute to energy security for 
future generations.

                                 ______
                                 

    Dr. Fleming. OK. Thank you, Mr. Shuster.
    The Chair now recognizes Mr. Hobbs for 5 minutes.

    STATEMENT OF ROBERT HOBBS, CHIEF EXECUTIVE OFFICER, TGS

    Mr. Hobbs. Chairman Fleming, Ranking Member Lowenthal, and 
members of the subcommittee, good morning, and thank you for 
giving us the opportunity to testify on the Administration's 5-
year plan. My name is Robert Hobbs, I am CEO of TGS, a company 
that provides geoscientific data products and services to the 
oil and gas industry here in the United States and around the 
world. I am the immediate past chairman of the International 
Association of Geophysical Contractors. I also serve on the 
Board of Directors for the National Oceans Industry 
Association.
    The energy resources of the Federal Outer Continental Shelf 
are vitally important to America's energy, economic, and 
national security. And the purpose of the 5-year plan is to 
provide a road map for the leasing of OCS areas. The 5-year 
plan provides the public, government, and industry with a 
measure of reliability and predictability in the leasing of 
offshore oil and gas resources.
    While seismic and other geophysical surveys are permitted 
through a separate process, these surveys provide information 
that is critical to a successful 5-year plan, improving the 
economics of oil and gas production, and, importantly, 
lessening its environmental impact.
    Before I outline how the geophysical sector fits into the 
plan, let me just spend a few moments explaining how we perform 
surveys, in this case, seismic surveys. And I will refer to a 
slide that will be projected on the monitors.
    [Slide]
    Mr. Hobbs. Geophysical surveys are the only feasible 
technology available to accurately image the subsurface before 
a single well is drilled. The use of modern seismic surveys is 
similar to ultrasound technology, a non-invasive mapping 
technique built upon the simple properties of sound waves. 
These surveys use acoustic sources to send sound energy deep 
into the earth's crust. As the sound waves return, we record 
them on hydrophones that may be towed up to 7 miles behind a 
survey vessel. The process allows us to record data to depths 
of 40,000 feet, and that is about 7\1/2\ miles below the 
earth's surface.
    However, the data still needs to be processed before it can 
be interpreted and potential oil and gas reserves can be 
identified. Geophysical companies like mine, and our customers, 
the oil and gas companies like Shell, use some of the most 
powerful computers in the world in order to perform that 
processing.
    [Slide]
    Mr. Hobbs. The next slide shows a seismic source. This 
seismic source itself looks like what you see on the monitor. 
It is simply a cylinder that is filled with air, which is then 
released under pressure. Depending on the size of the survey, 
several of these cylinders will be used in a synchronized 
manner. The sound itself lasts only about a tenth of a second.
    [Slide]
    Mr. Hobbs. The next slide, I know it is hard to read, but 
it will be submitted with my testimony. The industry utilizes a 
number of measures to reduce or eliminate any risk to marine 
life. As a result of these measures, BOEM has stated that there 
has--and this is quote from BOEM--``There has been no 
documented scientific evidence of noise from geological and 
geophysical, or G&G surveys, adversely affecting marine animal 
populations.''
    It is important that the committee understand that each 
step of the process--planning, permitting, acquiring, and 
processing the data--may take months.
    How does this all fit into the 5-year plan? BOEM needs 
geophysical data to assess and confirm the hydrocarbon resource 
potential in the OCS, and to ensure the government is receiving 
value on its lease bids. Industry needs the data to determine 
which lease areas are commercially viable. Modern seismic 
imaging reduces risk by increasing the likelihood that 
exploratory wells will successfully tap hydrocarbons, and 
decreasing the number of wells that need to be drilled in a 
given area, reducing the overall footprint for exploration. 
Most importantly, geophysical data acquisition and 
interpretation must take place long before a lease sale can be 
held.
    Interior Secretary Jewell has said the Administration wants 
to build up its understanding of resource potential on the 
Atlantic. Our surveys will provide that understanding. The need 
is pronounced: more than 60 percent of the Atlantic under 
consideration has never been surveyed. And the last survey of 
any of the potential lease areas took place in the 1970s and 
early 1980s. Compared to this level of detail that we can 
produce today, these surveys can be described, at best, 
primitive.
    [Slide]
    Mr. Hobbs. The next graphic shows an example of older 
technology versus the newer technology that we are able to 
provide now. The image on the left was produced from that 
earlier survey in the late 1970s, early 1980s. Yet it contains 
valuable information. But compare it to the image on the right, 
in this case, a modern 3D survey. Technological advances and 
the enormous strides in computing power tell us so much more 
than we could have imagined more than 30 years ago, when the 
older surveys were done. Very clearly, we need newer, better 
surveys to answer Secretary Jewell's call to build up our 
understanding.
    Unfortunately, the Administration's plans for an Atlantic 
lease sale have added a level of uncertainty to the process, 
because the first sale is not planned until 2021, and only one 
sale is scheduled. BOEM has lost any flexibility if the sale is 
postponed for any reason. The long wait will not encourage more 
thorough surveys. It creates an unnecessary level of 
unpredictability and risk.
    For this reason, we have encouraged the Administration to 
schedule an additional Atlantic sale for 2019, providing ample 
time to collect data and analyze the resource potential. At 
least 10 applications of geophysical surveys in the Atlantic 
OCS have been pending since BOEM completed its programmatic 
environmental review last July. We encourage the Administration 
to timely conduct the additional environmental reviews 
necessary to authorize these pending permit applications.
    Then, finally, the geophysical industry stands ready to 
provide government and industry with the information to make 
rational decisions, both economically and environmentally, on 
energy policy. The geophysical industry uses cutting-edge 
acoustic, geophysical, and computer technology to allow us to 
look miles beneath----
    Dr. Fleming. You are a minute over. I apologize.
    Mr. Hobbs. OK, that is fine.
    Dr. Fleming. We want to be sure we get to everyone, and I 
assure you, your entire testimony will be put into the record.
    Mr. Hobbs. Thank you.
    [The prepared statement of Mr. Hobbs follows:]
 Prepared Statement of Robert Hobbs, Chief Executive Officer, TGS, on 
behalf of the International Association of Geophysical Contractors and 
               the National Ocean Industries Association
    Chairman Lamborn, Ranking Member Lowenthal and members of the 
subcommittee, good morning and thank you for the opportunity to testify 
on the Administration's 5-year plan. My name is Robert Hobbs and I am 
the Chief Executive Officer of TGS, a company that provides 
geoscientific data products and services to the oil and gas industry 
here in the United States and around the world. I am the immediate past 
chairman of the International Association of Geophysical Contractors. 
IAGC's members provide geophysical services to the oil and natural gas 
industry. I also serve on the Board of Directors for the National Ocean 
Industries Association. NOIA is the only national trade association 
representing all segments of the offshore industry with an interest in 
the exploration and production of both traditional and renewable energy 
resources on the U.S. OCS.
    The energy resources of the OCS are vitally important to America's 
energy, economic, and national security, and the purpose of the 5-Year 
OCS Oil and Gas Leasing Program, or ``5-Year Plan,'' is to provide a 
roadmap for the leasing of OCS areas. The 5-Year Plan provides the 
public, government, and industry with a measure of reliability and 
predictability in the leasing of offshore oil and gas resources. While 
seismic and other geophysical surveys follow a separate permitting 
process, these surveys provide information that is critical to a 
successful 5-Year Plan, improving the economics of oil and gas 
exploration and production and, importantly, lessening its 
environmental impact. Without accurate surveys of the geological 
formations in the lease areas, exploration is a guessing game, like 
finding a needle in ten thousand haystacks. Before I outline how the 
geophysical sector fits into the plan, let me spend a few moments 
explaining how we perform surveys, in this case seismic surveys.
    Geophysical surveys are the only feasible technology available to 
accurately image the subsurface before a single well is drilled. The 
use of modern seismic technology is similar to ultrasound technology--a 
non-invasive mapping technique built upon the simple properties of 
sound waves. These surveys use acoustic sources to send sound energy 
deep into the earth's crust. As the sound waves return, we record them 
on hydrophones that may be towed up to 7 miles behind the survey 
vessel. This process allows us to record data to depths of 40,000 
feet--about 7.5 miles--below the earth's surface. (Exhibit A)
    However, the data still needs to be processed before it can be 
interpreted and potential oil and gas reserves can be identified. 
IAGC's members and their clients use some of the most powerful 
computers in the world in order to perform that processing.
    The acoustic source itself looks like this. (Exhibit B) It is a 
cylinder that is filled with air and which is then released under 
pressure, creating a seismic pulse. For the purposes of comparison, 
each cylinder releases an amount of air that you would find in a quart-
sized soft drink bottle and it is released at 2,000 psi, about the same 
pressure level that you would find in a home pressure washer. The sound 
itself lasts about a tenth of a second. Depending on the size of the 
survey, several of these cylinders will be used and released in a 
synchronized manner.
    We take seriously our responsibility to conduct our work with 
minimal impact on the environment and to protect marine life. Industry 
supports implementation of mitigation measures that are commensurate to 
the potential risk and supported by the best available science, and its 
members comply with mitigation and monitoring measures required after 
BOEM and NMFS conduct site-specific environmental assessments. The 
industry utilizes a number of measures to reduce or eliminate any risk 
to marine life. (Exhibit C) The potential impact of our operations on 
marine life is considered as a part of every permit to perform 
geophysical surveys. The Bureau of Ocean Energy Management reviews the 
daily reports of our activities offshore and has spent more than $50 
million studying the impact of surveys on marine life, especially 
marine mammals. Our industry has participated in additional research 
costing several more millions of dollars. As a result of these measures 
and based on careful review of research, BOEM has stated that ``To 
date, there has been no documented scientific evidence of noise from 
air guns used in geological and geophysical (G&G) seismic activities 
adversely affecting animal populations.'' \1\ The National Oceanic and 
Atmospheric Administration has also written within the last year that, 
``[T]here has been no specific documentation of temporary threshold 
shift (TTS) or permanent hearing damage, i.e., permanent threshold 
shift (PTS) in free-ranging marine mammals exposed to sequences of 
airgun pulses during realistic field conditions.'' \2\
---------------------------------------------------------------------------
    \1\ BOEM Science Notes, March 9, 2015.
    \2\ Environmental Assessment of an Incidental Harassment 
Authorization incidental to a National Science Foundation marine 
geophysical survey in the Atlantic Ocean off North Carolina, at 31 
(September 2014).
---------------------------------------------------------------------------
    The reason I have gone into this detail is to stress that each step 
of the process involves a high level of care, expense and, 
significantly, time. Each step--planning the survey, applying for the 
proper permits, performing the survey and then processing the data--may 
take months.
    How does this all fit into the 5-Year Plan? BOEM needs geophysical 
data to assess and confirm the hydrocarbon resource potential on the 
OCS and ensure the government is receiving market value on lease bids. 
Energy companies need the information to make informed decisions on 
what to lease and how to plan their drilling programs. Modern seismic 
imaging reduces risk by increasing the likelihood that exploratory 
wells will successfully tap hydrocarbons and decreasing the number of 
wells that need to be drilled in a given area, reducing the overall 
footprint for exploration. Ultimately it helps determine what areas are 
worth considering for exploration and what are not. In fact, surveys 
result in more areas being removed from consideration for drilling than 
actually being drilled--yet another way in which surveys are 
environmentally beneficial. Most importantly, geophysical data 
acquisition and interpretation should take place long before a lease 
sale can be held.
    A hundred years ago, wildcatters studied the land below their feet 
and made their decisions about where to drill based on rudimentary 
knowledge of geology, personal experience and large amounts of guess 
work. That is why old pictures of drilling fields show dozens of 
drilling rigs scattered over the horizon. Today, using quality 
geophysical surveys, energy companies can drill with an ever increasing 
sense of confidence that they have a high probability of finding 
recoverable hydrocarbons. Without surveys, offshore exploration would 
ultimately prove impractical.
    Interior Secretary Jewell has said the Administration wants to 
build up its understanding of resource potential in the Atlantic. Our 
surveys will provide that understanding. The need is pronounced. 
According to Professor James Knapp, PhD, of the University of South 
Carolina, who testified before this subcommittee in January of 2014, 
more than 60 percent of the Atlantic area under consideration for 
leasing has never been surveyed. And the last survey of any of the 
potential lease areas took place in the 1970s and early 80s. Compared 
to the level of detail that we can produce today, those surveys can be 
described as primitive.
    Here is one example. (Exhibit D) The image on the left was produced 
from that earlier survey. Yes, it contained valuable information, but 
compare it to the image on the right, in this case a modern 3-D survey. 
Technological advances and the enormous strides in computing power tell 
us so much more than we could have imagined when these areas were last 
surveyed more than 30 years ago. Very clearly, we need newer, better 
surveys to answer Secretary Jewell's call to build up our 
understanding.
    Unfortunately, the Administration's plans for an Atlantic lease 
sale have added a level of uncertainty to the process. Because the 
first sale is not planned until 2021 and only one sale is scheduled, 
BOEM has lost any flexibility if the sale is postponed for any reason. 
The long wait will not encourage more thorough surveys. It creates an 
unnecessary level of unpredictability and risk, and for this reason we 
have encouraged the Administration to schedule an Atlantic lease sale 
in 2019, providing ample time to collect and analyze the needed 
geophysical data. These concerns were outlined in joint trade 
association comments on the Draft Proposed Program.\3\
---------------------------------------------------------------------------
    \3\ ``The Associations feel that BOEM should reconsider its overly 
conservative decisions regarding potential Atlantic leasing. Scheduling 
only one lease sale in the Atlantic OCS and having the sale near the 
end of the program (2021) does not provide BOEM the flexibility 
required should the need arise to postpone the sale. Scheduling the 
sale in 2019 would provide ample time to collect and analyze the needed 
geophysical data, set the appropriate sale area, and hold the lease 
sale, it and would provide extra time that would allow BOEM to postpone 
the sale should there be any administrative delays. The Associations 
request that BOEM consider adjusting the lease sale schedule to have 
the Atlantic sale earlier in the program. In addition, the Associations 
requests BOEM consider adding another Atlantic Regional Sale to the 
DPP. Our recommendation would be to have one Atlantic Sale in 2019 and 
another in 2021 or early 2022.'' March 30, 2015 letter to the docket 
signed by IAGC, NOIA, API, IPAA, U.S. Oil & Gas Association, AXPC, PESA 
and AOGA.
---------------------------------------------------------------------------
    We also believe it is important that the agencies streamline the 
process of obtaining permits to perform geophysical surveys of the Mid- 
and South Atlantic OCS. The current process is estimated to take more 
than a year to accomplish. At least 10 applications for geophysical 
surveys in the Atlantic OCS have been pending since BOEM completed its 
programmatic environment review last July. We encourage the 
Administration to timely conduct the additional environmental reviews 
necessary to authorize these pending permit applications.
    We should also stress that the information that surveys provide on 
the potential resources are important for the long-term development of 
the Southeast. Just as offshore exploration and production require long 
lead times, regional development also is a long-term commitment. 
Businesses look for factors like inexpensive sources of energy that 
they can rely on many years down the road. Our conversations with 
business groups in the southeastern states indicate very clearly that 
they are looking for the roadmap that the 5-Year Plan process was 
intended to deliver.
    We have similar concerns over the Administration's plans for 
leasing offshore Alaska. In March, the National Petroleum Council 
advised the Secretary of Energy that America needs to plan 30 years 
into the future in order to meet the country's long-term energy needs, 
especially given the extraordinary lead time needed to explore in 
Arctic waters. We agree. Exploration of the Arctic--safely, effectively 
and with an absolute commitment to environmental stewardship--requires 
planning, preparation and extraordinary levels of investment. However, 
the Government is sending mixed messages on how much of the arctic will 
be leased and whether lease sales will actually take place. As 
geophysical companies, we need some sense of certainty in order to 
survey the right areas within the right time frame. More than that, the 
country needs to have a clear roadmap that industry can follow.
    Finally, the geophysical industry stands ready to provide 
government and industry with the information necessary to make rational 
decisions--both economically and environmentally--on energy policy. The 
geophysical industry uses cutting edge acoustic, geophysical and 
computer technology to allow us to peer back into history all the way 
to formation of our planet. In the process, we are able to look miles 
beneath the ocean floor to determine where valuable, recoverable energy 
resources lie and, importantly, where they do not. But we need a 5-Year 
Plan that is predictable and reliable in order to address the long-term 
energy needs of our country.

    Thank you and I will be happy to answer any questions.

                              Attachments

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Question Submitted for the Record by Chairman Lamborn to Robert Hobbs, 
                      Chief Executive Officer, TGS
    Question. The hearing delved into the promising resource potential 
that is currently off limits in the Eastern Gulf of Mexico Planning 
Area as a result of the Gulf of Mexico Energy Security Act of 2006. Can 
you provide further details, if available, on the potential economic 
and energy security benefits that would result from safe and 
responsible exploration and development in that area once the 
moratorium expires in 2022?

    Answer. In November 2014, Quest Offshore Resources, Inc. published 
a report entitled The Economic Benefits of Increasing U.S. Access to 
Offshore Oil and Natural Gas Resources in the Eastern Gulf of Mexico. 
The report concludes that developing oil and natural gas resources in 
the Eastern Gulf would require an estimated $115 billion in cumulative 
investment and operational spending, primarily inside the United States 
and mostly in the Gulf Coast states; produce nearly 1 million barrels 
of oil equivalent per day (MMboe/d); generate nearly 230,000 jobs; 
contribute over $18 billion per year to the U.S. economy; and generate 
$70 billion in cumulative government revenue.
    A copy of the full report can be found at http://www.noia.org/wp-
content/uploads/2014/11/The-Economic-Benefits-of-Increasing-US-Access-
to-Offshore-Oil-Natural-Gas-Resources-in-the-Eastern-GoM.pdf.

    Specific excerpts from the report's Executive Summary are included 
below:
Summary
        This report constructs a scenario of oil and natural gas 
        development in the Eastern Gulf, based on the resource 
        potential of the area, geologic analogs, and the full value 
        chain of oil and natural gas development and production. It 
        quantifies the capital and other investments projected to be 
        undertaken by the oil and natural gas industry, identifies 
        linkages to the oil and gas supply chain at both the state and 
        national levels, and estimates job creation, contributions to 
        economies associated with oil and natural gas development and, 
        government revenues due to lease bids, rents, and production 
        royalties. The report relies on Quest Offshore Resources, Inc. 
        (Quest) proprietary database on the offshore oil and natural 
        gas supply chain.
Projects
        Offshore projects are complex, requiring a multitude of diverse 
        engineers, contractors, and equipment suppliers working over a 
        number of years prior to the start of production. For the 
        purposes of this study, offshore project development was 
        generalized into six project types based on project size and 
        water depth. This study estimates that 82 projects could begin 
        oil and natural gas production in the Eastern Gulf, of which 51 
        would be deep water projects and 31 would be shallow water 
        projects.
Production
        Production is projected to reach nearly 1 million barrels of 
        oil equivalent per day (MMboe/d), with production expected to 
        be around 65 percent oil and 35 percent natural gas. Over 60 
        percent of production is expected to be from deep water 
        projects.
Spending
        Total cumulative spending is projected to be $134 billion, of 
        which $115 billion will be spent domestically. Spending is 
        projected to grow from an average of $270 million during the 
        first five years of initial leasing, seismic, and exploratory 
        drilling to over $14 billion per year. The largest amounts of 
        expenditures are for drilling, operational expenditures, 
        engineering, manufacturing and fabrication of platforms and 
        equipment.
Employment
        Eastern Gulf oil and natural gas development is expected to 
        lead to significant employment gains, both in the Gulf Coast 
        region and nationally. Employment impacts are expected to grow 
        throughout the forecast period, with total incremental U.S. 
        employment reaching nearly 230 thousand jobs.
Government Revenues
        Eastern Gulf oil and natural gas development has the potential 
        to increase government revenue from royalties, bonus bids, and 
        rents on leases by an estimated $69 billion cumulatively. The 
        majority of cumulative revenues are from royalties on produced 
        oil and natural gas which total approximately $61 billion. 
        Leasing bonus bids are projected to account for around $6.6 
        billion while rental income from offshore blocks is expected to 
        account for approximately $1.8 billion. This report assumes 
        that associated government revenue is split 37.5 percent to the 
        coastal states and 62.5 percent to the federal government.

    Once again, I appreciate the opportunity to provide input to such 
an important issue.
    I remain available to further assist your committee should it prove 
necessary.

                                 ______
                                 

    Dr. Fleming. Mr. Chiasson--I don't know why I am having 
trouble today. I guess, when I get outside of Louisiana, I 
can't articulate the words. But you are now recognized for 5 
minutes.

  STATEMENT OF CHETT C. CHIASSON, EXECUTIVE DIRECTOR, GREATER 
                   LAFOURCHE PORT COMMISSION

    Mr. Chiasson. Good morning, Mr. Chairman. Thank you, 
Ranking Member and members of the committee. I appreciate the 
opportunity to appear before you today. My name is Chett 
Chiasson, and I am the Executive Director of the Greater 
Lafourche Port Commission, otherwise known as Port Fourchon. I 
have submitted for the record a more detailed written 
testimony, including findings of a recent study detailing the 
economic impact of Port Fourchon to the local, state, and 
national economies. I will summarize my remarks now.
    Over the past several years, I have had the pleasure of 
appearing before this committee, as well as other committees 
here in the House and in the Senate. Similarly, Port Fourchon 
has, over the years, hosted at our facilities quite a number of 
Members of Congress, officials from a number of presidential 
administrations, local governments across the country, U.S. 
industry, and representatives of foreign governments, and non-
U.S. industry, as well.
    You see, Port Fourchon is rather unique. Our port is 
located on the Gulf of Mexico and is the only Louisiana port 
directly on the Gulf. Sitting between two of the most abundant 
estuaries in the world, we certainly have our share of 
commercial and recreational fishing within our jurisdictional 
boundaries.
    However, our principal business is serving as an 
intermodal, offshore energy supply port. We don't import and 
export containers or grain or oil, for that matter. Rather, 
more than 250 companies utilize Port Fourchon in carrying 
equipment, supplies, and personnel to offshore oil and gas 
exploration and production locations throughout the Gulf. Port 
Fourchon's tenants provide services to 90 percent of all 
deporter rigs in the U.S. Gulf of Mexico, and roughly 45 
percent of all shallow-water rigs in the Gulf. In sum, the 
activities at Port Fourchon impact 20 percent of the Nations' 
entire oil supply.
    It is for this reason that this committee and the others I 
just mentioned often turn to Port Fourchon for insight to the 
workings of the domestic offshore energy industry, as well as 
pointing to Port Fourchon as a leading example of the positive 
economic impact to not only our local area and our state, but 
to the entire Nation.
    Port Fourchon is the epicenter of offshore oil and gas 
activities, and the companies in and around Port Fourchon and 
their technologies and innovations developed as a result of 
these activities, would not only continue to sustain future 
offshore domestic oil and gas activities, but will foster 
growth in our budding offshore renewable energy industry, as 
well.
    For Port Fourchon to continue to grow and have a successful 
future creating jobs throughout the economy and facilitating 
development for our community, continued Gulf of Mexico lease 
sales are critically important. Robust lease sales have the 
ability to energize oil and gas service companies, and their 
suppliers throughout the country, who are planning for future 
development. It facilitates critically needed investment by 
entities that service these offshore activities, which has a 
positive ripple effect throughout the national economy.
    But this economic activity shouldn't be confined only to 
certain areas within the Gulf or Alaska. To achieve and 
maintain our Nation's energy security, and to enable 
communities across our country to benefit from this activity, 
the geography of offshore leasing must be expanded, and I would 
say not just expanded leasing for oil and gas activities, but 
for offshore renewable activity, as well.
    As an example of this point, just 2 weeks ago an official 
from the Hampton Roads area of Virginia visited Port Fourchon 
to better understand the scope of our operations. And, as I 
mentioned earlier, over the past few years I have had a number 
of similar visits or conversations with government and industry 
representatives from Florida, South Carolina, and Alaska.
    Just as there are communities across the country that have 
benefited from this recent boon of onshore energy production, 
coastal communities have also been anticipating expansion of 
offshore energy activities, welcoming the opportunity for 
economic benefits of increased employment, educational 
development, revenues, and the like.
    Two final points, if I may. First, as important as current 
and future offshore activity is to our coastal communities, 
offshore activity is not without its burdens to local 
communities, either, particularly the toll it takes on our 
roads, water supply systems, and other infrastructure. There 
are a variety of means on the Federal and state levels to 
address these local infrastructure needs, some more successful 
than others. And I appreciate that these needs are but a small 
part of the overwhelming infrastructure needs across our 
country.
    But what is also critical in this entire offshore leasing 
equation is the ability for states with energy activities off 
its coastline, including the Federal waters, to be able to 
share in the revenues that are generated from energy activity 
on offshore Federal lands. States where oil and gas production 
occurs on onshore Federal lands within the state boundaries are 
entitled to revenue sharing, but not for offshore production. 
Congress has attempted to address this inequity to varying 
degrees of success over the years. But the ability for local 
communities to fully reap the benefits of additional offshore 
energy activity requires parity with onshore activities.
    With that, the state of Louisiana has dedicated revenue 
sharing dollars that it will receive through GOMESA to coastal 
restoration, hurricane protection, and infrastructure critical 
to accessing the Gulf of Mexico. To take those provisions away 
now would be irresponsible.
    I will go ahead and wrap up now. Mr. Chairman and members 
of the committee, Port Fourchon should be seen as an example of 
what could happen in areas along the coastal communities. These 
areas would be available for conventional renewable energy 
development. Billions of dollars of investment throughout the 
country, low unemployment rates, high-paying jobs, more revenue 
for our local and Federal Government, and making great strides 
toward energy independence. What is not to like about that?
    Thank you.
    [The prepared statement of Mr. Chiasson follows:]
   Prepared Statement of Chett Chiasson, Executive Director, Greater 
                       Lafourche Port Commission
    Good morning Mr. Chairman and members of the committee. I 
appreciate the opportunity to appear before you today. My name is Chett 
Chiasson, and I am the Executive Director of the Greater Lafourche Port 
Commission, otherwise known as Port Fourchon.
    I am pleased to appear before you today to provide testimony on the 
future of domestic offshore energy exploration and production. Over the 
past several years, I have had the pleasure of appearing before this 
committee, as well as other committees here in the House and in the 
Senate. Similarly, Port Fourchon has, over the years, hosted at our 
facilities quite a number of Members of Congress, officials from a 
number of presidential administrations, local governments across the 
country, U.S. industry, and representatives of foreign governments and 
non-U.S. industry as well. You see, Port Fourchon is rather unique. Our 
Port is located on the Gulf of Mexico, and is the only Louisiana port 
directly on the Gulf. Sitting between two of the most abundant 
estuaries in the world, the Terrebonne and Barataria Estuaries, we 
certainly have our share of Commercial and Recreational Fishing within 
our jurisdiction boundaries, however, our principal business is serving 
as an intermodal offshore energy supply port. We don't import and 
export containers, or grain, or oil for that matter. Rather, more than 
250 companies utilize Port Fourchon in carrying equipment, supplies and 
personnel to offshore oil and gas exploration and production locations 
throughout the Gulf of Mexico. Port Fourchon's tenants provide services 
to 90 percent of all deepwater rigs in the Gulf of Mexico, and roughly 
45 percent of all shallow water rigs in the Gulf. In sum, the 
activities at Port Fourchon impact 20 percent of the Nation's entire 
oil supply.

    A study by Dr. Loren Scott, Professor Emeritus of Economics at 
Louisiana State University, has depicted the economic impact of Port 
Fourchon. What it showed was remarkable: the economic impact of the 
Port's activities on the Houma-Thibodaux MSA Annually is:

     Business Sales: $2.67 Billion

     Household Earnings: $652.9 Million

     Jobs: 8,723

      -- 1 in every 13 jobs directly connected to Port Fourchon 
            (Multiplier 4.6)

      -- $56,963 average annual wage

     Sales Taxes: $12.8 Million to local government

     Property Taxes: $60.4 Million ($41.7 Million of which is 
            from watercraft)

    For the State of Louisiana Annually:

     Business Sales: Over $3.3 Billion

     Household Earnings: $823.3 Million

     Jobs: 11,512 (Multiplier 6.2)

     Taxes: $46 Million to the State Treasury

    And the national effect is just as impressive. This study is only 
the most recent of several studies, including one conducted by the 
Department of Homeland Security, which demonstrates the negative impact 
on the Nation if Port Fourchon was out of service, in this instance, 
for a 3-week period:

     Business Sales: $11.2 Billion Lost

     Household Earnings: $3.1 Billion Lost

     Jobs: 65,502 Jobs Lost

    It is for this reason that this committee, and the others I just 
mentioned, often turn to Port Fourchon for insight to the workings of 
the domestic offshore energy industry, as well as pointing to Port 
Fourchon as a leading example of the positive economic impact to not 
only our local area and our state, but to the entire Nation. Port 
Fourchon is the epicenter of offshore oil and gas activities, and the 
companies in and around Fourchon, and their technologies and 
innovations developed as a result of these activities, will not only 
continue to sustain future offshore domestic oil and gas activities, 
but will foster growth in our budding offshore renewable energy 
industry as well.
    For Port Fourchon to continue to grow and have a successful future 
creating jobs throughout the economy and facilitating development for 
our community, continued Gulf of Mexico Lease-sales are critically 
important. Robust lease sales have the ability to energize oil and gas 
service companies', their suppliers and their suppliers' suppliers 
throughout the country, who are planning for future development. It 
facilitates critically needed investment by entities that service these 
offshore activities, which has a positive ripple effect throughout the 
national economy.
    But this economic activity shouldn't be confined only to certain 
areas within the Gulf of Mexico or Alaska. To achieve and maintain our 
Nation's energy security, and to enable communities across our country 
to benefit from this activity, the geography of offshore leasing must 
be expanded. And I would say not just expanded leasing for oil and gas 
activities, but for offshore renewable activity as well.
    As an example of this point, just 2 weeks ago, I had officials from 
the Hampton Roads area of Virginia visit Port Fourchon to better 
understand the scope of our operations. And as I mentioned earlier, 
over the past few years, I have had a number of similar visits or 
conversations with government and industry representatives from 
Florida, South Carolina, and Alaska. Just as there are communities 
across the country that have benefited from the recent boon of onshore 
energy production, coastal communities have also been anticipating 
expansion of offshore energy activities, welcoming the opportunity for 
economic benefits of increased employment, educational development, 
revenues and the like.
    Two final points--first, as important as current and future 
offshore activity is to our coastal communities, this activity is not 
without its burdens to local communities either, particularly the toll 
it takes on our roads and other infrastructure. There are a variety of 
means on the Federal and state levels to address these local 
infrastructure needs, some more successful than others. Several years 
ago, the then-Minerals Management Service, in a programmatic 
Environmental Impact Statement on offshore leasing in the Gulf of 
Mexico, specifically cited the impact on Louisiana Highway One, the 
only road leading to and from Port Fourchon, from the yearly truck and 
vehicle traffic as a result of the offshore energy activity. I 
appreciate that these needs are but a small part of the overwhelming 
infrastructure needs across our country. But what is also critical in 
this entire offshore leasing equation is the ability for states with 
energy activities off its coastline--including in Federal waters--to be 
able to share in the revenues that are generated from energy activity 
on offshore Federal lands. States where oil and gas production occurs 
on on-shore Federal lands within the state's boundaries are entitled to 
considerable revenue sharing, but not so for offshore production. 
Congress has attempted to address this inequity, to varying degrees of 
success over the years, but the ability for local communities to fully 
reap the benefits of additional offshore energy activity requires 
parity with on-shore energy activities. With that, the state of 
Louisiana has dedicated revenue sharing dollars that it will receive 
through the Gulf of Mexico Energy Security Act (GOMESA) to Coastal 
Restoration, Hurricane Protection, and Infrastructure Critical to 
accessing the Gulf of Mexico. To take those revenue sharing provisions 
away now would be irresponsible.
    Finally, from the standpoint of Federal policy impacting offshore 
energy activity, whether we're speaking of Federal lease-sales or 
Federal or state regulatory oversight--industry and local communities 
like ours need to have confidence that the investments made in domestic 
offshore energy production will not be overly impeded by governmental 
regulations, or inconsistent policies, and that our Nation's domestic 
energy policy will sustain investment of all energy types, over the 
long term.
    Mr. Chairman and members of the committee, Port Fourchon operates 
on the premise that Industry and the Environment are not mutually 
exclusive, they must work together, and they do. This Port should be 
seen as an example of what could happen in areas along Florida's Coast, 
and communities along the East and West Coasts if these areas would be 
available for conventional and renewable energy development. Billions 
of dollars of investment throughout the country, low unemployment 
rates, high paying jobs, more revenue for our local and Federal 
Government, and continuing strides toward energy independence--What's 
not to like about that!
    I appreciate the opportunity to testify before you today, and would 
be please to address any questions that the committee might have. Thank 
You!

                                 ______
                                 

    Mr. Lamborn [presiding]. Thank you. And I thank 
Representative Fleming for chairing this committee until I got 
back.
    The Chair now recognizes Ms. Swearingen to testify.

  STATEMENT OF EMILIE SWEARINGEN, COMMISSIONER, TOWN OF KURE 
                     BEACH, NORTH CAROLINA

    Ms. Swearingen. Chairman Lamborn, Ranking Member Lowenthal, 
and members of the subcommittee, my name is Emilie Swearingen. 
I am a member of the Kure Beach Town Council. We are a small 
community located on an island between the Atlantic Ocean and 
the Cape Fear River. We have approximately 2,000 year-round 
residents, and anywhere from 400,000 to 700,000 visitors every 
year.
    I am not here today to speak on behalf of our Town Council, 
but rather, on behalf of the residents of Kure Beach, our 
tourists, our fishermen, our seafood industry and small 
businesses, and everyone in this country who cares about the 
future of our coastal communities and our quality of life.
    Now, most of you probably have never been to Kure Beach. 
Well, we have about a half-dozen residents that show up for 
Town Council meetings once a month. But on January 27, 2014, 
more than 300 showed up to protest the Mayor's position in 
support of seismic testing and East Coast drilling. Since that 
night, opposition has been mounting up and down the coast. More 
than 300 national, state, and local elected officials have 
taken a public stance against seismic testing and offshore 
drilling, including more than 50 coastal towns passed 
resolutions opposing or voicing their concerns. Copies of these 
letters and resolutions can be found in Oceana's ``Coastal 
Resolution Toolkit.''
    You know those public hearings that Ms. Hopper talked about 
earlier that were held over the past few months? Well, 
attendance on the East Coast exceeded 1,800. North Carolina, of 
course, had the highest attendance. In addition, more than 
half-a-million citizens in this country have submitted comments 
directly to BOEM, opposing the inclusion of the Atlantic and 
Arctic Oceans in the 5-year plan.
    So, why are so many of your constituents concerned about 
this? Well, like many communities on the East and West Coast, 
tourism drives our economy. Our two little towns on Pleasure 
Island, Kure and Carolina Beach, generate more than $124 
million a year in beach expenditures. Direct seafood processing 
and packing generates over $5 million, for-hire fisheries 
generates almost $6 million. If we look at this on a larger 
scale, say, along the entire Atlantic Coast, offshore drilling 
could put at risk nearly 1.4 million jobs, and over $95 billion 
in gross domestic product. Both of these rely on healthy 
oceans, mainly through fishing, tourism, and recreation. And 
you may find a breakdown of those figures in another one of 
Oceana's reports that I would be glad to provide for you.
    I understand that the BP disaster, however, killed and 
injured more than 25,000 dolphins and whales, plus tens of 
thousands of sea turtles. It also killed numerous types of 
fish, and at least 700,000 birds. More than 100 species were 
affected, and more than 1,000 miles of shoreline, from Texas to 
Florida, were contaminated. Many of these areas are still 
devastated by oil.
    Spilled oil is nearly impossible to clean up entirely. What 
remains stays in the environment, causing harm for years and 
years. But it is not just the disasters, or the hundreds of 
smaller spills that go on throughout the year. There continue 
to be other consequences of another source, and that is 
industrialization. I am sure everyone here is familiar with 
that terminology, but this is not an issue that many of our 
citizens are aware of.
    Representative Lowenthal mentioned earlier about South 
Carolina State Republican Senator Chip Campsen and his 
editorial. I would like to continue the Senator's comments. 
``This perspective is rarely raised, and is not contingent upon 
an improbable catastrophic event. If we embrace offshore 
drilling in South Carolina, this factor will impact our coast 
continuously.'' He has seen, firsthand, the devastation by the 
land-based infrastructure for offshore drilling. ``It is not a 
pretty sight,'' he says. ``It is extensive, dirty, highly 
industrial, and there is no place for it in South Carolina. Our 
coast is dominated by residential and resort communities, 
wildlife, and extensive ecosystems.''
    Well, Congressmen and Congresswomen, there is no place for 
this on the coast of North Carolina, either. Please listen to 
the people in this country who are begging you to protect their 
quality of life. And thank you for giving me the opportunity to 
testify today.
    [The prepared statement of Ms. Swearingen follows:]
Prepared Statement of Emilie F. Swearingen, Commissioner, Town of Kure 
                         Beach, North Carolina
    Chairman Lamborn, Ranking Member Lowenthal and members of the 
Subcommittee on Energy and Mineral Resources, I appreciate the 
opportunity to testify today. My name is Emilie Swearingen. I am a 
member of the Kure Beach Town Council. We're a small community located 
on an island between the Atlantic Ocean and the Cape Fear River. We 
have approximately 2,000 year-round residents and anywhere between 
400,000 and 700,000 visitors every year. I am NOT here today to speak 
on behalf of our Town Council, but rather on behalf of the residents of 
Kure Beach, our tourists, our fishermen, our seafood industry and small 
businesses, and everyone in this country who cares about the future of 
our coastal communities and our quality of life.
    Most of you have probably never been to Kure Beach. About a half-
dozen residents occasionally show up for our monthly Council meetings; 
but on January 27, 2014, more than 300 showed up to protest our mayor's 
position in support of seismic testing and East Coast drilling. That 
night Kure Beach became ground zero for these issues. Since that night, 
the opposition has been mounting up and down the coast. More than 300 
national, state and local elected officials have taken a public stance 
against seismic testing and offshore drilling, including more than 50 
coastal towns that passed resolutions in opposition or voicing their 
concern. Copies of the letters and resolutions can be found in Oceana's 
grassroots ``Coastal Resolution Toolkit.'' http://usa.oceana.org/
seismic-airgun-testing/coastal-resolution-toolkit
    You know those public meetings the Bureau of Energy Management 
(BOEM) held over the past few months. Attendance on the East Coast 
exceeded 1,800. North Carolina, of course, had the highest attendance! 
In addition, more than half a million citizens in this country have 
submitted comments directly to BOEM opposing the inclusion of the 
Atlantic and Arctic in the 5-Year Plan.
    So . . . why are so many of your constituents concerned? Like many 
of the communities on the East and West Coast, tourism drives our 
economy.
    Our two little towns on Pleasure Island, Kure and Carolina Beaches, 
generate more than $124 million a year in beach expenditures. Direct 
seafood processing and packing on our little island generate almost $5 
million; and our for-hire fisheries generate almost $6 million. Tourism 
is the largest industry in our county and one of the largest industries 
in the state.
    Oceana's report, ``An Economic Analysis of Offshore Drilling and 
Wind Energy in the Atlantic,'' found that ``offshore oil and gas 
development along the Atlantic could put at risk nearly 1.4 million 
jobs and over $95 billion in gross domestic product that rely on 
healthy ocean ecosystems, mainly through fishing, tourism and 
recreation.

    But it's not just about our economy.

    I understand the BP Deepwater Horizon disaster killed or injured 
more than 25,000 dolphins and whales in the Gulf, plus tens of 
thousands of sea turtles. It also killed blackfin and bluefin tuna, 
blue marlin, mahi-mahi, sailfish, red snapper; and killed at least 
700,000 birds. More than 100 species were affected, including one-third 
of all laughing gulls in the Gulf region and 12 percent of the Gulf's 
brown pelicans, which had just been removed from the endangered species 
list.
    More than 1,000 miles of shoreline from Texas to Florida were 
contaminated, and many of these areas are still devastated by oil that 
may be hidden under sand until exposed by storms . . . storms like we 
have every year on the East Coast.
    But the damage went far beyond the Gulf, according to Environment 
America. ``Migratory birds, poisoned by oil, carried toxic chemicals 
across the country. As far away as Minnesota, white pelicans laid oil-
contaminated eggs in their breeding grounds after returning home from 
the Gulf. In Tennessee evaporation from the oil created a cloud of 
minuscule airborne tarballs exposing local residents to pollutants 
linked to heart and lung disease.''
    Cynthia Sarthou, Exec. Director at Gulf Restoration Network, 
reported that even now, 5 years after the disaster, ``Almost a mile of 
Louisiana's coast is still considered heavily oiled.. . . The dolphins 
are dying, tar mats as big as 2,000 pounds are affecting beach 
communities 100 miles away, and lucrative coastal businesses and 
industries have lost millions of dollars and continue to struggle 
today.''
    Spilled oil is impossible to clean up entirely. What remains stays 
in the environment, causing harm for years. But it's not just the 
disasters we're concerned about or even the hundreds of smaller spills 
that go on throughout the year. There continues to be consequences from 
another source: industrialization. This is NOT an issue many of our 
residents are aware of.
    To quote South Carolina State Senator Chip Campsen, a Republican 
and Isle of Palms resident, ``This perspective is rarely raised and is 
not contingent upon an improbable catastrophic event, such as an oil 
spill, to impact our coast. If we embrace offshore drilling in South 
Carolina this factor will impact our coast definitively and 
continuously.''
    ``Let me explain . . . I have observed firsthand the land-based 
infrastructure necessary to support offshore drilling. It is not a 
pretty sight. It is extensive, dirty and highly industrial. There 
simply is no place on South Carolina's coast appropriate for this kind 
of industrialization. Our coast is dominated by residential and resort 
development, wildlife and extensive protected ecosystems . . .''
    Well, Congressmen (and women) there is no place for such 
industrialization on North Carolina's coast either.
    Now I'm going to jump to the other end of the world for a minute. A 
couple of months ago I had an opportunity to visit Antarctica. It is 
the most pristine, most beautiful place in the world. While there, I 
thought about another pristine area, the Arctic, and the proposed 
drilling in the Arctic Ocean. What a tragedy it would be to destroy 
that part of our planet. The areas in the Arctic Ocean off the north 
coast of Alaska support very vibrant communities, iconic wildlife, and 
some of the last wild places that are relatively untouched by 
industrial development. The healthy waters are home to walrus, whales, 
seals, polar bears, and other wildlife species. These important 
resources are a part of a way of life practiced in those coastal 
communities for millennia. To destroy all of that would be a travesty 
for the entire world.
    Citizens living and working on our coasts have a right to decide 
for themselves if they want to allow drilling off their shores. Please 
. . . listen to the people in this country who are begging you not to 
destroy their quality of life.

    Thank you once again for the opportunity to testify today.

                                 ______
                                 

    Mr. Lamborn. OK. Thank you to you and to all of the 
witnesses who have testified on this panel.
    Let's see. The letter from Mayor Dean Lambeth of Kure Beach 
in favor of Atlantic OCS energy development has been mentioned. 
I would like to enter that into the record.
    If there is no opposition, so ordered.
    I will begin the round of questioning now, and I will start 
with Mr. Chiasson.
    Currently, production in the Gulf accounts for about 16 
percent of U.S. oil production and about 5 percent of natural 
gas production. Yet coexistence among other industries is key. 
When I toured an offshore facility in the Mississippi Canyon in 
2013, I remember flying over quite a few fishing trawlers, 
which was a sign of healthy coexistence.
    And, as you said, offshore oil and gas operation is pivotal 
to operations at Port Fourchon, but all of this activity is 
occurring along recreational fishing, military operations, and 
other tourism along beaches and coastal cities, including New 
Orleans. Can you elaborate on how these activities all coincide 
successfully together, as people on the Atlantic Coast look to 
that as an example?
    Mr. Chiasson. Sure. In our community, growing up, you know, 
we are a fishing community first, and have grown into servicing 
the oil and gas industry, in particular, the deport oil and gas 
industry.
    Like I said in my testimony, we sit between two of the most 
abundant estuaries in the world, and that is why fishing is so 
good in that area. As well as, within a 40-mile area of our 
port are over 600 rigs and platforms. When I look at that, I 
see it as beautiful, because what we are seeing is that every 
one of those platforms and rigs is an artificial reef.
    There is an abundance of fishing capability there, and it 
is a huge other side of industry. It is another industry that 
we have in our community, because of the abundance of wildlife 
feeding off of those rigs and platforms in the Gulf, as well as 
fishing and crabbing, shrimping, and all of the other sides. We 
are a community that embraces both, and we enjoy it. I grew up 
in the marsh, I grew up fishing and hunting, but I love the 
industry, as well.
    Mr. Lamborn. Thank you. Mr. Shuster, I have a question for 
you. When people look at the Macondo oil spill disaster, and 
the environment where it took place, I believe it was over a 
mile deep, in deep water. How is that the same, or how is that 
different from the offshore environment off of Alaska and off 
of the Atlantic, where the possibility of the 5-year plan 
allowing for a lease sale would take place?
    Mr. Shuster. Yes, thank you for the question. So, first, 
let me just respond. At least with the targets that are being 
addressed in Alaska, these are in different pressure regimes. 
It is much simpler and much shallower drilling than is required 
in the deeper water, deeper parts of the Gulf of Mexico.
    In the Atlantic, I would say that it is too premature, 
based on the data that we have, to actually make a comment on 
how those types of prospects would be different from the 
Macondo example that you mentioned.
    Mr. Lamborn. But how about in Alaska? What is the 
difference in depth, for instance?
    Mr. Shuster. You know, I don't know the exact numbers, but 
it is several tens of thousands of feet different.
    Mr. Lamborn. So what is the depth off of Alaska that the 
proposed lease sale would be for?
    Mr. Shuster. Now, the water depth is a couple hundred feet.
    Mr. Lamborn. So what does that mean? If there is, God 
forbid, but if there is the beginning of an oil spill, or oil 
leak, what can be done to remedy that that could not be done in 
the deep water off the coast of Gulf of Mexico?
    Mr. Shuster. Yes. So Alaska is not part of the area that I 
am focused on within Shell. Certainly we can provide details 
from my colleagues in Shell to be able to answer that question.
    But I can say, in general, we have put together significant 
resources, both to contain and also to respond to oil spills in 
Alaska.
    Mr. Lamborn. OK. Mr. Hobbs, are you able to address that?
    Mr. Hobbs. No, I agree with Mr. Shuster's testimony in 
regards to the environment in Alaska, certainly.
    Mr. Lamborn. OK. And what I was understanding is that, 
because of the much shallower depth, it is a lot easier to get 
at it with all kinds of equipment that you can't if it is 1 or 
2 miles below the surface, like in the case of Macondo.
    I now recognize the Ranking Member for any questions he 
might have.
    Mr. Lowenthal. Thank you, Mr. Chair. Before I begin, I 
would like to ask unanimous consent to introduce into the 
record resolutions passed by more than 50 towns opposing 
offshore drilling or seismic exploration.
    Mr. Lamborn. Any objection?
    [No response.]
    Mr. Lamborn. If not, so ordered.
    Mr. Lowenthal. Thank you. I would like to begin with Mr. 
Shuster. First, I want to thank you for coming by yesterday and 
visiting. I certainly enjoyed our conversation.
    As I mentioned to Director Hopper, we would like BOEM to 
look at all the impacts of the proposed leasing program, 
including impacts on climate.
    Now, I understand that Shell uses an internal price for 
carbon when evaluating potential projects. Could you describe 
that in a little bit more detail?
    Mr. Shuster. Yes. Representative Lowenthal, we ascribe a 
$40-per-ton price in our project economics for all the projects 
that we consider.
    Mr. Lowenthal. So I am going to ask you. It sounds like 
Shell believes climate change is real, we need to do something 
about it. So, the question I am going to ask about that, first, 
do you? Do you support putting a real price on carbon, such as 
through a carbon tax?
    Mr. Shuster. Yes, we do support putting a real price on 
carbon. Our view is that carbon is something that we have to be 
able to plan for. And certainly our concern is about long-term 
development.
    Mr. Lowenthal. Shell's CEO, Ben van Beurden, has talked 
positively about EPA's clean power plan, as well. Could you 
mention what Shell's position is on that?
    Mr. Shuster. So our position is to look at the changing 
energy mix over the next several decades. And, essentially, we 
want to be able to address that in the context of new energies 
that are coming along, new technologies that are underway, both 
to address the amount of carbon that is being put in the 
atmosphere, as well as to look at what the mix of energy 
opportunities is going to be in the future.
    Mr. Lowenthal. So, I have to say, Mr. Shuster, although I 
may not agree with much of what Shell does on the Outer 
Continental Shelf, I certainly think it is laudable that you 
are taking the issue of climate change seriously. Whether we 
agree on this particular path forward or not, acknowledging the 
cost is a critical first step. I hope that the Department of 
the Interior follows your lead on this issue, and factors these 
costs into the analysis of the 5-year leasing program.
    I would like to turn to Commissioner Swearingen. The 
Governor made it clear that, in the state of North Carolina, he 
would only support offshore drilling if it came with the 
diversion of Federal monies to the state. What is your position 
on this issue? And does the question of revenue sharing affect 
your support or opposition?
    Ms. Swearingen. To answer your question, sir, no, it does 
not change my position. Revenue sharing from oil and gas 
drilling could never compensate for the loss of our coastal way 
of life. Also from industrialization of the coast, oil spills, 
loss of tourism, fishing, and recreational businesses.
    But let me expand some here. Only four Gulf States have a 
regional sharing system for OCS drilling: Alabama, Mississippi, 
Louisiana, and Texas. The system was established by a Federal 
law in 2006. Note that this law was not retrospective. Revenue 
is being shared from recent leases only, not from all the 
leases in the Gulf. And there is a cap on it. There is no 
sharing of Federal revenues from offshore oil anywhere else in 
the country, especially California, Alaska, and the East Coast. 
There is revenue sharing for onshore.
    You know, it would be difficult for Congress to change this 
and pass a revenue sharing law, because revenue sharing money 
would take away from the Federal budget. Congress has sort of 
pay-as-you-go rules that require any reduction in Federal 
revenues be replaced with increased revenues from another 
source, and it is very hard to generate those revenues in our 
Congress.
    But let's say all of this were to come true. Here, in North 
Carolina, and there is a copy in your package, North Carolina 
Governor McCrory and our legislature passed a bill a couple of 
years ago on revenue from offshore energy. They indicated the 
first $250,000 would go to an emergency fund. The other funds 
would be distributed in different percentages. None of them, 
absolutely none of them, would go to local communities, 
counties, or municipalities.
    Mr. Lamborn. OK, thank you.
    Representative Fleming.
    Dr. Fleming. Thank you, Mr. Chairman. And my question, 
first, is for Mr. Shuster. There is an inference in these 
discussions always that why should we lease more land, there is 
leased land out there now that is not producing. Can you shed 
some light on that?
    Mr. Shuster. Happy to do that. So, as I mentioned 
previously, for every 100 OCS blocks that we see, we can 
identify about 10 prospects. And of those 10 prospects, 
typically we will see one commercial discovery made from that. 
And that really reflects a geology, the underlying 
prospectivity of the areas. And the point is that not all areas 
are the same. More areas, more perspective, and prospects are 
only limited to areas----
    Dr. Fleming. So to simplify, what you are saying is you 
drill where the oil is.
    Mr. Shuster. That is correct.
    Dr. Fleming. OK. Now, why can't we bring that kind of 
common sense to Washington? Wouldn't that be nice?
    [Laughter.]
    Dr. Fleming. But I am going to shift to Mr. Hobbs. How do 
we know where the oil is?
    Mr. Hobbs. You have to acquire new data with today's 
technology.
    Dr. Fleming. All right. And you gave a good demonstration 
there. And that technology centers around ultrasound. That is 
ultrasonic technology. The sound emitted, I believe you said, 
lasts only a tenth of a second. Did I hear that correctly?
    Mr. Hobbs. A single pulse of the seismic source is only a 
tenth of a second.
    Dr. Fleming. Now, to hear some of the discussion here, you 
would think that that is a very dangerous technology. But it 
happens to be, and by the way, I am a physician, it happens to 
be the very same technology that we use during pregnancy, early 
pregnancy, mid-pregnancy, late pregnancy. We have been using it 
for many years. We have never found one single problem with it.
    But the preciseness now that we can treat fetuses and, 
ultimately, babies, even to the point of now doing surgery 
interuterally, because of what we find out through 3D and 4D 
ultrasound is just amazing. So the preciseness of that, if you 
expand that to what you are doing out there in the field, 
suggests to me that by using seismic technology you are not 
drilling places that you don't belong. Is that correct?
    Mr. Hobbs. Absolutely correct. You actually, in many cases, 
can reduce the number of wells drilled in a particular area to 
find the amount of oil that, ultimately, will be found.
    Dr. Fleming. Would that have a potential benefit for the 
environment?
    Mr. Hobbs. Absolutely, yes.
    Dr. Fleming. If you dig less useless wells, you end up with 
less damage to the ecology, less cost. Therefore, the savings 
are transmitted to the end user, the consumer.
    So, I am sure some studies have been done. Has there been 
found any damage or injury to wildlife or to, really, any part 
of natural resources, when it comes to seismic technology?
    Mr. Hobbs. BOEM, the government themselves, has spent over 
$50 million looking at the impact of sound on marine life. Our 
industry has spent many millions of dollars looking at the 
impact of sound on marine life. And, really, all of the studies 
that have been done support BOEM's conclusion that seismic is 
not harmful to marine life.
    Dr. Fleming. OK. Very good. With that, I will yield back.
    Mr. Lamborn. Representative Beyer.
    Mr. Beyer. Thank you, Mr. Chairman, very much. And thank 
all of you for being here to testify on the 5-year leasing 
program.
    I am from Virginia, and the Navy and NASA have repeatedly 
said that offshore drilling could significantly affect their 
abilities to carry out training and testing activities. And a 
May 2010 Department of Defense report found that nearly 80 
percent of the proposed leasing area off Virginia's coast would 
interfere with U.S. Navy training and operations. And I know 
there is the 50-mile buffer, but we have Wallops Island, a 
launch site, and NASA has even expressed concern that that 50-
mile buffer zone won't be sufficient.
    I understand the governor of North Carolina was here 
recently to urge BOEM to reduce the buffer zone currently in 
the plan. I think, from Virginia, from Virginia Beach, we just 
look south to off the Virginia coast to be able to see the 
offshore drilling. And we know that oil spills don't respect 
offshore state boundaries. We have the Gulf stream, and so 
Virginia would bear the risk for North Carolina.
    What is equally interesting about his statement is that 
North Carolina could certainly benefit from offshore wind 
energy. A Chapel Hill UNC study found that North Carolina has 
some of the most potent wind energy off the Atlantic Coast. But 
it is interesting that his administration has recommended a 
buffer zone, 24 nautical miles for wind energy, but reducing it 
for oil.
    So, Commissioner Swearingen, you are directly affected by 
that. Can you give us your take on offshore wind? How would 
your community react to it? Do you support it, off the coast of 
your town? And what do you make of the Governor's inconsistency 
on the buffer zones?
    Ms. Swearingen. Yes, sir. Thank you for that question. Our 
governor has reiterated, like you said, that the buffer zone 
for wind energy needs to be expanded. And, in fact, he said up 
on the Outer Banks he has requested that all areas within 33.7 
miles of Bodie Island Lighthouse be even excluded from wind 
energy completely, because it would impair visibility from the 
lighthouse and from the Hatteras National Seashore, therefore, 
impacting tourism.
    OK. We sit there on the beaches there at Kure Beach, and 
watch the big tankers go by, and the ships and all, and they 
are, oh, maybe 5 to 10 miles off the coast. You can barely see 
them, you need binoculars. And, frankly, from everybody I have 
talked to, it is almost a tourist attraction for tourists to be 
able to sit there, use their binoculars, and look at the 
turbines going, you know, round and round like that.
    But, yes, the Governor then wants to do away with buffer 
zones for oil. And I really don't see an oil rig being nearly 
as beautiful as a wind turbine. But what he has done has really 
killed the possibility of wind energy for North Carolina. And I 
don't really understand this: we should have buffers for wind 
energy, we should not have buffers for oil rigs. None of us in 
North Carolina understand that.
    Mr. Beyer. Thank you, Madam Commissioner. I am very proud 
that Virginia, with our governor, we are the first state to 
actually sign one of these offshore wind leases from the 
Atlantic Coast. So we will lead the way for you.
    Ms. Swearingen. Thank you.
    Mr. Beyer. Mr. Shuster, I know Shell is taking really good 
actions to secure a sustainable energy future. I read all the 
ads about Shell. And Shell stated, ``Government action is 
needed in that Shell supports an international framework that 
puts a price on CO2.''
    Now, a global cap-and-trade system is not in our 
imagination any time soon. Would Shell consider using the 
social cost of carbon to estimate the climate impacts before 
making leasing and drilling decisions?
    Mr. Shuster. You know, I----
    Mr. Beyer. Given your understanding of the larger impact 
already.
    Mr. Shuster. I think our view on putting a price to carbon 
is really based on looking at the opportunities that are out 
there on a project-by-project basis, so that we can gauge the 
relative carbon footprint of each of these projects. How 
exactly we go about pricing it, I wouldn't want to comment on, 
because I don't think I could make a reasonable comment.
    Mr. Beyer. OK. But thank you for considering it.
    And, Commissioner Swearingen, if we look at offshore oil, 
natural gas off the coast of North Carolina, almost certainly 
we are going to have pipelines crossing the beaches and 
fundamentally changing the nature of those beaches and all the 
tourism. Could you speak to that, and what it would do to your 
community?
    Ms. Swearingen. Yes. I believe I had mentioned earlier 
about industrialization from offshore oil, the refineries, the 
storage, all of that. And, frankly, it would destroy our beach. 
I mean our little island isn't even big enough for that. I 
think what they are looking at is up at the Outer Banks. And if 
you have ever been to Nags Head or Kitty Hawk, you would no 
longer have any tourism because it is so narrow, you would have 
to do away with all the residences and the commercial 
development in order to do the infrastructure that would be 
needed.
    Mr. Beyer. Thank you. Thank you, Mr. Chairman.
    Mr. Lamborn. You are welcome. I am wondering if that would 
be more or less noticeable than high power lines.
    Representative Lummis, you are recognized.
    Mrs. Lummis. Thank you, Mr. Chairman.
    Mr. Shuster, we heard earlier from BOEM's testimony that 
when it develops 5-year programs, it uses estimates. And we 
know, in its current proposal, it is allowing potential lease 
sales, 80 percent of estimated undiscovered technically 
recoverable oil and gas reserves.
    Do you think that 80 percent figure captures the resource 
potential on the Outer Continental Shelf?
    Mr. Shuster. I think our view, based on the evaluation that 
we have done in the Eastern Gulf of Mexico and the Atlantic, is 
that it is reasonable. However, we think that there is 
potentially much more resource above and beyond those areas 
that are included in the draft proposed program.
    Mrs. Lummis. OK. Mr. Shuster, and Mr. Hobbs, I would like 
you to answer this question as well, after Mr. Shuster has 
responded. In both of your experience, whether it is onshore or 
offshore, does allowing development and exploration to move 
forward lead to discovery of more energy potential?
    Mr. Shuster. Certainly, from my experience, and I can say 
that this is experience globally, both onshore and offshore, 
what we have seen is that when areas are opened up for 
exploration and production, and if discoveries are found, that 
it opens up many more discoveries on the back of that.
    Mrs. Lummis. Mr. Hobbs?
    Mr. Hobbs. Every time we acquire a new seismic data set, or 
every time we see the subsurface by understanding the rocks 
through a well, we learn so much more about the potential of an 
area.
    So, I can't think of any basin around the world where you 
have successful exploration and development where you don't 
ultimately increase the reserves that are believed to be 
producible within that basin.
    Mrs. Lummis. Another question, Mr. Shuster. You showed us a 
map earlier that shows a big gap on the coastline of the 
Atlantic in the United States, where we don't have the 
opportunity to explore, produce, or drill. Looking at the 
proposed 5-year plan, do you believe the Administration is 
doing enough to keep the United States competitive with its 
neighbors to the north and to the south?
    Mr. Shuster. Yes. Based on, certainly, what we see both in 
North America and Latin America, where there is a very strong 
commitment from those countries outside the United States to 
support oil and gas exploration and production, we do not see 
enough being done in the current program.
    Mrs. Lummis. Now I would like to switch to the Eastern Gulf 
of Mexico. Could you talk to me a little bit about the energy 
potential there?
    Mr. Shuster. Yes. So the dividing line between the Eastern 
Gulf and the Central Gulf of Mexico, which is open for 
business, so to speak, is an artificial line. Essentially, 
based on the geology, and there is existing seismic data that 
covers the Eastern Gulf of Mexico, the prospective trends that 
we see in the Central Gulf, the areas of production in the 
Central Gulf, extend into the Eastern Gulf of Mexico.
    Mrs. Lummis. And where is the infrastructure to produce oil 
and gas in the Gulf?
    Mr. Shuster. Yes, the infrastructure is really across the 
Gulf of Mexico, both offshore and onshore. So that includes 
producing facilities, that includes pipelines, it includes Port 
Fourchon. And all that is part of the infrastructure.
    Mrs. Lummis. And because the infrastructure is in place, 
where would be the most efficient, expeditious place to add 
production that would allow further use of that infrastructure?
    Mr. Shuster. It would be in the Eastern Gulf of Mexico, if 
you are comparing that with the Atlantic. Just on the basis 
that, essentially, we would be able to extend the producing 
areas, and be able to utilize that infrastructure quickly. So 
it would accelerate production.
    Mrs. Lummis. How could more production within the Eastern 
Gulf of Mexico occur while still mitigating for impacts on 
tourism? Obviously, the Gulf Coast of Florida is a highly 
desirable tourist location.
    Mr. Shuster. Right. So, first, let me state that there is 
ongoing tourism, as was brought up by my co-panelist, in the 
Gulf of Mexico. And the areas most of interest, at least from 
our assessment, is in the deeper water, which is far away from 
the shorelines of Florida or the other coastal states.
    Mrs. Lummis. Thank you, Mr. Chairman. I yield back.
    Mr. Lamborn. Thank you. And there is another question I 
would like to ask, so I am going to call for a second round of 
questions, but limited to 3 minutes a piece. So any last 
questions that we have, we can get those out there, on the 
record.
    Mrs. Lummis. Thank you.
    Mr. Lamborn. And thank you, once again, for being here 
today, and for your patience.
    And, Mr. Hobbs, I would like to direct this last question 
to you. Can you explain how much seismic acquisition technology 
has matured since the last time any seismic activity was done 
off of the Atlantic Coast in the 1970s?
    Mr. Hobbs. The technology that we used in the 1970s was 
using very old sensor technology that we towed behind the 
vessels. The resolution of the data is far lower than what we 
can acquire now. We can see a lot deeper into the earth now, 
with the technology that we have. We can see features, geologic 
features in the subsurface, that are a lot more detailed that, 
again, are very, very important, not only for the oil and gas 
industry to reduce risk before they drill an exploration well 
or development well, but also for the government, to be able to 
develop policy, to be able to understand what resources are 
available. Because simply, right now, with the data available, 
we cannot accurately predict the resources that are available 
in this particular basin.
    Mr. Lamborn. What kind of potential is there to find more 
energy resources than the last time any seismic exploration was 
done over 40 years ago?
    Mr. Hobbs. It is extremely important for us to acquire the 
data sets that will allow us to understand what just the broad 
regional geology is, but also to understand what potential 
might be there to direct future license rounds.
    With the data that is currently available right now, it is 
impossible to do that. We have been able to try to reprocess 
the current data through our computer systems. And we have 
pretty much squeezed everything we can out of that old data. 
And what is absolutely necessary right now is to acquire new 
information. And these are surveys where we can come in, 
acquire the data, and leave, and process that data, and have 
that data available, both to the government, as well as to the 
oil and gas industry.
    Mr. Lamborn. And, Mr. Shuster, could you take a crack at 
that same question?
    Mr. Shuster. Yes. I certainly share the same view as my 
colleague. We need new data to be able to effectively 
characterize the resource. But we also need new seismic data in 
order to be able to actually determine where we want to drill. 
And, because of the improvement in the technology of the 
seismic methods, we certainly view that new data will let us 
see things that we haven't seen before, previously.
    Mr. Lamborn. Would you both agree that there is the 
potential for sizable amounts of oil or gas to be found, using 
advanced, current techniques?
    Mr. Shuster. Certainly. The view from Shell is that we see 
significant resource potential, both in the Atlantic and in the 
Eastern Gulf of Mexico.
    Mr. Hobbs. I would agree with that.
    Mr. Lamborn. OK. Thank you very much. And, with that, we 
will go to the last questions by Representative Beyer.
    Mr. Beyer. Thank you again, Mr. Chairman.
    Mr. Shuster, obviously, the great nightmare for all of us 
considering offshore drilling is the Deepwater Horizon, and 
what happened in the Gulf. Can you tell me what is going to be 
different, in terms of the drilling, technology, methodologies, 
science that will give us more comfort that this is not going 
to lead to massive oil spills along the Atlantic Coast?
    Mr. Shuster. Yes. So let me share with you what has already 
changed. So, the Macondo incident occurred in 2010, about 5 
years ago. And subsequent to that, the U.S. Government 
established a new organization, which is the Bureau of Safety 
and Environmental Enforcement, to ensure that new regulations 
that also had been put in place, like the new final drilling 
safety rule, could be enforced.
    In addition, industry moved forward and took steps with the 
formation of, for example, the Center of Offshore Safety, to 
ensure that the proper approaches to safety and environmental 
management systems could be put in place, that there were 
appropriate third-party audits being conducted on any offshore 
operation, including drilling.
    And, in addition, there have been technological advances 
and additional resources put on oil spill response that cover 
the Gulf of Mexico, including looking at new companies that are 
focused on containment. For example, the Marine Well 
Containment Company has been formed, and is active. And there 
is also the Helix Containment Group that is out there to be 
able to contain and intervene in the unlikely case that a spill 
should occur.
    Mr. Beyer. Can you tell us the current state of oil spill 
recovery, and the use of dispersants?
    Mr. Shuster. I can comment at a general level on that. I 
certainly can provide more information in detail from my 
colleagues. But the oil spill response has improved 
dramatically in the Gulf of Mexico. We have a much clearer 
understanding of how dispersants need to be used, and what sort 
of dispersants should be used in the case of a spill.
    Mr. Beyer. One last question for Commissioner Swearingen. I 
understand the Governor said that your Mayor was in favor of 
offshore drilling, and the Ranking Member submitted a bunch of 
letters of jurisdictions, towns that are opposed that are 
around the country. Do you know of any towns in North Carolina 
that have passed a resolution encouraging offshore drilling?
    Ms. Swearingen. No. As a matter of fact, of the 14 towns 
that submitted resolutions, absolutely none of them were in 
favor of offshore oil.
    And let me point out, because I also was going to ask to 
have our Mayor's letter inserted, because it is not from the 
town, it is not from the council. It is a letter he picked up 
at an oil industry conference. It is a canned letter on their 
letterhead, which he signed, supposedly as an individual, even 
though he did indicate he was with the Town of Kure Beach.
    Mr. Beyer. Are you going to run against him next time?
    Ms. Swearingen. Yes, I am running against him this year.
    [Laughter.]
    Mr. Beyer. Just kidding, actually. Thank you, Mr. Chairman.
    Mr. Lamborn. OK, thank you. And I appreciate the 
opportunity that we have had to ask all kinds of questions. I 
appreciate the knowledge and information that you have shared 
with us.
    And there are Members who may give you written questions 
for the record in the next couple of days. So I would ask that 
you respond to those in writing, as well, within 10 days. Let 
me clarify that.
    And the last business to do, I would like to enter into the 
record in support of Atlantic Coast energy exploration from the 
Lieutenant Governor of North Carolina; the Carteret County 
Economic Development Council in North Carolina; the North 
Carolina Farm Bureau; the OCS Governors Coalition, signed by 
the governors of North Carolina, Alabama, Mississippi, 
Virginia, Maine, and South Carolina; North Carolina's Joint 
Legislative Commission on Energy Policy; North Carolina State 
Senator Phil Berger; the city of Virginia Beach. And put these 
into the record, if no objection, so ordered.
    Last, I would like to enter into the record a recent letter 
led by Senators Mark Warner of Virginia and Tim Scott of South 
Carolina that expresses support for offshore energy development 
in the Mid- and South Atlantic, and revenue sharing for that 
development.
    Hearing no objection, so ordered.
    Let me lastly point out that next Wednesday we will have a 
full committee hearing on the changes that have taken place 
with advanced technology since the Macondo oil spill and 
government regulations to enhance safety.
    If there is no further business before the committee, we 
will be adjourned.
    [Whereupon, at 12:12 p.m., the subcommittee was adjourned.]

            [ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]

[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S 
                            OFFICIAL FILES]

Documents Submitted by Chairman Lamborn

Congressional Research Service Report, ``U.S. Crude Oil and 
Natural Gas Production in Federal and Non-Federal Areas,'' by 
Marc Humphries, Specialist in Energy Policy, dated April 3, 
2015. Available on the Internet at: http://www.crs.gov/
pdfloader/R42432

The following letters are submitted in support of OCS activity:

    -- Carteret County Economic Development Council, Eric 
            Gregson, President, March 23, 2015 Letter to 
            Governor McCrory, State of North Carolina

    -- City of Virginia Beach, William D. Sessoms, Jr., Mayor, 
            March 9, 2015 Letter to Ms. Kelly Hammerle, BOEM

    -- North Carolina Farm Bureau Federation, Inc., Larry 
            Wooten, President, July 10, 2014 Letter to Ms. 
            Kelly Hammerle, BOEM

    -- North Carolina Lieutenant Governor Dan Forest, August 
            14, 2014 Letter to Ms. Kelly Hammerle, BOEM

    -- North Carolina State Senator Philip Berger, August 14, 
            2014 Letter to Ms. Kelly Hammerle, BOEM

    -- North Carolina State Senator Philip Berger, March 30, 
            2015 Letter to Ms. Kelly Hammerle, and Mr. Geoffrey 
            Wikel, BOEM

    -- North Carolina State Senator Bob Rucho and North 
            Carolina State Rep. Mike Hager, North Carolina 
            Joint Legislative Commission on Energy Policy, July 
            29, 2014 Letter to Ms. Kelly Hammerle, BOEM

    -- Outer Continental Shelf Governors Coalition, March 30, 
            2015 Letter to Secretary Sally Jewell, U.S. 
            Department of the Interior

    -- Town of Kure Beach, North Carolina, Dean Lambeth, Mayor, 
            December 19, 2013 Letter to Mr. Tommy Beaudreau, 
            BOEM

    -- U.S. Senators Warner, Scott, Graham, Kaine, Burr, 
            Isakson, Perdue, and Tillis, April 7, 2015 Letter 
            to Senate Energy and Natural Resources Committee, 
            Chairman Lisa Murkowski and Ranking Member Maria 
            Cantwell

Documents Submitted by Ranking Member Lowenthal

Numerous Resolutions (53) from various towns and cities in 
Florida, Georgia, New Jersey, North Carolina, and South 
Carolina, opposing offshore drilling and seismic activity

The following letters are submitted in opposition to OCS 
activity:

    -- City of St. Augustine, Florida, April 15, 2014 Letter to 
            Mr. Gary D. Goeke, BOEM

    -- Group of Marine Scientists, Letter to President Obama

                                 [all]