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S. HRG. 111–303 

OFFSHORE ENERGY PRODUCTION 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

TO

RECEIVE TESTIMONY ON ENVIRONMENTAL STEWARDSHIP POLICIES 

RELATED TO OFFSHORE ENERGY PRODUCTION 

NOVEMBER 19, 2009 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Amos, John F., President, SkyTruth, Shepherdstown, WV ................................. 28 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Cruickshank, Walter, Deputy Director, Minerals Management Service, Department of the Interior ...................................................................................... 6 

Dorgan, Hon. Byron L., U.S. Senator From North Dakota .................................. 3 

Hrobsky, Jon, Director, Policy & Government Affairs, National Ocean Industries Association ................................................................................................... 65 

Menendez, Hon. Robert, U.S. Senator From New Jersey .................................... 5 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 2 

Odum, Marvin E., President, Shell Oil Company, Houston, TX .......................... 14 

Rainey, David, Vice President, Gulf of Mexico Exploration, BP America, Inc., 

Houston, TX .......................................................................................................... 35 

Short, Jeffrey, Pacific Science Director, Oceana, Juneau, AK ............................. 42 

APPENDIX 

Responses to additional questions .......................................................................... 69 

(1) 

OFFSHORE ENERGY PRODUCTION 

THURSDAY, NOVEMBER 19, 2009 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 10:35 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. All right, thank you all for coming. This is a 

hearing on environmental stewardship and offshore oil and gas development. These are vitally important issues to the long-term sustainability of our ocean resources and, obviously, to our national 

energy policy. 

It’s my hope that as part of this hearing we can focus on the 

facts surrounding offshore oil and gas production and its impact on 

the environment. At the end of the hearing, I hope we’ll have a better understanding of these issues that will help us in the upcoming 

debate on these subjects on the Senate floor. In the hearing, we’re 

following up on issues that were raised during the markup of our 

energy bill. 

Policy suggestions were made by Senator Dorgan and others 

about ways of addressing environmental concerns in this area. 

These ideas included limitations on structures within the line-ofsight of the coastline and the creation of ‘‘no development’’ buffer 

zones of various sizes between the coast, and actual production activities offshore. I think we all agreed that such discussion would 

benefit from a better understanding of the facts involved and that 

a hearing that would focus on these issues would be useful. 

The witnesses bring a wide variety of expertise to the subject. 

We have representatives from the Department of the Interior’s 

Minerals Management Service, the oil and gas industry, experts on 

ocean resources conservation. Each of these witnesses has significant technical and scientific experience with oceans and energy development. 

We look forward to a productive discussion. Let me call on Senator Murkowski for any comments she has. 

[The prepared statement of Senator Bingaman follows:] 

PREPARED STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW MEXICO

Welcome, everyone, to this Full Committee hearing on environmental stewardship 

and offshore oil and gas development. The issues we will discuss today are vitally 

important both to the long term sustainability of our ocean resources and to our na-
2 

tional energy policy. They are much debated, but unfortunately often with more 

heat than light on all sides. 

It is our hope in this hearing to move away from rhetoric and to focus on the facts 

surrounding offshore oil and gas production and its impact on the environment. At 

the end of this hearing I hope that we will have a better understanding of these 

issues that will guide our work on the Committee and in the Senate going forward. 

In this hearing we are following up on some issues raised during the markup of 

our energy bill earlier this year. Policy suggestions were made by Senator Dorgan 

and others about ways of addressing environmental concerns in this area. These 

ideas included limitations on structures within the line of sight of the coastline and 

the creation of no-development ‘‘buffer zones’’ of various sizes between the coast and 

production activities. I think we all agreed that such a discussion could benefit from 

a better understanding of the facts involved, and that a hearing focused specifically 

in this area would be useful. 

I look forward to hearing more about the environmental concerns presented by offshore development, the technologies and procedures available to address those concerns, and policy ideas to further environmental protection in the context of this development. It is my hope that we can use our time today to focus on these issues 

in particular, given the need for additional factual information in this area. 

The panel of witnesses here today brings a wide variety of expertise to these 

issues. We have representatives from the Department of the Interior’s Minerals 

Management Service; the oil and gas industry; and experts on ocean resources conservation. Each of these witnesses has significant technical or scientific experience 

with oceans and energy development, and we look forward to a productive discussion. 

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. Again, appreciate you convening this very important and timely hearing. 

I wasn’t sure that we were actually going to be returning to the 

OCS development this year after completing our energy bill, but 

I’m glad that we’re continuing the conversation. 

To start, I want to again congratulate you and Senator Dorgan 

for working with Republicans to advance an offshore production 

title in the energy bill. I think we recognize that there’s a need for 

balance in resource production with our responsibility to protect 

the environment. I do hope that we can improve on that production 

title and get the energy bill that we worked so hard on signed into 

law. 

We have got a duty to prevent and ameliorate environmental 

harm, and certainly buffer zones are one of the many ideas that 

can help protect our coastal areas. But, as we consider our options, 

I think we need to recognize that some of these ideas make more 

sense than others. I’m glad that we have the panel here to explore 

some of those in greater detail. 

Our committee has also debated revenue sharing. I believe it’s 

critical to environmental stewardship. Revenue sharing should be 

thought of as a collaboration between the Federal Government and 

coastal producing States necessary to secure meaningful production 

and to ensure that States and communities can study and adjust 

for any environmental impacts they might face. 

I’m proud of the bill that Senator Landrieu and I introduced, and 

I would remind my colleagues that there is a real and continuing 

need to reach agreement on this issue, because it’s not going away. 

In the meantime, I am compelled to voice my growing concern over 

this administration’s approach to OCS. It’s now been over a year 

since the offshore moratoria were lifted. This committee has voted 

for greater offshore production to boost our economy and our en-
3 

ergy security. But, there have been many executive actions, and 

perhaps a few that have not been taken, that appear to be taking 

us in an opposite direction. 

As we speak, the President’s Ocean Policy Task Force is developing recommendations that could effectively zone the oceans, in 

much the same way a local government could plan and zone a city. 

In September, the NOAA Administrator signed a letter to MMS 

criticizing most of the 5-year plan and suggesting its own set of deferrals, removals, and buffer zones. Then there’s the EPA, which 

has taken its authority for the permitting of OCS development outside of the Gulf of Mexico, and run with it. The agency has taken 

nearly 4 years now to consider an air permit for exploratory ships 

in our extremely remote Arctic areas. 

Some 200,000 miles, mostly offshore in resource-rich area of 

Alaska, had been proposed as critical habitat for polar bear. The 

Interior Department has committed to viewing all of its actions 

through the lens of climate change. Then hanging over all of this 

is Interior’s coming release of the revised 5-year plan, which will 

rank the sensitivity of coastal areas as a result of litigation by environmental groups. 

So, Senator Dorgan’s proposal for line-of-sight restrictions and a 

25-mile buffer zone is really just one of the many pending limitations. But, at least it’s originating here in the Energy Committee, 

where it can be properly vetted and debated. As we do, I think that 

we need to keep in mind just how many others are seeking authority that could be used to make the development process more complex than perhaps it should be. Instead of allowing many different 

agencies to control pieces of the offshore development process, we 

should be consolidating management, preferably to just one agency 

under this committee’s jurisdiction. 

We’ll have to work hard to restore our authority over the OCS, 

but it would be better for both resource development and environmental stewardship if we did. I don’t think that these goals are 

mutually exclusive, although perhaps some policies might tip that 

balance too far in one direction. 

I’m glad we’re having the opportunity to explore this here today, 

Mr. Chairman. Thank you. 

Mr. CHAIRMAN. Let me—since we don’t have many members, let 

me just see if Senator Dorgan would like to make a statement— 

and Senator Menendez, as well—before we hear from the witnesses. 

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM 

NORTH DAKOTA 

Senator DORGAN. Mr. Chairman, thank you. I asked for this 

hearing because I think, in the midst of discussion about climate 

change and energy policy, the issue of energy security will almost 

certainly require us to pursue the production of new energy from 

virtually every source. The question is, How do we produce additional energy, American-produced energy, in a manner that is in 

harmony with our responsibilities for environmental stewardship? 

During the debate earlier this year, I withheld an amendment 

that would have established in a requirement—a requirement that 

would set new standards on how oil and gas would have been pro-
4 

duced on the Outer Continental Shelf, based on various types of 

technologies, in terms of projects—a project’s distance to shore. I 

withheld that amendment, and yet you indicated you would hold 

this hearing. 

I requested this hearing really to focus on the technical issues of 

environmental stewardship, rather than to rehash the tired questions and old questions, but ones that won’t go away in other hearings, I assume, on State revenue sharing, royalty reform, the 5- 

year planning process, and so on. 

I think this question of environmental stewardship, and the technical questions that relate to that, vis-a-vis, line-of-sight and 25 

miles verses 45 miles, et cetera, are very, very important. 

I do want to mention that, during the 2005 hurricane season, 

when Katrina and Rita tore through the Gulf of Mexico, we had 

some damage to facilities in the Gulf—168 platforms had some 

damage, 55 rigs, 560 pipeline segments—and yet there were no 

major oil spills. The total amount of petroleum that was spilled as 

a result of the two most vigorous storms in many, many, many decades was 15,000 barrels. That’s about the size of an Olympic-size 

swimming pool. So, it suggests—and, I think, clearly suggests— 

that the technology has advanced in a very significant way. As a 

result of that, I offer the amendment that would open up the eastern Gulf. That had a 45-mile buffer zone, in the amendment that 

I offered. That eastern Gulf amendment, as you know, passed this 

committee. 

The question with respect to the Outer Continental Shelf, all of 

which is now open, and the production in the Outer Continental 

Shelf, is, What would be done with respect to a buffer zone there? 

The amendment that I had offered would have restricted surface 

presence, have ‘‘no surface presence’’ on line-of-sight. It would have 

had a 25-mile-plus ‘‘no surface’’ restriction. But, I think it is important for us to have a discussion in a committee hearing like this. 

What about these buffer zones? What are the consequences of 

them? How do we do the things that are necessary to unlock the 

opportunities so that we can produce more American energy? 

Mr. Chairman, you and I and Senator Domenici and Senator Talent were the first to offer legislation to open up Lease 181. A portion of that is now open as a result. In my judgment, more of those 

areas will become open on the Outer—well, more of those areas in 

the eastern Gulf will become open—all of it will become open as a 

result of our amendment if we get our bill to the floor at some 

point. Then the rest of the Outer Continental Shelf is open. So, the 

question is, How do we produce? With what environmental stewardship requirements do we begin this venture to produce more 

American energy? 

So, I thank you very much for calling this hearing, and look forward to the witnesses’ testimony. 

Mr. CHAIRMAN. Thank you. 

Senator Menendez, did you wish to make a statement before the 

witnesses—— 
5 

STATEMENT OF HON. ROBERT MENENDEZ, U.S. SENATOR 

FROM NEW JERSEY 

Senator MENENDEZ. Very briefly, Mr. Chairman. Thank you for 

the opportunity. 

You know, for those of us who look at States, like New Jersey, 

with a coastal line that is a national treasure and incredibly important to our economy and tourism, and the fishing industries that 

are economic engines of our State, we have concerns for any threat 

or risk to our shore. That is taken as seriously as the desire to 

produce energy. We don’t think it’s an unfettered concern or an unreasonable concern. 

You know, there’s natural disasters. Hurricane Katrina and Rita 

alone spilled some 9 million gallons of oil and—offshore and onshore operations. We see that, in fact, this is—recently, the National Academy of Sciences study showed us that current cleanup 

methods are still incapable of removing more than a small fraction 

of the oil spilled in marine waters. 

We look at the testimony this committee just most recently had, 

once again, where we had the Energy Information Administration 

say that the total unfettered drilling that some would seek on the 

Outer Continental Shelf would have no significant impact on domestic oil and natural gas production or prices. Or prices. 

Finally, I look at just what happened in Australia, with an entity 

that is state-of-the-art and is operating here in the United States, 

and I see millions and millions of oil spilling and weeks before, in 

fact, they cap it off. 

So, I know everybody says that can’t happen here. But, the fact 

is that it has happened. MMS has over 40 documented spills of 

47,000 gallons or more in the last decade or two—couple of decades, I should say. 

So, you know, when I look at Rita, Katrina, I look at just what 

happened in Australia, it’s a real cause for concern. 

So, I appreciate the balance that you’ve brought to the panel, Mr. 

Chairman, in today’s hearing, and look forward to the witnesses. 

Mr. CHAIRMAN. Very good. 

Let me introduce our witnesses, and then we’ll hear from them. 

Dr. Walter D. Cruickshank is here. He is deputy director of the 

Minerals Management Service in the Department of Interior. 

Thank you for being here. 

Mr. Marvin Odum, who’s not a regular witness, but a welcome 

witness here. He has been here before. He’s president of Shell Oil 

Company in Houston. 

Thank you for coming. 

Mr. John Amos is president of SkyTruth in Shepherdstown, West 

Virginia. 

Thank you for being here. 

Mr. David Rainey is vice president of Gulf of Mexico Exploration 

with BP America. 

Thank you for coming. 

Mr. Jeffery Short is Pacific Science Director for Oceana, which is 

located in Juno, Alaska. 

Thank you very much for being here. 

If each of you could take 5 or 6 minutes and give us the main 

points you think we need to understand about these issues, that 
6 

would be greatly appreciated. Your full statements will be included 

in the record, so you don’t need to go through it all with us. But, 

what are the main things we need to understand when we consider 

this set of issues. 

Mr. Cruickshank, you wish to go ahead? 

STATEMENT OF WALTER CRUICKSHANK, DEPUTY DIRECTOR, 

MINERALS MANAGEMENT SERVICE, DEPARTMENT OF THE 

INTERIOR 

Mr. CRUICKSHANK. Thank you, Mr. Chairman, Senator Murkowski, and members of the committee. Appreciate the opportunity 

to discuss the Minerals Management Service’s stewardship in promoting environmentally responsible energy and mineral development of the Outer Continental Shelf. 

MMS’s responsibilities extend over about 1.7 billion acres of the 

Outer Continental Shelf, or OCS. These responsibilities range from 

the initial resource assessments through the exploration, development, production, and, ultimately, the decommissioning of offshore 

facilities. We are charged with managing access to, and development of, oil and gas, renewable energy, and marine minerals in a 

manner that is operationally safe, environmentally sound, prevents 

waste, and provides a fair return to the public for its resources. 

For over 50 years, the Department of the Interior and MMS have 

overseen the OCS program by enforcing regulations, developing 

standards, and conducting environmental and technological research. The committee asked me to highlight MMS’s stewardship 

role with respect to oil and gas resources. I will provide a brief 

overview of three areas: how we determine which areas to lease, 

our environmental protections and standards over energy development, and our research programs. More detail on these topics can 

be found in my written statement, which I have submitted for the 

record. 

The OCS accounts for about 27 percent of the oil and 14 percent 

of the natural gas produced in the United States. We manage access to this oil and gas through our 5-year OCS Oil and Gas Leasing Program. In developing this program, we evaluate the economic, social, and environmental values of all the resources of the 

ocean and the OCS, and we look at the potential impact of oil and 

gas exploration on these resources and on the marine, coastal, and 

human environments. After a 5-year program is finalized, there is 

further environmental review and consultation with other Federal 

agencies, State, local, and tribal governments, and other stakeholders before holding any individual lease sale. As a result of this 

process, additional areas may be excluded from leasing and mitigating measures may be required to address any potential impacts 

from exploration and development. 

MMS’s responsibilities do not end when the leases are executed. 

We oversee a regulatory program that mixes prescriptive requirements and performance-based goals: failsafe mechanisms, including 

emergency shutoff valves and other safety equipment that are tested regularly; a robust inspection and enforcement program, which 

conducts over 25,000 inspections per year; conservation requirements to ensure the greatest ultimate recovery of oil and gas from 

developed fields and to limit the flaring and venting of natural gas; 
7 

oil-spill planning and response, including plans for responding to 

worst-case scenarios, and we conduct over 30 unannounced spill 

drills every year to test the capabilities of implementing those 

plans. All of this is done in coordination with other Federal agencies and State governments. 

We also administer a comprehensive environmental studies pro- gram that has invested about $840 million in research to support 

our stewardship role. We conduct studies in a variety of subject 

areas, including marine mammals, benthic biology, physical oceanography, fates and effects of discharges, and socioeconomics. Our 

research has added significantly to the scientific knowledge of the 

marine environment. For example, nearly 300 new marine species 

have been discovered as a result of the MMS studies. 

Our goal is to provide the information necessary for decisionmaking and in an adaptive management framework, and to develop 

workable solutions, such as mitigation measures, for activities that 

could impact the environment. 

MMS also funds research into operational safety, pollution prevention, and oil-spill response and cleanup through its technology, 

assessment, and research program. As part of this program, MMS 

manages the Ohmsett wave and test tank facility in New Jersey, 

which provides oil-spill response testing, training, and research opportunities to all comers. 

One of the best examples of MMS’s environmental stewardship 

is the Flower Garden Banks in the Gulf of Mexico, the northernmost coral reef in North America’s continental shelf. Starting in 

the 1970s, the Department of Interior began extensive studies and 

monitoring of these coral reefs, leading to the development of ‘‘no 

activity zones’’ and buffer zones of up to 4 miles where drilling discharges are handled in a manner to prevent contact with the coral 

reefs. In 1988, MMS established a monitoring program that now 

represents the longest continuously operating coral reef monitoring 

program in the world. After the Flower Garden Banks became a 

national marine sanctuary in 1992, MMS partnered with NOAA to 

ensure continued protection of these reefs, which now have a higher cover of living coral than other reefs off Florida and most areas 

of the Caribbean. They’re considered among the healthiest coral 

reefs in the world, while coexisting with oil and gas activity. 

In conclusion, the Department of the Interior and MMS are 

poised to continue our commitment to environmental protection 

and safe operations. We look forward to working with the committee as we move forward with our OCS oil and gas renewable energy and minerals programs. 

Mr. Chairman, this concludes my remarks and I would be happy 

to answer questions. 

[The prepared statement of Mr. Cruickshank follows:] 

PREPARED STATEMENT OF WALTER CRUICKSHANK, DEPUTY DIRECTOR, MINERALS

MANAGEMENT SERVICE, DEPARTMENT OF THE INTERIOR

Thank you, Chairman Bingaman, Senator Murkowski, and members of the Committee, for the opportunity to discuss the Minerals Management Service’s (MMS) 

stewardship in promoting environmentally responsible energy and mineral development on the Outer Continental Shelf (OCS). 

The Department of the Interior (Department) and its agencies, including the 

MMS, are public stewards for much of our nation’s natural resources. The Department manages 500 million acres of land, one-fifth of the land mass of the U.S., and 
8 

over 1.7 billion acres of the OCS. About 1/3 of the nation’s domestic oil and gas production comes from Federal resources managed by the Department. 

This land base includes areas that boast some of the best renewable energy resources available for development today. On the OCS, the Department of Energy’s 

National Renewable Energy Lab has identified more than 1,000 gigawatts of wind 

potential off the Atlantic coast, and more than 900 gigawatts of wind potential off 

the Pacific coast. Secretary Salazar is committed to taking the initiative in these 

areas by contributing to a clean energy-based economy that promotes investment 

and innovation here at home and in an environmentally responsible manner. Collectively, the Administration’s efforts to develop a clean energy economy will generate 

jobs, improve our energy security by reducing our dependence on oil, and reduce 

greenhouse gas emissions. 

We recognize that we will likely be dependent on conventional sources of energy— 

oil, gas and coal—for a significant portion of our energy for some time to come. 

Therefore, it is important that the Department continue careful stewardship of energy resources on public lands, both onshore and on the OCS. With these objectives 

in mind, the Department has been actively engaged in the Interagency Ocean Policy 

Task Force. The Task Force, established by President Obama is led by the White 

House Council on Environmental Quality and charged with developing a recommendation for a national policy that ensures protection, maintenance, and restoration of the ocean, our coasts and the Great Lakes. It will also recommend a 

framework for improved stewardship, and effective coastal and marine spatial planning designed to facilitate better management of multiple uses of the oceans, coasts, 

and Great Lakes, including oil and gas operations and emerging renewable energy 

resources well into the future. We strongly support this coordinated approach to sustainable management of our ocean, coastal, and Great Lakes resources. 

The MMS is charged with managing access to and development of the Nation’s 

energy and mineral resources on the Federal OCS in a manner that is operationally 

safe and environmentally sound, prevents waste, and provides a fair return for public resources. MMS is also responsible for the management of the mineral revenues 

generated from Federal and American Indian lands onshore and the Federal OCS. 

For 50 years, the Department of the Interior and MMS have overseen the OCS 

oil and gas program by enforcing regulations, developing standards, and conducting 

technology and environmental research. The Committee has asked me to highlight 

MMS’sstewardship role in managing OCS oil and gas resources. I will focus on three 

areas (1) how MMS determines which areas to lease to meet the Nation’s energy 

needs; (2) the environmental protections and standards for developing OCS energy 

and mineral resources; and (3) MMS research programs. 

DETERMINING AREAS TO LEASE

The MMS has cradle-to-grave management and oversight responsibility for oil and 

gas leasing, exploration, and development on the OCS. Section 18 of the OCS Lands 

Act requires the Secretary of the Interior to prepare a 5-Year oil and gas leasing 

program (5-Year Program) that consists of a 5-year schedule of proposed lease sales 

that shows size, timing, and location of leasing activity as precisely as possible. The 

OCS Lands Act mandates that the 5-Year Program must balance the priorities of 

meeting national energy needs, ensuring environmentally sound and safe operations, and assuring receipt of fair market value to the taxpayer. Before any particular lease sale is considered, it must be included in an approved 5-Year Program. 

The process to develop a 5-Year program includes three separate comment periods, two draft proposals, a final proposal, and the development of an environmental 

impact statement that informs the Secretary’s decision making. During this process 

MMS evaluates the economic, social, and environmental values of the renewable 

and nonrenewable resources in the OCS and the potential impact of oil and gas exploration on other resource values of the OCS and the marine, coastal, and human 

environments. Throughout the stages of developing the plan, MMS analysis is based 

on science and research obtained through the MMS Environmental Studies Program, Technology Assessment and Research Program, and studies from other 

sources such as other Federal and State agencies, the National Academy of Science, 

and universities. 

In order to balance the priorities of national energy needs, environmental protection and receipt of fair market value, the OCS Lands Act requires the Secretary to 

consider information on the geographical, geological, and ecological characteristics 

of each region; equitable sharing of development benefits and environmental risks; 

regional and national energy markets; other uses of the OCS; interest of potential 

oil and gas producers; the laws, goals and policies of the affected states; the relative 

environmental sensitivity and marine productivity of different areas of the OCS; and 
9 

the relevant environmental and predictive information for different areas of the 

OCS. 

The 5-Year Program initiates the process of deciding how, when and where it is 

appropriate to offer oil and gas leases on the OCS. As the leasing process moves 

forward, the potential areas to be offered for lease cannot be expanded from those 

available in the previous step without re-initiating the development of a new 5-Year 

Program. Thus, the entire leasing process proceeds from broad-based planning to a 

narrower focus as actual development is proposed. For example, it was at the final 

proposal stage of the current 2007-2012 5-Year Program, that the area 25-miles seaward of the coastline of the Chukchi Sea Planning Area was deferred from leasing 

activity to reduce potential environmental impact to the resources. For the Beaufort 

Sea Planning Area, the Barrow and Kaktovik bowhead whale hunt areas were also 

excluded from leasing. In the Central Gulf of Mexico Planning Area, the proposed 

final program included the commitment reached with the Governor of Alabama to 

avoid surface occupancy in a 15-mile area offshore Baldwin County, Alabama in 

order to mitigate visual impacts; this stipulation has been consistently included at 

the lease sale stage for all sales in this area since 1999. 

After a new 5-Year Program is finalized, there is further environmental review 

and consultation with other Federal agencies and state, local and Tribal governments before holding any individual lease sale. As with the 5-Year Program development, the individual sale process is conducted in an open, transparent, predictable 

manner. From the Call for Information/Nominations to the Final Notice of Sale, the 

individual lease sale process, described in section 19 of the OCSLA, includes many 

opportunities for public input, in addition to the opportunities offered by necessary 

procedures under the National Environmental Policy Act and Coastal Zone Management Act. In all, there are eight opportunities for public comment before a final decision is made to hold any OCS sale. As a result of environmental review and consultations in this pre-lease sale process, additional areas may be excluded from leasing and mitigating measures may be required to address any potential impacts from 

oil and gas exploration and development. For example, MMS has for decades ensured protection of the Flower Garden Banks in the northwest Gulf of Mexico, by 

prohibiting leasing in the immediate area and restricting activities in a surrounding 

buffer zone. 

OVERSIGHT OF OCS LEASES

MMS’s stewardship responsibilities do not end once leases are executed; they have 

only begun. The Department of the Interior’s OCS regulatory program has been in 

existence for 50 years. The program continues to evolve with the goals of improving 

effectiveness and efficiency and ensuring preparedness for new technological challenges such as deep water or Arctic operations. 

Our regulatory framework encompasses a variety of components which address 

environmental, safety, and conservation issues. This framework includes a threetiered approach to regulation, relying upon prescriptive requirements, performancebased goals, and consensus-based technical standards incorporated into MMS regulations. (A consensus-based technical standard is an industry standard where all 

concerned parties are given a voice in its development. While this process seeks 

agreement with most participants, it also resolves or mitigates the objections of the 

minority. MMS has incorporated 97 such standards into our regulations. The MMS 

continually reviews these regulations to update and revise them to ensure that they 

include the most effective requirements for promoting safety and environmental protection on the OCS.) 

Plan Submissions 

Once a lease has been issued, a lessee/operator must submit plans for MMS approval before beginning any activity. The lessee/operator must meet certain criteria 

documented in a site-specific Exploration Plan (EP) before beginning exploratory 

drilling on a lease. If exploration results are favorable, the lessee/operator moves to 

the production and development phase of its operations. The lessee/operator must 

submit a Development and Production Plan (DPP) or a Development Operations Coordination Document (DOCD). 

In water depths greater than 400 feet, the lessee/operator must also submit a 

Deepwater Operations Plan (DWOP) and a Conservation Information Document 

(CID). The purpose of the DWOP is to ensure that MMS has sufficient information 

to review any development project that uses non-conventional production or completion technology (in most cases, floating or subsea production systems) from a total 

system approach. MMS evaluates the system to determine whether the project will 

be properly developed, particularly from the standpoint of operational safety and en-
10 

vironmental protection issues. The purpose of the CID is to ensure that all economically producible reservoirs are developed. 

Each EP, DPP or DOCD must demonstrate that the proposed activities are conducted in a manner that— 

• Conforms to Federal laws and regulations • Is safe • Prevents waste, conserves natural resources, and protects Federal interests • Does not unreasonably interfere with other uses of the OCS • Does not cause undue or serious harm or damage to the human, marine, or 

coastal environment. 

An Application for Permit to Drill (APD) must be submitted to MMS for each and 

every well drilled on the OCS. Written approval is required before an operator may 

begin to drill any well, sidetrack, bypass or to deepen a well. The MMS requires 

each lessee/operator to take necessary precautions to keep wells under control at all 

times. The oil spill financial responsibility requirements must also be met. 

Fail-Safe Mechanisms 

Drilling and production safety equipment used on the OCS must be designed, installed, used, maintained, and tested in a manner to assure the safety and protection of the human, marine, and coastal environments. All wells open to hydrocarbon-bearing zones below the surface must be equipped with safety devices that 

will shut off the flow from the well in the event of an emergency, unless the well 

is incapable of flowing. All surface production facilities, including separators, treaters, compressors, headers, and flowlines, must be designed, installed, and maintained in a manner that provides for efficiency, safety of operations, and protection 

of the environment. Surface-and subsurface-controlled safety valves and locks must 

conform to the requirements of MMS regulations. Production facilities also have 

stringent requirements concerning electrical systems, flowlines, engines, and firefighting systems. The safety-system devices are tested by the lessee at specified intervals. 

Inspections 

MMS conducts announced and unannounced inspections of OCS facilities and any 

vessels engaged in drilling or downhole operations to determine whether an operator’s performance is acceptableyear-round. Surprise unannounced inspections foster 

a climate of safe operations, maintain an MMS presence, and focus on operators 

with a poor performance record. Noncompliance with requirements for specific installations or procedures is followed by prescribed enforcement actions consisting of 

written warnings or shut-ins of platforms, zones (wells), equipment, or pipelines. In 

the event noncompliance is detected, the inspector takes the appropriate enforcement action. If an operator is found in violation of a safety or environmental requirement, a citation is issued requiring that it be fixed within 7 days. The violation 

may call for the particular well component, production component, or the entire 

complex to be shut in. 

The Secretary also has other remedies, including the assessment of civil penalties 

for failure to comply with responsibilities under the law, a license, a permit, or any 

regulation or order issued. 

Coordination 

Throughout the 5-Year Program, individual sale, and regulatory processes, MMS 

consults with various Federal, state, and local agencies that share a stewardship 

role in managing the OCS. MMS consults with the National Oceanic and Atmospheric Administration (NOAA) and the U.S. Fish and Wildlife Service to meet the 

requirements of the Endangered Species Act. MMS meets with tribal leaders in accordance with government-to-government consultation requirements and to incorporate their views in decisions. MMS and other agencies routinely collaborate to develop Memoranda of Agreement on various areas of overlapping responsibility. 

Exploration and production activities proposed to MMS for approval must undergo 

environmental reviews by other federal agencies in compliance with more than ten 

statutes, executive orders and international agreements, in addition to the extensive 

environmental analysis required under NEPA. For example, proposed activities are 

examined for potential impacts to endangered and threatened species and habitat 

under the Endangered Species Act, to fish and habitat under the Magnuson-Stevens 

Fishery Conservation and Management Act, and to cultural resources under the National Historic Preservation Act. Evaluations of potential effects on marine mammals, birds, coral reefs, water quality, air quality, Indian sacred sites, and environmental justice also take place under separate consultation processes. Further, MMS 

coordinates with affected states under the Coastal Zone Management Act to ensure 
11 

any MMS-approved activities are consistent with a state’s federally-approved coastal 

management program. All of these environmental reviews are considered by MMS, 

along with the NEPA analysis, to make decisions on whether to approve an activity, 

and if so, what mitigation and monitoring measures must be put in place to eliminate or minimize any potential for adverse affects to these valuable marine resources. 

In addition, in 2004, MMS entered into a Memorandum of Understanding with 

the U.S. Coast Guard (USCG). MMS interacts with the USCG on a multitude of 

mission areas at all levels from Headquarters down to the field units. For example, 

MMS has been authorized to oversee the Fixed Platform Self-Inspection Program on 

behalf of the USCG, and frequently exchanges information with the USCG to clarify 

policy issues and provide compliance statistics. MMS also interacts with the USCG 

at the Region and District levels to coordinate overlapping areas of offshore inspection and accident investigation field activities. 

The MMS has been consulting with the military for more than 25 years at both 

the planning and operational stages to ensure that each agency meets the requirements of its mission while not unduly interfering with the other. Coordination under 

a 1983 MOA between the Department and the Department of Defense has yielded 

no serious conflict. For example, seven military communication towers installed by 

the U.S. Air Force offshore Mobile, Alabama support Air Combat Maneuvering Instrumentation; MMS coordinates with the Air Force to ensure non-interference with 

military operations in that area. Oil and gas activities are restricted so that no activity can take place within 500 feet of a tower site, and unobstructed lines of sight 

must be maintained between towers. The MOA is in the process of being updated 

to more accurately reflect the current status of the OCS and the new offshore renewable energy program. 

Conservation of Resources 

Part of the MMS mission is to manage ocean energy and mineral resources on 

the OCS to enhance public benefits, promote responsible use, and realize fair value. 

In order to accomplish this, MMS emphasizes the importance of conservation principles, which maximize the ultimate recovery of oil and natural gas from currently 

producing reservoirs. Sound conservation practices also ensure that the Nation 

reaps the full benefits of OCS development, including royalty revenues to the U.S. 

Treasury as well as domestic energy. 

Through regulation and oversight, MMS requires a lessee/operator to conform to 

sound conservation practices that ensure all recoverable oil and gas reserves are 

produced and enhanced recovery is used whenever possible. Enhanced recovery operations include a variety of methods that alter the natural forces in a reservoir to 

increase the ultimate recovery of oil and gas. To this end, in water depths greater 

than 400 feet, operators must submit conservation information documents (CID). 

The CID’s submitted by the operator undergo a detailed review by a multidisciplinary team composed of a petroleum engineer, a geologist and a geophysicist. This 

team reviews the CID to ensure that all economically producible hydrocarbon-bearing zones are developed in an efficient manner. Waste of hydrocarbons could occur 

if producible hydrocarbon reservoirs are bypassed. 

In addition, all requests to revise or abandon projects in deepwater are reviewed 

to ensure that wells are not prematurely abandoned before all economically producible reserves are recovered as outlined in the CID. 

In addition, MMS is revising its regulations on flaring and venting of natural gas. 

Flaring and venting are only allowed after receiving prior approval from MMS 

(MMS may deny a request to flare or vent). The new regulations will set clearer 

limits on natural gas flaring and venting and require operators to report the amount 

of natural gas they flare separately from the amount of natural gas they vent. In 

addition, we will require operators to install natural gas flare/vent meters on any 

facility that processes more than 2,000 barrels of oil per day. These changes will 

give MMS better data on natural gas flaring and venting operations on the OCS. 

Oil Spill Planning and Preparedness 

The Oil Pollution Act of 1990 and Executive Order 12777 gives DOI/MMS authority over oil spill planning and preparedness for facilities in state and Federal offshore waters that handle, store, or transport oil (excluding deepwater ports). The 

MMS Oil Spill Program was established to oversee planning and preparedness activities of operators of regulated facilities in offshore waters. The goal of the program is to ensure that, during a response, those who will operate oil spill response 

equipment or serve on management teams are prepared to do so in a manner that 

prevents or minimizes safety hazards to responders and the public, and negative impacts to the environment. 
12 

Affected offshore operators must prepare an oil spill response plan for MMS approval that includes details on how they will respond to a worst-case discharge scenario from both near-shore and far-shore locations. Contents of oil spill response 

plans include spill management team members, certification of contracts with oil 

spill removal organizations, notification requirements, sensitive resources, dispersant use plans, platform and pipeline information, and specific emergency management procedures. On an annual basis, MMS conducts over 30 unannounced oil spill 

drills to verify that operators are prepared to quickly and efficiently respond to a 

spill from one of their facilities. 

MMS RESEARCH PROGRAMS

The MMS is a leading participant in and supporter of scientific research relating 

to the ocean environment. Environmental stewardship is emphasized in all phases 

of OCS activity from the development of the 5-Year Program through platform decommissioning and removals. A fundamental goal of MMS’s Environmental Studies 

Program is to develop workable solutions for those activities in the OCS that could 

adversely affect environmental resources. Since the program’sinception in 1973, 

more than $867 million has been spent on environmental research to manage development of offshore energy and mineral resources. This allows MMS to determine 

how to maintain safety and environmental protection while approved exploration 

and development continue. In fiscal year 2008 alone, 29 environmental studies were 

contracted at nearly $16 million, and MMS completed 320 environmental assessments and two full, detailed environmental impact statements. 

In many areas, MMS research has added significantly to scientific knowledge of 

the marine environment. Nearly 300 new marine species have been discovered as 

a result of the MMS studies. One of these discoveries is the fascinating ‘‘iceworm,’’ 

that lives on the surface of frozen methane hydrate in deep waters of the Gulf of 

Mexico. 

One of the most important focuses for scientific study in the Alaskan offshore area 

has been the bowhead whale. Distinctive for its huge, comb-like baleen and thick 

blubber, the bowhead migrates annually between the Canadian Beaufort Sea and 

the Bering Sea. This large whale is vitally important to Alaska Native subsistence 

hunters and coastal villages in Alaska that are located along the migration route. 

The whale is protected by U.S. laws and has been designated as an endangered species. Since 1979, the MMS has funded and for many years conducted the ‘‘Bowhead 

Whale Aerial Survey Project’’to survey the bowhead whales’fall migration through 

the Western Beaufort Sea. During many summers between 1979 and 1991, the 

MMS funded aerial surveys in the Chukchi Sea for marine mammals. Since 2008, 

MMS has funded the ‘‘Chukchi Offshore Monitoring in Development Area’’to provide 

aerial surveys of the migration in the Chukchi Sea Planning Area. This project is 

coordinated through NOAA’s National Marine Mammal Laboratory. The MMS uses 

the aerial survey information from the Beaufort and Chukchi Seas in the environmental review of OCS activities. Further, the information is available for any other 

entity to use and is posted on MMS website and the NOAA Fisheries Alaska Fisheries Science Center website. 

The MMS also funds research into operational safety, pollution prevention, and 

oil spill response and cleanup capabilities through its Technology Assessment and 

Research (TAR) Program. In fiscal year 2008, the MMS funded 29 TAR studies at 

nearly $3 million. The components of the TAR Program include the Operational 

Safety and Engineering Research program that addresses technological issues associated with the complete spectrum of oil and gas operations ranging from the drilling of exploratory wells to the removal and decommissioning of facilities on the 

OCS; the Oil Spill Response Research (OSRR) program that covers a wide spectrum 

of oil spill response issues to improve the knowledge and technologies used for the 

detection, containment and cleanup of oil spills that may occur on the OCS; and the 

Renewable Energy Research program that addresses technology and engineering 

issues associated with renewable energy projects on the OCS. 

This research enables MMS managers to make better decisions in evaluating 

operational proposals and enables regulators to consider the latest technological advancements in enacting new regulations. As a result, the MMS has a robust regulatory system designed to prevent accidents and oil spills from occurring. This includes redundant well control equipment, emergency plans, and production safety 

systems as well as a host of other requirements. This has proven effective both in 

the wake of hurricanes in the Gulf of Mexico and in the Arctic conditions on the 

Alaska OCS. 

Through the OSRR program, MMS also manages the Ohmsett wave and test tank 

facility at the Naval Weapons Station Earle Waterfront in Leonardo, New Jersey. 
13 

Ohmsett provides oil spill response testing, training, and research opportunities to 

government, industry, academia, and private organizations on a reimbursable basis. 

Standard test protocols are used at Ohmsett to evaluate oil spill containment booms 

and skimmers. Ohmsett provides the intermediate step between small-scale and 

open water testing of equipment. An estimated 95% of the performance data on mechanical equipment used today was obtained at Ohmsett. Ohmsett is also developing the capability to test renewable energy wave and current systems. 

EXAMPLES OF MMS STEWARDSHIP OF LEASED AREAS ON THE OCS

One of the best examples of MMS environmental stewardship is at the Flower 

Garden Banks in the Northwest Gulf of Mexico. These two banks are the northernmost coral reefs on the continental shelf of North America and have a higher cover 

of living coral than other reefs off Florida or most areas of the Caribbean. They are 

considered among the healthiest coral reefs in the world. They also lie in an area 

of the Gulf of Mexico with extensive hydrocarbon reserves. 

Beginning in the early 1970s, MMS initially required extensive monitoring studies 

of the reefs related to each energy development activity, typically many miles away. 

This requirement was later dropped and buffer zones were developed to prevent any 

possible impacts to the coral habitats from energy development activities including 

physical contact as well as discharges from drilling activities. Required protection 

measures range from specific areas where no activity of any kind is allowed, up to 

a four-mile radius where all drilling discharges are required to be transported or 

shunted to near the sea bed in deeper water preventing any transport onto the coral 

reefs. 

Even though surrounded by numerous active oil and gas platforms, these coral 

reefs remain extremely healthy, while the majority of coral reefs all over the world 

suffer from extensive mortality due to heat stress and land-based sources of impacts. One existing platform structure is located just one mile from the coral reef 

at the East Flower Garden Bank. This platform predates, and is located inside the 

boundaries of the Flower Garden Banks National Marine Sanctuary. It has served 

as a research station in the past through cooperative arrangements with industry. 

Although MMS began research and monitoring at the Flower Gardens in the 1970s, 

both NOAA and MMS began sharing the expense of annual monitoring of the reefs 

beginning shortly after their designation as a sanctuary in 1992. 

The MMS has also been a leader in the protection of deep-sea biological communities, particularly chemosynthetic communities and cold water corals. 

Chemosynthetic communities (animals living independent of photosynthesis required by most all other life on earth) were first discovered in the Central Gulf of 

Mexico during an MMS-funded study of the deep continental slope in 1984. MMS 

recognized the importance of these unusual habitats and this particular project was 

extended specifically to study these new communities for the first time. Through 

MMS studies, chemosynthetic communities in the Gulf of Mexico are the best understood ecosystems of their kind anywhere in the world. Avoidance regulations were 

established beginning in 1988 and adapted over time as we learned more about 

these communities, leading to increased buffer distances from both energy production discharge locations and physical impacts such as anchors. 

MMS has also been at the forefront of the study of cold water corals beginning 

in the 1990s. The most extensive deep coral habitat in the Gulf of Mexico was discovered in 1,500 feet of water southeast of Louisiana in 1993, during a standard visual survey required by MMS prior to operations. Through an adaptive management 

approach, regulatory policies are being revised to incorporate recent MMS scientific 

findings. Two recent studies have determined that very sensitive deepwater coral 

habitats occur as shallow as 300 meters. Amending MMS’s regulatory policies to require review for these coral habitats beginning at 300 meters rather than 400 meters, will result in extended avoidance and buffer distances from all potential deep 

water coral habitats and protect these corals. 

Historic preservation is another aspect of MMS’s protection of theoffshore environment. The MMS considers the effect of all its actions, including lease sales, studies 

and permits, on the cultural heritage of the Nation. To meet this responsibility, it 

requires the oil and gas industry to conduct marine remote-sensing surveys that 

may identify shipwrecks. As a result, a highly sought-after World War II German 

submarine, the U-166, was discovered 45 miles from the mouth of the Mississippi 

River through the joint efforts of MMS and the oil industry charged with conducting 

the surveys. The U-166, the only German submarine sunk in the Gulf of Mexico, 

rests in the crater it created when it was sent to the bottom by a depth charge in 

the summer of 1942, shortly after the U-166 torpedoed and sank the passenger 

freighter S.S. Robert E. Lee. The wreckage of the submarine was found in 5,000 feet 
14 

of water. The U-boat’s whereabouts had long been disputed and it was thought to 

lie far from its actual resting-place. MMS archaeologists were part of the scientific 

team that was instrumental in locating and identifying the World War II U-boat. 

The discovery solved a 59-year old mystery and ended decades of fruitless searching. 

In addition, we have just finished the third year of a four-year project jointly 

sponsored by MMS and NOAA’s Office of Ocean Exploration and Research, to better 

understand ocean ecosystems, corals and submerged historic and cultural resources 

in the Gulf of Mexico. By working together, we combine our talent, funding and 

physical resources to meet important objectives for both agencies with better results 

and lower costs than either agency could realize alone. 

CONCLUSION

The Department and MMS are poised to continue their vital roles in managing 

OCS conventional and renewable energy resources. The magnitude and complexity 

of being a responsible steward requires a continued commitment to environmental 

protection and safe operations on the OCS. The MMS takes OCS stewardship responsibilities seriously and is committed to regulating the development of the Nation’s energy and mineral resources through measures to ensure environmental protection and safe operations, continued research, and requiring fair returns and accurate accounting of revenue generated from the Federal resources. 

We welcome your input on our Nation’s energy initiatives and look forward to 

working with the Committee as we move forward with our OCS energy and minerals programs. Mr. Chairman, this concludes my remarks. I would be happy to answer any questions. 

Mr. CHAIRMAN. Thank you very much. 

Mr. Odum, please go right ahead. 

STATEMENT OF MARVIN E. ODUM, PRESIDENT, SHELL OIL 

COMPANY, HOUSTON, TX 

Mr. ODUM. Thank you, Chairman Bingaman, Ranking Member 

Murkowski, members of the committee. Thank you for the opportunity to testify today on environmental stewardship as it relates 

to offshore oil and gas production. 

I’d like to begin by sharing a couple of relevant statistics. Global 

energy demand is projected to increase by 50 percent over the next 

20 years, and could double by the year 2050. The world faces a 

daunting challenge, how to meet this escalating demand in ways 

that protect the environment. 

Now, it’s very clear that we will need a wide range of energies, 

particularly over the next several decades, including alternatives, 

renewables, nuclear, and more oil and gas from the Outer Continental Shelf. Now, fortunately, we’re not forced to choose between 

OCS development or the environment. We can have both. 

Today, I would like to address questions that often come with 

discussions of OCS exploration and production, and explain some 

of the technologies and safeguards that Shell and the industry have 

in place to protect the environment. 

As a frame of reference, more than 30,000 wells have been 

drilled in the Gulf of Mexico, and thousands of scientific studies 

have been conducted by government, academia, and industry, and 

have shown that we can, and do, manage and mitigate environmental impacts responsibly. Our record continues to improve. 

We recognize, in the context of a comprehensive energy policy, 

that we need to address the challenges of climate change. Shell 

agrees that we must reduce CO2 emissions by developing a full 

range of low-carbon energies, along with effective mitigation technologies for fossil fuels like carbon capture and sequestration, all 
15 

preferably within a phased-in cap-and-trade program to protect 

American jobs and our economy. 

Now, we should take action on these issues now, but not at the 

expense of further development of the OCS. Access to the vast resources in the OCS is critical. We need it and it’s good for this 

country. Developing more of our own resources will reduce imports, 

create jobs, provide energy security, and help our balance of trade. 

It will allow these resources to be developed in a manner that fits 

our environmental goals and avoid the hypocrisy of being willing 

to buy from other countries rather than produce our own resources. 

Our industry can develop offshore resources with a footprint that 

is smaller than ever before. As an example, Shell’s Perdido project, 

in the ultradeep Gulf of Mexico—an example is that project. Three 

different offshore fields, covering about 90 square miles, will be 

tied into a single facility located in 8,000 feet of water, 200 miles 

offshore. Now, technically, this single surface point could reach oil 

and gas volumes within a 30-mile radius. 

Offshore oil and gas facilities are complex and highly sophisticated. It’s critical that they be designed, installed and operated for 

safety and environmental protection. Control practices are built on 

the principle of redundant barriers. For example, exploration and 

production wells entail multiple layers of protection, such as proper 

engineering, materials design, and training of staff, realtime monitoring of multiple data points, both at the surface and deep in well 

bores, and that’s used to detect variations in performance and mitigate those items before they become problems. Multiple mechanical 

barriers, such as pressure-sealed well casing, blowout preventers, 

and subsurface safety valves, are utilized. 

Now, despite these safeguards, it is necessary to be prepared to 

react and mitigate if an oil spill occurs. Now, we are prepared to 

respond quickly with the right skills and equipment. In Alaska, 

that means a response time of 1 hour or less. 

Now, discharges in the ocean are often cited as a concern. Now, 

this is a highly and effectively regulated activity. Any discharge or 

emission must meet Clean Water Act and Clean Air Act requirements. The EPA and the MMS impose tight controls on allowable 

discharges and emissions based upon sound science. 

Now, regulations require drilling fluids, for example, to be tested 

for composition and pass a battery of tests for toxicity to marine 

life and biodegradation rate in the environment before they can be 

discharged. 

Noise is also cited as a concern with respect to marine mammals. 

In Alaska, Shell has a monitoring program that includes marine 

mammal observers, both on board vessels and in aircraft, as well 

as an unprecedented network of seafloor acoustic recording devices 

to capture the sounds of whales, other animals, and human activity, helping us understand their distribution, their abundance, and 

the migration routes, as well as document any subtle behavioral 

changes that they might make in response to our activity. 

Shell and the industry take very seriously our responsibility to 

develop offshore resources with careful regard for the environment. 

If the government chooses to develop parts of the OCS, which is essential to meeting America’s energy needs, then the OCS leasing 

program should be truly supported. When a lease sale is held, the 
16 

government should be prepared to do the required permitting and 

environmental work in a timely manner by ensuring the necessary 

financial and human resource support. The regulatory system has 

worked well in the Gulf of Mexico for 50 years. The Federal system 

for the Alaska OCS, by contrast, is in need of attention. 

In addition, the government should provide revenue sharing for 

impacted coastal communities, not just the Gulf Coast States. Some 

argue that revenue sharing takes money out of the Federal treasury. I believe revenue sharing is essential to enable offshore development and will bring additional revenues into the Federal treasury. 

In summary, we must stop ignoring the fact that oil and gas will 

play a major part in meeting America’s energy demands for several 

decades as we transition to a more sustainable energy future. Our 

economy’s health and our Nation’s security demand and deserve 

nothing less. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Odum follows:] 

PREPARED STATEMENT OF MARVIN E. ODUM, PRESIDENT, SHELL OIL COMPANY, 

HOUSTON, TX 

Mr. Chairman and members of the Committee, I appreciate the opportunity to 

testify today about environmental stewardship and offshore oil and gas development. 

This hearing is timely and some might say urgent. 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 the fact that oil and gas will play a 

major part in meeting America’s energy needs for decades to come. The United 

States has vast oil and gas resources on the Outer Continental Shelf (OCS). 

There is some hypocrisy in locking these resources away while relying on resources produced in other countries. Instead, we should embrace policies that provide access to our own oil and gas resources. 

Let’s be clear. As a responsible integrated energy company, Shell recognizes that 

access alone will not solve our energy challenges. We also need alternatives and renewables and effective mitigation technologies, such as carbon capture and storage 

(CCS), operating within a workable, phased-in cap-and-trade program that best addresses CO2 emissions and protects our economy. 

Access to our natural resources will also contribute to U.S. energy security and 

contribute to economic health by creating U.S. jobs and improving our balance of 

trade. 

The record clearly shows that offshore development can occur in an environmentally responsible way. We should demand no less. 

There are those who promote a ‘‘do nothing’’ approach to OCS development. Perhaps they have an outdated view of how the oil and gas industry operates today. 

I appreciate the opportunity to provide the facts because the facts show that environmental stewardship and oil and gas activity are not mutually exclusive. We do 

not have to choose between OCS development or the environment. We can access 

OCS resources and be good environmental stewards. 

I am hopeful that this hearing will advance discussion so that we can come together around the facts, reject the myths and move forward on solutions that will 

fuel economic growth. 

Today I will discuss three major points. 

• First, the vast U.S. oil and gas resources that can and must play a critical role 

in meeting that future energy demand and in fueling the economy 

• Second, the oil and gas industry’s environmental record on the Outer Continental Shelf and the role of technology and science in environmental stewardship 

• Third, the steps that industry and governments can take to ensure environmentally sound development of the OCS. 
17 

ABOUT SHELL

Before addressing these points, let me provide background about Shell. We are 

an integrated oil and gas company, dedicated to meeting ever-growing energy needs 

efficiently and responsibly. 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. In 2009, we expect to invest about $31 billion worldwide to develop a broad portfolio of energies. 

THE OCS: MEETING ENERGY DEMAND AND DRIVING ECONOMIC GROWTH

In summary: 

• Global demand for energy will continue to grow, and existing and developing 

energy sources may well struggle to keep up with demand. Consistent with the 

desire to transition to a low carbon energy mix as soon as possible, oil and gas 

resources will be needed for decades to come. 

• The U.S. has vast oil and gas resources on the Outer Continental Shelf, and 

it is within government’s ability to reduce imported energy with more domestic 

supplies. 

• Domestic oil and gas production provides energy security, improves the balance 

of trade figures, creates jobs, generates federal revenue and drives economic stability. 

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 fades and economies recover, demand will accelerate. A key 

driver will be the strong economic growth and a vast, emerging middle-class in the 

developing nations. 

Just last week, the International Energy Agency warned that rising crude prices 

could hamper economic recovery. In raising its daily oil-demand forecast by 140,000 

barrels, the agency projected that demand for oil will increase to 86.2 million barrels 

a day next year because of emerging markets. 

U.S. OCS Resources 

The U.S. imports approximately 60 percent of its petroleum needs. This is not 

necessary and can be turned from a problem into an opportunity. The U.S. has vast 

oil and gas resources. According to the U.S. Minerals Management Service (MMS), 

there are 420 trillion cubic feet of natural gas and more than 86 billion barrels of 

oil yet to be discovered on the Outer Continental Shelf, including Alaska. To put 

that into perspective, that is enough natural gas to heat 100 million homes for 60 

years and enough oil to fuel 85 million cars for 35 years. My belief is that these 

resource estimates will continue to increase as we develop the technology to discover 

and produce them. 

Summarized here is the resource potential in four key offshore areas of the United 

States: the Gulf of Mexico, Alaska, the Atlantic Coast and the Pacific Coast. 

Gulf of Mexico.—This is the heartland of the U.S. offshore activity. The industry has been exploring for and producing in the Gulf for more than 50 years. 

Although records from the early days of near-shore production are incomplete 

or unavailable, we know from MMS and Energy Information Administration 

(EIA) records dating back to 1980 that the Gulf of Mexico has produced more 

than 10 billion barrels of oil and more than 73 trillion cubic feet of natural gas. 

The Gulf of Mexico remains a significant petroleum province. The MMS estimates that there are 45 billion barrels of oil and more than 233 trillion cubic 

feet of gas. Combined, this is the equivalent of more than 86 billion barrels of 

oil remaining. With new technology enabling development of deepwater and 

ultra-deep water, I believe these estimates could be low. 

Shell has been a leader in Gulf of Mexico production. More than 80 percent 

of our OCS leases are in deep and ultra-deep water. In the coming months, the 

Shell Perdido project will initiate production with a nameplate capacity of 

130,000 barrels equivalent per day. It will be the world’s deepest drilling and 

production facility and include the deepest subsea well. 

Shell-operated production in the Gulf of Mexico averages more than 400,000 

barrels of oil equivalent per day. In fact, our Mars Platform produces about 3 
18 

percent of all U.S. crude production and nearly 1 percent of the nation’s total 

daily crude oil usage. 

Alaska OCS.—Alaska’s OCS has world-class oil and gas potential, holding an 

estimated 27 billion barrels of oil and 132 trillion cubic feet of natural gas. Exploring for oil and gas offshore Alaska is not new. A total of 30 wells have been 

drilled in the Beaufort Sea and five wells drilled in the Chukchi Sea. In the 

1980s, Shell acquired federal leases in the Beaufort Sea and drilled seven exploration wells. Although we found oil and gas, developing these wells was not economically viable at that time. 

Now let’s fast forward some 25 years. Since 2005, the federal government has 

held several OCS lease sales in Alaska. Shell participated in making these sales 

a success and paying the federal treasury nearly $3 billion for ten-year leases 

in the Beaufort and Chukchi Seas. We have the most environmentally sensitive 

and thoroughly responsible exploration plan in history, involving hundreds of 

millions of dollars of investment in equipment, support vessels, baseline studies 

and workforce training. Yet, we have not drilled a single exploration well, due 

in large part to permitting delays and litigation. I will share more on this later 

in my testimony. 

Atlantic and Pacific Coasts.—The oil and gas resource potential off the Atlantic and Pacific Coasts is also substantial. The MMS estimates that there are 4 

billion barrels of oil and 37 trillion cubic feet of gas off the Atlantic Coast, and 

10 billion barrels of oil and 18 trillion cubic feet of gas off the Pacific Coast. 

However, assessments of resources have not been updated in decades, and, 

therefore, it is likely that even greater volumes of oil and gas exist. Although 

the moratorium on offshore leasing in these coastal areas has been lifted, the 

government has not yet determined whether and where to allow oil and gas 

lease sales. 

Benefits of Domestic Oil and Gas Development 

We should not be satisfied with having other nations produce their energy for our 

use. The cost is enormous. According to the EIA, the U.S. imports nearly 12 million 

barrels per day or approximately 60 percent of our consumption. These imports cost 

the U.S. nearly $600 billion last year. 

The choice is clear. We can continue to bear the costs of importing ever-increasing 

volumes of oil and gas or we can develop our own domestic resources. Producing 

more oil and gas in the U.S. is a ‘‘no lose’’ proposition. It will provide energy security, improve the balance of trade figures, create jobs and generate federal revenue. 

In sum, domestic oil and gas development is an economic engine. 

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 U.S., 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. 

Revenues to federal and state governments also increase as a result of domestic 

oil and gas activity. According to the MMS, the OCS leasing program is the second 

largest source of federal revenue. In 2008, a record $23.4 billion was collected from 

energy production on federal lands (onshore and offshore). In total, OCS oil and gas 

development has generated more than $190 billion in federal revenue from lease bonuses and royalty payments since 1953, in addition to federal, state and local income and property taxes. Future OCS activities would produce more federal revenues. A study by ICF International looked at oil and natural gas resources (both 

offshore and onshore) that until recently were off limits and concluded that development could generate more than $1.7 trillion in government revenue, create many 

thousands of new jobs and enhance our nation’s energy security. 

The Land & Water Conservation Fund (LWCF) is almost entirely funded from 

OCS revenues. Washington, D.C. has received $14 million in 85 grants, Virginia has 

received $81 million in 377 grants impacting 46,000 acres of parkland and Maryland 

received $76 million in 327 grants impacting 43,000 acres of parkland. Nationally, 

this program has funded more than $7.2 billion (leveraged with a 50-percent match) 

in more than 40,000 projects impacting more than 2.6 million acres of parkland 

across the U.S. Of importance, the LWCF program is at risk if additional OCS production is not pursued. 
19 

ENVIRONMENTAL STEWARDSHIP

Finding environmentally and socially responsible ways to meet the nation’s energy needs is critical to our business success. We are acutely aware of the passion 

around the potential adverse impacts of offshore oil and gas activities. These include: 

• GHG emissions from the combustion of oil and natural gas, 

• environmental footprint and visual impact, 

• risks of a major oil spill on marine wildlife and sensitive environments and 

whether spilled oil can be cleaned up (especially in Arctic conditions), 

• discharges into the ocean and air emissions from offshore platforms, 

• noise impacts on marine mammals, and 

• operating in sensitive areas. 

The industry has an excellent record of exploring for and developing OCS resources. Advances in technology and science have enabled this in ways that were 

unimaginable even a few years ago. We can drill safely and efficiently with an eversmaller environmental footprint in ever-greater water depths farther and farther 

from shore with minimal stress on the oceans. 

We can operate as good stewards of the environment and, at the same time, address many of our nation’s pressing needs, as the U.S. Commission on Ocean Policy 

said: 

America can protect the marine environment while creating jobs, increasing revenues, enhancing security, protecting cultural heritage, expanding 

trade, and ensuring ample supplies of energy, minerals, healthy foods, and 

life-saving drugs. 

Shell is very familiar with the work of the Interagency Ocean Policy Task Force 

to develop a national framework for eco-system-based management of our nation’s 

oceans. We believe this is an excellent opportunity to recognize the importance of 

offshore energy to our country’s economy and security, and we acknowledge the vast 

body of existing science that guides us, as I will discuss later in these remarks. 

Shell is hopeful that the Task Force will provide recommendations that properly 

balance the environmental, economic and social priorities that ought to guide our 

national ocean policy. 

Let me address some of those key concerns here. 

Climate Change 

There is concern or outright opposition to offshore oil and gas development from 

those who oppose the use of fossil fuels. This reflects a concern about the consequences of CO2 emissions and global climate change, including concerns about the 

impacts of the changing climate on sea levels, polar ice and ocean acidification. 

Shell agrees that CO2 emissions must be reduced and that climate solutions must 

be embraced. Shell advocates strongly for cap-and-trade-based legislation to ensure 

that greenhouse gas reduction goals are met, but any program must make a fair 

allocation of credits. 

Shell also recognizes the ‘‘hard truth’’ that the world must rely on oil and gas for 

several decades to come as we transition the U.S. energy mix to a lower carbon energy mix. It is simply not reasonable to think that we can turn off oil and gas use. 

And we cannot afford to. We need the energy from oil and gas to fuel economic 

growth and stability. Only if we are economically healthy can the transition to new 

technologies, new energy sources and new energy-efficient ways of living be 

achieved. It is important to recognize that this is not an ‘‘either/or’’ situation—either 

fossil fuels or alternatives, renewables and other energy sources. We will need all 

sources to meet demand. 

In addition to advocating for government cap-and-trade frameworks, Shell is 

working to address the climate challenge by 

• increasing the efficiency of our own operations; 

• establishing a substantial capability in Carbon Capture and Storage; 

• continuing research and development on technologies that will increase efficiency and reduce emissions; 

• helping our millions of retail and business customers use less energy and emit 

less CO2; and 

• aggressively developing low CO2 sources of energy, including natural gas, 

biofuels and other low-CO2 fuel options. 

Let me say a word about the potential for natural gas because the development 

of our nation’s domestic gas resources is a major success story for our country. By 
20 

combining new advanced technologies involving horizontal drilling with proven technologies such as hydraulic fracturing, we have increased onshore natural gas production by more than 20 percent over the past three years—an accomplishment that 

most energy experts thought impossible a few years ago. 

According to some experts, America’s known natural gas resources now exceed 

100 years of supply at current U.S. consumption levels—and we are finding more 

every day. The fact that we have such enormous resources gives our country increased energy security and flexibility to address issues, such as climate change, 

since natural gas is a clean-burning fuel that can help to reduce carbon emissions. 

It serves as an important bridge as we develop new renewable energy sources. 

Therefore, it is important that policymakers recognize the critical role of natural gas 

as climate and energy legislation is developed. In particular, legislation should not 

inadvertently disadvantage natural gas. 

Footprint on the OCS 

The oil and gas industry can develop offshore resources with a footprint smaller 

than ever before. This is an important aspect of our environmental stewardship. It 

is possible to develop very large sub-surface areas with a very small surface expression. The technologies that enable this can be applied both near shore and in deepwater. Let me describe some of the technologies. 

Our Deepwater technology program focuses on equipment and integrated systems 

required to produce hydrocarbons with fewer and smaller surface facilities and reduced environmental impacts. This involves the optimal use of subsea production 

systems and new floating drilling and production systems. New technologies include 

subsea separation and boosting, subsea re-injection of produced water and long-distance pumping with flow assurance. All of our deepwater projects go through an internal carbon footprint and environment impact assessment as part of the tollgates 

to final investment decisions. 

Perdido is an ultra-deep water project in the Gulf of Mexico that illustrates the 

industry’s ingenuity and smaller footprint. Three different offshore fields covering 

about 90 square miles in the OCS will be tied into a single facility at Perdido. Technically, the project provides the infrastructure that could enable future oil and gas 

volumes from a 30-mile radius. That means that about a 3,000-square-mile area can 

be developed sharing one facility. 

Even more astounding is the fact that Perdido is in 8,000 feet of water 200 miles 

south of Houston. When the leases were acquired in 1996, the deepest projects in 

the Gulf were in 3,000 feet of water. We did not have the technology at that time, 

but we were confident that it could be developed. 

There were significant challenges to the project due to water depth, water pressure and reservoir characteristics. What mooring systems should be used in ultradeep water? How should we address harsh wave loading conditions? How should we 

overcome the massive hydrostatic pressure in order to produce 8,000 feet below the 

surface of the water? 

Over a period of more than a decade and at a cost of several billion dollars, the 

technology was developed to make the project work. For the first time, the oil and 

gas produced will be separated on the seafloor and ‘‘boosted’’ to the surface using 

machines purposely built for this project and installed and maintained using robotics. Perdido is the first application of wet tree direct vertical access (DVA) wells 

from a spar—a configuration that allows a larger number of subsea wells to be 

accessed from a smaller surface host facility. By utilizing a single well slot to access 

the wells beneath the surface facility, the size and cost of project are reduced. At 

the same time, the number of wells that can be accommodated by the surface facility is not limited. 

When Perdido begins producing in the next few months, it will be the world’s 

deepest offshore oil development, the deepest drilling and production facility and the 

deepest subsea well. It will have a nameplate capacity of 130,000 barrels equivalent 

per day. 

The Ormen Lange project in Norway also demonstrates how technology enables 

offshore development with a small footprint. In fact, there is no surface facility on 

the offshore at all. Despite being in 3,600 feet of water with uneven seafloor terrain, 

strong seafloor currents, subzero temperatures and extreme wind and wave conditions, our engineers designed a ‘‘Subsea-to-Beach’’ production system in which the 

natural gas is produced from subsea wells and transported some 75 miles through 

subsea flowlines to the shore. This complex project producing from one of the largest 

gas wells in the world in the deepest water depths in Europe will provide up to 20 

percent of the natural gas needs of the UK for up to 40 years. 
21 

Operational Integrity and Incident Prevention 

Offshore oil and gas facilities are complex and highly sophisticated. It is critical 

that they be designed, installed and operated with rigorous attention to preventing 

incidents of any kind. Safety is a core operating principle essential to protecting people and the environment. So too is operational excellence. Let me describe some of 

the control practices that are in place when we drill a well and during producing 

operations. 

Well control.—When drilling a well, the pressure in the wellbore must be monitored and maintained in a way that gas and fluids in the geologic formation do not 

escape. There are four layers of prevention and containment (barriers) that maintain well control. This means that if one barrier fails due to operational error or 

equipment failure, there is no loss of well control. 

• Layer I includes proper planning and design of the wells to minimize any technical or environmental risks. This way, before we start to ‘‘Drill the Well Right,’’ 

we first decide on ‘‘The Right Well to Drill’’ from a technical and environmental 

perspective. This layer also includes training of our on-site staff on crucial well 

control procedures. • Layer II includes early detection of, and timely response to, events where gas 

or fluids begin to enter the wellbore. When such a ‘‘kick’’ is detected, the general 

response is to immediately shut down the pumps, perform a flow check, shut 

in the well and kill the well. To help carry out this task, Shell employs its Real 

Time Operations Centers (RTOCs) in New Orleans and Houston to monitor the 

wells 24 hours a day, 7 days a week. Through advanced information technology 

and satellite communications, the experts in the RTOCs monitor in real time 

what is happening at the drill site offshore. The RTOCs see the same drilling 

data at the same time as the drillers onsite, such as data from downhole sensors, rig gauges and sub-surface visualization. With those additional ‘‘sets of 

eyes’’ trained to monitor and detect any anomalies in the drilling process, operational concerns of any kind, in particular those associated with well control, 

can be stopped and mitigated immediately. • Layer III involves the use of mechanical barriers. Well casing, cemented in the 

hole, allows for safe deepening of the well and provides long-term protection 

against formation fluids coming to surface. Blowout preventers (BOPs) are mechanical devices that can shut off a well completely and prevent formation 

fluids from reaching the surface when the well is drilled. Weekly testing and 

inspections are performed to ensure their competency and integrity. • Layer IV represents relief well drilling. If, despite the first three layers of protection, there is the unlikely event of a blowout at an exploration well, site-specific, detailed contingency plans are in place for drilling a relief well. Contingency plans include dynamic surface control measures and the methods of drilling a relief well. 

Production Control.—MMS regulations and industry standards require all offshore producing platforms to have safety shutdown equipment. Fail-safe sub-surface 

safety valves must be installed in all wells at least 100 feet below the sea floor. 

These safety valves can be manually closed. They are also designed to shut tight 

whenever there is a loss of pressure from the surface facility. For example, if a surface platform is pushed over by a hurricane or ocean-going vessel, the safety valves 

will activate and shut in the well. This prevents the wells from blowing out. 

At the ‘‘Bridge,’’ located in New Orleans, we monitor all of our deepwater production systems in the Gulf of Mexico and Brazil (and ultimately Alaska). The centralized surveillance center is designed to optimize deepwater production rates, equipment reliability and system integrity. Specifically, production and equipment data 

streams are continuously scanned to identify any irregularities in performance and, 

if detected, are immediately addressed with technical and operational experts. The 

Bridge enables us to squeeze the most out of the reservoirs and maintain our systems and equipment to their best operating performance. This identifies potential 

problems before they occur and minimizes downtime. 

During the 2005 hurricanes that devastated the Gulf of Mexico, about 115 platforms were destroyed and more than 50 others were damaged. There was no loss 

of life due to the industry’s safety and evacuation practices. There were no well 

blowouts because the safety valves worked. There were some relatively small oil 

spills from storage tanks located on the platforms, but none that caused oiling of 

the coastline. 

Oil Spills: Impacts and Response 

Petroleum poses a range of environmental risks when released into the environment, whether as spills or discharges. U.S. federal agencies have turned to the Na-
22 

tional Research Council (NRC) on several instances to look at the issue. One of the 

most widely quoted studies of this type, titled Oil in the Sea: Inputs, Fates, and Effects, was completed in 1985. This study has been updated twice since then, the 

most recent update occurring in 2003. 

In North American marine waters, most petroleum comes from natural seeps 

(62.5%) rather than from anthropogenic (man-made) discharges associated with petroleum-extraction (1.2%), transportation (3.6%) and consumption (32.8%) of crude 

oil and refined products. (Table 1) (NRC, 2003) 

Table 1: Relative contribution of average, annual releases (1990-1999) 

of petroleum hydrocarbons in North American Marine Waters 

bbls Percent of 

Total (%) 

Natural Seeps 1,264,000 62 .5 

Petroleum Extraction 23,700 1 .2 

Petroleum Transportation 71,890 3 .6 

Petroleum Consumption 663,600 32 .8 

(from NRC 2003) 

Offshore seeps of hydrocarbons are known to occur around the United States in 

the Gulf of Mexico and southern California, and released oil can be delivered long 

distances by oceanic currents. Of the anthropogenic sources of oil in the sea, consumption is by far the largest contributor (32.8% of total and 87.4% of anthropogenic sources). As defined in the NRC 2003 report, ‘‘consumption’’ contributions are 

storm-and surface-water runoff, use of 2-stroke engines, non-tank vessel spills, operational discharges, atmospheric deposition and aircraft dumping. These releases due 

to consumption of petroleum products tend to occur in coastal areas. 

Oil and gas extraction activities are often concentrated in regions where natural 

seeps form. Historically, slicks of oil from seeps have been incorrectly attributed to 

releases from oil and gas platforms and vice versa. In North America, the largest 

and best-known natural seeps appear to be restricted to the Gulf of Mexico and the 

waters off of southern California, regions that also have extensive oil and gas production. In fact, geologists use aerial imagery of oil slicks in the ocean to identify 

likely areas to explore for oil and gas. 

The toxicity of petroleum hydrocarbons to marine organisms is dependent on the 

persistence and bioavailability of specific hydrocarbons. A quick and effective response to an oil spill is therefore critical in avoiding or minimizing any shoreline 

impacts. In other words, in the unlikely event of a spill we want to respond and 

remove the oil before it can impact sensitive environments. 

Each offshore oil and gas project must have such a plan in place before it is permitted to go forward. Given Shell’s investment in exploring in Alaska’s OCS, there 

are concerns that oil spills in arctic conditions or in ice conditions cannot be cleaned 

up. I would like to focus on and hopefully dispel that claim. 

Arctic exploration and production is building on a huge experience base in temperate conditions. The experience in the Gulf of Mexico is instructive. We know that 

with proper well design, well controls, improved technology and effective training, 

the likelihood of a significant spill incident has been reduced substantially. In fact, 

the MMS calculates that since 1980 less than 0.001% of the oil produced in the OCS 

has spilled. In the unlikely event that a spill does occur, we have a dedicated and 

proven oil spill response capability, including equipment, methods and competencies. 

During any spill that occurs in water (warm waters, cold waters or ice-covered 

waters), it is impossible to clean up 100 percent of the oil spilled. Depending on air 

temperature and oil gravity, as much as 40 percent of the oil can evaporate in the 

first 24 hours. However, in Arctic conditions, the evaporation rate will be lower and 

depend on water temperature and wind conditions. Waves and current can also impact the recovery rate since mechanical equipment is typically limited to operating 

in waves up to 2-3 meters. Daylight, access to the site, travel time, needed approvals from government agencies and other factors can also impact a spill operation. 

Shell accepts the fact that, in some cases, oil spill response in ice conditions can 

be more difficult than in open water. Ice conditions will demand more flexibility and 

planning in tactics, special response equipment and strong coordination and competence of staff and contractors. It will also require additional planning in areas 

such as forecasting ice conditions, monitoring ice and ice deflection to help trap oil. 

In some cases, the presence of cold water and ice can enhance response effectiveness 
23 

by limiting oil spreading (which in open water cannot be controlled) and slowing the 

weathering process. 

By working with the natural environment, responders can increase the response 

window of opportunity and improve the effectiveness of mechanical recovery and insitu burn techniques. For example, if a spill occurred during the winter season 

under the ice, the oil would be trapped, allowing the responders more time to evaluate options for recovery or in-situ burning because the oil is semi-stationary under 

the ice. 

Shell believes that it is very important to have the capability to include multiple 

response methods in the planning, have approval to use them and to respond with 

as many tools as needed. The response strategy and planning should allow the use 

of dispersants, in-situ burning and other methods that may be applicable. The method(s) selected during a response will depend on items such as the weather conditions, type of spill and other factors that are decided on a case-by-case basis in collaboration with the federal and state on-scene coordinators. Additionally, during a 

spill event the responders may change from one tactic to another as the conditions 

change. Dispersants have been proven to be effective in cold waters and can be applied with ice present and be effective for spills that cover a large area. In-situ burning (which has been used for 30 years around the world) can play an important role 

in the unlikely case of a blowout and can burn up to 95 percent of the oil spilled. 

Shell has created an unprecedented oil spill response capability to support its 

drilling plans in the Beaufort and Chukchi Seas. We have a dedicated fleet of vessels and specialized oil containment equipment, which will be on-site 24/7. Spill recovery equipment is state of the art and widely acknowledged as proven systems 

under cold-climate conditions and designed to remove the worst-case discharge. The 

Nanuq is an ice-class purpose-built vessel, which can begin recovery within an hour 

of any incident large or small. 

Arctic Oil Spill Response Research and Development 

International scientists and operational personnel, under management of SINTEF 

Norwegian Research Institute, spent two weeks in May of 2009 in the pack ice in 

the Norwegian Barents Sea to study the behavior of oil spills in Arctic waters and 

to test various response options in realistic oil-in-ice conditions. 

The tests proved that ice acts as a natural boom or protective barrier to confine 

and reduce the spread of an oil spill and to provide a longer window of opportunity 

in which clean-up technologies can be used effectively. These tests are the most 

wide-ranging research and development programs ever undertaken to evaluate Arctic oil spills. 

The Joint Industry Project (JIP), under the management of SINTEF, was sponsored by six international oil companies, including Shell. The MMS was also a 

project participant. The project’s major objectives are to further develop knowledge, 

tools and technologies for oil spill response in ice-covered waters. The program has 

consisted of project areas being carried out over a four-year period, ending in 2009. 

The JIP was designed to address key oil spill response issues and scenarios that 

program participants might have to deal with: 

1. The fate and behavior of oil spilled in Arctic conditions 

2. The in-situ burning of oil in Arctic and ice-covered waters 

3. The mechanical recovery of oil in Arctic and ice-covered waters 

4. The use of chemical dispersants in Arctic and ice-covered waters 

5. Monitoring and remote sensing of oil in and under ice 

6. The preparation of a generic oil spill contingency plan 

7. Field experiments at Svalbard, Norway, in offshore ice-covered waters 

These real-world offshore tests marked the final stage in the largest and most 

wide-ranging international research and development program ever undertaken to 

enhance understanding, to further improve and develop spill-response technologies 

and to increase the ability to react rapidly in the event of an accidental oil spill in 

ice-covered conditions. 

Discharges and Emissions 

‘‘Dumping’’ does not occur offshore. In fact, many materials cannot be discharged 

at all, including oily mud and trash and debris. Allowable discharges from offshore 

platforms can include produced waters, drilling discharges and air emissions. We 

understand public concern about their potential effect on the environment. Let’s be 

clear, however, that any discharge or emission must meet Clean Water Act or Clean 

Air Act requirements. The Environmental Protection Agency (EPA) and the MMS 

permit the allowable discharges and emissions under tight controls based upon 

sound science. Sensitive habitats on the seafloor, like corals or chemosynthetic com-
24 

munities in the Gulf of Mexico, must be avoided. These permits require drilling 

mud, for example, to be tested for composition before their use, to pass a battery 

of tests for toxicity to marine animals and biodegradation rate in the environment 

before they can be discharged. 

An example of how our industry has developed technology to address the challenges of deepwater and environmental performance at the same time is new synthetic drilling fluid. This fluid can be recycled and reused, and, as a result, discharges are minimized. They increase drilling penetration rates, resulting in less 

time on location and reduced air emissions. The EPA has classified this as a ‘‘pollution prevention technology.’’ 

More than 35,000 wells have been drilled in the Gulf of Mexico. For more than 

20 years, the petroleum industry, the regulatory agencies and academic researchers 

have conducted ocean monitoring around well sites to study effects on water quality, 

sediment quality, and the local biological communities. We have found that small 

areas of the seafloor can be temporarily disturbed by the deposition of drill cuttings. 

However, there are no long-lasting effects and no bioaccumulation of contaminants 

that would either jeopardize benthic animals or affect human consumption of seafood. In fact, our offshore platforms are some of the most prolific areas for recreational fisherman, and our industry has successfully coexisted with the commercial fishing industry for decades. 

Marine Animals and Noise 

In the Gulf of Mexico and offshore Alaska, our operations have to coexist with 

populations of marine mammals that are important to protect. Seismic exploration 

is one operation that is carefully regulated by the federal government and managed 

by the company so that, for example, the sounds created don’t cause whales to 

change their behavior in ways that might be harmful. Regulations require us to: 

• Have trained marine mammal observers onboard to watch for mammals 

• When starting, use a ramp-up procedure to gradually increase the sound level 

being produced, which allows animals to leave the area if the sound is uncomfortable 

• Stop any operations if a marine mammal is likely to enter a ‘‘safety zone’’ 

around the operation and wait to restart operations until the zone is all-clear 

for at least 30 minutes 

In Alaska, Shell goes further. We use observers on aircraft to monitor an even 

larger area around our operations in the Beaufort Sea. Since 2006, we have also deployed a network of seafloor acoustic recorders across the Chukchi Sea and Beaufort 

Sea that record the sounds of whales, seals, walrus and other animals, along with 

natural sounds like storms and earthquakes and man-made sounds, such as our 

seismic programs and vessels. This information helps us understand the distribution, abundance and migration routes of the animals, as well as document any subtle behavioral changes that they might make in response to our presence. 

Through these programs, we have seen and heard thousands of whales, seals, walruses and polar bears, and our monitoring has not detected a single one that has 

been injured by our activities. Our seafloor recorders have documented that migrating bowhead whales will swim around seismic activities at a distance of a few kilometers. We are now studying to determine if this response is biologically significant 

or less significant—like you or I might cross the street to avoid noise from a construction site. 

Operating in Sensitive Areas 

We have found that multiple uses of our oceans can be accommodated—we can 

conserve special places and have economic development. For example, the Flower 

Garden Banks National Marine Sanctuary in the Gulf of Mexico is a national treasure of manta rays, whale sharks, coral heads that are bigger than cars and hundreds of species of fish and invertebrates. Within a four-mile radius of the Flower 

Garden Banks, hundreds of exploratory wells have been drilled, and there are currently 10 production platforms and approximately 160 km. of pipelines. Twenty-five 

years of stringent environmental monitoring by the National Oceanic and Atmospheric Administration (NOAA), the MMS and industry have found no contamination 

or degradation of corals due to oil and gas activity. In fact, our marine biologists 

participate in an annual government/industry dive on the Flower Garden Banks, 

and we have observed firsthand the pristine coral formations and wildlife. 

Role of Technology 

Technology is not static. What we know and how we operate today will evolve. 

We must continue to find better ways of working through technology improvements 
25 

and breakthroughs that make our operations more efficient and environmentally 

safe. Let me give some examples of what Shell is doing. 

Shell has initiated a Future Wells Project involving a range of technical experts. 

Their goal is to identify new technologies and processes that will, for example, reduce the volume of well cuttings and fluids, increase production rates by reaching 

the drilling target with larger casing, unlock reserves that are currently uneconomic 

or unreachable and reduce our own fuel consumption. 

Shell’s interest in the Arctic, in Alaska and Russia, has accelerated the development of specific projects that will better equip us to work in this arena. Again, we 

are looking for alternative approaches that reduce our environmental footprint in 

an area that has unique characteristics very different from the Gulf of Mexico. We 

do so in order to advance our understanding of the region, to inform our design technologies to achieve smaller impact and to respond to concerns expressed by many, 

including the indigenous peoples with strong dependence on and cultural ties to the 

environment. 

• Unmanned Aircraft Systems (UAS).—One example of our work involves integrating unmanned aircraft into our existing manned aircraft monitoring programs. The monitoring is essential because it tracks the habits and movements 

of marine mammals, the movement of sea ice and the operations of offshore operations. The goal of the UAS research program is to reduce the risk and environmental footprint of monitoring. Unlike manned aircraft, the unmanned aircraft can carry compact payloads, which allows standard sensors like electro-optical video, electro-optical stills and infrared to be flown with very little airborne 

noise or disruption to natural surroundings. In Alaska, the industry and government agencies have collaborated in testing an A-20 ScanEagle system to track 

walrus, seals and endangered bowhead whales. We expect to be able to detect 

sea-surface contaminants, track sea ice and find stranded personnel and vessels 

in broken ice scenarios. 

• Marine Sound Reduction Program and Marine Mammal Impacts.—Another example involves developing ways to reduce the sound of our operations in the 

Arctic. Shell’s program is intended to better understand sound in Arctic waters 

and then to develop ways to mitigate man-made sound. This research is part 

of our marine mammal monitoring initiative in the Beaufort and Chukchi Seas. 

Together, these two programs seek to understand the sources and characteristics of man-made marine sound and its effect on marine animals so that appropriate sound management plans can be developed. We are analyzing sound data 

from drilling activities in Alaska waters done during the 1980s and 1990s. We 

are taking acoustic measurements on vessels and drilling rigs to understand the 

magnitude of sound generated. We are developing sound mitigation designs for 

new-build vessels and underwater acoustic barriers that could be deployed 

around existing rigs. 

Role of Science 

Scientific knowledge will also evolve. This expanded knowledge is critical because 

it informs government regulators who must issue permits, it informs policymakers 

who must develop sound energy and environmental policy and it informs our operational decisions. 

The government plays a leading role in performing scientific studies. Since 1973, 

federal agencies have performed more than 5,000 scientific studies on the environmental effects of offshore oil and gas activities. For example, the National Academy 

of Sciences has produced three reports focused directly on environmental science for 

offshore oil and gas, two with particular focus on Alaska. The Minerals Management 

Service’s OCS Environmental Studies Program has spent more than $600 million 

(more than $1 billion in inflation adjusted dollars) on scientific studies of offshore 

oil and gas—about half of that directed specifically to Alaska. Money is not a perfect 

measure for the applicability or credibility of the information, but it provides a metric of effort and breadth that many people will understand. 

The industry also has a role to play. Oil and gas companies have worked on major 

scientific programs that supplement the research by government agencies. In the 

last 10 years, the industry has published studies on the environmental effects of and 

best management practices for pollution prevention technology, emissions from offshore platforms that include produced waters, drilling discharges, air emissions, the 

effects of sound on marine life that includes whales and fish, weather and oceanographic studies, improved design standards for severe weather and even the causes 

of hypoxia in the Gulf of Mexico. 
26 

WHERE DO WE GO FROM HERE?

I have discussed the need for and benefits of developing the vast offshore oil and 

gas resources off the U.S. coast. I have discussed the industry environmental record 

and how technology and science are key enablers for our environmental stewardship. Now I would like to look forward—where do we go from here and what should 

policymakers do? 

RECOMMENDATIONS

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 its natural resources. Let me provide some policy recommendations 

for your consideration. 

First and foremost, the government must support the OCS leasing program 

In areas where OCS leasing has occurred, the government has done literally years 

of environmental analysis in advance of the lease sale. It has invited companies to 

buy the leases, and it has accepted bonus bids from companies. In return, the government bears some responsibility to the leaseholder. Companies bid on leases with 

the tacit understanding that the government is prepared to do the work that allows 

exploration and development. 

Shell’s experience in Alaska is a case in point. We participated in the government’s Alaska lease sales and paid the U.S. Treasury billions of dollars for the 

leases. We invested hundreds of millions of dollars more to prepare for exploration 

drilling. In order to drill, we must have some 30 state and federal permits. We have 

not yet drilled a single exploration well. Permitting delays, coupled with litigation 

delays, have blocked the work for several years. We are hopeful that we will be able 

to drill in 2010, but this will only happen if the federal government finally delivers 

all the permits and if litigation challenges do not occur. 

I fully support the permitting work and the regulatory requirements that Congress has put in place. Many of those requirements are intended to protect the environment. I do not believe the process should be ‘‘rubber stamped.’’ Quite the opposite. I believe that the government should have a robust and thorough process that 

leads to timely decisions. Endless delays and inefficiencies should not be tolerated 

because it is a waste of effort and money for all concerned—Shell, the government 

and the taxpayer. 

Specifically, I urge Congress to: 

• Fully fund and resource the various federal agencies that handle OCS oil and 

gas permitting. Inadequate funding and insufficient staff should not be the 

cause of permitting delays. If the government is going to hold a lease sale, it 

must be prepared to do the environmental studies and other analyses that underpin OCS permits. 

• Impose clear timelines on federal agencies, and hold the agencies to those deadlines so that the private sector has some assurance of action and can plan its 

investment decisions accordingly. If properly staffed and resourced, the deadline 

should not be a problem. 

• Defend its permits when there is a legal challenge and seek expeditious decisions by the courts. As a result of a court decision last spring, the Department 

of Interior (DOI) is remedying flaws in its current Five-Year OCS Plan. The 

DOI needs to move expeditiously to complete this work and in the process, remove the legal ‘‘cloud’’ that hangs over the 2008 Chukchi lease sale. 

• Consider whether the EPA is the appropriate agency to handle OCS permits. 

In the FY 2010 appropriations report for the EPA, Congress directed the EPA 

to put adequate staff and resources to permitting OCS facilities and further directed that the EPA ‘‘set clear, reasonable national guidelines for issuing OCS 

air permits.’’ Shell has applied to the EPA for our Alaska exploration work. The 

40-month process is still not complete. This should not be replicated or tolerated. 

• Increase funding for the MMS Environmental Studies Program. The government should invest now in key studies, ecological characterization and additional baseline science, all of which will be critical to permitting any oil and gas 

work in OCS areas outside the Gulf of Mexico. 

• Establish regional, inter-agency permitting offices to support OCS leasing and 

permitting. I commend this Committee for including an Alaska-based permitting office in the energy bill that was approved last summer. Such an office will 

enable agencies to coordinate their regulatory work, share resources and hopefully move expeditiously to approve permits. 
27 

Second, the government should support opening new OCS areas to oil and gas development 

As I discussed earlier, the U.S. is blessed with resources. Development has multiple energy and economic benefits. 

Third, the government should provide revenue sharing for all coastal communities 

States and communities adjacent to offshore development have infrastructure 

needs, such as roads, housing and schools for workers and their families, enhanced 

seaport and air terminal facilities, greater demands for basic public services and 

other expenses common to economic growth. Congress recognized this when it provided that the four Gulf states could share in federal OCS revenue from Gulf leases. 

Revenue sharing should not be denied to other states that have OCS leasing. Today, 

Alaska is the only other state with OCS leasing by the federal government. It is 

unfair and unreasonable to deny revenue sharing to the State of Alaska. Some 

argue that revenue sharing takes money out of the federal treasury. On the contrary, revenue sharing will enable offshore development and would bring revenues 

into the federal treasury. 

Fourth, the government should ensure that any National Ocean Policy recognizes the 

importance of offshore energy to the nation’s economy and energy security 

The President’s Interagency Ocean Policy Task Force is developing a national 

oceans policy. We will see this report by the end of the year. I hope the Task Force 

will provide recommendations that balance the nation’s environmental, economic 

and social goals without adding new bureaucracies that undermine the existing OCS 

oil and gas leasing program. The Task Force was directed by the President to develop a framework for marine spatial planning. This framework should inform government decision makers by providing access to environmental and ocean user information. It should be used in a way that allows for continued multiple uses of the 

oceans and not as a process to ‘‘zone off’’ important economic and recreational uses. 

Finally, Congress must have the will to support OCS oil and gas development, to embrace a domestic energy policy that works with domestic environmental goals 

The energy future of our country will be determined to a great extent by the legislation enacted by Congress. 

In closing, thank you for the opportunity to speak on behalf of Shell about issues 

of paramount importance, ones that cannot be overstated or overemphasized. 

The world faces a daunting challenge that demands aggressive, collaborative and 

realistic action to meet escalating energy demand in ways that are good for the environment. Shell challenges our elected officials to exercise political courage and leadership to make tough—often unpopular—decisions that are in the best interest of 

our citizens, economy and environment. 

Driving those decisions must be the reality that it will take all possible energy 

sources to meet demand—and that oil and gas will remain our primary energy 

sources for decades to come as we transition to a more sustainable energy future. 

Access to vast, untapped natural resources onshore and on the Outer Continental 

Shelf is critical—we need it now. Access is good for America. Developing more of 

our own resources will create jobs, provide energy security and help our balance of 

trade. We must stop sending hundreds of billions of dollars out of the country and 

start developing more of our own energy and bolstering our own economy. 

History shows that we can—and do—develop oil and gas resources in responsible 

ways. Our record at Shell is impressive. 

Shell is a leader in environmentally superior operations. We advocate globally for 

carbon dioxide reduction through a phased-in cap-and-trade program. We see great 

promise for carbon capture and storage as a mitigation technology and are collaborating on numerous CCS research and demonstration projects in the U.S., Canada 

and other parts of the world. 

Shell supports continued development of alternatives and renewables, with our 

focus on wind and biofuels. In addition, we are increasing production of natural gas, 

the cleanest-burning fossil fuel. New technology has opened up abundant gas resources contained in dense rock formations, which will increase supplies dramatically. 

Shell continues to deliver energy to Americans in responsible ways. That’s our job, 

day in and day out. Our elected officials have the role to move beyond discussion 

and enact sound, realistic legislation and to establish the regulatory framework necessary to bring more energy to America. Our economy and our nation’s security demand and deserve nothing less. Likewise, we should expect nothing less from our 

government. 

The CHAIRMAN. Thank you very much. 
28 

Mr. Amos, go right ahead. 

STATEMENT OF JOHN F. AMOS, PRESIDENT, SKYTRUTH, 

SHEPHERDSTOWN, WV 

Mr. AMOS. Mr. Chairman, members of the committee, thank you 

for this opportunity to present some of the ongoing risks posted by 

offshore oil and gas drilling. I’ve submitted written testimony for 

the record and will summarize my comments here. 

After more than a decade analyzing satellite imagery in the commercial sector for oil and gas exploration, I founded SkyTruth, a 

nonprofit corporation dedicated to investigating environmental 

issues, using satellite images and other remote sensing technologies. We work to inform decisionmakers and the public about 

the risks posed by resource extraction so we can make better decisions about developing our resources, understand the worst-case 

scenarios implied by those risks, and ensure that we can effectively 

respond to those scenarios. 

Our work investigating drilling mishaps, severe storm damage, 

and leaking pipelines demonstrates that major oil spills still occur 

today, including in U.S. waters, despite significant advances in 

technology. This testimony addresses several incidences of oil spills 

observed by SkyTruth that are directly related to current offshore 

oil and gas drilling and production and the utility and effectiveness 

of mitigation efforts, such as creating buffer zones. 

Most recently, on August 21, 2009, a production well at the new 

Montara oil platform, off the northwest coast of Australia, experienced a blowout, ejecting its cement plug and spraying oil and gas 

into the air and water. The platform and attached West Atlas drill 

rig, seen in this photo, were evacuated. For the next 10 weeks, oil 

and gas flowed unabated from the well. To plug the leak, authorities decided to bring in a second rig from Singapore and drill a relief well. On November 1, the spill was finally stopped by pumping 

heavy mud into the well. Concurrently, the platform and attached 

rig were engulfed in flames and burned for 2 days. The $250-million rig is reported to be a total loss, and engineers are assessing 

the integrity of the platform. Difficult work remains to install a 

permanent cement plug in the well. 

Estimates of the amount of oil spilled range from 1.2 million gallons to more than 9 million gallons. SkyTruth’s analysis of NASA’s 

satellite images, like the one here, showed that oil slicks and sheen 

moved as far as 225 miles from the leaking well and cumulatively 

impacted more than 24,000 square miles of ocean, an area the size 

of my State of West Virginia. Researchers documented impacts 

from the spill on seabirds and marine mammals. Indonesian and 

Australian fishermen cited fish kills and significant declines in 

catch, and news accounts report that fishermen are going bankrupt. 

The Australian government has launched an investigation into 

the causes of the blowout, effectiveness of the response, and environmental impacts. The investigation is expected to take 6 months. 

Severe storms present another risk. In 2005, as Senator Dorgan 

noted, Hurricanes Katrina and Rita moved through oil fields in the 

Gulf as powerful category-5 storms. SkyTruth’s analysis of satellite 

images, including this image taken a few days after Katrina made 
29 

landfall, revealed extensive slicks covering more than 700 square 

miles in the Gulf of Mexico. The Minerals Management Service reported that Katrina and Rita destroyed more than 100 platforms 

and damaged 450 offshore pipelines. 

These storms caused major spills from the onshore facilities that 

support offshore production. The Coast Guard reported that onshore infrastructure spilled 8 million gallons of oil into coastal wetlands, streams, and communities. A single spill from a ruptured 

storage tank inundated 1700 homes in Louisiana with crude oil. 

Infrastructure can fail even in the absence of storms. In calm 

weather, in July 2009, a major pipeline operated by Shell sprang 

a leak about 30 miles off the Louisiana coast. Divers located a 

crack in the pipe, but 63,000 gallons of oil spilled into the Gulf. The 

resulting slick covered 80 square miles. The failed pipeline was installed more than 30 years ago. In 2009, it began carrying oil from 

a new platform almost 200 miles south of New Orleans. In a common industry practice, the new platform was connected to the old 

pipeline network. 

Offshore production in the Gulf began in the late 1940s. Today, 

as you can see on this map, the seafloor is crisscrossed by 25,000 

miles of active pipeline, connecting 3600 platforms to coastal facilities. As the pipeline network ages, structural failures and spills become increasingly likely. 

In summary, offshore drilling is an inherently risky venture. Accidents happen despite the most technologically advanced systems. 

Nature can create insurmountable situations. Infrastructure ages 

and becomes vulnerable. Recent history shows that when things go 

wrong, consequences can be severe. As the Senate debates the merits of opening new offshore areas to energy development, it is important to understand and carefully evaluate the risks posed by offshore drilling. The critical first step is acknowledging these risks 

to the environment and to communities that depend on healthy 

marine and coastal ecosystems for their economic wellbeing. 

I thank you for your attention today, and I would be happy to 

answer questions. 

[The prepared statement of Mr. Amos follows:] 

PREPARED STATEMENT OF JOHN F. AMOS, PRESIDENT, SKYTRUTH, 

SHEPHERDSTOWN, WV 

Good morning, Mr. Chairman and members of the committee. Thank you for this 

opportunity to present information about some of the ongoing risks posed by offshor 

important issue for our nation as we face increasing political, strategic, environmental and economic consequences resulting from our dependence on fossil fuels as 

the primary energy source driving our economy. As the nation embarks on a new 

marine spatial planning process to help us make better informed management decisions governing our nation’s coastal and marine resources, and as the merits of 

opening new offshore areas to energy development carefully evaluate the risks of offshore drilling when considering the benefits acknowledging the potential risks of offshore oil and gas development to the environment, and communities that depend 

on healthy marine and coastal ecosystems for their economic well 

I received degrees in geology from Cornell University (B.S.) and the University 

of Wyoming (M.S.), and spent nearly a decade working as an exploration geol firms, 

Earth Satellite Corporation (now MDA Federal Inc.) and Advanced Resources International. During that time I developed expertise in remote sensing and digital mapping: processing and analyzing satellite images as a tool to explore for oil and gas, 

minerals, and ground water. I conducted dozens of onshore and offshore exploration 

studies for clients that included British Petroleum, Shell Oil Co., Exxon, and the 

U.S. Department of Energy, among many othe NASA-funded study to develop re-
30 

1http://www.seadrill.com/ 

2http://www.worleyparsons.com/Projects/Pages/MontaraPlatform.aspx 

3http://www.offshore-mag.com/index/article-display/6066428130/articles/offshore/companynews/australianew-zealand/2009/08/seadrill-issueslupdate.html 4http://www.ens-newswire.com/ens/aug2009/2009-08-24-02.asp 

5http://www.abc.net.au/news/stories/2009/08/25/2666754.htm 

6http://www.watoday.com.au/photogallery/wa-news/the-west-atlas-oil-spill/20090829-f34l.html 

* All figures have been retained in committee files. 

7http://www.au.pttep.com/ 

8http://www.news.com.au/perthnow/story/0,21598,26172761-5017962,00.html 

9http://www.theaustralian.com.au/news/breaking-news/oil-gas-leak-to-continue-for-sevenweeks/story-fn3dxity-1225765343929 10http://www.watoday.com.au/wa-news/mobile-rig-to-clean-up-oil-arrives-today-20090910- 

fj8p.html 11http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUYFMY8a.T6U 12http://www.news.com.au/perthnow/story/0,21598,26172761-5017962,00.html 13http://www.google.com/hostednews/afp/article/ALeqM5gwLtvodwRVStfa7BCRLFsX6WbqPg 14http://www.google.com/hostednews/afp/article/ALeqM5jBnSKYWjVXfddqxWb00p8eb6SqXQ 15http://www.google.com/hostednews/afp/article/ALeqM5gwLtvodwRVStfa7BCRLFsX6WbqPg 

mote sensing techniques for detecting and mapping both natural and human-caused 

oil slicks at sea. I have analyzed hundreds of satellite and aerial images of the 

world’s oceans, collected by a variety of radar, visible and infrared sensors. 

In 2001 I founded SkyTruth, a non-profit organization dedicated to investigating 

and illustrating environmental issues using satellite imagery, digital mapping, and 

other remote sensing technologies. This testimony addresses several instances of oil 

spills observed by SkyTruth that are directly related to current offshore oil and gas 

drilling and production. These incidents are notable for their magnitude and/or the 

potential risk they expose, and include a broad range of causes including: 

• Drilling accidents (Western Australia, August-November 2009) 

• Severe storm damage (Katrina and Rita, 2005; Ike, 2008) 

• Aging pipeline infrastructure (Eugene Island Pipeline, July 2009) 

I. DRILLING ACCIDENTS: THE MONTARA / WEST ATLAS BLOWOUT AND SPILL

On August 21, 2009, Seadrill, a Norwegian offshore drilling services company1, 

was working from their West Atlas portable jackup drilling rig at the new Montara 

oil production platform in the Timor Sea, about 150 miles off the coast of Western 

Australia, at a water depth of 260 feet2. The West Atlas rig was drilling a new production well3 when one of the previously completed and temporarily plugged wells 

on the platform experienced a ‘‘blowout,’’ ejecting its cement plug and spewing oil, 

natural gas, and vaporized natural gas condensate4 into the air and water. The rig 

and platform were immediately evacuated, with no injury to the 69 workers involved. Due to the extreme fire and explosion hazard posed by the situation, all personnel were excluded from the immediate vicinity of the platform and rig5. 

For the next ten weeks, oil and gas flowed from the damaged well unabated6, despite repeated attempts to plug the well (Figure 1).* Australian authorities and the 

platform operator, PTTEP-Australasia7, responded primarily by aerial spraying of 

chemical dispersants on the oil slick, with limited boom-and-skimmer operations to 

mechanically recover the spilled oil. PTTEP determined that the best way to stop 

the flow from the damaged well was to drill a relief well that would intercept the 

damaged well at a point approximately 8,600 feet below the seafloor8. Because the 

West Atlas drill rig was deemed too hazardous for personnel, a second jackup drill 

rig, the West Triton, was transported from Singapore9. The West Triton rig did not 

arrive on-scene until September 10, nearly three weeks after the spill began10. It 

was stationed about 6,500 feet from the West Atlas drill rig11, and began to drill 

the relief well. 

Nearly one month later, on October 6 the relief well had finally reached the target 

depth and the first attempt was made to intercept the damaged well, a target about 

ten inches in diameter. This attempt missed the well12, requiring the crew on the 

West Triton to pull the drillstring back and drill forward again on a slightly different trajectory, a process that takes several days to accomplish. This process was 

repeated three more times without success. Finally, on November 1, the fifth attempt to intercept the damaged well succeeded13. The West Triton crew began 

pumping heavy drilling mud into the damaged well to squelch the flow of oil and 

gas. Concurrently, the damaged well ignited (Figure 2), engulfing the Montara platform and attached West Atlas drill rig in flames14. The fire continued for two days15

before finally burning out all the residual oil and gas in the well and other combustible materials on the structures (Figure 3). 
31 

16http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFa6kCclA1Yg 17http://www.google.com/hostednews/afp/article/ALeqM5gwLtvodwRVStfa7BCRLFsX6WbqPg 18http://www.watoday.com.au/wa-news/oil-spill-is-now-one-of-australias-worst-20091022- 

hagd.html 19http://www.theaustralian.com.au/news/nation/timor-oil-leak-larger-than-claimed/storye6frg6pf-1225790241987 20http://www.news.com.au/perthnow/story/0,21498,25996354-2761,00.html?from=publiclrss 21http://www.sciencentral.com/video/2009/03/24/exxon-valdez-anniversary/ 22http://www.bloomberg.com/apps/news?pid=20601130&sid=asC4plvYuEuE 23http://blog.skytruth.org/search?q=timor 24http://modis.gsfc.nasa.gov/ 25http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=40029 26http://blog.skytruth.org/2009/09/timor-sea-drilling-spill-covers-2500.html 27http://blog.skytruth.org/2009/09/timor-sea-drilling-spill-covers-5800.html 28http://blog.skytruth.org/2009/09/timor-sea-drilling-spill-september-24.html 29http://www.ipl.org/div/stateknow/popchart.html#statesbysize 30http://www.flickr.com/photos/skytruth/sets/72157622226354812/ 31http://www.flickr.com/photos/skytruth/3951854968/sizes/l/in/set-72157622226354812/ 32http://www.wwf.org.au/publications/montaraoilspillreport/ 33http://www.environment.gov.au/coasts/publications/pubs/montara-rapid-survey.pdf 34http://www.news.com.au/perthnow/story/0,21598,26286663-5017007,00.html 35http://www.abc.net.au/news/stories/2009/11/07/2736012.htm 36http://thegovmonitor.com/energylandlenvironment/australia-looks-at-long-term-environmental-plan-formontara-oil-spill-13389.html 37http://www.time.com/time/health/article/0,8599,1902333,00.html 

At this time, leakage from the damaged well has been stopped. Engineers are assessing the structural integrity of the Montara platform, heavily damaged by the 

fire. The $250M West Atlas drill rig is reported to be a total loss16. Difficult and 

complex work remains to re-enter the damaged well so a permanent cement plug 

can be installed17. The ultimate disposition of the other previously drilled production wells has not been announced. 

Oil and gas flowed uncontrollably from the damaged Montara well for 73 days. 

No estimate has been made of the amount of methane—a potent greenhouse gas— 

released during this event. Estimates of the amount of oil spilled vary widely. Based 

on visual approximation only, PTTEP estimated 400 barrels (16,800 gallons) per 

day18. The Australian government’s Department of Resources, Energy and Tourism 

estimated the spill rate at ‘‘up to 2,000’’ barrels per day19. The Australian Greens 

party collected data on the measured flow rates from other oil wells in the vicinity 

and came up with an estimate of 3,000 barrels per day20. These spill rates translate 

into total spill volumes of 1.2 million gallons, 6.1 million gallons, and 9.2 million 

gallons respectively. For comparison, the Exxon Valdez tanker spill in Alaska in 

1989 released an estimated 10.8 million gallons21. 

Even at the lowest estimate of 400 barrels per day, the Montara event ranks as 

the worst productionrelated spill in Australia’s 40-year history of offshore energy development22. SkyTruth obtained daily NASA satellite imagery throughout the 

course of the spill to track and measure the locations of oil slicks and sheen in the 

Timor Sea23. MODIS24 satellites capture light reflected from the Earth’s surface in 

visible and infrared wavelengths. MODIS imagery on August 3025 showed slicks and 

sheen spread across an area of 2,500 square miles26 (Figure 4). On September 3 

patches of slicks and sheen ranged across 5,800 square miles27 (Figure 5). On September 24, MODIS images showed slicks and sheen spanning nearly 10,000 square 

miles of the Timor Sea28, an area larger than the state of Maryland29. 

Before the spill was stopped on November 1, satellite images obtained and analyzed by SkyTruth showed that oil slicks and sheen had cumulatively ranged across 

more than 24,000 square miles of ocean30, an area the size of West Virginia. Slicks 

had moved far into Indonesian territorial waters31, coming within 40 miles of the 

Timor coast and within 20 miles of islands along Western Australia’s biologically 

rich Kimberley coast. Slicks and sheen were observed at times as far as 225 miles 

away from the leaking Montara well. 

Preliminary investigations of the spill’s environmental impacts by World Wildlife 

Fund32 and by Australian government-funded researchers33 have documented impacts on seabirds and marine mammals. Timorese and Australian fishermen have 

cited fish kills and significant declines in catch in the region affected by the spill 

and the application of dispersants34. News accounts report that fishermen are going 

bankrupt as a result of the steep decline in catch35. A multi-year study of the spill’s 

impacts and lingering toxicity is being launched36; recent studies of the Exxon 

Valdez spill aftermath suggest that measurable impacts on ecosystem health and 

fisheries can be anticipated for decades37. 
32 

38http://www.watoday.com.au/environment/inquiry-announced-into-timor-sea-oil-spill20091105-hz7x.html 39http://www.cbsnews.com/stories/2009/11/05/ap/business/main5530677.shtml 40http://www.seadrill.com/streamlfile.asp?iEntityId=935 41http://oilgasglossary.com/jackup-drilling-rig.html 42http://www.rigzone.com/news/article.asp?a—id=64979 43http://www.upstreamonline.com/live/article172586.ece 44http://www.seadrill.com/modules/modulel123/proxy.asp?D=2&C=19&I=1772&mid=18 45http://www.drillingcontractor.org/dcpi/dc-julyaug08/DClJuly08lSeadrill.pdf 46http://www.rigzone.com/news/article.asp?alid=69946 47http://drillingclub.proboards.com/ 

index.cgi?board=wellcontrol&action=display&thread=4315&page=1 48http://www.gomr.mms.gov/homepg/offshore/safety/acclrepo/accindex.html 49http://www.upstreamonline.com/live/article197622.ece 50http://www.gomr.mms.gov/PDFs/2009/2009-016.pdf 51http://blog.nola.com/tpmoney/2008/05/mcmoranlsayslhighprofilelblack.html 52http://commons.wikimedia.org/wiki/File:Atlanticlhurricaneltracksl1980-2005.jpg 53http://www.katrina.noaa.gov/ 54http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=15546 55http://blog.skytruth.org/2007/12/hurricane-katrina-gulf-of-mexico-oil.html 

The Australian government has launched an investigation into the causes of the 

Montara blowout, effectiveness of the response, and environmental impacts38. This 

investigation is expected to take at least six months to come to completion39. Ideally, it will include an analysis of regulatory gaps or weaknesses that may have contributed to or allowed the occurrence of this accident. As with most major spills, it 

is unlikely that the exact causal chain of events will be repeated anywhere, including in U.S. waters. Yet the Montara blowout and spill offers cautionary lessons 

about modern offshore drilling, regardless of its cause: 

1. The West Atlas drill rig is new, technologically advanced equipment, built 

in 200740. It is a jackup rig41, a style commonly used for drilling in relatively 

shallow water (<400 feet), including much of the Gulf of Mexico continental 

shelf. The Montara production platform is also new equipment. Construction 

was completed in 200842, and the platform was installed in 2009 by an Australian engineering firm43. 

2. The West Atlas rig is owned and operated by Seadrill, a major international offshore drilling contractor that operates a global fleet of 41 drilling 

units, including nine that are under construction44. They have an office in 

Houston, identify the Gulf of Mexico as an important business target45, and are 

currently under contract with Devon Energy to drill deepwater wells in the U.S. 

Gulf of Mexico using their new West Sirius semisubmersible rig46. All of the 

personnel present when the Montara blowout occurred were working on the 

West Atlas rig47. 

3. The U.S. Minerals Management Service has investigated 18 blowouts and 

13 losses of well control in the U.S. Gulf of Mexico since 1983, with three such 

incidents occurring since 200748. 

4. The Montara platform is located in relatively shallow water (260 feet), and 

the Montara well suffered a failure 8,600 feet below the seafloor. Despite generally calm tropical seas and favorable weather for offshore operations, more 

than ten weeks elapsed before the Montara blowout could effectively be killed 

by one of the world’s leading well-control contractors (Alert Well Control)49. In 

contrast, drilling in the U.S. Gulf of Mexico has moved into ultradeep waters, 

approaching 10,000 feet for some recently targeted plays on the continental 

slope50, and wells in the Gulf are now being drilled to depths exceeding 30,000 

feet below the seafloor51. The Gulf of Mexico and Atlantic coasts are regularly 

hit by tropical storms52. Portions of the Arctic, where offshore energy development is being considered, feature adverse winter conditions characterized by sea 

ice, subzero temperatures, tropical storm-force winds, and low visibility. Effective response to a comparable accident in the deepwater Gulf, or mid-winter 

Arctic, could be significantly more difficult, prolonged, and costly. 

II. STORM DAMAGE: HURRICANES KATRINA, RITA AND IKE

In late August of 2005, Hurricane Katrina moved through oil fields in the central 

Gulf of Mexico as a Category 5 storm53. Just three weeks later another Category 

5 storm, Hurricane Rita54, drove through the offshore infrastructure in the western 

Gulf. SkyTruth acquired radar satellite images taken a few days after Katrina made 

landfall55. Our analysis of these images revealed extensive oil slicks covering more 

than 700 square miles in the Gulf of Mexico (Figure 6). Close examination revealed 
33 

56http://skytruth.mediatools.org/node/12846 57http://www.mms.gov/ooc/press/2006/press0501.htm 58http://meetingorganizer.copernicus.org/EGU2009/EGU2009-13707.pdf 59http://www.mms.gov/tarprojects/581/ 

44814183lMMSlKatrinalRitalPLlFinal%20Report%20Rev1.pdf 60http://www.uscg.mil/ccs/npfc/docs/PDFs/Reports/osltflreportlhurricanes.pdf 61http://www.epa.gov/katrina/testresults/murphy/ 62http://ngs.woc.noaa.gov/ike/IKE0000.HTM 63http://www.flickr.com/photos/47684393@N00/2861763336/sizes/l/ 64http://www.flickr.com/photos/skytruth/2924786274/sizes/l/ 65http://www.incidentnews.gov/attachments/8061/524175/ 

EugeneIslandNewsRelease090729.pdf 66http://www.incidentnews.gov/incident/8061 67http://www.incidentnews.gov/attachments/8061/524191/NESDIS—Analysis.jpg 68http://www.incidentnews.gov/entry/524230 69http://www.dfg.ca.gov/ospr/spill/nrda/nrdalirene.html 70http://www.reuters.com/article/environmentNews/idUSTRE56R46E20090729 71http://www.chevron.com/news/Press/release/?id=2009-05-06 72http://www.gasandoil.com/goc/company/cnn71530.htm 73http://www.offshore-technology.com/projects/tahiti/ 

multiple sources for the slicks, including known platform locations56 (Figure 7). 

Months later, the Minerals Management Service reported that Katrina and Rita had 

destroyed more than 100 platforms (Figure 8) and severely damaged more than 50 

others; damaged more than 450 pipelines; and caused at least 124 separate spills 

in the Gulf totaling 750,000 gallons of oil and other liquid hydrocarbons (primarily 

based on self-reporting by industry)57. Five drilling rigs were destroyed, and 19 others were severely damaged58. Nineteen mobile drilling units were broken loose from 

their moorings and set adrift by the storms, dragging their heavy anchor chains on 

the seafloor and causing much of the pipeline damage59. We conclude that many of 

the oil slicks SkyTruth identified on satellite images of the Gulf resulted from pipelines damaged in this manner. 

Aside from the direct damage to, and spills from, offshore facilities, these storms 

exposed a significant and previously unrecognized risk posed by offshore production: 

catastrophic spills resulted from the onshore oil and gas infrastructure that supports offshore production in the Gulf—the refineries, pipelines, and tanks required 

to receive, process, store and distribute oil and gas from offshore fields. In a May, 

2006 report to the U.S. Department of Homeland Security, the U.S. Coast Guard 

reported that Katrina and Rita released over 9 million gallons of oil, not including 

more than 5,000 minor spills60. Storm-damaged onshore infrastructure spilled 7 to 

8 million gallons of oil into coastal wetlands, streams, and communities. A single 

spill from a ruptured storage tank at the Murphy Oil Refinery inundated more than 

1,700 homes in the towns of Chalmette and Meraux, Louisiana, with more than one 

million gallons of crude oil61 (Figures 9 and 10). 

On September 13, 2008, this coastal vulnerability was exposed again when Hurricane Ike made landfall near Galveston, Texas, with Category 2 winds but a storm 

surge more typical of a Category 5 event. Coastal oil facilities were flooded. 

SkyTruth obtained NOAA aerial survey photographs62 that showed extensive oil 

slicks emanating from coastal wells63 and damaged storage facilities64 (Figure 11). 

Onshore facilities related to offshore production continue to pose risks that should 

be acknowledged and effectively managed. 

III. PIPELINE SPILLS: AGING INFRASTRUCTURE

Oil and gas infrastructure can become damaged and cause oil spills even in the 

absence of major storms. On July 25, 2009, Shell Oil Co. reported to the U.S. Coast 

Guard’s National Response Center that they had detected a loss of pressure in the 

Eugene Island Pipeline off Louisiana. Divers found a crack in the 20’’ diameter pipe 

at a point about 30 miles offshore, in water about 60 feet deep65. 63,000 gallons of 

oil leaked into the Gulf66, a ‘‘medium’’ spill by Coast Guard definition. Radar satellite imagery from NOAA showed the resulting oil slick67, which eventually 

stretched over 15 miles and reached a size of 80 square miles68 before it was effectively dispersed (Figure 12). Had this break occurred from a point closer to shore, 

beaches and coastal resources could have been directly impacted (Figure 13), as they 

were with the 1997 Torch spill from a pipeline just off the California coast69. 

The Eugene Island Pipeline was installed in 197670. In 200971 it began carrying 

oil produced from Chevron’s new deepwater ‘‘Tahiti’’ platform72, situated approximately 190 miles south of New Orleans73. 

In a common industry practice, Tahiti was ‘‘tied back’’ to the existing infrastructure: new pipeline was only extended 55 miles from Tahiti to Shell’s Boxer platform, 
34 

74http://www.subseaiq.com/data/ 

Project.aspx?projectlid=127&AspxAutoDetectCookieSupport=1 75http://www.gomr.mms.gov/homepg/regulate/environ/historyllouisiana.html 76 76http://tonto.eia.doe.gov/dnav/pet/petlcrdlgomls1la.htm 77http://www.gomr.mms.gov/homepg/pubinfo/repcat/arcinfo/index.html 78http://www.gomr.mms.gov/homepg/pubinfo/repcat/arcinfo/zipped/8321.zip 79 Crowder, L.B., G. Osherenko, O.R. Young, S. Airame ́, E.A. Norse, N. Baron, J.C. Day, F. 

Douvere, C.N. Ehler, B.S. Halpern, S.J. Langdon, K.L. McLeod, J.C. Ogden, R.E. Peach, A.A. 

Rosenberg, and J.A. Wilson (2006). Resolving mismatches in U.S. ocean governance. Science, v. 

313, pp. 617-618 80http://www.watoday.com.au/environment/cause-of-wa-oil-spill-revealed-20091109-i59k.html 81http://www.watoday.com.au/wa-news/oil-spill-cleanup-cost-tops-5-million-20091020- 

h6qx.html 

where it was connected to the existing pipeline network74. From Boxer, Tahiti oil 

flowed to shore through older pipelines including the Eugene Island Pipeline. 

The cause of the Eugene Island Pipeline failure has not yet been publicly reported, but as the existing nearshore pipeline network ages, structural failures become increasingly likely due to accumulated strain and corrosion. Offshore production of oil in the U.S. Gulf of Mexico began in the late 1940s75. In 2006, federal 

waters in the Gulf of Mexico produced 5.5 trillion cubic feet of natural gas and 400 

million barrels of crude oil76. Today, the seafloor in the western and central Gulf 

is crisscrossed by a complex network of over 25,000 miles of active pipeline, connecting 3,600 platforms and thousands of oil and gas wells to coastal processing, 

storage and distribution facilities77 (Figure 14). A recent SkyTruth analysis of pipeline data from the Minerals Management Service showed that 60 miles of still-active 

pipeline exceed 30 years in age. But most of the active pipeline segments in the 

MMS online dataset—totaling over 18,000 miles, or 72% of the active pipeline network—lack information pertaining to their installation date78, so the real extent of 

the age problem is elusive. 

Rigorous inspection and maintenance, routine monitoring, and aggressive programs to decommission aging pipeline can help manage the risk. But effective design and implementation of such programs may be complicated by the existing regulatory regime for offshore pipelines, with jurisdiction split between two separate 

agencies, the Department of Transportation and the Department of the Interior. 

This is a classic example of gaps and overlaps in ocean governance of the kind discussed in a widely quoted 2006 paper79 in the journal Science. 

IV. KEY OBSERVATIONS

Based on SkyTruth’s experience over the past five years investigating significant 

oil spill incidents caused by drilling mishaps, severe storm damage, and leaking 

pipelines, we offer the following thoughts: 

1. Offshore oil and gas production is a complex, technically challenging industrial activity. Relatively small spills occur regularly and, although accidents 

that lead to major spills are not common, they do still occur and pose a continuing threat to other marine and coastal resources, and to the communities 

and economic systems that depend on the integrity and sustainability of those 

other resources. 

2. While continual improvements to comprehensive regulation and enforcement, coupled with advances in technology and technique, can significantly reduce the likelihood of accidents that lead to major spills, offshore production 

still poses risks. 

3. When things go wrong offshore, the results can be disastrous, difficult to 

remediate, and extremely costly80 to both industry and society81. The risk becomes much higher in deeper water, in stormy locations, or where other difficult 

conditions (such as ice cover) slow and complicate oil spill response. 

4. Prepare for the worst. Determine the worst-case scenario wherever drilling 

is allowed, and integrate that scenario into the processes that will guide the decisionmaking and management of our nation’s marine and coastal resources. 

Other impacts, not addressed in this testimony, can also occur. This testimony 

does not provide a comprehensive analysis of the pollution that inevitably accompanies an intensive industrial resource extraction operation such as oil and gas production. Other important topics that should be thoroughly investigated and carefully 

considered when weighing the merits of offshore drilling include: 

• The routine, expected pollution from drilling and production activities (air, 

water). 
35 

* Table has been retained in committee files. 

82Fraser, G.S., J. Ellis, and L. Hussain, 2007. An international comparison of governmental 

disclosure of hydrocarbon spills from offshore oil and gas installations. Marine Pollution Bulletin, v. 56, pp. 9-13. 

• The occurrence of minor accidental spills and discharges. See Table 1,* for example, showing the frequency of spills >2100 gallons. Data addressing the frequency and cumulative impact of smaller spills are difficult to come by82. 

—Fugitive emissions of methane, a potent greenhouse gas, from oil and gas development activities and facilities. 

—The short- and long-term environmental, economic, and sociological impacts 

of spills and pollution. 

The CHAIRMAN. Thank you for being here. 

Mr. Rainey, go right ahead. 

STATEMENT OF DAVID RAINEY, VICE PRESIDENT, GULF OF 

MEXICO EXPLORATION, BP AMERICA, INC., HOUSTON, TX 

Mr. RAINEY. Thank you, Chairman Bingaman, Ranking Member 

Murkowski, and members of the committee. I am honored to appear before you today to share BP’s perspective on environmental 

stewardship and offshore energy production. 

Throughout the 20th century, an abundant supply of low cost energy has been the driving force behind America’s development, 

prosperity, and security. BP supports the view that energy security 

is inseparable from economic security and national security. BP is 

the largest producer of oil and natural gas in the U.S. and one of 

the largest investors in biofuels, wind, and solar. We recognize the 

need to transition to a lower-carbon economy, but that’s—that transition will take time. The U.S. will continue to rely on hydrocarbons for many years to come. Like any industrial activity, the 

production and transportation of oil and gas have environmental 

implications. The public is highly concerned about this, and we 

share their concerns. 

Releases from oil and gas operations are rare, and the application of technology has enabled a dramatic reduction of releases 

from our industry over the last 30 years. To be clear, any release 

from our operations is unacceptable, and we will continue to invest 

in research and technology to drive us to our ultimate goal of zero 

discharge. 

Contrary to popular perception, ours is a high-tech industry. To 

demonstrate this point, I would like to highlight three technologies 

which enable the safe and reliable production of offshore oil and 

gas. These are seismic imaging, drilling, and production systems. 

Seismic imaging allows us to predict the possibility of hydrocarbon reservoirs below the seabed. Drilling allows us to test for 

the presence of hydrocarbons in the reservoir, and, if hydrocarbons 

are present, the well bore connects the reservoir to the surface, 

where production systems enable us to produce the hydrocarbons 

and deliver them safely to market. 

Our industry has a remarkable track record of moving forward 

the limits of each of these technologies. I would like to highlight 

a few examples of how we have applied these technologies in the 

Gulf of Mexico, in Alaska, and in the United Kingdom. 

In the Gulf of Mexico, much of the seabed is underlain by shallow salt canopies. These salt canopies obscure the image below the 

seabed in the same way that a pane of frosted glass obscures the 
36 

image on the other side of a window. Early exploration focused on 

areas that had no shallow salt canopy. As the fields in these areas 

were discovered, industry began to explore under the thin edges of 

the canopies and eventually under thicker and more complex bodies of salt. Each phase of exploration was enabled by advances in 

seismic imaging technology. 

Recently, BP has pioneered a technology known as Wide-Azimuth Towed Streamer, or WATS. WATS is a 3-dimensional acquisition technology which has allowed us to get a better view of what 

lies on the other side of the frosted glass. As a result of the application of this technology, we recently announced a significant extension to our Mad Dog field, which is now firmly established as the 

third giant field in our Gulf of Mexico portfolio. 

Also in the Gulf, we have been progressing the limits of drilling 

and production systems. As drilling technology has moved forward 

enabling discoveries in deeper and deeper water, so production 

technology has followed. A variety of production systems has been 

developed to account for different metocean, seabed, and reservoir 

conditions. 

BP currently operates eight production hubs in the deepwater 

Gulf of Mexico using these technologies. One of these, our Marlin 

hub, has just celebrated its 10th anniversary of first production. As 

the original field has declined, five satellite fields up to 18 miles 

distant have been tied back to the Marlin host. This has been enabled by combination of directional and extended-reach drilling and 

subsea production technologies. The useful life of the facility has 

been extended and the environmental footprint has been reduced 

by requiring only one surface facility, where six would otherwise 

have been needed. In addition, Marlin has, this year, achieved a 

second peak of production, a very rare occurrence in our industry. 

In Alaska, BP is the only company producing oil and gas from 

the Beaufort Sea. Production began from our Endicott field in 1986. 

Drilling and production take place from an artificial gravel island 

located about 1 mile from the shore. The island is connected to 

shore via a gravel causeway along which oil and gas flows through 

aboveground pipelines. In 2000, production began at our Northstar 

project. The Northstar Island, from which drilling and production 

takes place, is further offshore than Endicott. At Northstar, however, there is no causeway and production is through a pipeline 

which is buried below the sea bed. 

Our third offshore development in Alaska is the Liberty Project, 

which is currently under development. The reservoir at Liberty is 

located in Beaufort Sea Federal waters, some 6 to 8 miles from the 

shoreline. Despite being much further offshore than either Endicott 

or Northstar, at Liberty there will be no new island and no new 

pipeline. Advances in extended-reach drilling will allow us to reach 

the Liberty reservoir from the existing facilities at Endicott. 

Finally, I would like to talk about our Wytch Farm development 

in the U.K. Wytch Farm is the largest onshore oil and gas development in Western Europe. It is located on the south coast of England in one of the most environmentally sensitive areas in the U.K. 

The application of extended-reach drilling has allowed the offshore 

parts of the reservoir to be drilled and produced from onshore facilities behind the shoreline. By working closely with government, 
37 

as well as surrounding communities and other stake holders, we 

have been able to design and locate the facilities to have minimal 

environmental and visual impacts. This project has been a resounding success, it is championed by local communities, by government 

leaders, and industry. In the 1995, it won the Queen’s Award for 

Environmental Achievement. 

In summary, I would like to return to the Gulf of Mexico, where 

technology has been a key driver of our success. In September, we 

announced a Tiber discovery, where we set a new drilling depth 

record for the industry at 35,055 feet. There are many challenges 

to overcome to bring Tiber to production, but they are exciting challenges and we look forward to addressing them. As we do so, we 

will be ever mindful and respectful of the communities and the environments in which we operate. 

We look forward to continuing to work with you to secure the energy supplies that our Nation will need. Thank you, and I will be 

happy to take your questions. 

[The prepared statement of Mr. Rainey follows:] 

PREPARED STATEMENT OF DAVID RAINEY, VICE PRESIDENT, GULF OF MEXICO

EXPLORATION, BP AMERICA, INC., HOUSTON, TX 

Chairman Bingaman, Ranking Member Murkowski, and Members of the Committee: 

My name is David Rainey, and I am BP’s Vice President of Exploration for the 

Gulf of Mexico. I am pleased to appear before you today to share BP’s perspectives 

on environmental stewardship and offshore energy production. 

BP IN THE UNITED STATES

BP is the largest oil and gas producer in the US, where we directly employ 29,000 

people. We have long been a proponent of comprehensive energy policies that promote energy security through the development of both traditional and non-traditional sources of energy, as well as conservation and efficiency. We have also been 

an advocate of taking a precautionary approach to CO2 emissions, and are committed to reducing the environmental impacts of both energy production and consumption. 

ENERGY TRENDS

Throughout the 20th century, an abundant supply of low-cost energy was the driving force behind America’s development, prosperity, and security. Globally, the 

world uses roughly 80 million barrels of oil a day. The US consumes a quarter of 

this—about 20 million barrels, of which we import 60 percent—or 12 million barrels. 

The Energy Information Administration (EIA) projects that US energy demand will 

grow by 11 percent from 2007 to 2030. Satisfying that demand in a sustainable way 

is one of our nation’s most significant challenges. If anticipated US needs are combined with those of the rest of the world, EIA projects that a 35 percent expansion 

in global oil production will be needed. That equates to an additional 30 million barrels of oil every day. 

Finding that oil and natural gas will be neither simple nor cheap. The era of ‘‘easy 

oil’’ may be over. New supplies are harder to find, more difficult and more expensive 

to extract, and are often located in politically unstable parts of the world. Wherever 

they come from, bringing new supplies to fuel our homes, businesses and transportation needs will require the investment of hundreds of billions of dollars. 

BP supports the need to transition to a lower-carbon economy—but this transition 

will take time—probably many decades. We believe that the nation’s and the world’s 

short- to medium-term energy mix will continue to be dominated by hydrocarbons, 

and finding and developing oil and gas remains a huge challenge. 

BP’S ENERGY PORTFOLIO

BP is not only the largest oil and gas producer in the United States, but also the 

largest investor in energy of all sorts. In the last five years, we have invested ap-
38 

proximately $35 billion in the US to ensure Americans have the energy and fuels 

they need to live their lives. These include: 

Oil and natural gas: Offshore and onshore, from the Alaskan North Slope to 

the deep waters of the US Gulf of Mexico, we are a leader in providing America’s traditional energy needs. 

Wind: We are major investors in wind generation and have 1,000 megawatts 

(MW) of wind generation on-line. We expect to have an installed capacity of 

2,000 MW by the end of 2010. And we also have a land position capable of potentially supporting 20,000 MW in the future—one of the largest portfolios in 

the country. 

Biofuels: We are one of the largest blenders and marketers of biofuels in the nation. BP has committed more than $1.5 billion to biofuels research, development, and production in response to increasing energy demand and the need to 

reduce overall greenhouse gas emissions. Our cutting-edge research looks to use 

dedicated non-food crops that will contain more energy and have less impact on 

the environment and human food supplies than past generations of biofuels. 

They will also be more compatible with existing engines and transport infrastructure, making them less costly to deploy at scale. 

Carbon Capture and Storage (CCS): BP is involved in three major CCS 

projects: active operations in Algeria, a planned project in Abu Dhabi, and a potential hydrogen energy project in California. 

Solar: BP’s solar business has been operating for over 30 years and last year 

had sales of 162 MW globally. This represents an increase of 29% over 2007 and 

further growth is expected. 

By investing heavily in a diverse portfolio of energy sources and the technologies 

to support them, BP is helping meet America’s energy needs while ensuring a more 

sustainable economy and energy future. 

TRACK RECORD OF ENVIRONMENTAL STEWARDSHIP

Like any industrial activity, production and transportation of oil and natural gas 

carries environmental implications. The public is rightly concerned about potential 

impacts and we share these concerns. 

Releases from oil and gas operations are rare, and the application of technology 

has enabled a dramatic reduction in releases from our industry over the last 30 

years. The National Academy of Sciences published its ‘‘Oil in the Sea III’’ report 

in 2002. This report states that oil released to the sea from the global oil and natural gas declined by 80 percent from 1975 to 2002. 

To be clear, any release of hydrocarbons from our operations into the environment 

is unacceptable, and we continue to invest in research and technology to drive us 

to our ultimate goal of zero discharge. 

Examples of the technologies which have helped to reduce accidental releases include: 

• Down hole flow control valves that shut down the well automatically if damage 

to the surface equipment is detected; 

• Blowout preventer technology which includes redundant systems and controls; 

• New and improved well control techniques which maintain constant control of 

the fluids in the wellbore; 

• Sensors which continually monitor the subsurface and seabed conditions for 

sudden changes in well pressures; and 

• BP’s fiber optic network in the US Gulf of Mexico which allows us to monitor 

well pressures in real time, both at the facility and in our offices in Houston. 

While our intent is to prevent all accidental discharges, we conduct regular emergency drills with local, state, and federal agencies. All of our production facilities 

have contingency plans that identify the procedures, response equipment, and key 

personnel needed for responding to incidents. 

OFFSHORE TECHNOLOGIES ENABLING ENVIRONMENTAL STEWARDSHIP

Three key technologies which enable the safe and reliable production of offshore 

oil and gas resources: 

• Seismic imaging; 

• Offshore drilling; and 

• Offshore production systems. 

Seismic imaging allows us to predict the presence of hydrocarbon reservoirs below 

the sea bed. Drilling allows us to test for the presence of hydrocarbons in the res-
39 

* Figures have been retained in committee files. 

ervoirs. When hydrocarbons are present, the well bore connects the reservoir to the 

surface, where production systems enable us to produce the hydrocarbons, and deliver them safely to the refinery. 

Our industry has a remarkable track record of moving forward the limits of each 

of these technologies. In BP, we have been at the forefront of both the development 

of the technologies, and their application. I would like to talk about three specific 

areas where we have employed these technologies: the US Gulf of Mexico, the Beaufort Sea offshore Alaska, and our Wytch Farm development in the UK. 

US DEEPWATER GULF OF MEXICO

Industry began to explore in the US Gulf of Mexico during the early 1930’s. The 

first discovery out of site of land was made by Kerr McGee in 1947. The MMS classifies water depths greater than 1,000 feet as deepwater, and depths beyond 5,000 

feet as ultra-deepwater. The first deepwater exploration well was drilled in 1975. 

The first ultra-deepwater exploration well was drilled in 1987. So, while it took 

more than 40 years for industry to develop the technology to move from the shoreline to 1,000 feet water depth, it took just 12 years to move from 1,000 feet to 5,000 

feet. Wells in water depths up to 10,000 feet are now routine. 

In the US Gulf of Mexico, shallow salt canopies underlie about 65 percent of the 

seabed in the deepwater areas. These salt canopies make seismic imaging of the 

subsurface very challenging. [See Figures 1A and 1B]* They present the same barrier to our seismic imaging capability that a pane of frosted glass presents to our 

eyes and our ability to see through it. The salt canopies bend the seismic waves and 

obscure the image of the underlying geology. 

Early exploration in the US Deepwater Gulf of Mexico was focused on the 35 percent of the area which has no salt canopy. Without the salt, conventional seismic 

imaging worked and fields were discovered as the advances in drilling technology 

enabled industry to move rapidly into the deepwater. Much of the success in this 

period was enabled by widely-spaced two dimensional seismic data. The technology 

challenge was about developing the systems to safely produce the oil and gas in 

these water depths. Our colleagues in Shell were at the forefront of this phase of 

Gulf of Mexico development. 

By the mid-1990’s, the large fields had been found in the areas of the deepwater 

free of shallow salt canopies. This led industry to turn its attention to the challenge 

of exploring below the salt. To do this, we matured a technology known as seismic 

depth imaging. This technology combines geological modeling and computer algorithms to restore the seismic wave paths to their correct positions-allowing the 

image to emerge. 

By the late 1990’s, depth imaging allowed the industry to begin to explore beneath 

the salt. These early forays were restricted to areas where the top and base of the 

salt were geometrically simple and the imaging problem was, from where we stand 

today, relatively easy to solve. BP’s Mad Dog, Atlantis, and Thunder Horse discoveries were delivered on the back of this technology in 1998 and 1999. Since then, 

we have continued to refine the technology and have been able to announce a steady 

stream of discoveries—most recently Kaskida in 2006, Isabela in 2007, Kodiak and 

Freedom in 2008, and this year Mad Dog South and Tiber. 

In 2003, BP began to address the problem of how we would explore under more 

complex salt geometries. We predicted that continuing incremental improvements to 

what was then considered conventional; depth imaging methods would soon reach 

a point of diminishing returns. So we set out to create a step change by developing 

a completely new seismic imaging technology. 

Conventional depth imaging is a data processing technology which involves some 

of the most sophisticated computer algorithms ever created. These algorithms require powerful super-computers to run them. However, the underlying data were acquired using a technology which had not changed significantly for 25 years. The 

data were acquired using a single seismic vessel towing both the seismic source and 

the receivers. Effectively, therefore, the data were acquired in two dimensions, but 

at sufficiently close spacing to allow processing in three dimensions. 

BP’s Wide Azimuth Towed Streamer (WATS) and Ocean Bottom Node technologies involve truly three-dimensional seismic acquisition. They were conceptualized, modeled, and piloted at scale in the US Deepwater Gulf of Mexico. The WATS 

pilot was on our Mad Dog Field, and the Nodes pilot was on Atlantis. At Mad Dog, 

the WATS data have contributed significantly to our ability to continue to develop 

the field. The successful Mad Dog South appraisal well which we announced in July 

of this year was enabled by these data. At Atlantis, development of the North Flank 
40 

of the field has been enabled through the application of nodes technology and production has begun. 

We have worked hard to drive our WATS technology into the market, and to refine it to make it cost effective in the exploration arena. Today, much of the US 

Deepwater Gulf of Mexico is covered by what we call XWATS—for Exploration 

WATS—seismic surveys. [See Figure 2] The data from these surveys will allow us 

to continue to move forward the limits of where we explore. As a result, we will be 

more efficient, drill fewer wells, and have less impact on the environment as we become better at predicting the presence of oil and gas in the subsurface. 

I have mentioned above how drilling technology advanced to allow us to drill in 

deep and ultra-deep waters. As discoveries were made, production technology followed. A variety of production systems have been developed to account for the different metocean, seabed, and reservoir conditions. [See Figure 3] 

BP has been at the forefront of this recent phase of deepwater development. 

Today, we operate eight major producing facilities in the US Deepwater Gulf of 

Mexico. [See Figure 4] They range from the Pompano fixed platform, installed in 

1994 in 1,300 feet of water, to the Atlantis semi-submersible platform, which started 

production in 2007 and sits in 7,100 feet of water. In between lie: 

• The Marlin tension leg platform in 3,234 feet of water; 

• The Holstein, Mad Dog, and Horn Mountain spar facilities in 4,344, 4500 and 

5,422 feet of water, respectively; and 

• The Thunder Horse and Nakika semi-submersible platforms in 6,050 feet and 

6,340 feet of water, respectively; 

Today Atlantis is the world’s deepest oil production facility, an honor previously 

held by both Horn Mountain and Nakika, when they began production. 

In addition to enabling the industry to move into ever deeper waters, the drilling 

envelope has been extended by advances in directional and extended reach drilling. 

The Nakika development is an example of where these technologies have been combined with subsea production technology to bring six otherwise uneconomic discoveries to production. These independent, medium-sized fields are tied back to the centrally-located semi-submersible production host facility. Distance from the central 

host varies from five to 26 miles. By combining directional and extended reach drilling with subsea production systems, the environmental footprint has been reduced 

by requiring only one surface facility, where previously six would have been needed. 

[See Figure 5] 

This month marks the tenth anniversary of our Marlin oil and gas hub. As the 

Marlin Field has declined, a series of satellite fields have been tied back using 

subsea production technology. In total, five satellite fields have been tied back, with 

distance from the host ranging from two miles to 18 miles. This year, the Dorado 

and King South satellite fields have been brought on line. These tiebacks have returned the facility to a second peak of production—a very rare occurrence in our industry. Again, the combination of directional and extended reach drilling and subsea 

production technology has enabled multiple fields to be developed from a single host 

platform. The environmental footprint has been reduced and the useful life of the 

facility has been extended. 

In addition to directional and extended reach drilling, today’s drilling technology 

allows us to drill to total depths which were unimaginable just 15 years ago. In the 

mid-1990s, drilling was restricted to roughly 20,000 feet total depth. Today we routinely drill to 30,000 feet and below. [See Figure 6] This means that we encounter 

ever greater temperatures and pressures. Our Thunder Horse development currently defines the limits for what we call high-pressure/high-temperature production 

technology. That said, we are already moving beyond these limits. Our Kaskida discovery, with reservoir depths ranging from 30,000 feet to 32,500 feet, has reservoir 

pressures above 20,000 pounds per square inch. We are currently designing the systems which will be required to bring Kaskida to production. 

Finally, we have recently announced our Tiber discovery—which was at the time 

of rig release the deepest well in the history of the oil and gas industry at 35,055 

feet. Tiber is an exciting discovery, and we are working hard to understand the 

technologies which will be required to bring it to production. 

LIBERTY PROJECT, BEAUFORT SEA, ALASKA

In Alaska, as elsewhere, much of the easy-to-reach oil and natural gas has been 

found and has been, or is being, produced. The new opportunities which have 

emerged are harder to reach and more technically challenging. They have become 

accessible, in large part, due to the technological advances we are discussing here 
41 

today. Presently, BP is the only company producing oil and natural gas from the 

Outer Continental Shelf in the Beaufort Sea. 

In 1986, the Endicott field became the first offshore producing field in the Beaufort Sea. The Endicott facility lies about a mile offshore and produces from an artificial gravel island which is connected to the coast by a gravel causeway. Oil and gas 

produced at Endicott come to shore via above-ground pipe lines. 

The next step of Arctic offshore developments in the Beaufort Sea was 

Northstar—also operated by BP. The artificial Northstar Island sits in state of Alaska waters, significantly further offshore than the Endicott Island. It is accessible by 

water and air only. There is no causeway, and production is through a pipeline 

which is buried below the seabed. The Northstar Island was designed to withstand 

Beaufort Sea ice conditions, and the pipeline was constructed to protect against 

leakage and is buried deep enough to protect against ice scouring on the sea bed. 

The latest evolution of the application of offshore Arctic technology is BP’s Liberty 

Project which is currently under development. The Liberty reservoir is located in 

Beaufort Sea Federal waters, roughly six to eight miles from the North Slope shoreline. The project will use existing, expanded facilities associated with Endicott and 

require no additional, roads, causeways or subsea pipelines. The key technology 

which will enable success is directional and ultra-extended reach drilling. 

During the last three decades, the limits of extended reach drilling have moved 

forward continuously. During the 1980’s, three to four miles was the maximum horizontal distance which a well could be drilled from its surface location. During the 

1990’s, five to six miles became the norm. At Liberty, the wells will reach out six 

to eight miles from the Endicott Island to access the reservoir under the Beaufort 

Sea. [See Figure 7] One of the world’s most powerful and most sophisticated onshore 

drilling rigs was constructed (in Washington state) to make this possible. For perspective, if the Washington Monument were the Liberty drill rig, it could extend out 

to the Capital Beltway and reach a target nearly two miles deep. These will be 

among the most challenging wells ever drilled in the industry. 

Drilling from the expanded Endicott surface facilities is expected to start in 2010, 

and first production is expected in 2011. Through the advance of drilling technology 

we will access a new, 100-million barrel field that will produce directly into existing 

facilities without the need for a drilling island, offshore production facility, or 

subsea pipeline. 

Another key to success in the Beaufort Sea has been our relationships with our 

neighbors on the North Slope. These relationships have spanned decades and are 

based on long-term trust and commitments to the community. We have staffed an 

office in Barrow, Alaska since 1979 and regularly interact with stakeholders, including the North Slope Borough, the Alaska Eskimo Whaling Commission, residents of 

Native Alaskan villages, and others. Things that concern our neighbors the most are 

those that pose a risk to their subsistence way of life. Understanding this has allowed a trusting relationship to prosper. 

THE WYTCH FARM FIELD

Located on the south coast of England, Wytch Farm is Western Europe’s largest 

onshore oil field. It is located in one of the most environmentally sensitive areas of 

the UK and it is operated by BP. [See Figure 8] In 1995, it won The Queen’s Award 

for Environmental Achievement. The area has also been designated as an Area of 

Outstanding Natural Beauty, a Site of Special Scientific Interest (SSSI), and a 

World Heritage Coastline. Wytch Farm achieved first oil in 1979. Since then, the 

project has been developed in three phases and over 100 wells have been drilled to 

date. [See Figure 9] 

The Wytch Farm reservoir extends underneath Poole Harbor, which is an area 

similar to Cape Cod here in the US. The reservoir is accessed by extended reach 

drilling from behind the shoreline. Development here has been achieved through 

close co-operation and engagement with governments, as well as the surrounding 

communities. Considerable input on the design of facilities was sought from local 

community and environmental stakeholders, including the siting of the operating 

equipment, with various above-ground permanent facilities designed to blend into 

the existing landscape. 

As a result of the area’s ecological importance, BP and other stakeholders applied 

strict environmental protection policies and established monitoring programs and 

surveys related to air quality, archaeology, seabed ecology, bird and reptile populations. All of these surveys were vital in determining how to develop the oilfield 

and in providing baseline data against which BP could monitor its performance. 

In recent years, BP applied extended reach drilling techniques, which brought environmental and commercial benefits to the development by enabling the furthest 
42 

parts of the offshore reservoir to be drilled from an onshore site. Well M16 set a 

new world record when it broke the six mile barrier in June 1999, reaching a total 

length of seven miles and a depth in excess one mile. In addition, the drilling rig 

and equipment also had noise-abatement controls installed to meet the requirements set by local officials. 

Wytch Farm continues to be a resounding success, championed by the local community, government leaders, and industry. The application of technology has enabled the development of this oil field in the midst of one of the most environmentally sensitive coastal environments in Europe. 

SUMMARY

In my testimony today, I have described the evolution of three key technologies 

which have enabled BP and our industry to explore for and produce oil and natural 

gas in some of the most challenging environments in the world. 

Seismic imaging is the key technology which enables us to see below the seabed 

and better predict the presence of oil and gas reservoirs. Finding oil and gas for the 

future requires exploring in areas that are ever deeper and more complex. To do 

this, we must continue to apply and enhance our seismic imaging technologies. 

Advances in drilling technologies and production systems have been significant. 

They include extended reach drilling, drilling in deeper waters, and to greater 

depths. These advances enable more production while reducing environmental impacts and allowing for efficient use of existing facilities and infrastructure. 

Floating production systems allow oil and gas to be produced from locations that 

are far removed from onshore oil refineries or pipelines. Sub-sea tiebacks allow multiple wells and fields to connect to one surface platform from many miles away. This 

means that fewer platforms are required which increases efficiency, and reduces the 

environmental footprint, and the visual profile. Many of the technology examples 

discussed herein have enabled a robust track record of environmental stewardship 

and can reduce or even eliminate the visual ‘‘footprint’’ of offshore energy operations. 

As we continue to move forward the limits of drilling and production technology, 

we are constantly mindful of our aspiration of ‘‘zero discharge’’. The technology to 

contain oil and gas is constantly moving forward as well. 

Technology has been, and will continue to be, the key to our energy future. We 

must continue to invest in exploration and production capability and in technology 

to meet demand. We must also continue to develop technologies to increase recovery 

of oil and gas from established hydrocarbon positions here in the US and around 

the world. Finally, to encourage and ensure continued success, we must have stable 

fiscal, regulatory, and leasing policies so that the oil and gas industry can continue 

to maintain investments which create jobs, generate revenues and enhance US energy security. 

Thank you for the opportunity to share BP’s perspectives on environmental stewardship and offshore energy production. 

The CHAIRMAN. Thank you very much. 

Mr. Short, go right ahead. 

STATEMENT OF JEFFREY SHORT, PACIFIC SCIENCE 

DIRECTOR, OCEANA, JUNEAU, AK 

Mr. SHORT. Thank you, Mr. Chairman, Senator Murkowski, 

other members of the committee. Good morning. 

I’m the Pacific science director for Oceana, an international marine conservation organization dedicated to using science, law, and 

policy to protecting the world’s oceans. While I understand we’re 

here today to talk about environmental stewardship as it relates to 

offshore oil and gas production, I must state for the record that 

Oceana opposes expanded oil development in the OCS because we 

and many other conservation organizations believe the environmental risks are poorly understood and are not justified by the economic benefits. 

Simply put, the current state of the science is just not capable 

of identifying all of the risks involved, let alone assess them with 

much confidence. We typically approach these projects by assuming 
43 

that we know all we need to know about how exploration and production affect the environment, which we use to justify doing an inadequate job of characterizing the environment before development 

starts, and then, when impacts occur, find we can’t really tell what 

caused them, because we didn’t document what was there to begin 

with carefully enough. 

Environmental scientists have made stunning discoveries on how 

oil affects marine life over the last 20 years, making it clear that 

there is a lot more that we need to know. The prudent management response is not to pretend that these impacts don’t exist, but 

to set the stage for their discovery, and to embrace truly precautionary science-based regulation of development. 

Along these lines, I commend to you the following principles: 

No. 1, decisions about development should be guided by a plan 

that prioritizes marine ecosystems and the services they provide 

and to ensure the integrity of the most important ecological areas 

is adequately protected. 

No. 2, we need to know what is in the ocean and how a marine 

ecosystem functions to have a reasonable chance of detecting impacts that really did occur. For example, claims that oil and gas development have had little effect on marine life in the Gulf of Mexico ring rather hollow, because, although we know these ecosystems 

have changed considerably, we do not know exactly how, because 

we did not establish, quantitatively, what was there beforehand. 

No. 3, the status of key ecosystem components should be monitored over the course of development and production so that natural trends and variability can be accounted for when assessing impacts. 

No. 4, the best available technology should be used and proposed 

incident response and recovery methods should be fully developed, 

proven effective, and readily available. 

No. 5, we should insist on adequate predevelopment social and 

economic research to evaluate subsistence and local use of the 

ocean in respective ecosystems. 

No. 6, we recommend increased dedicated funding to the National Oceanic and Atmospheric Administration to provide them 

with expanded agency capacity to evaluate the effects of—and impacts—of oil on marine ecosystems. 

This needn’t be prohibitively expensive. Per barrel produced, 

Norway currently spends over three times as much just on response and mitigation technologies as we do on our entire oil research program, and just 1 percent of the value of new oil produced 

would represent a tremendous expansion of our program. 

Finally, we believe that oil and gas development should only 

occur as part of a plan to move toward an alternative renewable 

energy. 

In closing, I cannot overemphasize the fact that marine ecology 

is still a developing science and that the science of oil pollution effects, in particular, is still in its infancy. The record of new toxicity 

mechanisms that continue to be discovered virtually guarantees 

that impacts occur in the environment that we still don’t even 

know how to detect. Responsible stewardship, therefore, compels us 

to embrace a much higher standard of precaution as we consider 

the risks associated with oil and gas development. 
44 

Thank you for this opportunity to comment, and I look forward 

to answering the committee’s questions. 

[The prepared statement of Mr. Short follows:] 

PREPARED STATEMENT OF JEFFREY SHORT, PACIFIC SCIENCE DIRECTOR, OCEANA, 

JUNEAU, AK 

Good morning. I am the Pacific Science Director for Oceana, an international marine conservation organization dedicated to using science, law, and policy to protect 

the world’s oceans. Oceana’s headquarters are in Washington, DC, and we have offices in five states as well as Belgium, Belize, Spain, and Chile. Oceana has 300,000 

members and supporters from all 50 states and from 150 countries around the 

globe. 

Prior to joining Oceana, I spent more than 30 years as an environmental chemist 

studying oil pollution fate and effects as an employee of the National Oceanic and 

Atmospheric Administration (NOAA). In that role, I led numerous studies on the 

Exxon Valdez oil spill beginning a week after the incident through my retirement 

from NOAA in November 2008. I have a Master of Science degree in chemistry, and 

I wrote the doctoral dissertation for my PhD in fisheries on data generated by the 

spill. With more than 50 professional papers on the Exxon Valdez oil spill and related topics, I have advised governments in Canada, China, Korea, Norway and 

Russia on oil pollution issues. 

Our oceans are places of wonder and beauty, and they provide important services 

that we want and need. Oceans are our largest public domain and house biological 

riches that surpass those of our national forests and wilderness areas. Oceans provide oxygen we breathe, food we eat, medicines we need, and aesthetic and spiritual 

nourishment. Healthy oceans and coastal ecosystems are also economic engines that 

provide valuable jobs, energy resources, and recreation and tourism opportunities. 

Simply put, oceans are essential to our lives and livelihoods. 

While I understand that the purpose of this hearing is to discuss environmental 

stewardship as it relates to offshore oil and gas production, I must state for the 

record that Oceana opposes expanded offshore oil and gas development. We and so 

many other environmental organizations take this position because we believe the 

environmental risks poorly are understood and are not justified by the potential economic benefits. The current lack of baseline information combined with the broad 

suite of toxicological risks, both known and emerging, requires responsible stewards 

to embrace a much higher standard of precaution in considering the risks associated 

with oil and gas development. We, therefore, believe that the potentially irreversible 

effects of oil pollution on marine ecosystems and their dependent economies do not 

warrant the questionable, and in any case short-term, economic benefits that might 

be gained from offshore oil and gas development. 

That said, Oceana and other conservation groups do support better stewardship 

for our oceans, and we appreciate the fact that the Committee has framed this hearing in those terms. As we consider any industrial activities in the ocean—oil and 

gas, shipping, fishing, alternative energy development—our first step should be to 

understand and protect the marine environment and those dependent on it. Once 

we understand the functioning of the ecosystem, we can better predict how activities 

might affect it and, therefore, undertake a true stewardship and planning effort. 

Too often, this is not the case. Large oil development proposals in the marine environment are presented and discussed as engineering challenges, without sufficient 

regard for the complexity of the environment in which they would occur, or the often 

dubious assumptions implicit in assessments of environmental risks and mitigation 

technologies. Oil spill contingency plans are presented as exercises in damage control, taking for granted that not all damage can be controlled, and based on the 

faulty assumption that the important variables and their interactions are adequately understood, predictable, and manageable. Similarly, the methods used to 

evaluate mitigation technologies in the field usually do not meet basic scientific 

principles, so that the results, and hence risk assessments based on them, are inherently questionable. In truth, our understanding of how oil behaves in the environment, the ways it affects organisms, and how well response and mitigation measures actually work in the field is still in its infancy. That fact alone argues for an 

especially precautionary approach to offshore oil and gas development. 

For example, following the 1989 Exxon Valdez oil spill, scientists and spill response managers assumed that oil would be most persistent in the uppermost parts 

of the intertidal zone because oil from the spill would be more likely to adhere to 
45 

1Owens, E. H., In Proceedings, 14th Arctic and Marine Oil Spill Program (AMOP) Technical 

Seminar, Environment Canada, Ottawa, ON, 1991, pp. 579-606. 2 Neff, J. M.; Owens, E. H.; Stoker, S. W. In Exxon Valdez Oil Spill: Fate and Effects in Alaskan Waters; Wells, P.G., Butler, J. N., Hughes, J. S., Eds.; American Society for Testing and 

Materials Pub. 1219: Philadelphia, Pennsylvania, 1995; pp 312-346. 3Short, J. W., Lindeberg, M. R., Harris, P. M., Maselko, J. M., Pella, J. J., and Rice, S. D. 

2004. An estimate of oil persisting on beaches of Prince William Sound, 12 years after the Exxon 

Valdez oil spill. Environmental Science and Technology, 38:19-26. 4 Carls, M.C., Rice, S.D., and Hose, J.E. 1999. Sensitivity of fish embryos to weathered crude 

oil: Part I. Low-level exposure during incubation causes malformations, genetic damage and 

mortality in larval Pacific herring (Clupea pallasi). Environ. Toxicol Chem 18: 481-493. 

Heintz, R.A., J.W. Short, and Rice, S.D. 1999. Sensitivity of fish embryos to weathered 

crude oil: Part II. Incubating downstream from weathered Exxon Valdez crude oil caused increased mortality of pink salmon (Oncorhynchus gorbuscha) embryos. Environ. Toxicol Chem 18: 

494-503. 

Incardona, J.P., Collier, T.K., and Scholtz, N.L. 2004. Defects in cardiac function precede 

morphological abnormalities in fish embryos exposed to polycyclic aromatic hydrocarbons. 

Toxicol. Appl. Pharmacol. 204:191-205. 

Barron, M.G., and Ka’aihue, L. 2001. Potential for photoenhanced toxicity of spilled oil in 

Prince William Sound and Gulf of Alaska waters. Mar. Pollut. Bull. 43:86-92. 

Cleveland, L., Little, E.E., Calfee, R.D., and Barron, M.G. 2000. Photoenhanced toxicity of 

weathered oil to Mysidopsis bahia. Aquat. Toxicol. 49:63-76. 5 Barron, M.G., Carls, M.C., Heintz, R., and Rice, S.D. 2004. Evaluation of fish early life stage 

toxicity models of chronic embryonic exposures to polycyclic aromatic hydrocarbon mixtures. 

Toxicol. Sci. 78:60-67. 

Barron, M.G., Podrabsky, T., Ogle, S., and Ricker, R.W. 1999. Are aromatic hydrocarbons 

the primary determinant of petroleum toxicity to aquatic organisms? Aquat. Toxicol. 46:253-268. 

Rowland, S., Donkin, P., Smith, E., and Wriage, E. 2001. Aromatic hydrocarbon ‘‘humps’’ 

in the marine environment: unrecognized toxins? Environ. Sci. Technol. 35:2640-2644. 6 Burns, K. A., Garrity, S. D., Jorissen, D., MacPherson, J., Stoelting, M.; Tierney, J., and 

Yelle-Simmons, L. 1994. The Galeta oil spill. II. Unexpected persistence of oil trapped in mangrove sediments. Estuarine Coast. Shelf Sci. 38:349-364. 

Reddy, C. M., Eglinton, T. I., Hounshell, A., White, H. K., Xu, L., Gaines, R. B., and 

Frysinger, G. S. 2002. The West Falmouth oil spill after thirty years: the persistence of petroleum hydrocarbons in marsh sediments. Environ. Sci. Technol. 36:4754-4760. 

Short, J.W., Irvine, G.V., Mann, D.H., Maselko, J.M., Pella, J.J., Lindeberg, M.R., Payne, 

J.R., Driskell, W.B., and Rice, S.D. 2007. Slightly weathered Exxon Valdez oil persists in Gulf 

of Alaska beach sediments after 16 years. Environ. Sci. Technol. 41:1245-1250. 7Fingas, M. 2004. Dispersants, salinity and Prince William Sound. Prince William Sound Regional Citizens’ Advisory Council Report No. 955.431.041201. Prince William Sound Regional 

Citizens’ Advisory Council, Anchorage, Alaska. 8Petersen, C. H., Rice, S. D., Short, J. W., Esler, D., Bodkin, J. L., Ballachey, B. E., and Irons, 

D. B. 2003. Emergence of ecosystem based toxicology: Long term consequences of the Exxon 

Valdez oil spill. Science, 302:2082-2086. 

the sediments there.1 Four years after the incident, beach cleanup and monitoring 

were terminated, because hardly any oil was still evident in the upper portion of 

the intertidal zones, either on beach surfaces or beneath.2 Subsequently, however, 

residents of the area repeatedly reported finding oil lower down in the intertidal 

zone and just below the beach surface. Sometimes enough oil was found to support 

combustion. Finally in 2001, I led a rigorous, quantitative study that involved no 

assumptions about where on a beach oil might be found. That study showed that 

most of the remaining oil was in the more biologically productive mid-tide portion 

of the beach.3

As it turned out, the policy decision to end cleanup and beach monitoring was 

largely based on unverified assumptions that went unquestioned for 9 years. Over 

the last 20 years, scientists have definitively proved false similarly naive assumptions regarding the ways in which oil components exert their toxic effects,4 the identities of many of the compounds that are known to be toxic,5 the processes that affect the persistence of oil in the environment once released,6 the efficacy of response 

and mitigation technologies,7 and the ecological impacts from disturbances associated with offshore oil and gas development.8 Each time one of these assumptions 

is proven incorrect, it reinforces the fact that there is a great deal that we do not 

know about these issues. 

This information is important because the risk assessments we undertake for oil 

and gas activities are, by definition, based on what we do know and what we assume. Given the fact that we have been wrong so many times before, we can rest 

assured that such assessments understate the actual likelihood of serious environmental impacts. 

Given the fundamental nature of the scientific uncertainties that remain, we 

should expect more unwelcome surprises regarding the environmental impacts of 

offshore oil and gas development in the future. While we have a better idea of what 

questions to ask scientifically, we have also learned that there are likely to be im-
46 

9See: http://wwww.evostc.state.ak.us/gem/gemdocs.cfm 

pacts that we do not know how to detect, let alone mitigate, because we do not even 

know what they might be. The prudent management response is not to pretend that 

such impacts do not exist, but to conduct the necessary research, account for uncertainty, and embrace truly precautionary, science-based regulation. Along these lines, 

I recommend to you the following principles: 

First, decisions about development, such as oil and gas activities should be 

made in the context of a plan that prioritizes protecting marine ecosystems and 

the services they provide. Decisions about industrial activities must be based on 

sound science, planning, and precaution. Critical habitats and processes, including important ecological areas should be identified and appropriate protective 

measures adopted for them as a predicate to development. 

Second, to make effective decisions about whether industrial activities should 

occur and, if so, when, where, and how, we need to know what is in the ocean 

as well as how the marine ecosystem is structured and functions. In the aftermath of the Exxon Valdez spill, consequences for populations of impacted species were often obscured because we did not have a sufficient picture of the preimpact population sizes. Similarly, the massive development in the Gulf of Mexico occurred with scant attention to the status of the ecosystem beforehand. As 

a result, claims that oil and gas development has had little effect on marine life 

in the Gulf of Mexico ring hollow. Although we know that these marine ecosystems have changed considerably, we cannot demonstrate exactly how because we did not establish quantitatively what was there before the development occurred. Without such baseline knowledge about what is in the ocean and 

how it interrelates, we cannot legitimately evaluate risks prior to industrial activities, and we risk being in the position of wondering what was lost following 

development or an industrial accident because we did not evaluate what was 

there to begin with. Yet, that is the current situation in most of the areas where 

expanded oil and gas drilling has been proposed—there simply is not sufficient 

ecological baseline information to adequately evaluate or mitigate risks. In the 

Arctic Ocean, for example, a massive expansion of oil and gas leasing has been 

authorized despite a paucity of scientific data about the marine ecosystem. 

To better understand the risks and to provide a baseline for decision makers, 

quantitative assessments of the major ecosystem components as well as ecological studies to provide a basic understanding of the food-web interactions that 

support them or are affected by them should be conducted prior to authorizing 

oil and gas activities. These studies should include baseline surveys of pollutants, pre-development population assessments of species at greatest risk, such 

as seabirds and marine mammals, and studies on their seasonal and spatial 

variability. 

For large-scale projects, the adequacy of these pre-development surveys 

should be evaluated by an independent panel of experts. Although the Minerals 

Management Service has expended considerable sums on studies, they were not 

guided by an integrated ecosystem research plan. As a result, population and 

distribution data for several vulnerable species that play important roles in the 

marine ecosystem are either outdated or missing. In contrast, careful formulation of integrated ecosystem research and monitoring plans, such as the Gulf 

Ecosystem Monitoring plan in Alaska formulated in the aftermath of the Exxon 

Valdez oil spill,9 may furnish more useful information at a fraction of the cost. 

Third, the status of key and vulnerable ecosystem components should be monitored over the course of development and subsequent production, so that natural trends and variability can be given due consideration when evaluating oil 

and gas impacts. Any important but poorly-understood ecological processes identified during the pre-development surveys and subsequent review should be 

studied in sufficient detail to elucidate and remedy the defects in our understanding. These on-going research and monitoring programs should be tailored 

to the respective regions where new development is proposed and overseen by 

an independent body comprising concerned local interests, such as the Regional 

Citizens’ Advisory Councils envisioned in the Oil Pollution Act of 1990. The results of these efforts should be made publicly available not only through 

websites and publications, but also periodic science symposia in respective ecosystem regions. Funding for these endeavors should be provided largely by 

those seeking to develop oil and gas leases. An oil spill risk assessment as outlined in S. 1564 introduced by Senator Begich should be a first step to determining if spill clean up is possible and under what conditions. 
47 

10 Engos, A., S. Lokkeborg, E. Ona, and Soldal, A.V. 1996. Effects of seismic shooting on local 

abundance and catch rates of cod (Gadus morhua) and haddock (Melanogrammus aeglefinus). 

Canadian J. Fish. Aquatic Sci. 53: pp. 2238-49. 

Mate, B.R., K.M. Stafford, and Ljungblad, D.K. 1994. A change in sperm whale (Physeter 

macrocephalus) distribution correlated to seismic surveys in the Gulf of Mexico. J. Acoustical 

Soc. Am. 96:3268-69. 

Richardson, W.J. ed., ‘‘Marine Mammal and Acoustical Monitoring of Western Geophysical’s 

Open-Water Seismic Program in the Alaskan Beaufort Sea, 1998’’ (1999) (LGL Rep. TA2230-3). 11 Cranford, P.J., Gordon, D.C. Jr., Lee, K., Armsworthy, S.L., and Tremblay, G.—H. 1999. 

Chronic toxicity and physical disturbance effects of water-and oil-based drilling fluids and some 

major constituents on adult sea scallops (Placopecten magellanicus). Mar. Environ. Res. 48:225- 

256. 

Ray, J.P., and Engelhardt, F.R. (eds). 1992. Produced water: technological/environmental 

issues and solutions. Proceedings of the 1992 International Produced Water Symposium, February 4-7, San Diego, California. Plenum Press, New York. 

Fourth, best available technology must be used, and proposed incident response and recovery methods be fully developed and readily available. These 

mechanisms must be demonstrated to be effective in the region where new oil 

and gas development is proceeding, not in some warehouse thousands of miles 

away, and under realistic environmental conditions in field tests. Oil spill response and recovery plans often rely on dispersants, for example. At this time, 

however, we have not developed a reliable and scientifically rigorous method for 

measuring the proportion of oil actually dispersed that did not, and would not, 

have temporarily disappeared because of wave action only to re-aggregate 

unmeasured elsewhere.7 Once a reliable method for performance evaluation is 

in hand, it should be applied in field tests to determine dispersant efficacy 

under a realistic range of temperatures, sea surface salinities and agitation, and 

oil types, viscosities and slick thicknesses. Similar concerns apply for in situ 

burning. For mechanical recovery, we need to know how well the proposed techniques can be expected to work in various states of the seas and winds, and 

for what fraction of the time they can even be deployed successfully. In the Arctic, it has been widely recognized that mechanical recovery is impossible in icy 

conditions, and it would be useful to know whether such response measures 

could even be deployed during the long Arctic night. 

A necessary component of these response and recovery methods is adequate 

infrastructure. We must ensure that all vessels are subject to tracking and that 

response and recovery equipment is stationed in accessible locations. 

We also must insist that impacts from the exploration process, production 

wastes, and other pollution are minimized. Exploration for oil, which involves 

seismic testing, can be harmful to many species of endangered and threatened 

species including marine mammals, sea turtles and fish.10 While we believe 

these impacts are unjustified in any areas that were previously set aside or protected, as well as in highly sensitive areas such as the Arctic, responsible environmental stewardship requires that these impacts at least be minimized by 

careful timing and choosing locations where these species are not present. Production wastes, such as drilling muds and produced waters also harm marine 

ecosystems.11 Methods should be developed to treat these wastes prior to releasing them into the environment, or they should not be released at all. Similarly, 

emissions of air and water pollutants must be minimized by requiring new and 

better technology, and the introduction of invasive species must be strictly prohibited. 

Fifth, we should insist on adequate pre-development social and economic research to evaluate subsistence and local use of the ocean in respective ecosystems. As we have seen with beach communities and fishery economies following oil spills and other ocean pollution events, just the perception that seafood could be tainted can lead to devastating market losses for commercial fishers and tourism providers and even more profound disruptions of communities 

that rely on subsistence for the main supply of food, as is often the case with 

Alaska Natives. Research before development is the only way to accurately account for these risks in the decision making process. 

Sixth, increased dedicated funding should be provided to the National Oceanic 

and Atmospheric Administration and through the National Science Foundation 

to support research on the toxicology of petroleum and petroleum products and 

their interactions with other contaminants. NOAA in particular has done pioneering work discovering heretofore unanticipated biochemical mechanisms 

through which petroleum can poison marine biota, such as the embryotoxic effects of certain polycyclic aromatic hydrocarbons (PAH) on fish eggs and the 

interaction of PAH with sunlight to dramatically increase toxicity.4 Funding for 
48 

12Torrice, M. 2009. Science lags on saving the Arctic from oil spills. Science 325:1335. 13 Central Intelligence Agency. 2008. The world factbook. Central Intelligence Agency, Washington, DC. 

this work should be broadened to include research aimed at identifying toxic 

compounds in petroleum that now remain obscure, as well as the biochemical 

mechanisms causing their toxic effects. The research methods developed at 

NOAA in these fields over the last decade hold great promise for producing 

more discoveries of fundamental value regarding responsible environmental 

stewardship. 

The funds needed to address all of the concerns listed above amount to a 

small fraction of likely revenues generated by new oil production. In fact, allocating just 1% of the revenues resulting from expanded offshore oil and gas production would amount to an enormous increase over current funding levels. 

Currently, the national oil-spill research plan is more than 10 years old, and 

of the $28 million annually authorized to fund it, only about a fourth is actually 

spent.12 In contrast, Norway has spent the equivalent of $10 million on new oilspill technologies alone since 2006,12 and it produces less than a third of the 

petroleum that the United States does.13 Truly responsible environmental stewardship would include substantial funding increases to better support research 

in all aspects of the environmental impacts of offshore oil and gas development. 

Moreover, the provision of adequate funding would address a chronic asymmetry in the scientific standards used to evaluate the environmental impacts 

of offshore oil and gas development. Paying inadequate attention to pre-development surveys, ecosystem process and monitoring studies, and ecotoxicological 

research, has crippled our ability to detect impacts. This failure exacerbates the 

likelihood of ill-advised policy recommendations. By contrast, there are rigorous 

standards typically applied to demonstrations of impacts from development. By 

acquiescing to defective standards prior to impacts but insisting on rigorous 

standards to demonstrate them afterward, we create a substantial bias that 

works to promote environmental harm. This bias could be considerably reduced 

simply by insisting on rigorous and adequately comprehensive pre-development 

surveys, as well as monitoring over the economic life of approved projects. There 

should be enough science to have a reasonable chance of detecting populationlevel effects that might result from plausible impacts associated with development within the associated region. 

Finally, new oil and gas activities should occur only as part of a plan to move 

toward alternative, renewable energy. We can all recognize that the country 

must undergo a shift to renewable energy. New oil and gas activities must only 

be undertaken as a bridge to that future. We must ensure that decisions are 

made and revenues allocated in such a way to move us closer to renewable energy and sustainable living. 

In closing, I cannot overemphasize the fact that marine ecology is still a developing science, with new, fundamental discoveries coming on a regular basis, and 

that the science of oil pollution effects is still in its infancy. We are never quite sure 

how oil will behave once released, where it will eventually find its way, how it may 

interact with other pollutants, or even all the ways it can harm marine life. When 

we make the effort to look closely, such as happened after the Exxon Valdez spill, 

fundamental surprises typically come to light. These discoveries overturn predictions of impacts often stated with unfounded confidence beforehand that in retrospect turn out to have been based on little more than conjecture. The record of new 

toxicity mechanisms that continue to be discovered, along with longstanding evidence of toxic effects that are clearly related to oil exposure but that cannot be explained on the basis of what we currently know about the toxicity of oil components, 

virtually guarantees that toxic impacts occur in the environment that we do not 

even know how to detect. Recognition of this requires us to embrace a much higher 

standard of precaution as we consider the risks associated with oil and gas development. It is largely on the basis of this recognition that we at Oceana, along with 

most of the marine conservation community, believe that the potentially irreversible 

effects of oil pollution on marine ecosystems and their dependent economies do not 

justify the potential short-term economic gains that might accrue from offshore oil 

and gas development. 

The CHAIRMAN. Thank you all very much for your testimony. Let 

me start with a few questions. 

Dr. Cruickshank, let me ask you, first of all—one of the suggestions we’ve heard and discussed is the idea of establishing ‘‘no de-
49 

velopment buffer zones’’ for a certain number of miles offshore or 

in particular sensitive areas. I notice, in your testimony, about 

the—which is it?—the Flower Garden Banks—you talk about how 

MMS established—as I understand your testimony—MMS established buffer zones to prevent possible impacts on the coral habitats in that area. That raises the obvious question, Is this something we should have MMS doing instead of having the Congress 

do it? I mean, we—once Congress legislates a buffer zone or a ‘‘no 

development’’ zone, whatever you want to call it, we’re then sort of 

locked into that until we get the votes to change that or until it 

becomes a big enough priority to change. I’m just wondering if it— 

is this really something that needs to be left to the agency with responsibility so that new information can be taken into account? 

What’s you’re—does the administration have a position on that 

question? 

Mr. CRUICKSHANK. We don’t have a position on that particular 

question. We certainly have authority, under current law, to establish buffer zones, and we have done so, not only in the Flower Garden Banks, but in certain sail areas where we’ve created buffer 

zones from the coast. We try and do that based on what we know 

about the specifics in an area—the specific environmental resources, the other uses of the sea and seabed, the particular social 

values of an area—and, as appropriate, we create zones to protect 

those resources and values that are appropriate to protect in a 

given area. That’s not to say that everybody would always agree 

with the decisions we make as to where we put buffer zones, and 

their size, but we certainly have the authority to do so. 

The CHAIRMAN. Do you also consider establishing buffer zones in 

order to protect the view? I mean, if there’s a community located 

there and they’re concerned about the possibility of rigs in the lineof-sight offshore, do you take that into account and perhaps establish buffer zones to deal with that, or is that not part of your authority, as you see it? 

Mr. CRUICKSHANK. We can, and we have done so in one place. 

We negotiated a lease stipulation with the State of Alabama for 

areas offshore Baldwin County, Alabama. There were some visual 

concerns for the tourism industry in Baldwin County, Alabama, 

and we’ve negotiated a requirement, on all leases, that they take 

steps to minimize the visual impact in that area. That stipulation 

applies to any lease within 15 miles of the coast of that county. 

The CHAIRMAN. OK. Why—if you did it there, have you considered doing it more broadly as part of a leasing plan, to just provide 

assurance to folks on—who—living on the coast, that—so they’re— 

they need not worry about any development occurring in a larger 

area? 

Mr. CRUICKSHANK. It’s certainly an option. To date, we have not 

applied that as a general rule across the OCS. We have—did so, 

in that case, because of particular concerns of the State and the 

ability to negotiate with them on an acceptable solution. Other 

buffer zones we have used have been to protect subsistence-hunting 

resources, marine mammal migration paths, and the like. So, it 

really depends on the particular circumstances. 

The CHAIRMAN. OK. Why don’t I stop and defer to Senator Murkowski. 
50 

Senator MURKOWSKI. Thank you, Mr. Chairman, and thank you 

all for your testimony this morning. 

Mr. Rainey, I appreciate you stating for the record that the oil 

and gas industry is high-tech. For people who don’t know about 

Perdido and about what is occurring at Liberty, it is nothing short 

of phenomenal to think that we can be exploring and producing in 

the depths that you’re talking about, 35,000 feet is the record, but 

what’s going on at Perdido at 8,000 feet, 200 miles offshore, tapping into things in a 30-mile radius. I had an opportunity to see 

what Shell is doing with the 4-D seismic technology, and it’s better 

than Disneyland, in terms of how you can take technologies and go 

after a resource that is thousands of years old, and do so in an environmentally sound way. So, I commend you for the efforts that 

have been made to really play out the technologies so that you’re 

able to gain the resource while at the same time working to care 

for the environment. 

Mr. Odum, I thought that you were more than just a little bit 

of a gentleman in your criticism. I wouldn’t even call it criticism, 

you just said that when, ‘‘We here at the Federal level commit to 

OCS, the government needs to be prepared to do the necessary permitting.’’ I think we recognize that up north that is not the case, 

and you have been very gentle in saying that the Federal system 

in Alaska needs attention. It needs more than attention, and I 

think we’re failing on that commitment when we can’t get these 

permits to you after years of waiting. You need to know that we’re 

working to that issue. 

I wanted to ask you, Mr. Odum and, Mr. Rainey, you were also 

involved, and Dr. Cruickshank there was a test that went on up 

in the Barents Sea, off of the coast of Norway, to determine how 

capable we are in responding to a spill in Arctic icy conditions. For 

us in Alaska, as we look to expanded offshore, this is something 

that is of keen interest. This was just reported in yesterday’s Anchorage Daily News, and the conclusion, as I understand it was 

pretty encouraging, the ice can actually act as more of a natural 

blockade that can trap the oil and give responders a greater time 

period to clean it up. Can you speak to this test that was conducted, and I understand that it was paid for by the industry, so 

of course that makes it suspect from the get-go. But, MMS was also 

involved, and I would like to explore what we’ve learned from this. 

Mr. ODUM. Thank you, Senator. I think the—so, SINTEF is the 

group that organized this. It’s a Norwegian research institute. As 

you say, there were a number of industry participants, plus also a 

number of other government-related participants, as well. 

The idea behind this study—this was a 3-year study to answer 

these questions about what happens—what’s the behavior of oil in 

water that is either partially or all the way up to fully ice-covered? 

So, this was a—an opportunity to do this in a real-world situation 

in the Barents Sea. 

I think it actually—if I could just link it very quickly to a statement made earlier—we do a certain amount of research—you 

know, the MMS does, here in this country, but we benefit from research that’s done all around the world. I think this is a great, 

great example of that. 
51 

It tested the behavior of oil in the water, various recovery methods, which would include mechanical-type recovery methods, boom 

and scooping oil out of the water, as well as dispersants in ice, as 

well as in situ burning. What it found was that—I think, two major 

conclusions. One is that each of those methods is successful to a degree—and I think ‘‘better than expectations’’ would be the way to 

say it—but ten, in a mitigating sense, in a preparatory sense as we 

work in a area, we should be prepared to apply all three of those 

methods. So, it was good news, from that perspective, and we’re 

happy to see the report out on that. 

Senator MURKOWSKI. Dr. Cruickshank, would you care to comment on that? 

Mr. CRUICKSHANK. Yes. So, I’m aware of this report. We’re— 

SINTEF is coming in to brief us next week on the results, so I 

won’t comment on that. But, I would like to note that that’s only 

one of a lot of research that’s gone on in the ability to clean up 

spills in Arctic waters. Earlier this year, we published a report 

highlighting the research results of about 10 years of research on 

this topic, and we can certainly make that available to the committee, if it’s interested. 

Senator MURKOWSKI. Great, I appreciate it. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you. 

Because there’s no longer a restriction on drilling on the Outer 

Continental Shelf, and, I think, because there’s a generally different view about the eastern Gulf—I mean, reflected by the vote 

in this committee—it seems to me that it probably is useful now 

for your agency, Dr. Cruickshank, to be thinking about what kind 

of buffer zones would be advisable. I know you’ve said you described it in one State because of concerns about the State, but do 

you think it’s probably advisable for the agency to be thinking 

about that more generally? 

Mr. CRUICKSHANK. It’s certainly an option that we have on table. 

We are currently going through over a half million comments that 

we received on a draft proposed program for the OCS, and one of 

the specific questions asked in that program was about the applicability of buffer zones and how they might be used. So, we’re going 

through and analyzing those comments, and it will be among the 

information that’s available to the Secretary as he considers his decisions for the OCS. 

Senator DORGAN. I mean, the issue of environmental stewardship 

is about a lot of things. It’s about visual line-of-sight issues with 

respect to drilling. It’s about ecosystems and other things. So, I 

mean, I think all of us are interested in trying to determine, What 

does this mean as we prepare to produce more energy here in our 

country and drill where we perhaps have not drilled before? What 

is our responsibilities and requirements for environmental stewardship? 

One of the witnesses raised the question—I think Mr. Amos—of 

the blowout of the new rig in Australia. My understanding is that 

an official from MMS indicated that that agency would never have 

approved the engineering design of the well that is leaking off of 

Australia. Are you familiar with that at all? 
52 

Mr. CRUICKSHANK. A bit. Until the Australian government completes its investigation, we won’t know for sure what caused the incident. But, there are some differences between here and there that 

I think are significant. 

The well design is not one that we would have approved. They 

had a single barrier to control the well, we require redundant barriers. We also require that the barriers be tested at pressures at 

least as great as those expected to be found in the reservoir. It’s 

our understanding there was no such requirement to test the barrier offshore Australia. 

We also have what we believe is the most aggressive oil spill contingency planning and oil spill drill program in the world, where 

we are constantly making sure people are able to respond quickly 

and muster the equipment quickly to respond to spills. Whether 

any of these would have had any bearing on the spill in the Timor 

Sea, we won’t know until Australia completes its investigation. 

But, I do believe that these factors would help reduce the likelihood 

of such a spill, and mitigate impacts of any such spill. 

Senator DORGAN. Mr. Amos, you talked about the 9 million gallons of oil, Katrina/Rita—and it’s—I’m just—I think—I’m trying to 

read this—the storm damage onshore infrastructure spill, 7 to 8 

million gallons. So, the bulk of that was not spilled from offshore 

drilling, the bulk of that was onshore storage. Is that correct? 

Mr. AMOS. That’s correct. 

Senator DORGAN. OK. The reason I mention that is, my colleague 

from New Jersey used the 9-million-gallon gross number, without 

a description of it. I didn’t have the same number. But—so, the 

bulk of that was onshore. 

Mr. AMOS. Correct. 

Senator DORGAN. All right. Let me ask, if I can—the sources of 

hydrocarbons in the marine ecosystem from oil drilling verses natural seeps and discharges from shipping—does anybody on the 

panel have some notion about what kind of percentages we’re talking about there? 

Mr. Short. 

Mr. SHORT. Yes, there are much greater inputs of hydrocarbons 

to the marine environment from natural oil seeps than there are 

from exploration activities and development activities. The key difference is that when hydrocarbons are released into the environment from seeps, the ecosystem has adapted to that over centuries, 

if not millennia. So, birds, marine mammals, other biota in the region are—know to avoid the area if they’re impacted toxicologically. 

Senator DORGAN. So—— 

Mr. SHORT. But, a marine spill or catastrophic release, the animals aren’t adapted to, so they get clobbered. 

Senator DORGAN. So, there’s a difference between seeps and discharges and spills and so on— 

Mr. SHORT. Yes. 

Senator DORGAN [continuing]. Just based on the ecosystem’s response to it. My understanding is that about 2 percent of the volume of oil released into U.S. waters comes from spills. About 98 

percent comes from seeps and discharges from shipping and so on, 

so forth. I’m not—by that, I’m not suggesting that there is not a 

concern or an interest here. You—Mr. Short, you’ve talked about 
53 

the need to understand the ecosystem better, and the fact that 

drilling occurred without a baseline study. Of course, a baseline 

study at this point would simply describe today’s baseline. 

Mr. SHORT. Exactly. 

Senator DORGAN. I’d—but—and there’s a great deal of drilling 

going on in the Gulf, and many of us feel there will be more drilling. One of the things that we will rely on very substantially is Dr. 

Cruickshank’s agency to make sure that the rules, the regulations, 

the conditions, the restrictions, including environmental stewardship, reflect the kind of safety that our country will expect and demand with respect to offshore drilling. I personally believe that, 

from the standpoint of energy security for this country, which is a 

very important issue for America right now and going forward, we 

are going to produce more American energy. A portion of that is 

going to be offshore oil and gas. The question isn’t ‘‘whether,’’ the 

question is, ‘‘How do we do that in a way that accomplishes two 

goals, greater energy security for our country and, at the same 

time, protecting our environment and our ecosystem?’’ 

So, I really appreciate, Mr. Chairman, your holding this hearing, 

because it relates to the amendment that I withdrew, and I think 

that this will attend, I think, a much longer discussion over a 

longer period of time. But, I thought the witnesses gave us a good 

blend of virtually all of the interests and discussion that need to 

be a part of this. 

The CHAIRMAN. Thank you very much. 

Senator RISCH. Senator RISCH. I’ll pass. 

The CHAIRMAN. All right. 

I think Senator Shaheen was—no. Is that—oh, that’s right. Senator Shaheen came before Senator Landrieu. 

Senator Shaheen. 

Senator SHAHEEN. Thank you, Mr. Chairman. You know, we 

women all look alike—— 

[Laughter.] 

Senator SHAHEEN. I’m sorry, but—I didn’t mean that. That was 

a shot. 

[Laughter.] 

The CHAIRMAN. I didn’t suggest you looked the same. 

[Laughter.] 

Senator SHAHEEN. Thank you all very much for being here. 

I want to follow up on your comment, Dr. Cruickshank, about the 

decision to ask, in Alabama, that the company minimize their sight 

impacts. What exactly does that mean? 

Mr. CRUICKSHANK. What the stipulation calls for is to look at opportunities to—instead of building a new platform in those waters, 

to perhaps have subsea completion and tie it back to an existing 

platform, to drill from existing facilities. If you’re not able to do 

that, to try and place and design a facility so that it will have a 

minimal visual impact on the shoreline. 

Senator SHAHEEN. Dr. Short, in his testimony, talks about the 

national oil spill research plan being more than 10 years old and 

that only about a fourth of the 28 million authorized to fund it has 

been actually spent. Is that—would you agree with that assessment? Should we—what more should we be doing in that area? 
54 

Mr. CRUICKSHANK. I can’t speak specifically to those numbers, 

though we can get them for you. At MMS, we have a budget of about $6 million a year that we 

put into oil spill response research and training programs. We’ve 

funded that regularly every year to look into improved technologies 

and to operate the National Oil Spill Response Test Tank in New 

Jersey. I know that there are a lot of other agencies involved in oil 

spill research, as well, but I can’t speak to their levels of funding. 

Senator SHAHEEN. Dr. Short, would you like to comment on 

your—put that in a context for us. You talked about how much 

Norway has spent on new oil spill technologies. Do you have recommendations for what we ought to be doing to address cleanup? 

Mr. SHORT. Addressing much greater emphasis on how well 

these technologies actually work in the field would be the—my single greatest recommendation, so that we do field tests that are— 

employ methods of known recovery so we can make quantitative 

comparisons between different approaches, and do them in a realistic field setting rather than in the artificial settings that are so 

often employed. 

I don’t know what the conditions were in the Barents test. I’m 

very encouraged, and I congratulate Shell and SINTEF for pursuing that research. But, typically, these sorts of experiments are 

limited, don’t have much replication, and they’re very expensive to 

conduct. So, doing them in a rigorous way that will give us robust 

results, I would encourage that that further continue. 

Senator SHAHEEN. Dr. Cruickshank, is it MMS that has the responsibility to do that kind of comparative analysis of technologies 

that are available? 

Mr. CRUICKSHANK. I think that the responsibility is shared 

among agencies, and we are certainly one of them. 

I do want to say a little bit more about the test tank we have 

in New Jersey. It’s one of a kind in the world, and it’s about 660 

yards long, 75 yards wide, and can create oceanlike conditions and 

test response technologies in real-world conditions, a variety of 

temperatures and sea conditions. It is used to try and compare the 

results of different cleanup technologies under different conditions. 

These—responsible for probably about 95 percent of the data that’s 

out there on mechanical response information. So, we think this is 

a very valuable resource that we make available to anybody who 

wants to use it to try and improve understanding. 

Senator SHAHEEN. Is there a lead agency that is charged with 

being the decisionmaker on those kinds of analyses? 

Mr. CRUICKSHANK. I’ve—— 

Senator SHAHEEN. If there’s a discrepancy between what agencies come up with? 

Mr. CRUICKSHANK. I’m not sure there’s a discrepancy between 

agencies that—we all sit down together. We’re involved, NOAA’s 

involved, and the Coast Guard is involved, and others, as well. We 

do compare notes on the sorts of research we’re conducting, and the 

results that we get. 

Senator SHAHEEN. Thank you. Just very quickly, for both Shell 

and BP, what—you pointed out the technological advancements 

that have been made by both of those companies in the industry 

in drilling processes. Are you also working on those same kinds of 
55 

research and development efforts when it comes to cleanup and 

how to deal with spills and challenges like the ones Mr. Amos 

showed us? 

Mr. RAINEY. I’m not familiar with the details of the studies, but 

I do know that BP participates in research studies all over the 

world on these issues. So, I can get you the details if you would 

like me to. 

Mr. ODUM. Senator, my answer—— 

Senator SHAHEEN. Thank you, I’d appreciate that. 

Mr. ODUM [continuing]. My answer is really the same. The answer is clearly, yes, we do. The studies that we did in Norway, 

which were multimillion-dollar, multiyear studies, were to answer 

exactly this type of question. We recognize that is not only important to being able to mitigate a spill if it happens, but it’s an important enabler to helping convince stakeholders that we can actually do this the right way. 

I’ll make the point again, too, I think the idea that research 

needs to be one place or the other, we—I think we should look at 

it and say, ‘‘This is research that’s shared openly all over the world. 

It’s not protected and kept to any particular area.’’ So, the fact that 

it is done globally is important, I believe. 

Senator SHAHEEN. Thank you. 

The CHAIRMAN. Senator Landrieu. 

Senator LANDRIEU. Thank you. 

Let me begin, quickly, Mr. Chairman, by just thanking you for 

holding this very important hearing, because, like several of my 

colleagues have said, I think it’s important for us to really examine 

the facts and to try to seek the truth, relative to the benefits and 

the risk associated with energy production. 

I particularly like the term ‘‘stewardship,’’ and I believe that 

stewardship actually begins with presenting facts in a way that tell 

the truth about what’s really happening in offshore and onshore oil 

and gas. 

So, knowing, Mr. Amos, that you would bring your charts, I 

brought some of my own. I’d like to start with a picture first. 

I think my colleagues need to see a satellite image from NASA 

in the Gulf of Mexico, because most of the offshore oil and gas drilling in the Nation, of course, has gone on, as Mr. Amos said, for 40 

years off of the State that I represent. So, we would know a lot 

about this. So, I brought a picture of what the Gulf looks like. 

These are oil spills in the Gulf. This was taken, Tom, when? 

2007. But, Mr. Amos, as you know, none of these spills are spills, 

they’re leakages, natural seepage in the Gulf of Mexico. On any 

day, you could take a shot from NASA, in any ocean, in any place 

in the world, and you will see the oil like this, because of this 

chart. I’m going to ask Mr. Amos to read this chart. Go ahead, 

please. 

Mr. AMOS. I’m sorry, I can’t see it very well from where I sit. 

Senator LANDRIEU. OK. Let me try to read it for you. It says petroleum transportation tankering, it’s petroleum in American 

waters, 4 percent, which is the blue, from tankering. Those are 

spills caused by tankers that run aground because organizations 

like yours don’t encourage safe domestic drilling, but we have to 
56 

bring in oil from other countries, which is a lot more hazardous. 

I’ll get to that in a minute. 

So, these tankers run aground and spill oil in lots of places, including New Jersey and California and all places. Then cars and 

boats and other sources that Americans drive put 32 percent of the 

oil into the oceans. Then natural seepage puts 63 percent. Then, 

you see that little green? It’s very small, so it’s hard for a lot of 

people to see it, even though you don’t—some people even have 

glasses—it’s hard to see, so I’m going to point it out. It’s 1 percent 

of the oil in the oceans—1 percent is from drilling. We could, if we 

work together and be truthful about what’s happening, perhaps 

even eliminate that 1 percent, which is a very small portion. That’s 

hopefully what this hearing will be about. 

In addition, the other point I would like to make is that this 1 

percent, which is a risk, and there are impacts, but, to put this into 

perspective, the spill that you cited in Australia which causes some 

people to back up—I want to give you these details here. You said 

it was the largest spill in Australia’s history. It’s true. It leaked 

823,000 gallons of oil. As Mr. Cruickshank testified, it wouldn’t 

even be allowed in this country, because it doesn’t stand up to our 

strict environmental rules. But, let’s say we had messed up and allowed it to produce oil off of our shores. The spill equals one-third 

of the amount necessary to fill the Reflecting Pool outside of this 

Capitol. It’s largest spill in the history of Australia. It’s a pretty 

long history. The rig that blew didn’t meet our standards, but if 

we—it had slipped through and we had allowed it to drill, the oil 

it spilled would fill up a third of the Capitol Reflecting Pool. 

So, Mr. Chairman, I think one of the ways forward is for people 

to start telling the truth about what actually happens, onshore and 

off. The risk associated with offshore oil and gas drilling domestically are far outweighed by the benefits. I’m going to go about 30 

seconds over my time. Those benefits would be victory in World 

War II, would be the Industrial Revolution, would be the automobile or the airline industry. You do a great disservice, you and 

your organizations, in not telling the American people the truth 

about what happens in domestic drilling, onshore and off, and putting it in the perspective that it deserves. 

So, my second point—and I’ll be very, very brief here—is that 

stewardship also, I think, starts with understanding that the more 

we push this industry off of our own shores and off domestically, 

it goes to countries that we have absolutely no control over, that 

don’t even have democracies, that don’t have lawyers, that don’t 

have courts, that, when things go wrong, it can’t be fixed easily, 

countries like Cuba or Venezuela, or places like Saudi Arabia or 

other places. 

So, I would strongly suggest that we have more hearings like 

this. The people that I represent—and I’m going to show one more 

chart, which talks about this, and I’ll give back my time, Mr. 

Chairman—we brought this chart. We use it a lot, because this is 

what the Gulf looks like. That doesn’t look like a bad picture to us, 

that looks like a jobs picture to us, because thousands of people are 

employed, laying those pipelines, working on those rigs, producing 

tremendous wealth for this Nation. We intend to pursue this in 

other places in the country, as well. 
57 

Thank you. 

The CHAIRMAN. Dr. Cruickshank, let me ask you, just to be 

clear—Mr. Amos has made the point, which I don’t think anyone 

has contradicted, that most of the spill that occurred as a result of 

Katrina and Rita was onshore—I mean, that wound up in the Gulf, 

was onshore, spillage from storage facilities and pipelines that 

were onshore. That’s—is that a correct description of what you testified to, Mr. Amos? 

Mr. AMOS. Senator, that’s correct, although I do want to point 

out that you can’t have offshore production without building those 

onshore facilities. 

The CHAIRMAN. No, I agree with that, and I’m just trying to get 

clear in my mind, Dr. Cruickshank. What is MMS’s responsibility 

for preventing spills and leakage from onshore facilities such as 

these? 

Mr. CRUICKSHANK. We have no authority over onshore facilities. 

Those are typically permitted by the States. 

The CHAIRMAN. So, that’s strictly a State problem, the way the 

law now stands, as you see it. 

Mr. CRUICKSHANK. Yes. 

The CHAIRMAN. EPA does not get involved, and the Department 

of Energy does not get involved— 

Mr. CRUICKSHANK. I’m sure there are a number of Federal agencies that have rules in permitting, such as EPA, for clean air, clean 

water; Army Corps of Engineers, if wetlands are affected. But, in 

terms of the decisions to build a facility and a lot of the specifics 

about where it’s going and how it’s operating—— 

The CHAIRMAN. So, the Department of Interior’s position under 

the law is that your responsibility for this kind of issue commences 

at the water’s edge, essentially. Is that accurate, or not? 

Mr. CRUICKSHANK. That’s what we have authority to permit. 

What we do require, as part of the environmental review, is that 

a company needs to explain how they’re going to get the product 

to shore, where it’s going to go, the facilities they may use, so that 

can all be considered and the environmental impact statement and 

any information used in the Coastal Zone Management Act reviews. 

The CHAIRMAN. But, in these—in the pipelines and the storage 

that is constructed, once that is constructed, the question of how 

hardened that is to resist damage from hurricanes, for example, 

that’s not a subject that you address through MMS. 

Mr. CRUICKSHANK. That’s correct. 

The CHAIRMAN. OK. 

Senator Murkowski, do you have any other questions? 

Senator MURKOWSKI. I do, just a couple, Mr. Chairman. 

Senator Landrieu, the last poster that you showed, you said, 

‘‘This is jobs.’’ I think we can go further, it’s not only jobs, it’s energy security for this Nation. 

Senator LANDRIEU. For America. 

Senator MURKOWSKI [continuing]. It’s environmental protection. 

I would like to ask you both, Mr. Rainey and Mr. Odum—both 

of your companies work all over the world, not just here in the 

United States. I believe that the environmental standards that we 

put in place, the requirements that we put on you as an industry, 
58 

are pretty tough. I know, certainly in Alaska, they’re extra tough. 

It’s because we have an environment up there that is different, it 

is unique, and it is harsh, but it’s also very fragile. 

Can you rank for me, if you will, where the United States is in 

terms of environmental protections and regulations as compared to 

the other places in the world that you operate? Where are we? 

Mr. ODUM. Certainly, I think the—it’s taking a very broad perspective. I would say that the U.S. programs are the most comprehensive and—‘‘strict’’ would probably be appropriate word to 

use, as well—in the world. That’s taking into account the specific 

regulations around areas like Alaska, but also the comprehensive 

nature of that entire program across the U.S. OCS. I would put it 

at the top. 

Senator MURKOWSKI. Mr. Rainey. 

Mr. RAINEY. Yes, Senator, I would agree with Mr. Odum, that, 

in my view, environmental regulations in the U.S. are amongst the 

most stringent that we see anywhere in the world, and they provide the highest level of environmental protection that we see anywhere in the world. 

Senator MURKOWSKI. I know there were announcements made 

this past week, in terms of some changes with the U.S. program 

where we are shortening the lease terms, there are additional, I 

would call them ‘‘regulatory burdens,’’ but perhaps others would 

describe them otherwise. When we put in place in policies that say, 

‘‘OK, we’re going to shorten your lease terms,’’ what does that do 

for you, from a business perspective, and where you choose to operate in the globe? 

Mr. RAINEY. Thank you, Senator. I can speak to that from an explorer’s perspective. In BP, we rank our exploration opportunities 

on a global basis. The nature of the leasing and the regulatory and 

the fiscal regime is an important aspect of that ranking. 

At the present time, the U.S. receives a very large proportion of 

our global exploration spend. You all know that, without successful 

exploration, there is no development and there is no production. So, 

if we choose to send our exploration dollars elsewhere, then the follow-on benefits of development and production will go elsewhere, as 

well. 

Senator MURKOWSKI. ‘‘Go elsewhere’’ to nations to where the environmental regulations are not near as stringent. 

Mr. RAINEY. Exactly. 

Senator MURKOWSKI. We need to think globally about this. 

Mr. Amos, let me ask you—because you made the statement that 

SkyTruth essentially focuses on the risks that are posed by resource extraction. Does your organization also focus on other energy resources that might have impact to the environment? A lot 

of discussion has taken place in this committee about offshore 

wind. There are some environmental challenges with that, and also 

environmental challenges with the onshore wind. Do you do environmental assessments in other energy areas as well, or is it just 

resource extraction? 

Mr. AMOS. I would like to correct a misperception, that Senator 

Landrieu suggested that our agency actually takes a position on 

whether more offshore oil or gas drilling should or should not be 

done. We do not take such a position. Our work is focused on en-
59 

suring, in fact, that drilling for resources can and will be done in 

a more sustainable and environmentally friendly manner, wherever 

it’s done, including here in U.S. waters. So, I just wanted to correct 

that. 

I will say that our organization does look at other forms of energy production and extraction. As you suggest, no form of energy 

production is without its impacts and risks. 

I would also suggest that the very same technology that we’ve 

shown you today that can be used to demonstrate what happens 

when things go wrong, even with the best technology—and they do 

still go wrong—can also be used to show where things are not 

going wrong. So, we would welcome the opportunity to work with 

you, and to work with representatives of industry and government, 

to use this monitoring technology in a publically transparent way 

so that, hopefully, we can show where it’s being done right instead 

of just where it’s being done wrong. 

Senator MURKOWSKI. I think industry would welcome the opportunity to demonstrate where it’s being done right. 

Senator LANDRIEU. I do have a followup. 

The CHAIRMAN. I think maybe the others do, too. Let me—— 

Senator LANDRIEU. I’m sorry. 

Senator Shaheen. 

The CHAIRMAN. Senator Menendez, I think, would be next, and 

then Senator Shaheen, and then Senator Landrieu. 

Senator MENENDEZ. Thank you, Mr. Chairman. Mr. Chairman, I 

appreciate the hearing. 

Mr. Odum, in your testimony, you painted what I think is a pretty absurdly rosy picture of the oil reserves contained in the Outer 

Continental Shelf. Listening to your testimony, one might think 

that we had several Saudi Arabias beyond our shores ready to be, 

you know, drilled and wash over us in low gas prices and rainbows. 

Of course, I have a different picture of that, because the Energy Information Administration’s 2007 report on what effects opening the 

entire OCS to drilling would have on energy production and prices 

states that such a policy, quote, ‘‘would not have a significant impact on domestic crude oil and natural gas production or prices.’’ 

Then, the EIA testified before this committee last month, and they 

reaffirmed, basically, that statement again. 

But, I’m concerned, when, you know, witnesses like yourself come 

before the committee and make these, you know, incredibly rosy 

pictures, because it affects our policy—you know, I’m concerned 

when, in 2004, your parent company was caught falsifying its oil 

reserves, was fined $150 million, faced criminal charges, and only 

recently settled shareholder lawsuits. Why would, based upon that 

experience, the committee necessarily believe what you are saying 

about oil reserves versus, you know, predictions? 

Mr. ODUM. Thank you, Senator. I think we—the good news is, we 

have the ability to go back to the facts. I think the easiest place 

for me to point to is the Gulf of Mexico. Gulf of Mexico right now 

makes probably on the order of 1.4 million barrels a day. We have 

a project out there,—we call it the Mars development—that itself 

makes a few hundred thousand barrels a day. We have the Perdido 

project, which will come on in the next couple of months, which 
60 

itself will make—has the capacity to make 130,000 barrels a day. 

There are other examples from other industry players out there. 

My point is, you know, 1.4 million barrels, in its entirety, right 

now from the Gulf of Mexico, in these discrete projects, which are 

the development opportunities we have out there, are adding significant pieces. So, I would disagree, fundamentally, that this area, 

where—you know, the other characteristic we’ve seen in the Gulf 

of Mexico is, the resource estimates have continued to grow as 

we’ve been there, done additional research, improved technology— 

throughout the history of us being there, those resource estimates 

have grown. I would anticipate the exact same thing would happen 

at other areas of the OCS in the U.S. So, we can make a significant 

difference in—— 

Senator MENENDEZ. But, there is a difference between a guess 

and what actually is a reserve, is it not? 

Mr. ODUM. There are very clear parameters on which the U.S. 

uses to define what a ‘‘reserve’’ is verses what ‘‘resources’’ are. 

Senator MENENDEZ. Let me ask you this. You, in your testimony, 

state that you believe that those who believe that there are serious 

environmental risks to offshore drilling have a, quote, ‘‘outdated 

view of how the oil and gas industry operates today.’’ Is it really 

so outdated, in view of what just happened off the coast of Australia, that it spewed oil into the ocean—do you have a picture of 

that?—for over 10 weeks, and then caught fire before finally being 

plugged, just 2 week ago? Is it really just an outdated view to believe that environmental effects of drilling, when it’s estimated that 

9 million gallons of oil spilled during that spill? Am I just being 

old-fashioned, when that same drilling entity is working in U.S. 

waters today? I find it difficult to—you know, maybe you can say 

that things are safer, but to suggest that there are no risks. I want 

to end there, with that question. 

Then, Mr. Amos, I want to ask you a question. I know that—earlier, I talked about what happened in Katrina and Rita. I was talking about both offshore and onshore spills. When the Coast Guard 

reported to Congress—not me, but the Coast Guard—that 8 million 

gallons of oil spilled onshore, and MMS reported that over 700,000 

gallons spilled offshore, aren’t the labyrinth of onshore pipelines 

and refineries directly linked to offshore production? If we didn’t 

have the offshore production, would we necessarily have all of that 

additional risk? Shouldn’t we count that as part of the overall risk 

factor? 

So, if you would both answer those questions, I’d appreciate it. 

Mr. ODUM. If I go back to the question of, ‘‘Do we have an outdated view?’’ my point is this, that the technology has dramatically 

changed over the decades, and many people do have a view of how 

they saw the industry 20, 30 years ago. I’m telling you, yes, it’s 

very different today. 

As we think about opening new areas of the OCS to exploration 

production, I believe the way to look at it is to look at latest developments by the industry in the current areas that are open, translate that to the new areas, because that’s where you see the new 

technology, and, in addition, all the mitigation techniques and 

other things that we’ve learned over these decades. So, that’s 

where my view, an outdated view, comes from. 
61 

Mr. AMOS. Thank you, Senator. You’re absolutely correct in your 

statement that the onshore and offshore infrastructure is essentially one interconnected facility. It should be considered as such. 

The 1700 homes in Louisiana that were inundated by crude oil 

from the spilled storage tank, those homeowners probably would 

not differentiate between where the oil came from and who owned 

it. So, as we consider offshore drilling in new areas, it’s not just 

the risk from what happens on multibillion-dollar high-tech platforms that are operated by the biggest energy companies in the 

world; it’s also the risk posed by the network of pipelines and onshore processing and storage facilities that are a requirement of 

supporting that offshore development. 

I’d also like to point out that—I think you mentioned that the 

Norwegian company that was drilling off Australia when this blowout occurred is a well-respected global operator. They have a fleet 

of 41 drilling platforms around the world. They’ve targeted the Gulf 

of Mexico as an important area of business operations, and have 

an office in Houston. I think you mentioned, they’re currently 

under contract to drill in the Gulf of Mexico through 2012. So, it’s 

imperative that we understand exactly what caused that blowout 

and spill in Australia. But, as we’ve seen in our investigations in 

recent years, every individual accident is a unique—a culmination 

of a unique chain of circumstances. 

Senator MENENDEZ. I appreciate it. I’ve asked Secretary Salazar 

to look into exactly that. 

Thank you very much, Mr. Chairman. 

The CHAIRMAN. Senator Shaheen. 

Senator SHAHEEN. Thank you, Mr. Chairman. 

The Interagency Ocean Policy Task Force that was established 

by President Obama in June released their interim report in September. The priorities that the task force laid out included ecosystem-based management, comprehensive coastal and marine spatial planning, increased scientific knowledge of the oceans that we 

can apply to policy decisions, and improved coordination between 

Federal, State, local, and regional ocean management entities. 

Now, we haven’t yet seen the final report. But, if we were going 

to incorporate that framework into current policies around our 

oceans and coasts, how would that affect what we’re currently 

doing with respect to development, drilling? How would existing 

environmental standards change, or not, based on that kind of a 

framework? 

Dr. Short, I’m going to ask you to, if you would, go first, because 

I think what’s being talked about in those recommendations is consistent with the kinds of things you were talking about in your testimony. 

Mr. SHORT. Thank you, Senator. 

We would like to see the—those recommendations integrated into 

policies for offshore oil and gas leasing—in particular, marine spatial planning and ecosystem-based management aspects of them— 

because too often these—as I mentioned earlier, too often these 

things focus on a zoning approach rather than identifying which 

parts of the marine ecosystem are disproportionately productive 

and vulnerable and need protection. We feel that those should be 

first identified and then appropriate protections conferred on 
62 

them—not necessarily to exclude industrial development, but to 

make sure that we preserve the integrity of the function of what 

they do—and that that should be number-one priority of any marine spatial planning exercise. 

Along with that, ecosystem-based management could usefully be 

applied to the way that we go about assessing the background and 

then monitoring of ecosystems as these industrial projects are—unfold, because we see that, although there is a great deal of money 

often spent on environmental studies, it’s not spent as intelligently 

as it could be if you were to take an ecosystem approach at the outset to figure out, in a fundamental way, what’s there and how it 

works together, what it depends on. This doesn’t have to cost a fortune. There are several examples in Alaska of highly respected ecosystem-based management plans—study plans, in effect, primarily 

now directed toward fishery issues—that could be usefully adopted 

toward oil and gas issues, as well. 

Senator SHAHEEN. Thank you. 

Mr. Rainey and Mr. Odum, how would you see, if those priorities 

were adopted, that changing or affecting the way you currently do 

business? 

Mr. ODUM. The—Senator, I think the—the first thing that I 

think is important here is that we recognize what currently happens within the purview of the agencies that exist. So, for example, 

the idea of looking out at long-term impacts, at multiple uses, that 

is actually already within the purview of the MMS that’s done. I 

may get the terminology wrong, but I think it’s the OCS Lands Act 

that, you know, provides for that type of analysis. So, first of all, 

I think it’s important to recognize what’s already done. 

Second of all, if I could be very frank, I mean, one of the things 

that—if I went to the worry side, one of the things that worries me 

is, it creates a very big bureaucracy, potentially. It could be done 

right. If it wasn’t done right, it could create a large bureaucracy 

that could potentially put us into a mode of slowing things down 

and just studying forever rather than truly moving forward on 

things. So, I do worry about that, to be perfectly open. 

I think the—you know, my personal take on it is that I think we 

need to understand what we mean when we say an ‘‘adaptive approach.’’ I’ll use Alaska as an example. There’s—across the Arctic, 

there, through the Canadian Beaufort, as well as the coast off Alaska in the Beaufort and the Chukchi, there’s been about 112 exploration wells drilled. There’s been an enormous amount of data collected associated with that activity, which has taken great steps 

forward, in terms of the understanding of everything from migration of mammals all the way to the impact of noise and so forth. 

So, that activity actually, to a degree, enables the collection of that 

information. We adapt as we learn from that and how we move forward. 

So, I think we’d have to be cautious about a program that says, 

‘‘Are we going to learn and adapt and move forward, or are we just 

going to study until we’ve answered every possible question?’’ 

That’s my concern. 

Senator SHAHEEN. I don’t—other than the increased scientific 

knowledge, I don’t think it said anything about studying. Do you 

not think increased scientific knowledge is appropriate? 
63 

Mr. ODUM. No, I certainly do. I mean, I absolutely, fully support 

having the right information. 

Senator SHAHEEN. Thank you. 

I’m actually out of time, Mr. Rainey. 

The CHAIRMAN. Go ahead, if you want to respond. 

Mr. RAINEY. I was just going to add, Senator, that I think we 

should remember that scientific knowledge is always moving forward. Actually, using the best available and most up-to-date scientific information is part of the current regulatory system, and it 

supports the OCS leasing and exploration and development programs. 

I think we also need to remember that OCS development has 

been going on for the last 50 years, and it has been going on in 

a way that is both safe and protective of the environment. 

The CHAIRMAN. Senator Landrieu. 

Senator LANDRIEU. Thank you very much. 

Following up, I’d like to use Senator Menendez’s picture, which 

is a very disturbing picture, but it’s part of the truth that I’m going 

to continue to try to tell. The fact is, these things happen. 

On this day, when this picture was taken, however, on this rig 

off the coast of Australia—I’m going rough it; maybe, Mr. Rainey, 

you, or Mr. Odum know better. But, since we have 4,000 structures 

like this in the Gulf, I’m going to rough that there are 20,000 in 

the world. So, 19,999 were not on fire. I want to repeat, 9,999 were 

not on fire. This one was. The oil spilled from this would fill up, 

as I said, one-third of the Reflecting Pool outside of the Capitol. 

So, let us agree that there are risks associated, but it has already 

been determined, and testified to at this hearing by Mr. 

Cruickshank, who is the expert for the government, does not work 

for oil companies and does not work for SkyTruth, has said that 

this rig would not be allowed to operate in the United States of 

America. 

No. 2. The spill that occurred in my State, in St. Bernard Parish, 

that went—the oil went into 1700 homes—I’m very familiar with, 

because I walked through many of them myself—was leaked from 

a holding tank, Mr. Chairman. Murphy Oil, this is public record, 

had 5 or 6 of these large holding tanks that are very familiar to 

places in Louisiana, Texas, New Jersey, Alaska—all over the country, actually. They’re refined products, and sometimes unrefined 

products, that are held until they can be refined in the Nation. 

There is a regulation that says that, when a storm comes—because 

we have them all the time, and have for hundreds of years in the 

United States—the companies have to fill them up so that they’re 

heavy and the winds that blow against them won’t overtop them. 

That was not done. They are liable, and they paid a significant 

amount of money to people. Now, four or five of the tanks were 

filled, and one was not. Now, that is public record. You all can go 

look at it. 

Mistakes are made every day, even though there are regulations 

and there are enforcements. We’ve learned from that. Mr. Amos, 

you would be happy to know that I think we’ve adopted new regulations so that maybe inspectors now go out and check, before 

storms come, to see how much these tanks are filled up. We did 

some good things. 
64 

But, those things happen. But, the fact is, people were compensated, it was terrible, there was a lot of cleanup. But, the same 

people that had the oil in their homes also worked for the company, 

so they didn’t want them to go out of business because they would 

lose their jobs. So, we all rolled up our sleeves, we cleaned up, 

learned, passed new regulations, and moved on. 

The third and final point I want to make are the reserves. My 

colleagues continue to say that this whole effort is for naught, because there’s no oil anywhere anyway, so why drill? I’m going to 

ask you, Mr. Amos, where you support drilling, because you said 

you did, and I want to know specifically in what area. 

These are the estimates—not from the oil companies, not from 

the environmental groups; this is from the Minerals Management 

Service—that is proving what Mr. Odum has said is true, that the 

estimates are going up, and they’re going up because technology’s 

getting better, we’re learning how to find oil in places we didn’t 

know it was before, and gas. We used to have to drill lots of wells 

before we’d find the oil and gas; now, with the new imaging technology, we’re finding it more quickly. As we continue to produce 

more, we’re finding more. So, based on our own data—this is the 

U.S. Government, this isn’t Louisiana, this isn’t Texas, this isn’t 

Alaska trying to tell everybody there’s oil out there when there’s 

not—this is the U.S. Government saying, ‘‘If you look for it, you’ll 

find it.’’ There are lots of resources. These resources belong to the 

people of the United States, and they have a right to earn a living 

and to create wealth for them. They actually own these resources. 

My final point is this. Mr. Amos, we have found something we 

agree on. You said that we need more environmental support, and 

I agree. If the States of Louisiana, Texas, and Mississippi and Alabama, who have—are bearing the burden of this production— 

proudly—we know their risk, their advantages—had gotten a portion of the funding that all the other States in this country have 

gotten, based on a 37-and-a-half-percent share, which Harry Truman offered to us in 1920, which we did not get, it would have generated $23 billion for us just in the last 7 years. That would have 

supported a lot of environmental support, rules, and regulations, 

coastal restoration, flood protection, navigation control. But, we 

have this great industry that we’re proud of and virtually no help 

from the Federal Government to regulate it in the way that we 

would wish and would want to—although there are great regulations out there—for the protection of our coast. 

So, I’m going to conclude with: good stewardship, again, starts 

with telling the truth, painting a clearer picture of the hazards and 

benefits, and sharing the revenues in a way that promotes good 

stewardship of the environment and good economic opportunity for 

the people of our Nation. 

Thank you. 

The CHAIRMAN. Let me just ask one additional question, then I 

think we’re ready to terminate the hearing. 

Mr. Amos, your satellite imagery and digital mapping and remote sensing technologies that you made reference to and have in 

your exhibits here, those are available to our agencies at this time? 

I mean, the information that you collect through those. Is that 

right, or not? 
65 

Mr. AMOS. The satellites we collect information from are operated by a variety of sources, including the U.S. Government. In the 

case of Australia, the images we showed were produced by NASA 

from NASA taxpayer-funded satellites. But, in some cases, we have 

to buy satellite imagery from commercial providers. For oil pollution, in particular, the best tool is radar satellite imagery, and the 

U.S. Government does not operate any civilian radar satellites. 

But, NOAA Satellite Services Division does have agreements with 

other countries to purchase those kinds of images, when necessary. 

The CHAIRMAN. OK. All right. 

I think there’s been useful testimony. I appreciate all of you coming. We will try to learn from your written reports and see if any 

action can be taken here in Congress. 

Thank you very much. 

[Whereupon, at 12:15 p.m., the hearing was adjourned.] 

[The following statement was received for the record.] 

STATEMENT OF JON HROBSKY, DIRECTOR, POLICY & GOVERNMENT AFFAIRS, 

NATIONAL OCEAN INDUSTRIES ASSOCIATION

Thank you for the opportunity to submit written testimony for the record regarding the Committee’s November 19, 2009 hearing to receive testimony on environmental stewardship policies related to offshore energy production. 

NOIA is the only national trade association that represents all companies engaged 

in the exploration for, and production of, traditional and alternative energy on the 

nation’s Outer Continental Shelf. The NOIA membership comprises more than 300 

companies engaged in activities ranging from producing to drilling, engineering to 

marine and air transport, offshore construction to equipment manufacture and supply, shipyards to communications, and geophysical surveying to diving operations. 

As such, this hearing is of particular importance to our members. 

While some of your witnesses may be testifying on particular environmental stewardship proposals related to offshore energy production, we would like to concentrate our testimony on general technological advancements and improved safety 

practices in the offshore oil and gas industry which may help guide the committee 

in your decision making. 

A SOURCE OF CONSTANT TECHNOLOGICAL INNOVATION

Today’s offshore technology allows us to produce more energy by reaching places 

that would never before have been possible. New world records are always being set. 

Industry recently set one of these records by drilling a well in water depths exceeding 10,000 feet. That’s the equivalent of successfully navigating nearly two 

miles down from the surface of the ocean before even beginning to drill, sometimes 

another 30.000 feet into the earth below the sea floor. The technology required to 

drill, complete and produce this type of well must overcome an environment of high 

pressure (in excess of 20,000 pounds per square inch) and high temperature (exceeding 350°F). Deep wells such as this are expensive, costing as much as $100 million 

apiece. 

After coming from the ground, the oil or natural gas then travels through a pipeline where the temperature is just above freezing and the formation of ice crystals 

threatens to block the flow unless constantly supervised and adjusted. At depths far 

beyond where humans can travel, sometimes as much as 5,000 feet or more below 

the ocean surface, Remotely-Operated Vehicles (ROVs) are used to perform maintenance and repairs. 

All this is possible with fewer facilities and less impact—even visual—than ever 

before. For example, multiple subsea wells can be connected by tiebacks to a single 

platform over great distances. Such an installation is capable of reaching wells on 

the ocean floor dozens of miles away in all directions while connecting to an ocean 

surface platform one mile above. 

Directional drilling also allows for extraction of resources which are miles away 

from the point where the actual well is drilled. 

This cutting edge technology doesn’t come cheap, however. The total cost of this 

type of project, including wells drilled and the subsea connection system, can exceed 

$5 billion. 
66 

1 Clinton Administration DOE report: Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology, 1999. 

AN EXEMPLARY RECORD OF ENVIRONMENTAL PROTECTION AND STEWARDSHIP

The outstanding environmental record of U.S. companies operating offshore 

around the world is well recognized as . . .technologies are allowing the offshore industry to venture into deeper waters than ever before, while protecting marine life 

and subsea habitats. . .1—even in the most challenging areas such as the Arctic 

and North Sea and in otherwise catastrophic weather. 

Off the part of our coast in which exploration and production has historically been 

allowed, the safety of our operations was demonstrated in the most severe hurricane 

situations in 2005 and 2008. Though many of the exploration and production facilities in the Gulf of Mexico were severely damaged or destroyed, the high-tech safety 

and environmental protection equipment and processes worked. 

Careful scientific environmental study and operational planning always precede 

OCS activity. For example, our offshore geophysical companies, which conduct seismic work that allows us to ‘‘see’’ geologic structures beneath the seabed—have 

worked with the National Marine Fisheries Service and MMS to implement many 

procedures and practices designed to avoid harm to marine mammals, including: 

• Monitoring for the presence of animals of concern • Shutdown or no start-up when they are too close • Slow, gradual ramp-up of operations just in case 

During exploration, jack-up or semi-submersible rigs and drill ships have multiple 

systems and physical barriers to ensure that no spill occurs. Most important, along 

with multiple, redundant remote control systems. are ‘‘blowout preventers’’ which in 

deepwater are installed on the well at the seabed and are capable of immediate closure in event of any emergency. 

Also, a ‘‘downhole safety valve’’ in the well itself below the seabed provides an 

added protection barrier in the event of some catastrophic event. 

As a result of these safeguards, the offshore oil and gas industry has a laudable 

environmental record, as noted in the ‘‘Oil in the Seas III’’ National Academy of 

Sciences study, which finds that although the amount of oil produced and transported on the sea continues to rise, improved production technology and safety 

training of personnel have significantly reduced both blowouts and daily operational 

spills. 

The industry remains under intense scrutiny by its two primary regulators—the 

MMS and the U.S. Coast Guard—as well as a host of other governmental agencies 

with oversight responsibilities such as the Environmental Protection Agency and the 

National Oceanic and Atmospheric Administration. 

However, it is the MMS that regulates all exploration, development, and production activities on about 8,000 active leases to ensure that these activities are conducted safely and in an environmentally sound manner. The MMS reviews and approves industry exploration and development plans before allowing any operations 

to commence, monitors all lease operations to ensure that industry is in compliance 

with relevant requirements, and conducts scheduled and unscheduled inspections. 

In 2008, MMS conducted over 25,000 inspections of OCS facilities. 

To summarize, the latest technology and sound management practices not only 

allow for the continued production of domestic energy resources, but they have also 

made the U.S. offshore industry the envy of the world. Its environmental record is 

superb: 

• Since 1985, more than 8 billion barrels of oil were produced in federal offshore 

waters with less than 0.001 percent spilled—a 99.999 percent record for clean 

operations. 

• There has not been an incident involving a significant oil spill from a U.S. exploration and production platform in nearly 30 years (since 1980). 

• Government statistics show that the injury and illness rate for offshore workers 

is about 70 percent lower than for all of private industry. 

• Today’s modern technology includes such environmental protections as automatic subsea well shut-in devices, including sub-seabed safety valves. 

The industry’s performance during the 2005 hurricane season (Hurricanes 

Katrina and Rita), which moved through a core area of offshore operations, is instructive. While it is true that 115 platforms were destroyed, the storm threatened 

over 3,000 facilities, the vast majority of which survived. Despite sustained winds 

reaching 170 miles per hour and towering waves and the resulting destruction of 

numerous platforms and rigs, there was no significant spill from production wells 
67 

and no injury or loss of life among the 25,000—30,000 workers who are offshore at 

any given time. 

We thank you again for this opportunity to submit written testimony, and remain 

available for any further questions. 

(69) 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSE OF JOHN F. AMOS TO QUESTION FROM SENATOR BINGAMAN

Question 1. Your testimony expressed concern about the impact of the offshore 

and onshore infrastructure necessary to support offshore production. The Minerals 

Management Service (MMS) testified that their jurisdiction generally ends at the 

state-federal offshore boundary. Please discuss your understanding of the governmental entities with jurisdiction over this infrastructure, and any view you may 

have about the adequacy of the regulatory oversight for this infrastructure. 

Answer. MMS decisions about outer continental shelf (OCS) leasing will generate 

demand for onshore facilities to support new, or additional, offshore exploration and 

production. Current regulatory roles are now provided to impacted coastal states 

under the federal consistency provision of the Coastal Zone Management Act 

(CZMA), for those impacted coastal states that have a federally-approved Coastal 

Zone Management Plan. If OCS leasing expands into previously protected federal 

waters, onshore industrialization in shoreline areas—where coastal states have set 

aside important habitats, parklands, and coastal-dependent tourism infrastructure— 

will likely require continued reliance on a strong state role under the CZMA consistency process. 

An additional complicating factor in regulatory oversight is the division of offshore 

pipeline oversight between MMS and the Department of Transportation (DOT). It 

is our understanding that, in general, MMS is responsible for ‘‘gathering’’ lines that 

typically collect oil and gas from offshore wells and deliver it to platforms, while 

DOT is responsible for ‘‘market’’ lines that then bring the product to shore. We are 

not sure how, specifically, a given segment of pipeline is assigned to MMS or DOT 

jurisdiction. 

I would like to take this opportunity to expand on my response to a question you 

asked during the hearing: whether the data and information that SkyTruth uses are 

available to government agencies as well. I interpreted your question to refer to the 

satellite images that we use in our work, and answered that government agencies 

certainly have access to those same satellite systems and the images and data they 

produce. I also want to make clear that we routinely make SkyTruth-processed images and analyses available to the public, including government agencies, for noncommercial purposes. For example, we have provided images to the Surface Water 

Quality Bureau of the State of New Mexico Environment Department, and to scientists in Wyoming conducting studies funded by industry and the Bureau of Land 

Management. In the immediate aftermath of Hurricane Katrina, we worked around 

the clock to produce and publish precision image-maps showing platform and pipeline locations and sources of oil leaks in the Gulf of Mexico, and informally provided 

those maps to staff at MMS and NOAA as fast as we could generate them. It was 

our hope that these image-maps would be helpful for the response and repair effort 

so we produced and published them as a public service. For an example of one of 

these image maps, see http://skytruth.mediatools.org/sites/default/files/ 

photolimport/1904/935/11980.jpg. 

RESPONSES OF JOHN F. AMOS TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. You stated in your testimony that ‘‘effective design and implementation of safe pipeline systems may be complicated by the existing regulatory regime 

for offshore pipelines, with jurisdiction split between two separate agencies, the Department of Transportation and the Department of the Interior. This is a classic example of gaps and overlaps in ocean governance of the kind discussed in a widely 

quoted 2006 paper in the journal Science.’’ Would you agree that it makes sense to 

consolidate as much management as possible of the OCS oil and gas resources within one department, with other agencies serving in advisory roles? 
70 

Answer. Our observation is that gaps raise the possibility that existing or potential problems are not being recognized or effectively addressed. However, SkyTruth 

has no expertise in developing government policy and regulation, so we can make 

no specific recommendations in those areas. 

Question 2. From your testimony, it appears that SkyTruth focuses much of its 

efforts on oil and natural gas operations. 

a. Does your organization track or project the impacts that offshore wind installations could have on the marine environment? 

Answer. We’re not aware of any large offshore wind projects in U.S. waters. We 

have, however, produced images illustrating the landscape footprint of utility-scale 

onshore wind and solar projects (see our renewable energy gallery at http:// 

www.flickr.com/photos/skytruth/sets/72157616622223819/). 

b. Does your organization track or project the impacts that solar energy, 

biofuels, and any other onshore alternative energy projects could have? 

Answer. See above. 

c. Would you agree that the development of offshore wind energy, solar energy, biofuels, and other alternative energy resources will impact the environment? 

Answer. We’re not experts in understanding the impacts posed by all potential 

sources of energy, particularly offshore in the complex and relatively poorly understood marine environment. We know what we see, and that’s generally limited by 

the primary technologies we use—satellite and aerial imagery—to impacts that are 

directly observable on land, or on the ocean’s surface. But in general it seems likely 

that any industrial-scale activity to produce and transport energy will have impacts 

on the environment. 

Question 3. As I understand your organization, you obtain, create, and supply pictures of resource extraction impacts and potential resource extraction impacts to environmental groups and other entities interested in documenting and communicating such impacts. Is this accurate? 

Answer. SkyTruth produces images that illustrate a range of environmental 

issues, including resource extraction activities such as drilling, mining, and logging. 

We routinely make these images available to the public, including interested individuals, conservation organizations and government agencies, for noncommercial, 

educational and scientific purposes. 

a. Would you provide a comprehensive list of all of the organizations to whom 

you have supplied SkyTruth’s materials? 

Answer. SkyTruth generally distributes images publicly through our website and 

online image galleries, so it’s not possible for us to compile a comprehensive list. 

However, we do know that users of our images have included the Bureau of Land 

Management, the New Mexico state government, Trout Unlimited, Rocky Mountain 

Elk Foundation, World Wildlife Fund-Australia, The Wilderness Society, Sierra 

Club, Earthworks, Appalachian Voices, PBS, NBC Nightly News, and CBS Evening 

News, among others. 

b. Of these groups, how many have taken positions generally or specifically 

opposing the projects of which you’ve provided photographs? 

Answer. I have no way of knowing this (see above). Certainly many of the conservation groups that have used our images advocate for changes in the way public 

lands and resources are managed. 

c. If all or an overwhelming percentage of the groups to whom you supply 

your pictures oppose offshore and onshore drilling projects, how is it true to 

state, as you did in testimony before this committee, that your group takes no 

position on the issue? 

Answer. We don’t know what percentage of citizens groups, organizations, or other 

public entities using our work are opposing drilling projects (see above). SkyTruth 

believes that the relative risks, benefits, and impacts of all industrial uses of public 

lands and waters should be acknowledged, fully presented to the public, and carefully weighed as part of the decisionmaking process about how to best manage those 

public resources. Our role is to help provide information about these risks, benefits 

and impacts, using remote sensing technologies, to those engaged in policy debates. 

Question 4. Several of the images on your website and in your testimony aren’t 

actual photos of development but they’re photos of an area with your own drawings 

of what your organization believes some possible future development might look 
71 

like. Do you ever run these images by the proposed developer of the area to verify 

whether they happen to agree or disagree with your sketches? 

Answer. SkyTruth simulations are based on satellite and aerial imagery of actual 

pollution incidents, and on existing, comparable, developments. To the extent possible we use published plans or applications from the proposed developers, and government rules and management practices that would likely apply. 

Question 5. Your testimony cites what you label catastrophic oil spills resulting 

from hurricanes Katrina and Rita, but these larger spills seem to have occurred onshore from the refineries, the pipelines, and other infrastructure associated with delivering the products to customers. I’m not sure how this is specifically relevant to 

the debate about offshore development. Wouldn’t similar risks apply to the same 

types of facilities much further inland, supporting on-shore development, if they 

were hit by other disasters like tornadoes or earthquakes? 

Answer. Hurricane Katrina caused damage to OCS facilities that spilled more 

than 700,000 gallons of oil and condensate offshore, cumulatively a ‘‘major’’ spill by 

Coast Guard definition. Among other spills, Hurricane Rita caused 1.9 million gallons of heavy fuel oil to spill into the Gulf from a damaged barge; most of this product sank into the water and could not be recovered (http://www.darrp.noaa.gov/ 

southeast/dbl152/). 

SkyTruth’s work with severe storms highlights the interconnectedness between 

offshore development and onshore infrastructure. In the case of Hurricanes Katrina, 

Rita, and Ike, these facilities caused significant spills. Communities that are being 

asked to consider drilling off their shores should be aware that coastal infrastructure is also implied by that development, and can be a source of damaging spills. 

For this reason, the information I presented on coastal spills is directly relevant to 

offshore development. 

Although I have no knowledge of major spills caused by earthquakes or tornadoes, 

large earthquakes certainly have the potential to damage pipelines and storage facilities. Seismic and volcanic activity present hazards somewhat unique to Alaska: 

Cook Inlet risked a major spill early this year from an oil storage tank facility located in the well-documented path of dangerous mudflows from the latest eruption 

of Redoubt Volcano, and the facility has since been closed (http://www.rigzone.com/ 

news/article.asp?alid=82587). All such risks should be acknowledged and incorporated into the decisionmaking processes that inform resource management and 

emergency preparedness. 

Question 6. I’m trying to get a better sense of your organization SkyTruth’s philosophy. What I’m getting from your testimony is that the risks of offshore development outweigh the benefits. My question is where and how you may suggest Americans obtain our 20 million barrels of oil each day in the immediate to short term. 

Do you think tankers from abroad, presumably increasing traffic in the Houston 

ship channel to make up for a slowdown in domestic production, would be a safer 

measure until our Nation ceases to consume oil? 

Answer. The risks and benefits of offshore development should be honestly and 

publicly debated as part of an ongoing national decisionmaking process. Industry 

spends millions of dollars each year reiterating the benefits of drilling to the public 

and to influential decisionmakers. However, the impacts of development and the 

continued risk of accidental spills often are not apparent to the public and decisionmakers. These impacts would need to be considered in comprehensive cost-benefit 

analyses to address the question of benefit vs. risk. SkyTruth doesn’t engage in comprehensive cost-benefit analysis; that is well beyond the scope of our mission and 

current resources. Rather, we provide information on impacts and risks to be included in such public policy debates. 

a. Where, specifically, have your pictures revealed that oil development can 

be or is being conducted in a safe manner? 

Answer. With a publicly transparent, systematic program of regular monitoring, 

we could demonstrate over time that development is avoiding some observable impacts (such as moderate to large oil spills, or excessive landscape fragmentation). 

Such a program would require substantial resources to buy and process the stream 

of imagery required to do this kind of systematic monitoring. To date, these resources have not been dedicated to implement such a monitoring effort here in the 

US. 

To help evaluate the safety of offshore energy development, we recommend forming a partnership among government agencies, industry, researchers, citizens 

groups and other stakeholders to design and conduct routine OCS monitoring. 

SkyTruth has worked with two satellite data receiving, processing and analysis facilities that could house such a monitoring program: the Center for Southeastern 

Tropical Advanced Remote Sensing (CSTARS) at the University of Miami (http:// 
72 

cstars.rsmas.miami.edu/), and the Alaska Satellite Facility (ASF) at the University 

of Alaska-Fairbanks (http://www.asf.alaska.edu/). 

Question 7. Concentrated oil spills always have some environmental impact— 

that’s why we agree that oil and gas should always be produced as safely as possible, under stringent conditions. However, according to a report issued in 2003 by 

the National Academy of Sciences (Oil in the Sea III), extraction activities release 

far less oil each year than consumption activities, which in turn release far less 

than natural seepages. In fact, the NAS report found that extraction activities— 

which your organization so closely tracks—accounts for just 1 percent of the oil entering North American waters each year. Taking this a step further, multiple peerreviewed studies [see http://www.ia.ucsb.edu/pa/display.aspx?pkey=412] have found 

that the offshore production of oil could actually help reduce the amount that naturally seeps from the ocean floor. 

Answer. I understand from SkyTruth’s scientific advisors that there is a substantial difference in toxicological impact between slow, steady-state, widely distributed 

seepage of weathered and biodegraded oil, vs. the sudden concentrated release of 

raw crude oil into an environment that has not evolved mechanisms to accommodate 

it. The deaths of marine mammals, birds, fishes and shellfish that result from major 

oil spills attests to that difference. 

In fact, entirely unique and potentially valuable ecosystems of hydrocarbon-metabolizing organisms have developed on the seafloor around many of the natural 

seeps in the Gulf of Mexico. I personally observed these organisms on two deep research dives in the Gulf, at water depths over 1,000 feet (http://tinyurl.com/y9edj5l). 

These organisms survive by ‘‘eating’’ the oil and gas that emerges from the seeps. 

In this case, if oil production actually reduced the flow of oil from these natural 

seeps, it could extinguish rare communities of organisms that are not yet well-studied. This would not necessarily be a net positive outcome, since these seeps and 

communities are an integral part of the marine environment in this area. 

In addition, natural seeps are not ubiquitous. Background research for a NASAfunded study I participated in determined that in US waters, most natural oil seeps 

occur on the continental slope in the deepwater Gulf of Mexico, and in the Santa 

Barbara Channel off southern California (http://www.nasa.gov/home/hqnews/1999/ 

99-001.txt). 

Question 8. Although accidental spills or blowouts involve a much more concentrated release of oil than natural seeps, much of the testimony discusses toxicity 

of oil in the sea and the idea that its continued buildup and dispersal may have 

toxic effects. Is this any less true of a constant seepage of oil from the seabed than 

from the 1 percent of the ocean’s oil from production related releases? 

Answer. See above. The acute toxicity of a major oil spill can have effects on the 

environment and on economically valuable fisheries that can last for decades (http:// 

tinyurl.com/cfekru). Natural seepage, as a long-term natural phenomenon, is part of 

the evolved landscape where it occurs; therefore the local ecosystem is adapted to 

that local flux of hydrocarbons. 

Question 9. Have you ever considered that oil production could actually have a 

positive environmental impact, insofar that it could be reducing the rate of natural 

seepages? 

Answer. See above. The arbitrary destruction of unique and potentially important 

seep ecosystems, that have evolved over a long period of time, would not necessarily 

be a positive environmental or economic outcome. 

Question 10. Would policies not be more efficient in terms of reducing oil in the 

sea to focus on reducing the amount of oil that is spilled during consumption activities, rather than narrowly focusing on a part of the process that is believed to account for nearly 30 times less spillage each year? 

Answer. As the personal opinion of a seafood lover and a body-surfing fanatic, I 

think our nation should diligently work to reduce all human-caused sources of oil 

pollution in the sea. 

Question 11. I understand your organization also tracks and projects the effects 

of domestic mining operations. While you certainly have every right to do that, have 

you considered mining’s importance to the development of clean energy technologies? Some of the largest wind turbines can contain 335 tons of steel (forged 

with iron ore), nearly 5 tons of copper, 3 tons of aluminum, and up to 2 tons of rare 

earths. If we refuse to produce our own mineral resources, we will simply cede the 

front end of the clean energy supply chain, fall further behind in the development 

of these technologies, and trade our dependence on foreign oil for an equally devastating dependence on foreign minerals. So, do you believe the environmental impacts that can be associated with hardrock mining outweigh the beneficial effects 

of the raw minerals and metals that it yields? 
73 

Answer. Again, SkyTruth’s mission is to help the public and decisionmakers become aware of the impacts of mining so that these impacts can be honestly acknowledged, debated, and incorporated into the planning process for mine approval, bonding, permitting and closure. SkyTruth does not have the expertise or resources to 

engage in comprehensive cost-benefit analyses. 

Question 12. Since your career as a geologist began, have you observed any meaningful improvements in the development of offshore or onshore oil and gas development in the U.S.? 

Answer. Most of the technical advances I’m aware of come in the area of seismic 

data processing and analysis, and drilling and completion technology. These advances improve industry’s ability to profitably locate and produce resources from unconventional reservoirs, complex geologic settings, and logistically challenging environments. 

Question 13. Since SkyTruth’s inception, can you illustrate any success stories in 

terms of influencing policy and regulation, or providing pictures to groups that do 

so influence, that has resulted in meaningfully safer offshore oil and gas development? 

Answer. I’m not aware of any such examples with certainty but I consider it possible that our post-Katrina oil spill imagery helped spur MMS and industry to rapidly develop new, stricter requirements for the mooring systems of mobile drilling 

units; and spurred NOAA to acquire satellite imagery after severe storms, enhancing our nation’s ability to evaluate and respond to storm-damaged infrastructure. 

Question 14. On November 5th of this year, you headlined a briefing in the Capitol, presented by the Sierra Club, on the ‘‘risks associated with including offshore 

drilling in the upcoming climate legislation.’’ Was a member of Congress a sponsor 

of this briefing, and was a member of Congress present at this briefing? 

Answer. My understanding is that Senator Bill Nelson sponsored this briefing, 

which was attended by one of his staff. No members of Congress attended. SkyTruth 

was invited to provide information on recent offshore oil spills, similar to our testimony on November 19. We clearly stated that we do not promote any particular legislative or policy prescriptions related to offshore drilling. 

RESPONSE OF JOHN F. AMOS TO QUESTION FROM SENATOR MENENDEZ

Question 1. The Australian oil spill in the Timor Sea is the latest and best known 

mishap, but isn’t it true that in the just the last six months there have been other 

oil spills, in the U.S. and around the world? Please describe what you know of these 

incidents and comment on how they illustrate our current risk for spills despite the 

existence of advanced technology and regulatory laws. 

Answer. There have been other oil spills since June 2009, including the following: 

• Prudhoe Bay pipeline spill, December 2009—an above-ground, onshore pipeline 

operated by British Petroleum in the Lisburne field ruptured and spilled 46,000 

gallons of mixed oil and water onto the tundra (http://dec.alaska.gov/spar/perp/ 

response/sumlfy10/091129301/091129301lindex.ht m), one of the biggest 

spills to occur on the North Slope (http://www.adn.com/money/industries/oil/ 

prudhoe/story/1046914.html). A 200,000 gallon spill from a poorly maintained 

BP pipeline in March 2006 still ranks as the largest North Slope spill (http:// 

www.adn.com/money/industries/oil/story/876063.html). Lack of inspections and 

regular maintenance resulted in corrosion that caused the 2006 spill; the cause 

of the 2009 spill is under investigation. • Dubai Star tanker spill, December 2009—a 2007-built tanker carrying jet fuel 

was at anchor in San Francisco Bay and loading bunker fuel from a barge when 

a mechanical failure occurred, spilling fuel onto the deck and into the Bay. Responders were immediately activated but the resulting oil slick reached 2 miles 

in length and 200 yards in width, and was not contained for four hours (http:// 

www.mercurynews.com/topstories/ cil13677172). 

• Eugene Island Pipeline, July 2009—a large-diameter pipeline operated by Shell 

Oil Co. sprang a leak about 30 miles off the Louisiana coast and spilled 63,000 

gallons into the Gulf of Mexico (http://www.incidentnews.gov/incident/8061), creating an 80-square-mile oil slick before the spill could be contained. The pipeline was installed in 1976 and recently began carrying oil produced from a new 

platform located in deep water 190 miles south of New Orleans. It is common 

for new producing fields to be tied back in to the existing pipeline network closer to shore. To the best of our knowledge, no cause has yet been determined 

for this failure. • Mystery spill, July 2009—tar balls began washing ashore on the beaches of 

South Padre Island, Texas. The source of the oil is unknown (http:// 

www.mysanantonio.com/news/51521182.html). 
74 

• Norway tanker spill, July 2009—One of Norway’s worst oil spills ever occurred 

when a tanker ran aground and spilled part of its cargo of diesel fuel (http:// 

www.independent.co.uk/news/world/europe/norway-cleans-up-after-oil-spill1769714.html). The captain of the vessel failed to call for assistance when his 

engine failed in stormy conditions. 

These spills result from a mix of old and new technology, but what they share 

(for those where a cause has been established) is the element of human error: neglected maintenance, and failing to follow the law and best practices. Technology advances can provide a measure of protection from spills, but we observe that accidents due to equipment failure, bad practices, and bad decisions continue to have 

serious consequences. 

RESPONSES OF MARVIN E. ODUM TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. The Committee heard testimony about the infrastructure necessary to 

support offshore oil and gas production and to bring the product onshore. Please 

state the extent to which your company typically is involved in the development, 

construction or maintenance of this infrastructure. If you do not typically handle 

this directly, please indicate the extent to which you are involved with the entities 

who are responsible for this infrastructure. 

Answer. Shell is an integrated energy company with exploration, development, 

and producing capability. We also own and operate pipeline transportation infrastructure, which transports crude oil and natural gas from offshore platforms to 

shore for refining and marketing. While we do have design engineering capability 

in-house, we typically manage development projects in-house and contract with engineering firms to design the facilities. Construction and installation of offshore infrastructure is performed by contactors and managed by our project engineers and 

construction staff. Shell operates its own platforms and pipelines with the help of 

contactors that Shell requires be trained to Shell and Industry standards. 

In some cases, we determine that facilities (including pipelines and platforms) 

owned and operated by other companies can be used in lieu of constructing new infrastructure. Doing so generates efficiency and reduces the infrastructure footprint. 

For example, our Perdido facility in the Gulf of Mexico utilized new technology to 

make a world record water depth subsea tie-in to an existing pipeline. 

Question 2. The Committee also heard testimony to the effect that the Minerals 

Management Service’s authority ends ‘‘at the water’s edge.’’ Please state your understanding of the various government entities—federal, state, or local—responsible for 

permitting, oversight, or spill response related to the infrastructure necessary to 

support offshore production or to bring the product onshore. 

Answer. The Mineral Management Service’s (MMS) authority for leasing and regulatory enforcement for oil and gas facilities begins at the dividing line between the 

state territorial seas and the Outer Continental Shelf (OCS). The territorial seas 

typically extend from the shoreline out to three nautical miles but can extend further out in the case of Texas and Florida. The MMS is also required to consult with 

any Federal agency that has regulatory jurisdiction. There are, however, some exceptions to the MMS’s jurisdiction and a myriad of other federal statutes and agencies that impact offshore development and peripheral activities. These include: 

• For oil spill prevention and response preparedness under the Oil Pollution Act 

requirements, the President delegated authority over oil and gas facilities—including pipelines—to MMS from the shoreline out to and including the offshore 

platforms. This includes the state territorial seas. 

• The U.S. Coast Guard (USCG) has jurisdiction for actual response to an oil spill 

from oil and gas facilities and for workplace safety on offshore platforms. 

• The Department of Transportation has jurisdiction for the design, construction, 

and maintenance of offshore pipelines downstream of the oil and gas sales 

point. 

• The Environmental Protection Agency (EPA) has authority to regulate water 

discharges in the OCS and air emissions in the OCS, except for the central and 

western Gulf of Mexico. 

• The Fish and Wildlife Service and the National Marine Fisheries Service have 

authority to regulate activities for the protection of marine mammals that could 

be impacted by offshore projects. 

Offshore facilities are subject to the Federal consistency requirements of the 

Coastal Zone Management Act (CZMA), whereby a coastal state can determine 

whether any project receiving a Federal permit is consistent with its coastal management program. If an offshore project requires on onshore pipeline or onshore 
75 

1 Economic Analysis of Future Offshore Oil & Gas Development: Beaufort Sea, Chukchi Sea, 

and North Aleutian Basin, Northern Economics and the Institute of Social and Economic Research of the University of Alaska, March 2009. 

processing facilities, that portion of the project is subject to the permitting requirements of the coastal state and the local jurisdictions, such as zoning requirements 

of a county. 

Question 3. The Committee heard testimony regarding oil spills that occurred during severe storms in the Gulf of Mexico from onshore oil and gas infrastructure that 

supports offshore production—refineries, pipelines, and tanks required to receive, 

process, store and distribute oil and gas from offshore fields. Please describe your 

company’s involvement in developing and maintaining this onshore infrastructure, 

and your understanding of the governmental entities responsible for permitting, 

oversight and spill response for this infrastructure. 

Answer. Coastal states and local jurisdictions (county, parish, or town) will have 

jurisdiction for onshore pipelines and other infrastructure. Shell has constructed 

and does maintain onshore oil and gas infrastructure that support offshore production. This is primarily pipelines and pumping and storage facilities along the coast 

where offshore pipelines come ashore. In addition, Shell owns and operates refineries, pipelines, and tanks required to receive, process, store and distribute oil and 

gas from offshore fields. These facilities are designed to withstand operational and 

environmental loading, such as internal pressures and wind and wave loads as prescribed by Industry standards and required by both Federal and state regulations. 

We perform regular inspections of and maintenance on these facilities as required 

by Shell policies and state and Federal regulations. 

A spill or discharge from a facility onshore or offshore that causes the release of 

a pollutant or results in a sheen on the water is reported to the National Response 

Center (NRC), which is the national point of contact and operations center for the 

release of any hazardous substances that occurs in the U.S. The NRC will relay information to the appropriate federal on-scene coordinators (USCG or EPA, depending on the spill’s location), which in turn will contact and mobilize other federal and 

state incident teams. The first and most immediate response; however, is that of the 

facility, and the facility’s response plan is immediately activated in the event of a 

spill. For this reason, the facility’s response equipment and the quantity, operation, 

and location of this equipment and supplies are all critical to effective spill recovery 

and clean-up. 

RESPONSES OF MARVIN E. ODUM TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Can you amplify for me your concerns about domestic energy production and, if regulatory uncertainty and overly burdensome litigation continues to 

stall development, what we can expect to see in terms of driving energy jobs and 

production overseas? Feel free to answer in numbers of actual jobs and numbers of 

barrels of oil, or percentages, whichever is available. 

Answer. When considering an investment in a multi-year, multi-million or billion 

dollar exploration and development project, a company looks at many factors including the applicable fiscal terms, regulatory requirements and legal or political risks. 

The project’s attractiveness is impacted if there is a high potential for legal challenge or political interference; or if the fiscal terms or the regulations are uncertain 

or unstable. 

It is difficult for me to say how many US oil and gas projects and associated jobs 

have been left ‘‘on the table’’ due to a company’s analysis of these criteria. I can 

say, first, that oil and gas development in the central and western Gulf of Mexico 

over the last 50 years has been successful in large part due to clear and equitable 

‘‘rules of the road;’’ and second, we are seeing that the ‘‘rules of the road’’ are not 

as clear in other areas of the OCS that are opening up. This should be a concern 

to policymakers. Let me provide two examples. 

In the OCS off the coast of Alaska, we have experienced a delay of three years 

in acquiring permits necessary to drill exploratory wells in the Beaufort Sea and 

incurred hundreds of million dollars in costs for preparation and equipment and personnel mobilization. Limited term leases were acquired from MMS in 2005, and we 

have not been able to drill a well. A recent study by the Institute of Social and Economic Research of the University of Alaska1 quantifies OCS development could generate an annual average of 35,000 jobs over the next 50 years for the state of Alaska 

alone. These jobs represent a total payroll of $72 billion (2007$) over the 50-year 

period. OCS-related employment growth could more than offset losses from the de-
76 

cline of petroleum production on state lands and could help sustain the Alaska economy for several decades. 

In the Eastern Gulf of Mexico, we have received approval from MMS for an exploration plan in ultra-deep water, but issuance of an air permit from EPA will take 

an additional 18-24 months. The Gulf of Mexico Energy Security Act of 2006 opened 

several million acres of the Eastern Gulf to leasing but failed to adequately provide 

for streamlined air permitting, such as that applied in the central and western Gulf 

of Mexico. To help illustrate the significance of the oil and gas industry relative to 

job creation, a recent study entitled, ‘‘The Energy Sector: Still a Giant Economic Engine for the Louisiana Economy’’ by Dr. Loren C. Scott, Ph.D found that in 2005 

alone the oil and gas industry supported $70.2 billion in sales in Louisiana firms, 

generated over $12.7 billon in household earnings for Louisianans, and supported 

320,280 jobs in the state. 

Question 2. When evaluating offshore oil and gas development opportunities in 

nations outside the U.S., what are some of the main factors a company might take 

into account when assessing the attractiveness of the investment climate? 

Answer. Oil and gas exploration and development opportunities both in the U.S. 

and around the world are evaluated on a number of criteria. The internal screening 

process is designed to ensure that investments are made in projects that will successfully grow the business and return value to our shareholders. Among the criteria applied to a proposed exploration or development project are: 

• The recoverable oil and gas volume and price forecast • The cost to bring the resource to market, including applicable fiscal terms, and 

any uncertainty about the applicable legal and regulatory regime that might increase project costs • The ability to meet a schedule, which is affected by litigation and regulatory 

delays • The predictability and certainty of gaining a license to operate and the security 

of that license • The technology required to develop the resource—does it exist? • The potential environmental and social factors associated with the project The 

political stability of the resource holding country • Access to skilled workers 

Question 3. When we talk about environmental stewardship on a global level, 

knowing what we know about the U.S. program, is it better or worse for the world’s 

environment when the U.S. adds to its environmental restrictions things like shorter lease terms and heightened regulatory burdens? 

Answer. Like any policy that impacts the factors listed above (in Murkowski Response No. 2), shorter lease terms and heightened regulatory burdens reduce the 

attractiveness and global competitiveness of U.S. energy prospects. Failure to provide for adequate timeframes to explore and properly evaluate offshore leaseholds 

before having to make a multi-million dollar decision would impact the viability and 

prospective value of domestic lease rights and could influence the energy industry 

to pursue more attractive foreign alternatives. Unnecessary regulatory burdens have 

a similar economic impact. Because U.S. demand will need to be met, the effect of 

overly burdensome regulation is to force the importation of foreign energy sources 

that may have greater environmental impacts or risks. 

The U.S. has very high safety standards and environmental controls. The environmental record over the past 40 years, as documented by the Department of Interior 

and the National Academy of Sciences, attests that such a regulatory framework is 

effective and is continuously improving. We know this because other countries copy 

what we have here in the U.S. On the other side of the equation, for every barrel 

of oil or TCF of natural gas that the U.S. imports rather than produces domestically, the U.S. effectively increases environmental risks while exporting the environmental effects of production and transport. 

Any policies that unnecessarily favor less stringent environmental alternatives 

are obviously contrary to U.S. goals regarding global environmental stewardship. 

When you add the tremendous economic and national security benefits from domestic production compared to imports, the net benefits weigh greatly in favor of 

domestic development of our energy resources. 

Question 4. While EIA has said that increased domestic offshore oil and gas production would not result in meaningful energy price differences for Americans, do 

you think that a major ramp up of development in the Atlantic, Pacific, Eastern 

Gulf, and Alaska OCS would send a market signal that could, in fact, affect world 

price of oil? 

Answer. It is very difficult to predict oil prices with any degree of certainty—given 

the multitude of factors, anticipated and unanticipated—which can come into play 
77 

over time. Any price impact would also depend on whether more investment in productive capacity for oil in the U.S. OCS adds to, or substitutes for, investment in 

capacity in other regions of the world. In the first case, this could result in a more 

moderate price environment. It the second case, it may not, depending on the relative cost and volume profiles of competing developments. Increased access to development options in the lower 48 OCS and Alaska OCS would clearly improve the set 

of investment choices available to the oil and gas industry and allow growth of additional producing capacity and supply where economic parameters and market needs 

are most favorable. 

a. Is the analysis the same for natural gas prices as oil, even though natural 

gas is not based on a world price? 

Answer. Although gas prices in the U.S. tend to be more closely related to supply 

and demand developments in North America, rather than global trends, similar considerations to oil apply. 

Question 5. Senator Menendez indicated that not only would price be unaffected 

by increased domestic offshore drilling, but that ‘‘production’’ would be unaffected 

by increased domestic offshore drilling. Is it accurate to imply that increasing production would have no effect on energy security? 

Answer. As indicated in my response to question #4, we do not agree with the 

Senator’s basic assumption. If we assume, however, that ‘‘energy security’’ means 

a stable energy supply that promotes and fuels a healthy economy, then there can 

be no doubt that increasing domestic production will contribute to domestic energy 

security. 

• Each barrel of oil produced in the U.S. will displace a barrel of oil imported 

from abroad and is a more secure supply source. 

• Nearly $1 billion is exported from the U.S. to other nations in order to import 

oil. This export of U.S. dollars has an adverse effect on our balance of trade and 

therefore, an adverse impact on the overall economic health of the U.S. economy. 

• Exploration and production in the U.S. will create jobs. Over 9 million people 

are employed directly and indirectly by the domestic oil and gas industry. A 

study by the University of Alaska concluded that developing the vast resources 

off the coast of Alaska will create 35,000 annual jobs in Alaska and the lower 

48 states. 

• Exploration and production on U.S. land creates revenue for the federal government in the form of bonus bids, rentals and royalties. The industry is the largest revenue source for the federal government after the Internal Revenue Service. 

• Increasing oil and gas production in the U.S. will generate tax revenues for federal, state and local governments in the form of income taxes, sales taxes, property taxes and the like. 

In sum, by creating more jobs, more government revenue, and more energy, increasing domestic production will substantially enhance the health of the economy 

and make us less dependent on foreign sources. A healthy economy will be essential 

as we move to invest in a lower carbon future. 

Question 6. Environmental stewardship has improved through directional drilling 

and subsea tiebacks, among other improvements, as I understand it. Can you describe your environmental record in terms of exploration, development, and production for both Alaska and the Gulf of Mexico? 

Answer. I refer you to my written testimony submitted to the Committee where 

I covered our environmental record, which I was not able to go into detail during 

my oral testimony. Let me provide a condensed response for you here. The oil and 

gas industry can develop offshore (and onshore) resources with a footprint smaller 

than ever before. This is an important aspect of our environmental stewardship. It 

is possible to develop very large sub-surface areas with a very small surface expression. The technologies that enable this can be applied both near shore and in deepwater. Let me describe some of the technologies. 

Our deepwater technology program focuses on equipment and integrated systems 

required to produce hydrocarbons with fewer and smaller surface facilities and reduced environmental impacts. This involves the optimal use of subsea production 

systems and new floating drilling and production systems. New technologies include 

subsea separation and boosting, subsea re-injection of produced water and long-distance pumping with flow assurance. All of our deepwater projects go through an internal carbon footprint and environment impact assessment as part of the tollgates 

to final investment decisions. 
78 

Gulf of Mexico. Perdido is an ultra-deep water project in the Gulf of Mexico that 

illustrates the industry’s ingenuity and smaller footprint. Three different offshore 

fields covering about 90 square miles in the OCS will be tied into a single floating 

surface facility at Perdido. Technically, the project provides the infrastructure that 

could enable future oil and gas volumes from a 30-mile radius. That means that 

about a 3,000-square-mile area can be developed sharing one floating facility. 

Alaska. Shell hopes to drill two exploratory wells in the Alaska OCS in 2010. 

Shell has created an unprecedented oil spill response capability to support its drilling plans in the Beaufort and Chukchi Seas. We have a dedicated fleet of vessels 

and specialized oil containment equipment, which will be on-site 24/7. Spill recovery 

equipment is state of the art and widely acknowledged as proven systems under 

cold-climate conditions and designed to remove the worst-case discharge. The Nanuq 

is an ice-class purpose-built vessel, which can begin recovery within an hour of any 

incident large or small. 

Question 7. Seismic data acquisition has also improved over the years. Please describe any environmental benefit that may be conferred as a result, and feel free 

to discuss any additional benefits to the OCS program through this technology. 

Answer. Environmental performance of all aspects of our business continues to 

improve as we understand and incorporate the latest information into the way we 

work. These improvements, such as passive acoustic monitoring and air gun technology, go a long way in mitigating the environmental effects of seismic exploration. 

Operational commitment is also a factor. In the Alaska OCS, for instance, Shell 

seismic vessels followed a gradual sound ramp up profile at commencement of any 

seismic survey, to give marine mammals time to clear the area. We also maintained 

constant vigilance for marine mammals with trained native observers on board the 

seismic ships and with airborne monitors flying ahead on its planned course. Seismic operations ceased with any sighting and did not restart until the area was clear. 

Still, the oil and gas industry, geophysical contractors, and governmental regulatory agencies continue to further scientific understanding of the effects of sound 

on marine life, to investigate if additional improvements can be made. For example, 

a joint industry program (JIP) organized by the International Association of Oil and 

Gas Producers has provided approximately $24 million USD to advance scientific 

understanding of the effects of sound generated by offshore oil and gas exploration 

and production operations on marine mammals, fish, and reptiles through independent research by some of the leading scientists and institutions in the field. This 

work is available to all—the public, the scientific community, and international regulators at: http://www.soundandmarinelife.org/ 

In addition to mitigating the environmental impacts of seismic exploration, improvements in seismic data acquisition include 3-D seismic, wide azimuth seismic, 

and enhanced processing and visualization. These improvements allow us to see 

below salt formations, which typically ‘‘whiteout’’ or blur seismic data and better 

pinpoint oil and gas reservoirs. This results in a smaller environmental footprint 

(i.e., fewer exploratory and appraisal wells, fewer platforms, and more productive 

wells). It also better enables us to locate potential hazards to drilling, such as shallow gas formations. 

Question 8. How are competing uses in the offshore areas dealt with currently 

under existing laws and regulations—does this work and are changes needed? 

Answer. We don’t believe that significant changes are needed to balance multipleuses of offshore areas. There is a robust, effective system already in place to balance 

environmental stewardship and responsible energy development of the OCS that 

takes into consideration multiple-uses of the ocean. The leasing process established 

by the Outer Continental Shelf Lands Act requires the Secretary of Interior to consult with other agencies to obtain information pertinent to responsible OCS oil and 

gas leasing, exploration, and development decisions as well as to monitor the 

human, marine, and coastal environments. The MMS puts stipulations on operations in place during the planning process to minimize and mitigate potential conflicts between different user groups. The MMS is also obligated to incorporate public 

concern and potential conflicts between different user groups through the public 

participation process and response. 

The system works in the Gulf of Mexico. For example, the oil and gas industry 

has co-existed with the sport and commercial fishing industry in the Gulf for decades and also co-exists within the protected boundaries of the Flower Garden Banks 

National Marine Sanctuary (FGBNMS). In the Gulf, it’s common for fishermen to 

target areas around platforms because they serve as artificial habitat for so many 

important species. A 2002 study from the MMS reported that the total economic output to Gulf coastal counties associated with sport fishing and diving activities near 
79 

2 Hiett, R.L. and J.W. Milon. 2001. Economic Impact of Recreational Fishing and Diving Associated with Offshore Oil and Gas Structures in the Gulf of Mexico: Final Report. OCS Study 

MMS 2002-010. U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS 

Region, New Orleans, LA. 98 pp. 

oil and gas structures is more than $300 million per year2. At the Flower Garden 

Banks National Marine Sanctuary, 25 years of stringent environmental monitoring 

by NOAA, MMS, and industry has found no contamination or degradation of corals 

due to oil and gas activity, even though hundreds of exploratory wells have been 

drilled, and there are currently 10 production platforms and approx. 160 km of pipelines within 4 miles of the sanctuary boundary. 

RESPONSE OF MARVIN E. ODUM TO QUESTION FROM SENATOR DORGAN

Question 1. Earlier this year in this committee, I proposed an amendment which 

is one of the primary reasons for the oversight hearing. Through my approach, the 

MMS would be authorized to go through a rulemaking process to issue regulations 

and would consider a range of local and other conditions during that process. In federal waters, the Secretary would establish zones which would determine what kind 

of restrictions would be placed on surface activities. The onus is then placed on individual companies to develop innovative technology solutions in those zones. Renewable development (i.e. wind turbines offshore) and previously existing oil and gas 

projects would be exempt. I believe that if we could pursue this approach, it is possible to deploy innovative technology applications to limit the environmental footprint and significantly reduce the visual impact while increasing access to resources. 

Given your company’s experience with projects in other regions and the testimony 

that you have presented, do you believe that this is a concept that you could support? 

Answer. The footprint and visual impact of offshore oil and gas activities could 

be addressed through the process you describe. As new areas of the Outer Continental Shelf (OCS) are opened to oil and gas leasing, perhaps such a proposal merits consideration. I will note that the federal agencies currently have tools to protect 

sensitive areas offshore. For example, MMS requires buffer zones around corals and 

chemosynthetic communities on the seafloor and around marine protected areas. 

Currently, States control activities in their Territorial Seas (generally three miles 

from the coast) and require that offshore projects do not conflict with coastal management plans, which can include view shed criteria. 

RESPONSES OF MARVIN E. ODUM TO QUESTIONS FROM SENATOR MENENDEZ

Question 1. Much of your testimony has focused on the spill prevention capacity 

of your company. But realistically, an accident is an accident, and by its very nature 

cannot be fully anticipated or prevented. Yet, some preliminary reports have shown 

that the recent Australian oil spill in the Timor Sea happened as a result of negligence on the part of its operator. On this issue, how can your company ensure that 

human error is not a factor in drilling operations? If we cannot prevent human 

error, are we not then to assume that further accidents could happen? 

Answer. I invite you and your staff to tour Shell’s facilities to meet the men and 

women involved with our operations and the technology they employ to ensure the 

safety and integrity of our operations. In my testimony, I described some of the technology, such as the multiple redundant barriers in place when drilling exploration 

wells. I described the exploration and production control rooms that are manned 24/ 

7 and see in real time the operations that occur offshore. Should there be any anomaly in those operations, experts both on-site and onshore work to understand the 

anomaly and resolve it before it becomes an incident. Shell takes extreme measures 

to avoid incidents that will pose a danger to our employees, to the residents of the 

communities in which we operate, or to the environment. 

Question 2. One of the troubling aspects of the Australian spill is that it took 

three weeks before any efforts to plug the leak were even attempted. This was the 

case despite the fact that the rig is in relatively shallow water and mild weather 

conditions were present. How would Shell be able to respond to a well blow-out if 

it happened in the wake of a disaster similar to Hurricane Katrina? Or, if it happened in the frigid conditions of the Beaufort Sea, or far offshore in the Chukchi 

Sea, in the winter? How long do you think it would take to stop a spill and clean 

it up under those conditions? 

Answer. Further to my response to the question above, Shell has a robust contingency plan in place to deal with a loss of well control. In the Gulf of Mexico, all 

drilling operations are shutdown prior to a hurricane entering the Gulf. If a well 

blow-out occurred as a result of a hurricane, the same relief well drilling plan is 
80 

put in place—there is no difference. Access to a suitable drilling rig would not be 

a problem. 

In Alaska, the drillship is equipped with special devices that allow it to disconnect 

from the well quickly (within minutes) and move away from the site to avoid damage by the blowout. This allows the same drillship to drill the relief well for the 

blowout. In the Timor Sea incident the original rig was a jackup rig could not escape 

quickly, so it was evacuated at the beginning of the leak. A second jackup rig had 

to be activated, equipped for service, manned, mobilized to the well site, jacked to 

the proper height, a relief well planned and drilling operations initiated all while 

the leak was still in progress. 

The MMS requires all offshore operators to have a relief well drilling plan with 

a blowout kill plan before initiating well drilling operations. Adequate casing, 

wellheads, the guide base, cement, drilling fluids, a second Blow Out Preventor 

(BOP) and all other components of the relief well must be aboard the drillship or 

its supporting fleet or within ‘‘easy reach’’. Unlike the Timor Sea incident, in its offshore U.S. operations, Shell will be ready to initiate the relief well drilling process 

almost immediately. 

It is difficult to say how long it would take to stop a spill and clean it up since 

there are a variety of factors and conditions that will affect this. We have designed 

our systems to minimize this time as much as reasonably possible. 

RESPONSES OF MARVIN E. ODUM TO QUESTIONS FROM SENATOR SESSIONS

Question 1. In your opinion, do shorter lease terms, an increase in royalties, and 

an increase in taxes play a part in determining which country your company with 

produce? 

Answer. Yes. Although there are other intangible factors that play a role in our 

investment decisions, economic reality dictates that such costs and lease terms are 

a critical determinant. We have a serious responsibility to our shareholders to 

thoughtfully and analytically select the most favorable economic alternative. 

Question 2. The oil and gas industry directly and indirectly employ 9.2 million 

people, so could someone explain to me why with double digit unemployment numbers are we not moving forward with increasing domestic production and employing 

individuals here at home? 

Answer. Shell supports government policies that will enable the growth of domestic production and believes that increasing domestic oil and gas production is a 

‘‘win-win-win.’’ Such policies will generate jobs, contribute to government revenues 

and improve the overall US economy. As noted, over 9 million people are employed 

directly and indirectly by the domestic oil and gas industry. A study by the University of Alaska concluded that developing the vast resources off the coast of Alaska 

would create 35,000 annual jobs in Alaska and the lower 48 states. 

Question 3. In total, the OCS development has generated $190 billion in federal 

revenue from bonus bids and royalty payments. Its puzzles me with record breaking 

deficit numbers, why the 5 year plan for OCS is getting delayed when it could 

produce federal revenues. Does anyone have an opinion on this? 

Answer. With all due respect, the US Department of the Interior is in the best 

position to explain the reason for delay in issuing the 5-year OCS leasing plan. It 

is true that the oil and gas industry makes a substantial contribution to federal revenues each year in the form of bonus bids, rentals and royalties, as well as in tax 

revenues generated by associated jobs. 

Question 4. What is the role of the National Oceanic and Atmospheric Administration (NOAA) in OCS development? NOAA Administrator Lubchenco sent a letter to 

MMS dated September 21, 2009, which also appeared the LA Times commenting on 

the OCS proposed 5-year plan—2010-2015. However, NOAA later claimed it was an 

unofficial letter. How is MMS bound or inclined to react to this letter’s contents? 

Answer. With all due respect, the MMS is better positioned to comment on whether or not it will react to or be bound by the Sept. 21, 2009 letter that NOAA submitted and withdrew. I read the letter and believe that it contained serious factual 

inaccuracies, unfounded allegations and important omissions. Therefore, I sent a response to the NOAA Administrator in an attempt to set the record straight. I attach 

that letter here for your review. 

Question 5. How many agencies does an oil and natural gas company have to deal 

with to produce from a federal offshore lease? Does this number of different and 

competing bureaucracies make operations in the OCS more efficient or less efficient? 

Answer. I have attempted to answer the question of regulatory jurisdiction in my 

response to Senator Bingaman’s question #2. The number of agencies varies by the 

nature of the specific activity, location of the offshore lease and whether the state 

and local jurisdictions are involved. Suffice it to say, there are many agencies. How-
81 

ever, the number of agencies and regulations is not as problematic as agencies not 

working together effectively and agencies whose policy and objectives are at odds 

with the responsible development of federal OCS resources. 

For example, if an agency’s mission is primarily conservation related, it may not 

diligently and objectively review and process regulatory approvals unless a national 

federal policy provides such guidance. 

I call your attention, though, to the effectiveness of the regulatory framework (and 

the corresponding environmental record) of the central and western Gulf of Mexico. 

The regulatory agencies work cooperatively to review and process regulatory approvals and maintain the highest standard of environmental and safety standards of 

anywhere in the world. I question why this model can’t be replicated in other areas 

of the OCS. We strongly support the provision in the Senate Energy bill for an Alaska OCS permitting office with direction to major federal agencies to work cooperatively to process permits. 

Question 6. We’ve heard the U.S. ranks very high in environmental stewardship. 

How high does the U.S. rank in terms of applying its stewardship policies in such 

a way as to provide certainty to the process of leasing and developing the OCS? 

Answer. The environmental statutes and regulatory regimes that implement those 

statutes are among the most protective in the world. That is why many say that 

the US ranks very high in environmental stewardship. In the same vein, the US 

offshore leasing program in the Gulf of Mexico has been among the most transparent and certain in the world. As federal leasing of other offshore areas occurs, 

there appears to be valid reason to be concerned that the ‘‘rules of the road’’ are 

less clear and less certain. 

The example is the OCS off Alaska. The federal government has held lease sales 

there, awarded leases and collected billions of dollars in bonus bids and rentals. 

Shell paid about $2.2 billion for leases; we invested about another $1 billion; and 

have been ‘‘shovel ready’’ to explore since 2007. Due to legal and regulatory roadblocks, we have not yet been able to drill a single exploration well. We have urged 

policymakers to address this dilemma. 

RESPONSE OF JEFFREY SHORT TO QUESTION FROM SENATOR BINGAMAN

Question 1. You testified that current scientific knowledge related to the impacts 

of offshore oil and gas production on the marine environment is inadequate. You 

recommended that additional research be conducted. Please be more specific about 

the highest priority areas of research that you believe are necessary. Also state 

which research entities or agencies you believe to be best suited to conduct this priority research. 

Answer. My written statement details, at a broad level, the scientific research 

that must be undertaken before we can make informed decisions about whether oil 

and gas production should occur offshore and, if so, when, where, and how. We cannot fully evaluate the potential impacts of production without understanding the 

marine ecosystem, and the necessary steps to beginning that understanding are outlined in my written statement. 

The three priority areas for research are in the toxicology of oil pollution, in oil 

spill cleanup and mitigation technology, and in gathering basic scientific information in Arctic coastal and marine environments. In toxicology, research on the biochemical mechanisms of toxic impacts of polycyclic aromatic hydrocarbons (PAH) on 

developing embryos is likely to be immediately rewarding, and the toxicity of other 

oil components such as the alkylbenzenes (Rowland et al. 2001) that have been identified as toxic as a class but have not been examined in detail are also likely to be 

fruitful. In cleanup and mitigation, quantitative methods for assessing the efficacy 

of existing and new methods are urgently needed. Cleanup and mitigation methods 

are typically ‘‘evaluated’’ with little or no regard for routine scientific practices elsewhere such as use of positive and negative controls, comparison with reference 

standards, determination of precision through replication, etc. In general, much 

higher standards of scientific evaluation should be mandated for qualifying performance claims for these technologies. 

As I highlighted in my testimony and below, we should have sufficient understanding of ecosystems to conduct a quantitative risk assessment of impacts. Our 

understanding of Arctic marine ecosystems is especially deficient. With few exceptions we do not know even basic information such as the abundance and distribution 

of marine species. A large expansion of oil and gas activities is occurring in the U.S. 

portion of the Arctic Ocean. An investment in research to at least attain a basic understanding of Arctic ecosystems is necessary to inform the public and decision makers of the risks and trade-offs to developing this region. 
82 

The agency most qualified to perform research in these areas is the National Oceanic and Atmospheric Administration (NOAA). Scientists at NOAA discovered the 

embryotoxic effects of PAH and have done subsequent pioneering studies on the biochemical mechanisms responsible. Modest but sustained support for continuing 

these studies is almost certain to lead to practically useful insights regarding the 

ways that oil affects wildlife, and possibly humans as well. NOAA’s Office of Response and Restoration has the most direct experience with using practical methods 

for mitigating oil spills when they occur, and hence is best equipped to evaluate 

technological improvements. NOAA is also well suited to conduct much of the research necessary to gain a better understanding of Arctic marine ecosystems. 

RESPONSES OF JEFFREY SHORT TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. I agree with your testimony that there should be a plan that balances 

ecosystems with resource management. I also certainly agree with best available 

technology and continuing research on how to better prevent and mitigate risks for 

offshore development. My question is, since there is always room for improvement, 

does that mean that the science may never quite be good enough for some to accept 

offshore development? 

Answer. Thank you, Senator Murkowski, for your support of balanced and comprehensive planning. Please do not hesitate to ask if there is anything I or my colleagues can do to further your efforts in that regard. 

With regard to your specific question, while it may be true that some people are 

never satisfied with anything, the more relevant issue here is how much science is 

adequate. Just because scientific enquiry is boundless should not be used as an excuse to forego investment in enough science to achieve a basic understanding of ecosystem functioning. In my view, adequate science here means sufficient understanding of the ecosystem to conduct a quantitative risk assessment of impacts that 

may occur because of offshore development. Ability to couch impacts in terms of a 

known distribution of likely outcomes is key here, as distinct from unsupported 

opinions of agency staff, contractors and others, all having varying degrees of credentials, which has typically been the case to the present. 

By definition, ‘‘risk’’ is uncertainty that is quantifiable. This implies that the most 

important sources of risk are known, as well as the uncertainties associated with 

each source. Applied to a risk assessment of ecosystem impacts from defined events 

such as an oil spill or well blowout, a quantitative assessment of ecosystem risks 

would require a basic understanding of how the ecosystem works. This means 

knowledge of the major ecosystem components (i.e. species) and their food web dependencies, including their seasonal variability. Once a basic food-web is constructed, comprising the dominant species, the energy flows connecting them and 

the natural variability of these species or functional equivalents, it is possible to run 

Monte Carlo simulations of effects from impact scenarios. These simulations allow 

estimation of the probability of specified responses, and hence a quantitative specification of risk. 

Question 2. Your testimony indicates that 4 years after the Valdez spill, ‘‘monitoring was terminated.’’ I want to give you a chance to clarify this; has there really 

been no monitoring of the coastal areas around the Valdez spill since 1993? 

Answer. Thank you for the opportunity to clarify this statement. I was referring 

to the monitoring done by Shoreline Cleanup Assessment Teams (SCAT) to evaluate 

the persistence of oil remaining on beaches oiled by the 1989 Exxon Valdez oil spill. 

This monitoring was terminated after the summer of 1993, when it was determined 

that natural dispersion and degradation processes would remove any remaining oil. 

Subsequently, research that I led in 2001 demonstrated that the assumptions underlying this determination were substantially incorrect (see Short et al. 2004, 

2006). 

In particular, the 1993 decision assumed that (1) observation and persistence of 

oil on the surface of beaches was closely correlated with the location of oil beneath 

the surface (2) that the subsurface oil was located in the upper intertidal; (3) that 

clay-oil flocculation processes, recently discovered to be an apparently effective natural dispersion process (Bragg and Yang 1993) would rapidly disperse remaining 

subsurface oil, and (4) microbial degradation would effectively degrade any remaining oil within beaches. All four of these assumptions turned out to be incorrect. Subsequent studies carried out after 2000 showed that the location of visually-evident 

surface oil and obscured subsurface oil were poorly correlated, so that monitoring 

oil persistence at locations where surface oil was present (and where most monitoring effort was directed) gave little information on the persistence of subsurface 

oil. Surface oil was located mainly in the upper intertidal, whereas subsurface oil 

was concentrated near the mid-tide level on beaches. These two factors led to mis- 
83 

allocations of monitoring effort for subsurface oil from 1990 to 1993, so that efforts 

were put toward the wrong beaches and the wrong places on beaches. 

The unanticipated persistence of oil in some locations shows that natural dispersion processes including clay-oil flocculation and microbial degradation were less effective than expected. Indeed, in some places the composition of the oil remaining 

today is similar to that of oil present near the end of 1989 (Short et al. 2007a). The 

reasons for this persistence are currently under investigation. 

The surprising persistence of oil on beaches of Prince William Sound following the 

Exxon Valdez oil spill serves as an excellent example of my primary point: that 

management decisions regarding the environmental impacts of oil are far too often 

based on unwarranted assumptions that usually go unchallenged. Tragic though it 

was, the Exxon Valdez oil spill provided a rare opportunity to evaluate some of these 

assumptions, because the remote setting was conducive to evaluating impacts with 

scant interference from other sources of pollution, and because the settlement funds 

provided a relatively ample source of funding for the scientific studies. These studies 

led to realization that oil was not only much more persistent than expected, it was 

also much more toxic to fish embryos (Carls et al. 1999, Heintz et al. 1999), and 

the toxic components were not those thought to be primarily responsible for toxicity 

prior to 1989 (Incardona et al. 2004). These discoveries clearly indicate that much 

more needs to be learned about how oil affects marine ecosystems to support sound 

management decisions, and the agency best positioned to investigate these issues 

is the National Oceanic and Atmospheric Administration. 

Question 3. Are you or your organization familiar with the population of sperm 

whales in the Gulf of Mexico? 

Answer. Oceana is not familiar with the population of sperm whales in the Gulf 

of Mexico. 

a. Has the population increased or decreased as the Gulf continues to be developed? 

Answer. Oceana is not familiar with the status of the sperm whale population in 

the Gulf of Mexico. 

b. Would you agree that we continue to learn new information about marine 

mammals through monitoring programs associated directly with, and dependent 

upon, deepwater oil and natural gas programs? 

Answer. The collection of new information about marine life in general helps us 

better understand how marine ecosystems are structured and function. We should, 

however, strive to understand ecosystems before industrial activities proceed in 

order to better assess the risk of activities to the health of the ecosystem and provide critical baseline information. Monitoring that is conducted during operations 

can then be compared to baseline conditions to help determine if impacts have occurred. Such monitoring should be independently verified. 

c. Is there any conclusive or empirical evidence that these marine mammals 

have been harmed by seismic activity in the Gulf of Mexico? 

Answer. I am not familiar with research that has been done on the impacts of 

seismic activity in the Gulf of Mexico, but it is my understanding that MMS did 

commission a study that showed some effects of seismic on sperm whales. Without 

adequate baseline information, it is extremely difficult to demonstrate harm to a 

population of marine mammals. Furthermore, marine mammals can be especially 

difficult to study. If there is a lack of sufficient science to determine effects, that 

is not necessarily an indicator of a lack of effects. 

Question 4. Concentrated oil spills always have some environmental impact— 

that’s why we agree that oil and gas should always be produced as safely as possible, under stringent conditions. However, according to a report issued in 2003 by 

the National Academy of Sciences (Oil in the Sea III), extraction activities release 

far less oil each year than consumption activities, which in turn release far less 

than natural seepages. In fact, the NAS report found that extraction activities— 

which your organization so closely tracks—accounts for just 1 percent of the oil entering North American waters each year. Taking this a step further, multiple 

peerreviewed studies [see http://www.ia.ucsb.edu/pa/display.aspx?pkey=412] have 

found that the offshore production of oil could actually help reduce the amount that 

naturally seeps from the ocean floor. 

a. Although accidental spills or blowouts involve a much more concentrated 

release of oil than natural seeps, much of your testimony discusses toxicity of 

oil in the sea and the idea that its continued buildup and dispersal may have 

toxic or poisoning effects. Is this risk any less for a constant seepage of oil from 
84 

the seabed than from the 1 percent of the ocean’s oil from production related 

releases? 

Answer. Thank you for the opportunity to elaborate on this issue. Comparing the 

total amount of oil released by seeps and development is diverting Congress and the 

public from the real issue here. The fact that natural seeps release oil into the environment has little bearing on the risks posed by catastrophic spills and blowouts, 

or even on chronic, intermittent releases of oil related to development activities. 

Natural seeps provide a reliable source of reduced carbon for microbial communities that detoxify the oil by assimilating and decomposing the toxic components. 

More complex and mobile organisms are able to avoid areas impacted by the toxic 

components of oil seeps, thus avoiding the toxic effects of oil. Many sessile organisms have adapted over long time periods to such seeps, which is not possible in 

an accidental spill. Furthermore, pollution from oil seeps is largely unavoidable. In 

contrast, pollution from oil spills, blowouts and even urban runoff are more variable 

in both time and space, and hence enter environments where populations of microbes capable of decomposing the toxic components of oil are low, more complex organisms are not habituated to inputs. 

b. Have you ever considered that oil production could actually have a positive 

environmental impact, insofar that it could be reducing the rate of natural seepages? 

Answer. I am not aware of any scientific data supporting this contention. In my 

studies of natural oil seeps in Alaska (Short et al. 2007b), my petroleum geologist 

colleagues have remarked that while oil seeps reliably indicate the regional presence 

of oil, they are typically poor indicators of specific, economically attractive deposits 

because the seepage usually means that most of the oil associated with the deposit 

from which it arises has already seeped away. To the extent that this is true, tapping unconnected oil deposits nearby would have little or no effect on oil seepage 

rates. 

c. Would policies not be more efficient in terms of reducing oil in the sea to 

focus on reducing the amount of oil that is spilled during consumption activities, 

rather than narrowly focusing on a part of the process that is believed to account for nearly 30 times less spillage each year? In other words, should more 

taxpayer dollars be directed towards dealing with production or consumption 

spills? 

Answer. Careful assessment of the impacts of oil released into the environment 

from consumption activities deserves far more scientific scrutiny than has so far 

been devoted to it. At present, too little is known about these impacts to provide 

a reasonably sound basis for resolving this question. 

Question 5. Your testimony states ‘‘When we make the effort to look closely. . .fundamental surprises typically come to light. These discoveries overturn predictions of impacts often stated with unfounded confidence beforehand that in retrospect turnout to have been based on little more than conjecture.’’ Does this principle 

ever apply to predictions of both environmental organizations as well as offshore 

drilling proponents in terms of what an impact might or might not turn out to be? 

Answer. Again, thank you for the opportunity to clarify this important point. I 

want to be clear that my answer is emphatically in the affirmative. If, on the basis 

of rigorously conducted science, a practice or activity can be shown to have negligible or otherwise environmentally acceptable impacts, then we should not waste 

time or resources to oppose them, and I am personally committed to this principle. 

For example, in 2001 I participated in a study of toxic hydrocarbons in the discharge from the ballast water treatment facility at the Alyeska marine oil terminal 

into Port Valdez, Alaska (Salazar et al. 2002). Our study clearly showed that the 

most contaminated site located just above the discharge diffuser was cleaner than 

the supposedly clean, un-impacted reference site in similar studies of the Sullom 

Voe marine oil terminal in the United Kingdom. I was subsequently quite vocal in 

my defense of the outstanding job done by Alyeska to treat their discharges, and 

our study effectively laid to rest concerns regarding suspected effects of these discharges on the biological resources of Port Valdez. So as a matter of principle as 

well as practice, I strongly believe that when industry can be clearly shown to be 

doing an environmentally responsible job, they deserve the support and applause of 

the environmental community. 

Question 6. Presume a major increase in efficiencies, biofuels, electric cars, and 

other efforts to reduce American consumption of oil, but that millions of barrels a 

day will still be consumed for many decades to come. What is Oceana’s position on 
85 

1 Note that these scenarios assume no reductions in jet fuel consumption through conservation 

or increased energy efficiency. 

where, specifically, such oil should come from, and if there is no such position, why 

not? 

Answer. Careful review of America’s oil production and consumption figures show 

that a major national initiative to reduce dependence on oil could eliminate our dependence on foreign oil, especially oil from countries other than Canada and Mexico, 

our closest trading partners. Based on data for 2008 from the Energy Information 

Agency, the United States consumed 19.5 million barrels per day (MBD), of which 

11.1 MBD was imported (EIA 2009). Of this, 9.0 MBD was used for gasoline for 

transportation, 4.6 MBD for diesel fuel and home heating oil (not including jet fuel), 

and 1.9 MBD for liquid petroleum gas. Reducing our consumption through conservation, alternative energy sources and increased efficiencies of these three components 

of consumption by 72%, an achievable goal, would eliminate our need for imported 

oil entirely. Assuming the 2.5 MBD we import from Canada remains a reliable additional source reduces our conservation requirement to 55% and our imports from 

Mexico reduce it even further.1

Such a conservation program would have multiple benefits for the United States. 

It would dramatically reduce our balance of payments, increase our latitude in foreign policy with respect to countries from whom we import oil and who are less 

friendly toward the United States than are Canada and Mexico, dramatically lower 

our emissions of carbon dioxide thus helping to mitigate global warming, and substantially lower the cost of all petroleum products that are still used, thus enhancing the efficiency of our economy. For as is well known the price of petroleum is 

very sensitive to supply, and were the United States to effectively increase supply 

by ∼10 MBD through conservation, increased energy efficiency and alternative energy, the price of petroleum would plummet. 

Question 7. Since Oceana’s inception, can you illustrate any success stories in 

terms of influencing policy and regulation that has resulted in meaningfully safer 

offshore oil and gas development? 

Answer. In the nearly ten years of Oceana’s existence, decisions about offshore oil 

and gas activities have focused on opening new areas to leasing and increasing seismic and other activities. Those decisions have been made without a comparable increase in available science or clean-up technology. 

RESPONSES OF WALTER CRUICKSHANK TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Offshore oil and gas production involves not only production wells, but 

also considerable infrastructure to support those wells, to bring the product onshore, 

and to process or transport the product once it is onshore. This includes onshore 

refineries, pipelines and tanks required to receive, process, store and distribute oil 

and gas from offshore fields. Please describe MMS’ authority and responsibility regarding permitting, oversight, and spill response for the offshore and onshore infrastructure necessary to support offshore oil and gas production. Include in your response a discussion of the extent to which MMS’ analysis of offshore activity under 

the National Environmental Policy Act (NEPA) includes impacts caused by this infrastructure. 

Answer. MMS has no authority under OCSLA or any other law to regulate OCSrelated activities in State waters and onshore. While MMS’s permitting authority 

ends at the Federal/State boundary, impacts of any new OCS-related infrastructure 

in State waters and onshore which will be installed in order to serve the OCS production activities are considered indirect impacts and must be analyzed in MMS’s 

NEPA documents. At the lease sale stage, NEPA documents analyze programmatically the impacts of coastal infrastructure including existing oil refineries and 

pipelines, and this analysis typically extends to the first onshore processing point. 

While the States, Army Corps of Engineers, Federal Energy Regulatory Commission 

and/or Department of Transportation have permitting authority for OCS-related activities in State waters and onshore, the MMS prepares NEPA documents to address the general impacts from hypothetical new OCS-related facilities that could 

extend into State water or onshore areas. Actual permitting for construction or expansion of any OCS-related coastal facility, such as a pipeline or gas processing 

plant, would not be within MMS purview. Detailed impact analyses and any mitigation requirements for OCS-related infrastructure in State waters and onshore fall 

under the purview of permitting agencies such as those listed above. 

The MMS’s responsibilities under the Oil Pollution Act of 1990 (OPA 90) include 

spill prevention, review, and approval of oil-spill response plans (OSRP); inspection 
86 

1 Under provisions of the Clean Air Act Amendments (CAAA) of 1990, the Environmental Protection Agency’s (EPA) Administrator, in consultation with the Department of the Interior’s Secretary and the U.S. Coast Guard’s Commandant, established requirements to control air pollution in Outer Continental Shelf (OCS) areas of the Arctic, Atlantic, Pacific, and eastward of 

87°30’W longitude in the Gulf of Mexico 

of oil-spill containment and cleanup equipment; and ensuring oil-spill financial responsibility for all offshore facilities seaward of the coast line. 

Question 2. Please describe your understanding of the authority and responsibility 

of other government entities or agencies, including federal, state, or local authorities, regarding the permitting, oversight or spill response for this infrastructure 

both offshore and onshore. Also describe any ways in which MMS coordinates with 

any of these entities in carrying out its responsibilities. 

Answer. The OCSLA directs the Secretary to conserve the Nation’s natural resources; develop natural gas and oil reserves in an orderly and timely manner; meet 

the energy needs of the country; protect the human, marine, and coastal environments; and receive a fair and equitable return on the resources of the OCS. The 

Department uses marine spatial planning (MSP) as a collaborative process of working with other Federal agencies, along with its diverse stakeholders, to meet its 

stewardship and ocean resource management responsibilities using an adaptive and 

ecosystem-based approach to management. To that end, MMS presently leads the 

development of a Web-based Multipurpose Marine Cadastre, in a partnership with 

NOAA. The Cadastre is intended to evolve toward meeting the needs of the entire 

U.S. ocean community for the purpose of planning ocean uses, avoiding conflicts, 

and determining the necessary participants for individual project assessments. 

The following agencies are those with whom the MMS shares jurisdiction of the 

OCS and works collaboratively either as lead or in a participating capacity: 

Coast Guard 

• Maritime safety and security • Cranes on mobile facilities • Facilitate spill clean-up in Federal and state waters • Aids to navigation, fairways and anchorage areas • Offshore workplace health and safety • Hazardous materials storage 

Army Corps of Engineers 

• Offshore structures locations • Evaluates permit applications for essentially all construction activities 

that occur in the Nation’s waters 

Air Force and Navy 

• Designated military warning and water test areas • Decommissioning and site clearance 

States 

• Permitting and oversight of oil and gas operations in state waters 

• Coastal Zone Management—Coastal area protection, preservation. 

Environmental Protection Agency 

• Water quality in state and federal waters, 

• Air quality in all OCS areas except the Gulf of Mexico west of 87°30’W 

longitude1

National Oceanic and Atmospheric Administration 

• Coastal Zone Management—Coastal area protection, preservation 

• Marine sanctuaries 

• Marine mammal protection 

• Endangered species 

• Essential fish habitat 

• Commercial fisheries 

• Consultation for Decommissioning 

• Fishermen’s Contingency Fund 

• Provide oil spill response scientific support 

Fish and Wildlife Service 

• Marine mammal protection 

• Endangered species 

Department of Transportation 

• Oversight of transportation pipelines offshore and onshore (Pipeline 

and Hazardous Materials Safety Administration (PHMSA)) 
87 

Federal Aviation Administration 

• Oceanic air traffic (helicopters), towers 

Occupational Safety and Health Administration 

• Safe and healthful working conditions 

As described above, onshore regulation rests with the States, Army Corps of Engineers, Federal Energy Regulatory Commission and/or Department of Transportation 

Question 3. The Committee heard testimony that existing research efforts related 

to the marine ecosystem and the impact of industrial activities in particular areas 

is inadequate. Specifically, concern was expressed about the lack of baseline data, 

an integrated ecosystem research plan, monitoring of vulnerable ecosystem components, and information on best available technology. What is MMS’ view of the adequacy of its research capacity in this area? Are there other federal entities that currently complement MMS’ research? What if any additional resources for research 

does MMS need to ensure that these issues are adequately addressed? 

Answer. The MMS is committed to maintaining the capability to conduct the research needed to ensure safe and environmentally sound offshore energy development. The MMS does not operate research facilities and therefore seeks the most 

highly qualified scientists through a selective and competitive process to meet mission requirements. 

This approach has been successfully followed since the 1970s when the OCS Environmental Studies Program (ESP) began. The ESP research strategy has evolved 

over the years. Initially the focus was on the development of statistically significant 

baseline information. Following recommendations from a National Academy of 

Sciences review, the program strategy evolved to gathering focused, scientific information that could inform management decisions, such as the development of protective measures and identifying vulnerable ecosystem components. This approach has 

served the program and the scientific community well. Over the decades, the offshore energy program created the stimulus for pioneering research that otherwise 

would not have occurred. This research has led to discovery of new habitats and 

new species, description and modeling of physical processes, and an improved body 

of scientific knowledge regarding the ecosystem components that could possibly be 

impacted by offshore energy development. 

MMS has a strong record of gathering baseline data and monitoring information 

in areas that actively experience offshore energy development. Notably, our early 

studies of the Flower Gardens Banks (now part of the Flower Garden Banks National Marine Sanctuary) in the 1970’s evolved to a continuous monitoring program 

that, decades later, attests to the successful management of, and coexistence of, oil 

and gas activities in proximity to one of the healthiest coral reefs in the world. Another example of MMS development of baseline data with subsequent long-term 

monitoring is the establishment of the Multi-agency Rocky Intertidal Network (MARINe) which started along the Pacific coast in the area of offshore oil development. 

That program has gathered several decades of observations and has grown over the 

years to include more than a dozen partners. Through the addition of numerous new 

partners, the MARINe program has expanded to include the entire west coast from 

Alaska to Mexico and is currently adding new sites on the east coast. The use of 

MARINe monitoring results and processes have been instrumental for a number of 

notable events including the M/V Cosco Bussan oil spill in San Francisco Bay in 

2007 and the closure of the black abalone fishery in Southern California. 

MMS has the responsibility for environmental assessment and environmental research to support offshore energy activities. To carry out these responsibilities, 

MMS works with other science agencies including the National Oceanic and Atmospheric Administration (NOAA), U.S. Fish and Wildlife Service, U.S. Geological Survey (USGS), Environmental Protection Agency, and many other agencies that have 

complementary interests. Frequently, MMS will use the research capabilities within 

another federal agency to meet mission requirements. For example, NOAA performs 

much of the marine mammal research in offshore Alaska to meet MMS scientific 

information needs. Similarly, the MMS utilizes the scientific capabilities of the 

USGS to carry out mission research in Louisiana and California. Our federal partners in turn utilize the body of scientific knowledge that includes MMS funded research to accomplish their mission. For example, much of the MMS marine mammal 

research will be used by MMS and the NOAA National Marine Fisheries Service 

for biological consultations under the Endangered Species Act. On several occasions, 

MMS-managed research has received awards for excellence in partnering from the 

National Oceanographic Partnership Program (NOPP) and the Department of the 

Interior. 
88 

RESPONSES OF WALTER CRUICKSHANK TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Are you able to speak to Mr. Amos’ account of the Eugene Island pipeline spill this past summer insofar as whether it resulted in any environmental degradation such as oiled birds or mammals or fisheries impacts? Did it reach shore? 

Answer. The Eugene Island Pipeline oil spill, which occurred on July 25, 2009, 

was from a Shell pipeline that is regulated by the Department of Transportation 

(DOT). DOT is conducting the investigation of the incident. The Unified Command 

for the Eugene Island Pipeline oil spill announced that clean-up operations were 

completed on August 3, 2009. 

The July 25, 2009 spill from the 20’’ Eugene Island Pipeline released approximately 1,500 barrels (63,000 gallons) of crude oil before it was secured on July 27, 

2009. The actual break was approximately 33 miles offshore and 60 miles southwest 

of Houma, LA. There were no reports of contacts to mammals, birds, fish, other 

wildlife species, or coastal habitats. There were no reported contacts to shore. The 

Marine Spill Response Corporation (MSRC) responded to the spill by applying 

dispersants and skimming surface oil. 

Question 2. Can you talk about the Rigs to Reef program and how it figures into 

the agency’s environmental stewardship priorities? On this point, would you characterize your experience with the impact of oil rigs on fishing to be a positive or negative one? 

Answer. MMS is proud of the Rigs to Reefs program and its place in our environmental stewardship priorities. Natural hard substrate is limited in the Gulf of Mexico OCS region. Oil and gas platforms contribute substantially to local and regional 

abundance of reef habitat and the abundance of reef associated fishes. In many 

areas, platforms also allow the development of numerous species of coral. All offshore platforms, including those in the Rigs to Reefs program, provide protected 

areas from trawling and associated impacts such as bycatch (living creatures captured unintentionally). Coastal states with approved, State specific, artificial reef 

plans can identify offshore areas and sites suitable for artificial reef developments. 

The total number of platforms that have been used in all states’ Rigs to Reefs programs over its entire history is 323 as of 2009 (Alabama 4; Florida 3; Louisiana 215; 

Mississippi 8 and Texas 93). These substantial additional areas of hard bottom habitat result in an overall positive impact to the Gulf of Mexico. MMS works very closely with the states’ artificial reef coordinators to ensure the program is run efficiently 

and provides a benefit to fishermen and the environment without unreasonable impediments to other users or to oil and gas infrastructure and future exploration and 

development. 

Question 3. Can you describe the process at Interior for ranking the environmental sensitivity of coastal areas under the Outer Continental Shelf Lands Act? 

Do you have all the information you need to have completed this exercise in environmental stewardship? Can you provide a status update on this as relates to the 

5-year plan. 

Answer. It would be premature to describe the process for ranking the environmental sensitivity of coastal areas for the 5-year OCS program, as the Department 

has not yet finalized the analysis required by the D.C. Circuit in last year’s Center 

for Biological Diversity case. As required by the Court, the Department’s consideration goes beyond NOAA’s Environmental Sensitivity Index (ESI) data to analyze 

the sensitivity of (shoreline) coastal habitats as well as the sensitivity of offshore 

(marine) resources. 

Question 4. You mentioned your engagement with the President’s Ocean Policy 

Task Force. To what extent has MMS ceded any of its authority over managing the 

OCS energy resources to this interagency commission? Do you think that energy priorities will be lower or higher upon completion of the recommendations? 

Answer. The OCS Lands Act and the Energy Policy Act of 2005 vest the Department with authority and responsibility for mineral and energy development on the 

OCS, in conjunction with other relevant statutes such as the National Environmental Policy Act (NEPA), Marine Mammal Protection Act (MMPA), Coastal Zone 

Management Act (CZMA), etc. The Ocean Policy Task Force intends to provide policy guidance, encourage efficiencies among governmental entities, and provide a better framework for application of existing laws and agency authorities, but it does 

not supersede these laws and authorities. 

Question 5. In soliciting comments for the Chukchi POE application from Shell, 

did any DOI office issue a direct or specific solicitation, apart from the Federal Register, to the North Slope Borough or any other specific entity? 

Answer. The MMS Alaska OCS Region formally solicited comments on the 

Chukchi Exploration Plan (EP) from multiple stakeholders. The MMS made direct 

distribution of the EP to the North Slope Borough, Alaska Eskimo Whaling Commis-
89 

2 Air emissions information requirements for EPs and DOCDs are specified at 30 CFR 250.218 

and 250.249. 

sion, Alaska Beluga Whale Committee, Alaska Eskimo Walrus Commission, Ice Seal 

Commission, Nanuk Commission, Federally recognized tribes, local community leaders and Federal and State agencies. The MMS also posted the EP on the MMS Alaska OCS Region webpage and provided copies of the EP to local libraries in Anchorage and Fairbanks for direct access to the public. MMS also formally notified several environmental organizations that the EP was available for review. The MMS 

offered to conduct government-to-government consultations with Federally recognized tribes and to meet with any interested party. The Native Village of Point 

Hope, the North West Arctic Borough and the Village of Wainwright each requested 

a meeting, which MMS staff attended in person or by teleconference. 

Question 6. Are you aware of any coordination between any DOI office and outside 

environmental organizations in the formulation of official comments or 

rulemakings? 

Answer. MMS does collaborate with other federal, state, tribal and non-governmental organizations (e.g., environmental groups) on many topics, such as developing studies, soliciting input on environmental analyses during public comment periods, and formulating mitigation and monitoring measures. While we would review 

any input from various parties, we independently develop and transmit official MMS 

comments for various governmental actions and do not assist outside environmental 

organizations in the formulation of their official comments. For an action where 

MMS is the main Federal agency, we review any comments from environmental organizations received during the public comment process and consider them during 

the rulemaking process, as we do with any other entity. 

Question 7. What is the average length of time, from application receipt to approval, for MMS to issue an air permit for the Western and Central Gulf of Mexico? 

Answer. MMS does not ‘‘issue a permit,’’ but does require operations to limit air 

pollutant emissions. Air emissions are evaluated and approved as part of an Exploration Plan (EP) or Development Operations Coordination Document (DOCD) submitted to MMS by an offshore operator. 

The legal foundation for the air reporting required in EPs and DOCDs is set forth 

in the Outer Continental Shelf Lands Act (43 U.S.C. 1334(a)(8)).2 ‘‘The regulations 

prescribed by the Secretary under this subsection shall include, but not be limited 

to, provisions—for compliance with the national ambient air quality standards pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) to the extent that activities authorized under this subchapter significantly affect the air quality of any State.’’ 

The Clean Air Act Amendments of 1990 provide that the Secretary of the Interior 

will work with the U.S. Environmental Protection Agency’s (USEPA) Administrator 

to establish requirements to control air pollution in OCS areas of the Gulf of Mexico 

westward of 87o30’ longitude. For sources located in areas under MMS jurisdiction, 

regulations are promulgated by 30 CFR 250 Subpart C. 

The purpose of the EP and DOCD is to determine if proposed activities will comply with applicable United States federal laws and regulations including the Clean 

Air Act; unreasonably interfere with other uses of the area; interfere with or endanger operations on other leases; result in pollution; create hazardous or unsafe conditions; and to determine if proposed activities will cause serious or undue harm or 

damage to life, property, any other mineral deposits (in leased or unleased areas), 

the national security or defense, the marine, coastal, or human environment. 

The contents of an EP and DOCD include, but are not limited to, a description 

of the proposed activities; a description of the drilling unit, if applicable, with brief 

discussion of safety and pollution prevention features; and, for DOCDs, proposed or 

existing structure locations and a description of each proposed piece of infrastructure (including any production equipment to be installed), and a brief discussion of 

safety and pollution prevention features of each item. 

EP and DOCD reporting requirements are promulgated at 30 CFR 250 Subpart 

B and further clarified in Minerals Management Service Notice to Lessees No. 2008- 

G04, Information Requirements for Exploration Plans and Development Operations 

Coordination Documents. 

If an EP or DOCD is accurate and complete when submitted, including air emissions information, the document must be approved or conditionally approved (approved with modifications) within 30 days for an EP (30CFR 250.233) or within 120 

days for a DOCD (30CFR 250.270). The clock does not start until the plan is deemed 

complete by MMS. EPs or DOCDs that are deemed incomplete are sent back for corrections, which usually take 2 to 4 additional weeks. Submission of inadequate or 

inaccurate information in any of the multiple plan reviews within the EP or DOCD 
90 

can require modification of a plan, which slows down the review and approval process. For the period 1991 through 2009, the average time from application receipt to 

approval (including the time to deem plans complete) was 43 days for an EP and 

60 days for a DOCD. The DOCD typically has more information submitted related 

to oil and gas production and transportation facilities and equipment. 

Question 8. Are shorter lease terms, such as the proposed reduction from 10-to7 years and 8-to-5 years, projected to confer any benefit in terms of environmental 

stewardship? 

Answer. The policy proposal for Lease Sale 213 is to shorten primary lease terms 

from 10 to 7 years in 800-1600 meters of water depth in the Gulf of Mexico, with 

extension from 7 to 10 years in the primary term granted in return for commencing 

an exploration well within the new initial 7-year primary term. A similar policy is 

being proposed for leases in 400-800 meters, where 8-year term leases will be shortened to 5 years with extension to 8 years for commencing an exploration well within 

the first 5 years of the lease. However, that second proposed policy change reflects 

a similar existing policy in which 8-year primary term leases are cancelled at the 

end of 5 years if an exploratory well is not commenced within the first 5 years of 

the lease. 

MMS’s internal analysis indicates that industry is already capable of operating 

on these timeframes (see response to next question). One effect of the proposal as 

it relates to 7-year term leases will be to accelerate drilling on some leases that 

would otherwise have been drilled closer to the end of the 10-year primary term. 

Another effect will be to speed up the relinquishment and reoffering of leases that 

otherwise would be held to the end of the 10-year primary term. Because this would 

only affect a narrow band of leases, a reduction or increase of overall production is 

not anticipated. Therefore, MMS does not anticipate negative or positive environmental impacts from this policy proposal. 

Question 9. What evidence is there to prove or strongly indicate that the length 

of existing lease terms is resulting in the U.S. taxpayer failing to derive the maximum benefit from OCS oil and gas development? 

Answer. As proposed in the Proposed Notice of Sale for Central Gulf of Mexico 

OCS Sale 213, the existing lease term of 10 years would be shortened to 7 years 

for leases in water depths from 800 to 1600 meters deep in the Gulf of Mexico, but 

they would receive an automatic 3-year extension provided drilling has started by 

the end of the seventh year after lease issuance. Evidence derived from detailed 

data MMS routinely collects on OCS activity strongly indicates that the evolution 

of capabilities in these water depths have decreased time necessary for exploration. 

In contrast to earlier periods, deepwater leases that have completed their primary 

term in the last 5 years show that nearly all producing leases in 800 to 1600 meters 

of water commenced drilling by year 7. In 800 to 1200 meters of water, 92% of 

leases issued from 1995 to 1999 that have achieved production were found to have 

started drilling by the 7th year of their lease term, up from 33% of those issued 

from 1985 to 1989. The data are similar in 1200 to 1600 meters, where 85% of producing leases issued from 1995 to 1999 were drilled by year 7, up from 25% for 

those issued from 1985 to 1989. Almost all prospective leases that were not drilled 

by year 7 either were extended through unitization or encountered unusual circumstances that led to authorized extensions beyond the 10-year primary term 

through suspensions. Because the unitization and suspension programs handle such 

unusual cases, the primary term does not need to be set to accommodate the exceptional cases. 

The shortened drilling periods will improve taxpayer benefit largely by expediting 

re-leasing and exploration on non-producing leases. In some cases lessees that otherwise would have postponed drilling until near year 10 will find ways to drill earlier. 

Those who do not accelerate drilling will relinquish their blocks sooner so those 

tracts can be reoffered to others who may have different ideas about their oil and 

gas potential. Earlier reoffering will accelerate the receipt of new bids for the relinquished acreage and its evaluation by new lessees. 

Question 10. How are competing uses in the offshore areas dealt with currently 

under existing laws and regulations—does this work and are changes needed? 

Answer. Under existing laws and regulations, MMS is the lead for all energy and 

mineral resources activities on the OCS. Several other federal agencies also have 

jurisdiction over certain aspects of OCS activities. At the lease sale stage, MMS coordinates with those federal agencies along with a number of affected State agencies. This coordination includes, but is not limited to, consultations required under 

the Endangered Species Act with the National Marine Fisheries Service and Fish 

and Wildlife Service; Essential Fish Habitat consultation with the National Marine 

Fisheries Service; and Coastal Zone Management Act consistency determination 
91 

with affected States. In addition, MMS and the United States Coast Guard have 

several Memoranda of Understanding and Memoranda of Agreement regarding our 

respective responsibilities in such areas as oil discharge planning, preparedness, 

and response; incident investigations, floating offshore facilities, civil penalties and 

general jurisdictional concerns. 

For post-lease activity, the number of federal agencies an oil and gas company 

must deal with directly depends on the lease location and type of activity proposed. 

A list of those pertinent federal agencies was previously provided above in reply to 

Chairman Bingaman’s second question. Not every federal agency listed above is involved in the review and approval of every OCS oil and gas proposal, but every proposal does involve consultations with at least a few of these agencies. The MMS 

strives to ensure that its NEPA and other analyses contain all the information needed for decision-making, including information related to compliance with laws and 

regulations outside MMS’ direct purview. Our collaborative processes continue to 

work successfully as they are currently structured under existing laws and regulations. 

RESPONSES OF WALTER CRUICKSHANK TO QUESTIONS FROM SENATOR DORGAN

Question 1. Earlier this year in this committee, I proposed an amendment which 

is one of the primary reasons for the oversight hearing. Through my approach, the 

MMS would be authorized to go through a rulemaking process to issue regulations 

and would consider a range of local and other conditions during that process. In federal waters, the Secretary would establish zones which would determine what kind 

of restrictions would be placed on surface activities. The onus is then placed on individual companies to develop innovative technology solutions in those zones. Renewable projects (i.e. wind turbines offshore) and previously existing oil and gas projects 

would be exempt. I believe that if we could pursue this approach, it is possible to 

deploy innovative technology applications to limit the environmental footprint and 

significantly reduce the visual impact while increasing access to resources. 

Is this the type of approach that could have environmental merits and also allow 

for increased access to hydrocarbon resources near shore in the federal waters? 

Answer. A similar approach is already in use off of Baldwin County, Alabama to 

limit visual impacts per the State’s request. Since 1999, MMS has adopted in each 

annual Central Gulf of Mexico lease sale a lease stipulation that requires consultation when developing plans for fixed structures within 15 miles of the coast of Baldwin County. MMS’s NEPA documents also analyze deferring this area, but have 

found that the stipulation adequately addresses adverse visual impacts. 

The stipulation states that in order to minimize visual impacts from development 

operations on this area, lessees must contact other lessees and operators of leases 

in the vicinity to determine if existing or planned surface production structures can 

be shared. If the lessee cannot formulate a feasible development scenario that does 

not call for new surface structure(s), the operator should ensure that new structures 

are the minimum necessary for the proper development of the block and that they 

will be constructed and placed, using orientation, camouflage, or other design measures in such a manner as to limit their visibility from shore. 

Likewise, the use of newer technological innovations in the Gulf of Mexico now 

allows the use of subsea development projects to ’tie-back’ to existing structures. It 

is possible to forego surface structures in near-shore environments by connecting 

subsea production to structures as far away as 45 miles away for oil and 77 miles 

away for natural gas. The use of this technology also allows for the minimization 

of the number of offshore facilities, reducing multiple use conflicts, and aesthetics. 

This technique also provides policymakers with an option to allow coastal buffer 

zones with no permanent surface structures without putting the oil and gas resources out of reach. 

In the Pacific Region, some leases, particularly those close to shore, contain a stipulation ‘‘all platforms will be an acceptable design, properly camouflaged and subject 

to other conditions to protect aesthetic values.’’ In other cases, mitigation attached 

to the development plan and environmental documents addressed aesthetic concerns. In both cases, these measures result in the use of a paint color anticipated 

to reduce visual impacts. In the latter case, these mitigation measures were coordinated with the U.S. Coast Guard, State of California Coastal Commission, California State Lands Commission, adjacent counties, industry and MMS. 

Question 2. If buffer zones on structures within certain distances from shore are 

implemented, do you have a view on the environmental issues intended to be addressed, and what are the appropriate distances to be identified for such limitations? How would the MMS take this into consideration? 
92 

Answer. Alternatives, including buffer zones, are identified during the public 

scoping process for the 5-Year Program and individual lease sales. All reasonable 

alternatives would then be analyzed in MMS’s NEPA documents. Buffer zones are 

usually proposed with the intention of limiting visual impacts or risk of an oil spill 

contacting shore. In addition, buffer zones are used to protect sensitive areas such 

as critical habitat for endangered and threatened species. The appropriate buffer 

distance to address visual impacts would depend on such things as the type of structures, coastal elevation, and presence of historic properties, while risk of oil spill 

contact with sensitive archaeological and biological resources would depend on prevailing winds and currents, and the presence of any such resources. 

Question 3. Another witness, Dr. Jeffrey Short, Pacific Science Director of Oceana, 

made strong assertions that much more needed to be done in terms of better understanding of the marine ecosystem in order to protect it from serious environmental 

damage. He stated that the U.S. does not have a good baseline record of the original 

state of the environment in the Gulf of Mexico before we started oil and gas operations, so we cannot assess the impact of these activities on the environment in the 

Gulf of Mexico. He indicated that we need to study and monitor ecosystems and 

technologies before projects were able to proceed and that funding needed to be provided for that. 

Answer. The MMS places a high priority on conducting an integrated scientific 

program that develops information on living marine resources and their interaction 

with, and influence by physical and other environmental processes. MMS’s environmental research strategy is developed around an understanding of the energy technologies and the potential nature of impacts they might produce. This focus provides 

the greatest opportunity to successfully develop the scientific information needed to 

mitigate environmental impacts. It is true that many areas of the marine environment have been exposed to impacts from fishing, shipping, naval operations, and in 

some cases, offshore oil and gas development. Baseline environmental conditions are 

constantly changing, but that does not preclude the conduct of scientifically valid 

studies to assess impacts. In the Gulf of Mexico, highly regarded studies published 

in peer-reviewed scientific journals describe the localized impacts that can be measured around drill sites and/or production platforms. MMS sponsored pioneering research of biologic communities on the continental slope in the 1980’s, long before 

the oil industry had moved into these water depths. MMS research led to important 

discoveries of chemosynthetic communities of biological organisms that were subsequently protected through operational regulations. MMS environmental research 

moved into still deeper Gulf of Mexico waters, and many of these studies, in collaboration with federal partners in NOAA and USGS, identified new chemosynthetic 

and deepwater coral communities. This research has informed resource managers 

and has led to additional protections for these deepwater biological communities. 

Follow-on research and monitoring then assesses the effectiveness of the mitigation. As a research strategy, MMS will continue to conduct studies of marine ecosystems in areas that are being considered for development, and it will continue to 

conduct studies throughout the life of the offshore energy development activity. 

Question 4. Is this the type of work that the MMS has authority to do? If so, what 

kinds of research and analysis are underway at the MMS that would respond to the 

concerns of Dr. Short? Do you know of any areas in the world where we do have 

adequate baseline data and where we have been able to measure the impact of oil 

and gas activities? What do these studies show as the impact of oil and gas activities and how concerned should we be about their environmental impact when compared to other activities in the marine environment in other regions of the world? 

Answer. The OCS Lands Act provides MMS with the authority to conduct the research needed to manage offshore energy development in a safe and environmentally sound manner. MMS conducts a broad array of environmental research designed to meet the needs in a particular OCS area. While a general research strategy can be described, the scientific knowledge base and state of OCS activity varies 

from the Gulf of Mexico to the Pacific and from the Atlantic to offshore Alaska. The 

research programs in each of these areas will vary depending on these and other 

factors. The MMS conducts public workshops to give the scientific community and 

stakeholders the opportunity to work with MMS scientists as we develop our research plans. In addition, the MMS has established an independent Scientific Advisory Committee (chartered under the Federal Advisory Committee Act) that provides advice on the Environmental Studies Program research direction and focus. 

This input, numerous reviews by the National Academy of Sciences over the years, 

and publication of scientific findings in peer-reviewed scientific journals, all combine 

to validate the kinds of research and analyses that are undertaken. 

Considerable resources have been allocated towards gathering baseline data in 

each of the OCS areas over the decades. However, MMS data gathering does not 
93 

continue when the prospect of offshore energy development no longer exists. The 

Gulf of Mexico is probably the most studied and well described area in the world. 

In the 1970’s, baseline studies evolved into focused ecosystem studies and monitoring studies. These studies provide a solid basis for the management of potential 

impacts from offshore oil and gas activities. Notably, our early studies of the Flower 

Gardens Banks (now part of the Flower Gardens National Marine Sanctuary) in the 

1970’s evolved to a continuous monitoring program that, decades later, attests to the 

successful management of, and coexistence of, oil and gas activities in proximity to 

one of the healthiest coral reefs in the world. 

While other regions around the world undergo oil and gas development, few have 

been developed under the broad safety and environmental safeguards afforded 

through U.S. regulations. MMS has invested more than $800 million in environmental research since the beginning of the program studying marine life and ecosystem processes. No other program in the world can match the investment and regulatory protections of the United States. Notwithstanding that fact, we do engage 

with colleagues from around the world to learn from their experiences and to share 

our knowledge. For example, we have collaborated on many scientific projects related to offshore oil and gas activities offshore Canada, Norway, Mexico, and Australia. 

RESPONSES OF WALTER CRUICKSHANK TO QUESTIONS FROM SENATOR MENENDEZ

Question 1. Dr. Cruickshank, I am concerned about the offshore activities of 

Seadrill—the operator of the failed rig in the Australia disaster. They operate here 

in the United States and have at least one rig in the Gulf of Mexico. In a recent 

letter to Secretary Salazar, I requested that the Department of the Interior conduct 

a full investigation of Seadrill and its activities in American waters to ensure that 

a similar accident is not repeated here at home. Has MMS independently done anything to examine Seadrill, its activities in US waters or its compliance with US law? 

How is Seadrill’s safety record, and what exactly about the Australian spill makes 

you convinced it couldn’t happen here? 

Answer. The MMS is conducting the requested analysis of Seadrill’s compliance 

and safety record. As mentioned in a response to your letter, we anticipate completing this analysis by the end of February 2010. 

Regulations governing U.S. OCS drilling operations provide that on the U.S 

OCS— 

• The drilling program would have to be submitted to MMS as required in the 

regulations. The program would have to satisfy MMS engineers before it was 

approved by the MMS District Supervisor. 

• The casing would have to be cemented in accordance with the requirements in 

the drilling regulations. 

• The casing would have to be pressure tested to 70% of the minimum internal 

yield for 30 minutes with less than a 10% pressure drop. This test would have 

likely identified the problem with the primary cement job on the Timor Sea 

well. 

• For suspended wells, the operator would have to set a secondary plug in the 

casing as described in the decommissioning regulations . 

• The operation would be inspected by MMS personnel at least once during the 

course of the drilling operations, and all casing, cementing, and testing information would be closely reviewed. 

Each of these requirements separately, and certainly all of them together, should 

have prevented the drilling operations that occurred in the West Timor Sea, as we 

understand them. The Australian Government’s final review of the causes of the 

West Timor spill, however, has yet to be completed. 

Question 2. Dr. Cruickshank, according to statistics compiled by the MMS, there 

have been over 40 spills greater than 42,000 gallons (1,000 barrels) since 1964. During Hurricanes Katrina and Rita alone, some 9 million gallons of oil were spilled 

from offshore and onshore operations.5 Oil is extremely toxic to a wide variety of 

marine species, and as noted by a recent National Academy of Sciences study, current cleanup methods are, ‘‘incapable of removing more than a small fraction of the 

oil spilled in marine waters.’’ Why is it so difficult to clean up oil once it is spilled 

into coastal ecosystems? 

Answer. A primary focus of the MMS regulatory program is spill prevention. MMS 

is also a leader in spill preparedness, response research, and studies to address the 

potential effects of spills on marine and coastal resources. The ability to clean up 

oil varies with each circumstance depending on the product released, location, 

weather conditions and more. MMS requires offshore operators to have the nec-
94 

essary equipment on standby, usually through contracts with oil spill response companies, to respond to a worst case scenario spill. Booms, skimmers, and other response equipment frequently recover substantial volumes of oil given the right circumstances. In the open ocean, any remaining oil will weather and become entrained in the water column and will be diluted by the far greater volume of ocean 

water so as not to raise the oil concentration above natural conditions. 

An oil spill that comes in contact with shore can become entrained in sensitive 

habitats where attempts to remove the oil may cause more damage than the oil. 

Since 1964, only 10 OCS spills have contacted shore; all originated 19 miles or less 

from shore, and only one caused substantial harm to wildlife and habitats (1969). 

Deepwater tracts generate much of the current offshore oil production and are expected to generate more each year. Deepwater tracts are generally 50 or more miles 

offshore, from where it is highly unlikely a spill would contact shore. 

There have been 36 petroleum spills of 42,000 gallons (1,000 barrels) or greater 

from Federal OCS oil and gas activities since 1964. Most of these spills had no recorded contacts to marine species or coastal habitats. Only six of these spills contacted shore, the last of which was in 1998. Most of the contacts were minor, with 

no wildlife contacts recorded and minimal beach cleanup required. The exception 

was the 80,000 barrel Santa Barbara spill in 1969, which had substantial contacts 

to birds and to coastal habitats. Current OCS regulations have far more stringent 

requirements for well casing, which would have prevented the Santa Barbara well 

failure. 

The OCS petroleum spill record has improved greatly over time from the first 15- 

year record of approximately 10,300 barrels produced per barrel spilled (1964-1978), 

to more than 88,400 barrels produced per barrel spilled (1979-1993), to more than 

140,000 barrels produced per barrel spilled (1994-2008) 

The article referenced in the question supporting the Hurricane Katrina and Rita 

spill statistics was published by the Houston Chronicle in November 2005 and was 

written prior to any comprehensive spill statistics being available for Hurricanes 

Katrina and Rita and should be considered preliminary. 

Over 250,000 barrels of oil spilled onshore and in Louisiana State waters during 

Hurricane Katrina. This included nine crude oil spills of 1,000 barrels and greater 

from onshore oil refinery tank farms totaling more than 193,000 barrels. Most of 

the remaining spillage was reported as dispersed during Hurricane Katrina. Over 

22,000 barrels of oil spilled onshore and in Louisiana State waters during Hurricane 

Rita. This included three crude oil spills of 1,000 barrels and greater totaling 10,783 

barrels of which 7,500 barrels were reported recovered. Most of the remaining spillage was reported as dispersed during Hurricane Rita. (Source: Louisiana Department of Environmental Quality, December 2007). 

By far the greatest amount of oil spilled as a result of the hurricanes came from 

facilities not regulated by MMS. An estimated 8 million gallons of oil were spilled 

from coastal oil storage facilities and approximately 50 percent of this was recovered. An additional 1.46 million gallons were spilled onshore or in State waters as 

a result of Hurricane Katrina and none of the oil was recovered. An estimated 0.49 

million gallons of crude oil from eleven onshore or coastal facilities in State waters 

released during Hurricane Rita and approximately 70 percent of this was recovered. 

An additional 45 spills resulting in 0.43 million gallons occurred onshore or in coastal waters as a result of Hurricane Katrina with none of the oil recovered. Finally, 

approximately 3.3 million gallons were spilled from a tank barge, when it struck a 

submerged oil platform that had been damaged during the storms and only 4.8 percent was recovered. 

MMS reported the following petroleum losses from offshore structures during: 

Hurricane Ivan, 4,645 barrels; Hurricane Katrina, 4,729 barrels; Hurricane Rita, 

8,734 barrels; and Hurricanes Gustav/Ike, 5,858 barrels for a total of 23,966 barrels 

(811,482 gallons). Over 1 million gallons were spilled from federal offshore oil platforms and associated pipelines during these storms. The loss of hydrocarbons from 

wells and pipelines was minimized by the successful operation of the safety valves 

that MMS requires to be installed. All OCS facilities in areas threatened by the 

storms’ approach were shut in before the hurricanes so that oil losses were mostly 

limited to the oil stored on the damaged platforms and rigs or contained in damaged 

pipeline sections between the check valves. The hydrocarbons lost during the hurricanes were thoroughly dispersed offshore by the hostile sea conditions, which eliminated the potential for oiling the shores. However, some of the platforms and pipelines damaged during the 2004, 2005, and 2008 hurricane seasons continue to release small volumes of oil, some with short duration releases, and repairs have not 

been fully completed for all facilities and pipelines. These small volumes amounted 

to an additional 1,767 barrels (about 74,000 gallons) through the end of 2009. 
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There were no accounts of environmental consequences resulting from spills from 

OCS facilities that occurred during major hurricanes from 2002 through 2008: 

• no spill contacts to the shoreline 

• no oiling of marine mammals, birds, or other wildlife 

• no large volumes of oil on the ocean surface to be collected or cleaned up 

• no identified environmental impacts from any OCS spills from these hurricanes 

RESPONSES OF WALTER CRUICKSHANK TO QUESTIONS FROM SENATOR SESSIONS

Question 1. Has the Minerals Management Service (MMS) taken a stance on revenue sharing? 

Answer. The Administration has not taken a position on establishing additional 

revenue sharing programs. 

Question 2. MMS announced yesterday that it disbursed $10.68 billion in Fiscal 

Year 2009 for mineral development (oil, gas and coal), but in FY 08 the Department 

of Interior’s MMS distributed $23.4 billion. Could you please explain why there has 

been a significant decline? 

Answer. In the last five years, the Department has disbursed an average of more 

than $13 billion annually. It is important to note that the FY 2008 disbursement 

of over $23 billion was an anomaly due in part to the high prices of oil and gas 

boosting royalties and causing record bonus bids for Outer Continental Shelf leases. 

In FY 2008, MMS disbursed approximately $23.4 billion in total revenues with 

$10.1 billion in bonus bids, $.3 billion in rents and $13 billion in royalties and other 

revenues. In FY 2009, MMS disbursed approximately $10.7 billion in total revenues 

with $1.3 billion in bonus bids, $.3 billion in rents, and $9.1 billion in royalties and 

other revenue. 

Question 3. My state of Alabama received revenues through Fiscal Year 2009 in 

amount of $ 17.2 million, but I noticed that several onshore states specifically New 

Mexico received $388.5 million. In your opinion, wouldn’t allowing revenue sharing 

and additional production off coastal states help with state budget issues? 

Answer. The Gulf of Mexico Energy Security Act established a revenue sharing 

program with four Gulf of Mexico coastal producing states. The MMS allocates and 

distributes the funds annually, based on a formula established under the Act. Congress authorized the States’ use of the funds for mitigation of damage to fish, wildlife, or natural resources; implementation of a federally-approved marine, coastal, 

or comprehensive conservation management plan; mitigation of the impact of OCS 

activities through the funding of onshore infrastructure projects; and the planning 

and administrative costs of such projects. 

Question 4. How can MMS justify its recent announcement to shorten lease terms 

in deepwater Gulf of Mexico, when the Department of Interior Inspector General 

has testified that this could be counterproductive by reducing interest in leases? 

Was there any analysis completed beforehand by MMS to study the impacts this decision could have? 

Answer. As set forth in the Proposed Notice of Sale for Central Gulf of Mexico 

OCS Sale 213, the existing lease term of 10 years would be shortened to 7 years 

for leases in water depths from 800 to 1600 meters deep in the Gulf of Mexico, but 

those leases would receive an automatic 3-year extension provided drilling has started by the end of the seventh year after lease issuance. The shortened period to start 

drilling recognizes the evolution of capabilities in the deeper water depths and the 

decreased time necessary for exploration and infrastructure development. Over the 

last 25 years, industry has become more experienced with deepwater drilling, offshore development technology has improved and infrastructure has spread into the 

deeper waters of the Gulf of Mexico. The number of possible host facilities emerging 

from existing prospects has increased, so more fields will likely be produced by less 

costly tie-back arrangements. Consequently, parts of the deepwater Gulf basin can 

reasonably be explored and developed in less than a decade. 

Analysis of data accumulated by MMS as part of its duties to manage the OCS 

confirm that industry has become able to identify and drill the prospective leases 

in up to 1600 meters of water depth in the Gulf in less than 10 years. In contrast 

to earlier periods, deepwater leases that have completed their primary term in the 

last 5 years show that nearly all producing leases in 800 to 1600 meters of water 

commenced drilling by year 7. In 800 to 1200 meters of water, 92% of leases issued 

from 1995 to 1999 that have achieved production were found to have started drilling 

by the 7th year of their lease term, up from 33% of those issued from 1985 to 1989. 

The data are similar in 1200 to 1600 meters, where 85% of producing leases issued 

from 1995 to 1999 were drilled by year 7, up from 25% for those issued from 1985 

to 1989. 
96 

These data show that most leases not drilled by year 7 were eventually relinquished undrilled, while the relatively few leases drilled after the 7th year were almost invariably relinquished, presumably because those wells did not result in the 

discovery resources worth developing. Almost all prospective leases that were not 

drilled by year 7 either were extended through unitization or confronted unusual 

circumstances that led to authorized extensions beyond the 10-year primary term 

suspensions. Because the unitization and suspension programs handle such unusual 

cases, the primary term need not deal with those kinds of productive leases. 

Question 5. Secretary Salazar has made several decisions that has made it increasingly difficult for producers to supply domestic oil and natural gas and increase 

energy security. Secretary Salazar has repeatedly stated that the Obama Administration is not ‘‘anti-oil and gas,’’ yet when it comes to Interior’s onshore and offshore 

natural gas and oil program, the record suggests otherwise. The 2010-2015 5-year 

plan, as of today, is still stuck at Interior and Secretary Salazar is indicating that 

whatever revised plan comes out will have to go through additional public comment 

time as well as resubmission to DC Circuit. You have been with the agency for at 

least 4 other 5 year plans. Why is this particular plan taking so long to become 

final? 

Answer. The 2007-12 program is being revised to meet the mandate of the U.S. 

Court of Appeals for the D.C. Circuit, which found fault with the program developed 

by the prior Secretary June 2007. The Court found that in using the NOAA Environmental Sensitivity Index that addresses shoreline/coastal habitats only, the Department had failed to consider the relative environmental sensitivity of the entirety 

of ‘‘ the outer Continental Shelf’’ of the different areas, as required by section 18 

of the OCS Lands Act. The Department formed a team of well-qualified scientists 

and other subject matter experts that conducted a more complete environmental 

sensitivity analysis. The Secretary is considering the new information along with 

the existing information and analysis that was either upheld by the court or not 

challenged, including the Final EIS, to make the necessary decisions under the Act 

to balance the potentials for environmental damage, discovery of oil and gas, and 

adverse impact on the coastal zone. In accordance with the Government’s petition 

to the Court, the Preliminary Final Program will be announced for public comment 

and submitted to the President and Congress, before being finally approved. It 

should be noted that, in response to a petition for reconsideration filed by Secretary 

Salazar, the Court limited its order to three areas of the Alaska OCS, so that other 

sales included in the 2007-2012 program are proceeding without awaiting the curative work.. The last sale was Western Gulf of Mexico Sale 210 held in August of 

2009. The next proposed sale is Central Gulf of Mexico Sale 213 scheduled for 

March 2010. 

In mid-2008, the previous Administration began preparation of a 5-Year Program 

and issued a Draft Proposed Program for 2010-2015 on January 16, 2009 with a 60- 

day comment period. The Secretary extended the comment period an additional 180 

days and held four regional meetings to allow for greater public input. Over 530,000 

comments were received and are being summarized and considered for the next decisions, beginning with the announcement of public meetings for scoping issues for 

preparation of a draft EIS. The current program does not expire until June 30, 

2012. Accordingly, the preparation process of a new program does not affect sales 

in the current program for 2007-2012. 

Question 6. Has Carol Browner, Energy Czar, been briefed in regards to the 5 

year plan and has she had any input in deciding to move forward? 

Answer. MMS has not briefed Ms. Browner. 

Question 7. The oil and gas industry directly and indirectly employ 9.2 million 

people, so could someone explain to me why with double digit unemployment numbers are we not moving forward with increasing domestic production and employ individuals here at home? 

Answer. President Obama expects the Department of the Interior to make significant progress toward a new energy future, with attention to responsible domestic 

production of conventional energy resources as well as a strong new emphasis on 

renewable energy production and transmission. We are delivering on this task. 

Since January 20, 2009, we have offered tens of millions of acres of onshore and 

offshore lands for oil and gas leasing, adopted a new framework for renewable energy development in the OCS, and expedited the review of solar, wind, and geothermal energy projects on public lands. These actions will create more supplies of 

conventional and renewable domestic energy, leading to more jobs. 

Question 8. In total, the OCS development has generated $190 billion in federal 

revenue from bonus bids and royalty payments. Its puzzles me with record breaking 

deficit numbers, why the 5 year plan for OCS is getting delayed when it could 

produce federal revenues. Does anyone have an opinion on this? 
97 

Answer. The Department is currently operating under the existing OCS Leasing 

Program, 2007-2012. While Secretary Salazar did extend the comment period last 

February for an out-of-cycle Draft Proposed Program, which the previous Administration released on January 16, 2009, the Department expects to issue an approved 

Final Program and Final EIS, with a schedule of offshore lease sales to allow for 

activities to be conducted in an environmentally safe and operationally sound manner, prior to the scheduled expiration of the current program. 

Question 9. What is the role of the National Oceanic and Atmospheric Administration (NOAA) in OCS development? NOAA Administrator Lubchenco sent a letter to 

MMS dated September 21, 2009, which also appeared the LA Times commenting on 

the OCS proposed 5 year plan-2010-2015. However, NOAA later claimed it was an 

unofficial letter. How is MMS bound or inclined to react to this letter’s contents? 

Answer. During the 5-Year Program preparation process, comments are solicited 

three separate times, the initial Request for Information, the Draft Proposed Program and the Proposed Program. In addition to public comment, pursuant to statutory requirements, MMS specifically solicits review and comment from Governors 

and other Federal agencies, including NOAA. On September 30, 2009, NOAA sent 

a follow-up letter clarifying that their earlier letter was intended to provide informal 

comments to start a dialogue between the agencies on a variety of issues. The Department has had a long-standing relationship with NOAA and their highly-respected scientists and other experts. The Department looks forward to continuing 

this relationship and pursuing this dialogue with NOAA throughout the entire OCS 

process. MMS is not bound by NOAA’s comments, except to the extent that NOAA 

is providing an official position on a mandate under NOAA’s authority that requires 

certain actions or responses from MMS, but will give careful consideration to its recommendations as well as those of other commenters. 

Question 10. How many agencies does an oil and natural gas company have to 

deal with to produce from a federal offshore lease? Does this number of different 

and competing bureaucracies make operations in the OCS more efficient or less efficient? 

Answer. While MMS is the lead for all energy and mineral resources activities on 

the OCS, several other Federal agencies also have jurisdiction over certain aspects 

of OCS activities. At the lease sale stage, MMS coordinates with several federal and 

state agencies. This coordination includes, but is not limited to, consultations required under the Endangered Species Act with the National Marine Fisheries Service and Fish and Wildlife Service; Essential Fish Habitat consultation with the National Marine Fisheries Service; and Coastal Zone Management Act consistency determination with affected States. 

For post-lease activity, the number of Federal agencies an oil and gas company 

must deal with directly depends on the lease location and type of activity proposed. 

In addition to MMS, the following Federal agencies may also have jurisdiction over 

an individual proposal: 

• Department of Defense (including the U.S. Army Corps of Engineers) 

• Department of Transportation (including U.S. Maritime Administration) 

• Environmental Protection Agency 

• Federal Aviation Administration 

• Federal Energy Regulatory Commission 

• National Aeronautics and Space Administration 

• National Marine Fisheries Service 

• National Park Service 

• Fish and Wildlife Service 

• U.S. Coast Guard 

While not every Federal agency listed above is involved in the review and approval of every OCS oil and gas proposal, every proposal does involve at least a few 

of these agencies. The magnitude of this involvement ranges from receipt of notifications to issuing permits. 

Because MMS is the lead for OCS oil and gas activities, MMS considers the overall proposal, while other Federal agencies may look at one aspect of the proposal. 

These agencies have various specialties that in many cases can bring forth pertinent 

information more efficiently than one or two agencies could. It is not the number 

of agencies, but rather, how they coordinate and cooperate that makes the difference 

in efficiency. MMS strives to ensure that its NEPA and other analyses contain the 

information needed for decision-making, including information related to compliance 

with laws and regulation outside MMS’ direct purview. MMS and other Federal 

agencies have worked together and will continue to work together to promote the 

efficiency of the permitting process for OCS oil and gas activities. 
98 

RESPONSES OF DAVID RAINEY TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. The Committee heard testimony about the offshore infrastructure necessary to support offshore oil and gas production and to bring the product onshore. 

Please state the extent to which your company typically is involved in the development, construction or maintenance of this infrastructure. If you do not typically 

handle this directly, please indicate the extent to which you are involved with the 

entities who are responsible for this infrastructure. 

Answer. BP currently operates eight deepwater projects in the Gulf of Mexico. In 

some cases, BP owns pipeline capacity to bring oil and gas production to shore and 

in others, we utilize existing capacity owned by other producers or pipeline operators. The development, construction and maintenance of the infrastructure required 

to support offshore oil and gas production is an integral part of BP’s business. BP 

recently completed the delivery of a series of five new developments in the deepwater Gulf of Mexico, they included: Mad Dog, Holstein, Nakika, Atlantis and 

Thunderhorse. As we proceeded with the development of these projects, we were 

also engaged in the installation of the critical pipeline infrastructure to bring the 

oil and gas produced from these facilities to shore. BP undertook these investments 

because there was no existing capacity to bring these volumes to shore. These collective investments are called the Mardi Gras Pipeline Transportation System. The 

project transports production from the five major deepwater Gulf of Mexico projects 

previously mentioned and also transports 50 percent of all current deepwater Gulf 

production at depths of more than 7,000 feet. This transportation system consists 

of five main lines which total 490 miles—Okeanos (100 miles), Proteus (70 miles), 

Endymion (90 miles), Caesar (115 miles) and Cleopatra (115 miles)—and is the 

highest capacity deepwater pipeline system ever built. The Mardi Gras system is 

able to move more than one million barrels of crude and 1.5 billion cubic feet of natural gas per day. This project is but one example of the investment BP has made 

and continues to make in the safe and environmentally responsible exploration, development, production and transportation of offshore oil and gas resources to consumers and businesses in the United States. 

Question 2. The Committee also heard testimony to the effect that the Minerals 

Management Service’s authority ends ‘‘at the water’s edge.’’ Please state your understanding of the various government entities—federal, state, or local—responsible for 

permitting, oversight, or spill response related to the offshore infrastructure necessary to support offshore production or to bring the product onshore. 

Answer. The Department of Interior, through the Minerals Management Service, 

is charged with implementation of the OCS Lands Act. Many other agencies regulate activity on the OCS, including a number of federal and state agencies responsible for implementing laws and regulations relating to the protection of the environment and marine life. These laws, and the agencies charged with their oversight, 

are able to assure adequate oversight and rigor with respect to safety and the environment on the OCS. 

Among the laws designed to address those concerns are: Coastal Zone Management Act, National Environmental Policy Act, Rivers and Harbors Act, Clean Water 

Act, Oil Pollution Act, Clean Air Act, Noise Pollution Control Act, Comprehensive 

Environmental Response, Compensation, and Liability Act, Resource Conservation 

and Recovery Act, Endangered Species Act, Marine Mammal Protection Act, Migratory Bird Treaty Act, Magnuson-Stevens Fishery Conservation and Management 

Act, National Fishing Enhancement Act, as well as acts designed to protect historical and ecologically important resources, including the National Marine Sanctuaries 

Act, Antiquities Act, Abandoned Shipwrecks Act, Archeological Resources Protection 

Act, and National Historic Preservation Act. 

In addition to the MMS, other federal agencies and departments having influence 

on operations on the OCS are: Department of Transportation, Department of Homeland Security (Customs and Border Patrol, U.S. Coast Guard), Department of Commerce (National Oceanic and Atmospheric Administration, National Marine Fisheries Service), Department of Interior (Fish & Wildlife Service), Army Corps of Engineers, Federal Energy Regulatory Commission, Environmental Protection Agency, 

Department of Labor, Occupational Safety and Health Administration. 

State agencies involved in OCS operations include: Departments of Natural Resources, Offices of Conservation, Departments of Environmental Quality, State Mineral Boards, State Land Offices, Railroad Commissions, and various local government entities. 

Question 3. The Committee heard testimony regarding oil spills that occurred during severe storms in the Gulf of Mexico from onshore oil and gas infrastructure that 

supports offshore production—refineries, pipelines, and tanks required to receive 

process, store and distribute oil and gas from offshore fields. Please describe your 
99 

company’s involvement in developing and maintaining this onshore infrastructure, 

and your understanding of the governmental entities responsible for permitting, 

oversight and spill response for this infrastructure. 

Answer. BP is involved in the production and transportation of oil and gas from 

onshore facilities to onshore refineries and natural gas processing facilities. Where 

we have owner and operator positions, we are accountable for the maintenance of 

these facilities. All onshore facilities are regulated by state and federal pipeline 

transportation authorities, as well as environmental agencies. 

All pipelines operated by BP which deliver oil and natural gas from offshore facilities to onshore locations are equipped with high and low-pressure sensors. In the 

event of a change in pipeline pressure beyond a specified set point, the pressure sensors will trigger an alarm to the facility operator and/or shut down the pipeline. 

When alerted of a potential pipeline emergency BP will first shut down the operation and investigate the cause including ensuring that the pressure sensing equipment is not malfunctioning, and then will visually observe the pipeline, if possible, 

to determine the source. If the source is not within observable range, BP will contact the sending and receiving facilities to determine the abnormality. In the event 

a release is discovered, the BP Pipeline Response Plan with its predetermined response capabilities will be activated. 

Question 4. BP has recently reported a spill from a pipeline that serves Prudhoe 

Bay in Alaska. Please describe the cause of this spill and state which governmental 

entities are involved in regulating that pipeline and in assisting in the spill response. Please indicate whether there is any difference between the pipeline infrastructure involved in that spill and the onshore infrastructure that is utilized to 

transport oil produced offshore. 

Answer. On November 29 while performing routine rounds, a BP operator discovered an oil leak on an 18 inch oil production line to its Lisburne Production Center 

(LPC). Workers have identified the specific point of the leak. It is a rupture, roughly 

24-inches long, running lengthwise on the bottom of the 18-inch diameter pipe. The 

rupture, by visual inspection, appears to have been caused by overpressure in the 

pipeline, linked to ice forming inside the pipe. Large ice plugs have been identified 

on both sides of the leak. The investigation into the incident continues, and is expected to conclusively determine the cause. 

The pipeline in question is regulated by the State of Alaska through the Department of Natural Resources, the Department of Environmental Conservation and the 

Alaska Oil and Gas Conservation Commission. The response to the incident is being 

managed through a Unified Command structure. The Unified Command is comprised of BP, the Alaska Department of Environmental Conservation, the North 

Slope Borough and the US Environmental Protection Agency. The US Coast Guard 

has also participated. 

The design of every pipeline system is unique to its specific circumstances and 

needs. Each design takes into consideration items such as the type of service (full 

or partially processed oil, multi-phase production, water, gas, etc), the properties of 

the oil produced (e.g. SPE specific gravity, paraffin content, etc.), operating pressures, fluid temperatures, and external temperatures. In addition, pipeline construction, control and monitoring technology continues to evolve and is applied as applicable to each project. 

RESPONSES OF DAVID RAINEY TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Can you amplify for me your concerns about domestic energy production and, if regulatory uncertainty and overly burdensome litigation continues to 

stall development, what we can expect to see in terms of driving energy jobs and 

production overseas? Feel free to answer in numbers of actual jobs and numbers of 

barrels of oil, or percentages, whichever is available. 

Answer. As a company involved in many aspects of energy development—wind, 

solar, biofuels, oil, natural gas, and shale gas—we remain very concerned about the 

impact that litigation is having on US energy development. No form of energy is 

immune; wind is now seeing significant development challenges just like oil and 

natural gas. Recently, the industry has seen challenges to seismic acquisition programs, the MMS Five-year leasing program and other project specific matters. BP 

is intimately familiar with ‘‘public challenges’’ (i.e. protests, challenges or litigation) 

involving BP America Production Company. These challenges have the potential to 

affect oil and gas leasing and development decisions made by the United Stats Department of the Interior, Bureau of Land Management: San Juan Citizens Alliance 

v. Norton (United States Court of Appeals for the Tenth Judicial Circuit); San Juan 

Citizens Alliance v. Stiles (United States District Court for the District of Colorado); 
100 

and Biodiversity Conservation Alliance v. Bureau of Land Management (United 

States District Court for the District of Wyoming). 

In additional to litigation, BP is also concerned about the cumulative effects of 

others policy proposals, including higher taxation, legislative initiatives, and proposed regulatory changes on the oil and gas industry. It is true that increased level 

of uncertainty brought about by these multiple policy initiatives does not enhance 

the attractiveness of the US. We believe the result of increased uncertainty could 

lead to reduced investment, which will mean less energy production, fewer jobs, 

lower revenues to state and federal treasuries, etc. 

Question 2. When evaluating offshore oil and gas development opportunities in 

nations outside the U.S., what are some of the main factors a company might take 

into account when assessing the attractiveness of the investment climate? 

Answer. Key factors that companies look for when assessing the attractiveness of 

an area for long term investment include: economic attractiveness and the ability 

to make a return on the investment for shareholders, historical fiscal stability, and 

stable regulatory regimes. Other factors that also are assessed include: 

• Level of technical risk—the ability to find and develop the resource 

• Technical challenges such as water and reservoir deeper, pressures, temperatures. 

• The attractiveness of the opportunity (size of the opportunity, ease of developing, will new technologies be required, etc.) 

• Fiscal arrangements—for example in some Production Sharing Agreements, 

which are popular outside the US, countries allow companies to recover capital 

investment before applying royalties, taxes, etc. 

• Upfront capital investment required by BP before starting to receive money 

back. 

• Amount of capital required 

• Type of fiscal regime and the level of complexity (federal vs. state, a 3 x 3 mile 

block, or a 30 x 30 miles block 

• Progressive or regressive tax structures 

Question 3. When we talk about environmental stewardship on a global level, 

knowing what we know about the U.S. program, is it better or worse for the world’s 

environment when the U.S. adds to its environmental restrictions things like shorter lease terms and heightened regulatory burdens? 

Answer. The OCS has been safely and reliably producing oil and natural gas for 

the nation for over 50 years. The current regulatory structures and lease terms have 

served the US Government and industry well. Stable fiscal, regulatory and leasing 

policies are important to sustainable oil and natural gas development which help 

the nation meet its goals for energy and economic security. 

We would be concerned about the creation of additional regulation that duplicates 

current practices of Federal and State governments and would not add value or enhance the consultation that already takes place between the various government 

agencies, oil and gas companies and other stakeholders. Onerous regulation and bureaucracy would discourage companies from investing in the United States versus 

elsewhere, reduce government revenues and opportunities for jobs related to our industry’s activities, and also have potential overall negative impacts on the environment because we would likely import more oil from other countries that may have 

less stringent environmental standards. 

Stringent regulatory oversight in the US helps maintain environmental performance. Offshore operators operate under 17 major permits and must follow 90 sets 

of federal regulations. 

In accordance with National Environmental Policy Act (NEPA), the Minerals 

Management Service prepares environmental documents on lease sales and other 

major exploration and production related activities to be informed on environmental 

consequences of their decisions. For example, environmental impacts of seismic acquisition in the OCS are addressed in Environmental Impact Statements. Mitigation 

and monitoring requirements are determined during consultation processes with US 

Fish and Wildlife, National Marine Fisheries Service and state Coastal Zone Management agencies. 

The MMS strictly governs well drilling programs. The policies followed by the industry and MMS regulations ensure that wells on the US OCS are cased, cemented, 

protected with internal plugs and monitored to prevent problems during drilling of 

wells. The United States has the most effective oil spill prevention and response regime in the world. The OCS leases produce about 1.4 million barrels of oil per day. 

MMS calculates that since 1980 less than 0.001% of the oil produced in the OCS 

has spilled. Natural seepage of oil from the ocean floor is much greater. 
101 

Industry’s performance during Hurricanes Katrina and Rita demonstrated the 

success of the environmental protection built into offshore operations. MMS estimates 3,050 of 4,000 Gulf platforms and 22,000 of 33,000 miles of pipelines were 

in direct paths of the storms. About 115 platforms were destroyed and over 50 others damaged. There was no loss of life and there were no significant oil spills from 

OCS facilities. 

In addition, Federal lease sales include a 5 Year plan with both draft and final 

environmental impact statements and solicitation of public comment no fewer than 

three times. The Federal Lease Sale planning process is public lengthy and elaborate. 

We are very concerned about reducing lease terms and in a letter to Mr. Marshal 

Rose, Chief, Economics Division, Minerals Management Service, on November 24, 

2009, BP urged the Minerals Management Service to reconsider its proposal to reduce lease terms in oil and gas Lease Sale 213 for the Central Gulf of Mexico Planning Area to be held March 17, 2010 (letter is attached herein). Stable and predictable leasing structures have encouraged significant investments which have led to 

a dramatic increase in production in the past decade. Today the GoM accounts for 

almost one quarter of the oil produced in the United States. Key to the success has 

been a stable leasing program, including lease terms that do not change from one 

sale to another. 

We believe that the proposed reduction of lease terms could produce serious unintended consequences. The proposal will likely impact the overall attractiveness of 

the GoM in comparison with other areas around the world. If the region becomes 

less attractive for investment, this will result in reduced revenues to the US. Furthermore, limiting the terms of leases in water depths of up to 1600 meters likely 

will result in the drilling of fewer exploration wells. We also believe that the proposed changes could result in production of less oil from fewer deepwater projects, 

not more. This will cause the US to import more oil from other locations where environmental laws are less stringent. The US balance of trade would also be negatively 

impacted with fewer jobs created and US energy and national security could be undermined. 

Policies that drive companies to drill additional wells merely to retain leases or 

extend shortened lease terms will result in a waste of resources simply for the purpose of extending the term of the lease. This is inconsistent with the Congressional 

declaration of policy found in the Outer Continental Shelf Lands Act, particularly 

Congress’ stated policy of ‘‘. . .expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of 

competition and other national needs. . .’’ This could lead to inefficiencies in the 

GoM drilling sector and unnecessary environmental risks. 

Due in large part to advances in seismic imaging, deepwater drilling technology 

and production systems technology, the industry is able to explore previously inaccessible areas of the Outer Continental Shelf. New supplies are harder to find, more 

difficult and more expensive to extract and take much more time and resources of 

all kinds to bring online, not less. As a result, we need a more flexible leasing program to support safe and reliable oil and gas development in the US OCS, not one 

which is more restrictive. 

Question 4. While EIA has said that increased domestic offshore oil and gas production would not result in meaningful energy price differences for Americans, do 

you think that a major ramp up of development in the Atlantic, Pacific, Eastern 

Gulf, and Alaska OCS would send a market signal that could, in fact, affect world 

price of oil? 

a. Is the analysis the same for natural gas prices as oil, even though natural 

gas is not based on a world price? 

Answer. The market impact of developing areas of the OCS currently closed to 

development would ultimately depend on the volumes of oil (and natural gas) discovered and produced. Based on official data, the National Petroleum Council estimated in 2007 that undiscovered, technically recoverable resources in Federal OCS 

moratoria areas amounted to 17.8 billion barrels of oil and 76.5 Tcf of natural gas, 

which the NPC estimated could support production by 2025 of 1 Mb/d and 3.8 bcf/ 

d, respectively. (NPC Hard Truths, tables 2-12 and 2-13) 

New discoveries could begin to impact prices even before production started if 

they contributed to changing market expectations of short-and long-term future supply availability. Moreover, the market impact could be amplified if opening OCS 

acreage to development were part of a larger energy policy package aiming to increase domestic production, slow demand growth, and increase the flexibility of the 

US and global economic systems to deal with changing market circumstances. The 
102 

market impact would also be affected by the reactions of consumers and producers 

alike to the changing supply prospects signaled by such an opening. 

While there is not an integrated global natural gas market, regional markets have 

become increasingly linked in recent years. And US natural gas prices would be 

likely to efficiently reflect the market impact of any new supplies that resulted from 

a lifting of OCS moratoria. 

Question 5. Senator Menendez indicated that not only would price be unaffected 

by increased domestic offshore drilling, but that ‘‘production’’ would be unaffected 

by increased domestic offshore drilling. Is it accurate to say that increasing production would have no effect on energy security? 

Answer. The market impact of increased domestic offshore drilling would ultimately depend on the volumes of oil (and natural gas) discovered and produced. It 

is true that oil is a global market—and the US natural gas market has become more 

linked to other regional gas markets—so developments here must be assessed in a 

global context. That said, an increase in domestic oil and natural gas production 

that resulted from an increase in offshore drilling would be likely to have an impact. 

The extent of that impact would depend on the additional volume of oil and natural 

gas produced; the impact on market perceptions about short-and long-term supply 

availability; and the reactions of other market participants to these changes. 

Given the global nature of the oil market—and the increasingly linked nature of 

natural gas markets—import independence would not totally isolate the US from 

energy supply disruptions abroad. However, increased domestic production would 

benefit the economy by creating domestic jobs and by reducing the trade deficit. The 

National Petroleum Council estimated in 2007 that opening Federal OCS moratoria 

areas to development could attract a cumulative total of $98 billion in new investment by 2025; create more than 130,000 (direct) jobs; raise $41 billion in federal 

royalties and $28 billion in federal income taxes; and reduce the trade deficit by 

$145 billion. (NPC Hard Truths, table 2-13) 

Question 6. Environmental stewardship has improved through directional drilling 

and subsea tiebacks, among other improvements, as I understand it. Can you describe your environmental record in terms of exploration, development, and production for both Alaska and the Gulf of Mexico? 

Answer. The record of BP and the industry when viewed through a historical perspective is one of extraordinary success both in the Gulf of Mexico and Alaska. 

While we have had incidents, our objective and aspiration is to have none. Any release of oil from our facilities is unacceptable. Operations today include regulatory 

requirements for blow-out preventers and also include multiple technological and 

mechanical redundancies to ensure that releases do not occur and the environment 

is protected. In addition, inspection and maintenance programs ensure that facilities 

are regularly monitored to prevent incidents and releases from occurring. 

Question 7. Seismic data acquisition has also improved over the years. Please describe any environmental benefit that may be conferred as a result, and feel free 

to discuss any additional benefits to the OCS program through this technology. 

Answer. Seismic imaging allows us to predict the presence of hydrocarbon reservoirs below the sea bed. BP’s Wide Azimuth Towed Streamer (WATS) and Ocean 

Bottom Node technologies involve truly three-dimensional seismic acquisition and 

help in improvement of imaging below salt and other complicated geology. These acquisition technologies have been adopted industry-wide in the Gulf of Mexico. Additionally, improvement in seismic imaging in a producing field over time helps in 

monitoring fluid movement. As a result, we as an industry will be more efficient, 

drill fewer wells, and have less impact on the environment as we become better at 

predicting the presence of oil and gas in the subsurface. 

This ability to more clearly see the reservoir increases drilling success. Fewer 

wells drilled to find and develop a reservoir lead to incrementally less emissions per 

barrel of oil produced from drilling and its logistical support operations. That means 

less discharges to air and water and fewer solid wastes. And energy efficiency per 

barrel of oil produced is improved. 

Increased seismic success in the OCS results in more barrels of oil and gas produced domestically which can have environmental benefits. This provides energy 

closer to the end user reducing air emissions and fuel consumption from transporting imported oil. This lessens the carbon footprint for the same barrel of oil and 

risks from transporting oil via tankers. 

Furthermore, BP has developed the attached OCS resources assessment document 

which we feel will assist policy makers in trying to understand the issues government and industry should consider as it contemplates opening new areas. 

Question 8. How are competing uses in the offshore areas dealt with currently 

under existing laws and regulations—does this work and are changes needed? 
103 

Answer. The Minerals Management Service process has proven to be an effective, 

deliberate public process that provides area residents and other users of the OCS 

with extensive opportunities for comment and consultation. 

• Draft and final environmental impact statements are prepared, soliciting public 

comment. 

• MMS holds scoping sessions and public hearings in local communities during 

the stages in the lease sale planning process. 

• These are supplemented with numerous formal and informal contacts and consultations with various stakeholders. 

• Effective multiple-use planning continues when leases are awarded as companies seek approval for exploration plans, consulting with potential affected communities. 

Policy needs to allow for true multiple uses, encourage cooperative efforts that engage all stakeholders, including industry and commercial users, and consider all 

benefits that the United States and its communities derive from oceans, lakes and 

coasts. 

National policy should be built on extensive region and local stakeholder investment already in place. For example, BP already participates in a number of voluntary efforts with stakeholders in areas it operates including (but not limited to): 

• Numerous consultation and coordinated research efforts with communities and 

sustenance resource users in Alaska; 

• Participation in the Gulf of Mexico Foundation, founded to help protect the 

health and productivity of the Gulf; 

• And the SERPENT Project which facilitates scientific research with academia 

using industry resources. 

All oil and gas development projects in the OCS go through a permitting process 

that involves multiple agencies at the local, state, and federal levels. Nearly every 

state and federal permit process requires, at a minimum, public notice. Direct consultation with communities and stakeholders is an agency requirement for more 

complex projects, including those requiring an environmental impact statement. 

For example, in Alaska, BP’s development projects require approvals from the 

Borough’s Planning Department, Planning Commission and Assembly and this also 

includes consultation with key communities and subsistence hunters. BP Alaska’s 

Liberty project provides a recent example of the extensive nature of these consultation requirements. In order to develop the Liberty field, the company was required 

to obtain over 25 major permits. These include: federal permits (e.g., U.S. Army 

Corps of Engineers wetlands fill, U.S. Fish and Wildlife Service marine mammal authorization, and U.S Environmental Protection Agency camp wastewater permit), 

state permits (e.g. Alaska Department of Natural Resources land use and water use 

permits, Alaska Department of Environmental Conservation air quality permit) and 

Borough permits (rezoning and master plan approval). For each of these there was 

a formal public consultation requirement as part of the permit approval process. 

This included public notice, public meetings, and federal and state government consultations. 

BP takes a proactive role in this consultation. In the case of the Northstar EIS 

process, we recognized the critical role the Borough would have in overall project 

review, and we insisted the Borough be involved in the planning and preparation 

of the EIS for Northstar by making them a cooperating agency. In designing our 

environmental marine mammal monitoring, BP works closely with the Borough with 

an extensive peer-review process lasting several days. Along with federal agencies 

such as the Minerals Management Service and the National Marine Fisheries Service, the Alaska Eskimo Whaling Commission, individual hunters and Borough staff 

are very involved in these meetings and offer very detailed comments. 

Borough officials have ongoing access to our facilities and periodically meet with 

BP on matters relating to Borough jurisdiction and concern. Planning Commission 

members are invited to visit the field and are regularly updated on activities and 

issues. BP also goes beyond the required legal or regulatory requirements for consultation and pursues a healthy, ongoing working relationship with the North Slope 

community. Some examples are: 

• Since the mid 1980s when BP has had a need to conduct any activities in offshore waters during later summer and fall, BP has negotiated annual Conflict 

Avoidance Agreements with the Alaska Eskimo Whaling Commission and key 

whaling captains associations of villages closest to our activities. The CAA is 

an agreement to minimize the potential for conflicts and negative impacts be-
104 

tween subsistence hunters and industry operators and includes mutually agreed 

upon mitigation measures. 

• BP shares scientific data with the Borough and participates in scientific working groups. 

• A company policy (‘‘The Good Neighbor Policy’’) designed to mitigate the potential effects in the event of a large offshore oil spill related to the Northstar facility 

RESPONSES OF DAVID RAINEY TO QUESTIONS FROM SENATOR DORGAN

Question 1. Earlier this year in this committee, I proposed an amendment which 

is one of the primary reasons for the oversight hearing. Through my approach, the 

MMS would be authorized to go through a rulemaking process to issue regulations 

and would consider a range of local and other conditions during that process. In federal waters, the Secretary would establish zones which would determine what kind 

of restrictions would be placed on surface activities. The onus is then placed on individual companies to develop innovative technology solutions in those zones. Renewable development (i.e. wind turbines offshore) and previously existing oil and gas 

projects would be exempt. I believe that if we could pursue this approach, it is possible to deploy innovative technology applications to limit the environmental footprint and significantly reduce the visual impact while increasing access to resources. 

Given your company’s experience with projects in other regions and the testimony 

that you have presented, do you believe that this is a concept that you could support? 

Answer. BP fundamentally believes that it is possible to deploy innovative technology applications to limit environmental footprints and reduce visual impacts 

while increasing access to resources. BP supports a pragmatic approach to offshore 

energy development. Our experience—at Wytch Farm, in the environmentally sensitive Poole Harbor area of southern England and the Liberty Project in Alaska— 

clearly demonstrates that these objectives can be achieved through innovative technology solutions. 

Question 2. The extended reach drilling from onshore as a part of the Poole Harbor/Wytch Farm Field in the U.K. seems particularly interesting to me. You have 

effectively been able to use technology to drill 11 kilometers offshore in a very ecological sensitive location. As you explain, over 100 wells have been drilled so far. 

Answer. Wytch Farm has been developed by BP to be Western Europe’s largest 

known onshore oil field in one of the most environmentally sensitive areas of the 

UK. It is an Area of Outstanding Natural Beauty, featuring: Sites of Special Scientific Interest (SSSI), Special Protection Areas, World Heritage Coastline, Ramsar 

Sites (designated wetlands of international importance), National Trust land, National Nature Reserves. 

Development has been achieved through close co-operation and openness with the 

surrounding communities. Local liaison committees were formed to consult fully 

with all statutory and non-regulatory bodies and local residents are kept informed 

of relevant activities. Careful consideration was given to the levels, shape and general arrangement of the developed area and the siting of the operating equipment, 

with the various above-ground permanent facilities designed to blend into the existing landscape. 

As a result of the area’s ecological importance, BP vigorously applied its environmental protection policy, establishing a monitoring program covering 23 studies, 

from archaeology and seabed ecology, to surveys of the wintering bird population, 

reptile communities and the red squirrel colony on Furzey Island, to the health of 

heathland, reed beds and saltmarshes. The results of these surveys were vital in 

determining both how to develop the oilfield and in providing baseline data against 

which BP could monitor its performance. 

Regular atmospheric monitoring around the oilfield facilities, together with observation of lichens on nearby trees, indicate that the air quality around existing well 

sites and the gathering station generally suffers no adverse impacts from BP’s activities in the area. 

In recent years, BP has pioneered significant advances in extended reach drilling 

techniques, which has brought considerable environmental benefits to the development by enabling the furthest parts of the offshore Sherwood reservoir to be drilled 

from an onshore site. Well M16 set a new world record when it broke the 10km barrier in June 1999, reaching a displacement distance of 10,728m, a total length of 

11,278m and a depth of 1638m. The drilling rig and ancillary equipment had a comprehensive noise-control package installed to meet the strict noise criteria imposed 

by Dorset County Council. 
105 

In 1995, the Wytch Farm Development won The Queen’s Award for Environmental Achievement in acknowledgement of the innovative, technologically challenging and environmentally beneficial manner in which the offshore section of the 

Sherwood reservoir was being developed. 

BP continues to manage an area of land around the site in order to integrate 

Wytch Farm into the Purbeck countryside and to ensure that due consideration is 

given to the ecology of the area for the life of the oilfield. 

DEVELOPMENT/FACILITIES

There have been three phases of development at Wytch Farm, which has a total 

of 98 wells, 63 producers and 35 injectors, operating from 10 sites. 

EXPORT

The heart of the project is at Wytch Heath, the site of the gathering station, 

where the crude oil and liquid petroleum gases (LPGs) from the reservoirs are separated. 

LPG is stored in 12 large steel vessels and is loaded into road tankers and transported to the local market. A 16-inch diameter pipeline exports up to 110,000 barrels of crude oil a day, 91km via the Fawley Refinery across Southampton Water 

to Hamble Oil Terminal. Here it is stored in five tanks before being exported by 

tanker. 

At the gathering station there is a parallel 48km, 8-inch diameter pipeline that 

was laid by BP on behalf of British Gas. It exports two million cubic feet a day of 

methane/ethane to Sopley, north of Christchurch, for feeding into the main domestic 

gas network. 

FAST FACTS

Field description Wytch Farm oil field comprises three separate 

reservoirs that lie under Poole Harbour and 

Poole Bay, in Dorset, South-west England. 

Location 17 miles from Poole, Dorset 

Block number PL089 (main onshore fields); PI259 (small onshore area under sandbanks); 98/6 and 98/7 

(Sherwood offshore) 

Participants BP (Operator—67.5%), Premier (12.5%), 

Maersk (7.5%), ONEPM (7.5%), Talisman (5%) 

Discovered 1959-1978 

Start-up 1979 (Stage I); 1990 (Stage II), 1994 (Stage 

III) 

Average daily production (2007) 23,000 bpd oil; 6 mmscfd gas; 50 tonnes LPGs 

Peak production 1997—110,000 bpd 

Question 3. Can you tell me more about how this project came about? How were 

local communities and governments engaged? What kind of consultative process was 

undertaken before the project began? What kinds of policies were put in place to 

meet the strict environmental conditions? Do you think that this approach is something that could be employed in the U.S. federal OCS? 

Answer. See response to previous question. Yes, the approaches that were taken 

at Wytch Farm and which are being take at our Liberty project in Alaska could certainly be employed in the US federal OCS. 

RESPONSE OF DAVID RAINEY TO QUESTION FROM SENATOR MENENDEZ

Question 1. I think that the environmental integrity of offshore oil operations 

should not be limited to what happens on platforms. Pipelines, tankers/barges and 

onshore facilities—all necessary for oil production—are also at risk for spills. In 

March 2006 the largest crude oil spill in the history of North Slope operations 
106 

brought national attention to the chronic problem of spills. BP was fined $20 million 

including criminal penalties and probation for knowingly neglecting corroded pipelines. As a result, the federal government and the State of Alaska have filed separate lawsuits against BP. In 2007 BP shut down Northstar oil field, which lies six 

miles offshore of the Prudhoe Bay field in the Beaufort Sea, after a worker noticed 

a leak in some pipe. What has BP learned from these experiences and how can you 

assure us this problem will not happen again? 

Answer. In 2006 BPXA set up the Technical Directorate to provide in addition to 

other roles integrity management capability and oversight of North Slope operations 

with respect to engineering standards, operating systems development and corrosion 

management. Over the past 3 years, this team has successfully introduced a new 

corrosion control strategy, doubled the size of the corrosion, inspection and chemicals group, and implemented a new BP Operating Management System. These actions have made a significant improvement to the integrity of our facilities and operating systems. 

RESPONSES OF DAVID RAINEY TO QUESTIONS FROM SENATOR SESSIONS

Question 1. In your opinion, do shorter lease terms, an increase in royalties, and 

an increase in taxes play a part in determining which country your company with 

produce? 

Answer. Lease terms, royalty rates and taxes all play a critical role in determining how BP approaches investment decisions around the world. 

BP is especially concerned about what we see as a trend toward higher levels of 

government take. This includes recent increases in royalty rates on leases across the 

GoM, new taxes on GoM production being contemplated by Congress and the administration, and escalating rental rates. These actions, when combined with a reduction in lease terms, have the undesired effect of decreasing the competitiveness of 

the GoM. 

We believe that a reduction of lease terms as recently proposed by MMS could 

produce serious unintended detrimental consequences. The proposal will likely impact the overall attractiveness of the GoM in comparison with other areas around 

the world. If the region becomes less attractive for investment, this will result in 

a reduction in revenues to the US Treasury from lower bonus bids on leases, reduced rental payments and lower royalties. Furthermore, limiting the terms of 

leases in water depths up to 1600 meters will likely result in the drilling of fewer 

exploration wells. We also believe that the proposed changes could result in production of less oil from fewer deepwater projects, not more. This will cause the US to 

import more oil from other locations where environmental laws are less stringent. 

The US balance of trade would also be negatively impacted, fewer jobs will be created, and US energy and national security could be undermined. 

To encourage continued success with domestic energy development, we must have 

stable leasing, fiscal, and regulatory policies. They are critical to continuing investments which create jobs, generate revenues and enhance US energy and national 

security. 

Also please see attached comments submitted by BP on the Notice of Lease Sale 

213 proposal to reduce lease terms for leases in the Gulf of Mexico: 

Question 2. The oil and gas industry directly and indirectly employ 9.2 million 

people, so could someone explain to me why with double digit unemployment numbers are we not moving forward with increasing domestic production and employing 

individuals here at home? 

Answer. The oil and gas industry does directly and indirectly employ over nine 

million people in the US. We believe that increasing access to new areas would have 

a significant stimulative impact on the domestic employment situation. In the energy industry, the best way to increase investment and create new jobs is to promote policies which open new areas to exploration and development. The US government can play an important role in this respect. The impact of such policy proposals 

would be to create jobs in a multitude of areas, including oil and gas exploration, 

development and production, pipeline manufacturing and construction, equipment 

manufacturing, offshore service sector expansion, natural gas plant construction and 

installation, as well as the service sectors which support these activities. While 

many of the jobs would be construction related, a significant number would sustained by an expanding industry. 

Question 3. In total, the OCS development has generated $190 billion in federal 

revenue from bonus bids and royalty payments. Its puzzles me with record breaking 

deficit numbers, why the 5 year plan for OCS is getting delayed when it could 

produce federal revenues. Does anyone have an opinion on this? 
107 

Answer. BP believes that the current MMS Five-year leasing program is robust 

and should continue as originally outlined. Furthermore, we support the proposed 

2010-2015 Five-year plan and would like to see it move forward expeditiously so 

that the US can begin to enjoy the economic and energy benefits that come from 

opening new areas. 

Question 4. What is the role of the National Oceanic and Atmospheric Administration (NOAA) in OCS development? NOAA Administrator Lubchenco sent a letter to 

MMS dated September 21, 2009, which also appeared the LA Times commenting on 

the OCS proposed 5 year plan—2010-2015. However, NOAA later claimed it was an 

unofficial letter. How is MMS bound or inclined to react to this letter’s contents? 

Question 5. How many agencies does an oil and natural gas company have to deal 

with to produce from a federal offshore lease? Does this number of different and 

competing bureaucracies make operations in the OCS more efficient or less efficient? 

Answer. The Department of Interior, through the MMS, is charged with implementation of the OCS Lands Act. Many other agencies regulate activity on the OCS, 

including a number of federal and state agencies responsible for implementing laws 

and regulations relating to the protection of the environment and marine life. These 

laws, and the agencies charged with their oversight, are able to assure adequate 

oversight and rigor with respect to safety and the environment on the OCS. 

Among the laws designed to address those concerns are Coastal Zone Management Act, National Environmental Policy Act, Rivers and Harbors Act, Clean Water 

Act, Oil Pollution Act, Clean Air Act, Noise Pollution Control Act, Comprehensive 

Environmental Response, Compensation, and Liability Act, Resource Conservation 

and Recovery Act, Endangered Species Act, Marine Mammal Protection Act, Migratory Bird Treaty Act, Magnuson-Stevens Fishery Conservation and Management 

Act, National Fishing Enhancement Act, as well as acts designed to protect historical and ecologically important resources, including the National Marine Sanctuaries 

Act, Antiquities Act, Abandoned Shipwrecks Act, Archeological Resources Protection 

Act, and National Historic Preservation Act. 

In addition to the MMS, other federal agencies and departments having influence 

on operations on the OCS are: Department of Transportation, Department of Homeland Security (Customs and Border Patrol, U.S. Coast Guard), Department of Commerce (National Oceanic and Atmospheric Administration, National Marine Fisheries Service), Department of Interior (Fish & Wildlife Service), Department of the 

Army (Corps of Engineers), Federal Energy Regulatory Commission (FERC), Environmental Protection Agency (EPA), Department of Labor, Occupational Safety and 

Health Administration. 

State agencies involved in OCS operations include: Departments of Natural Resources, Offices of Conservation, Departments of Environmental Quality, State Mineral Boards, State Land Offices, Railroad Commission, and various local government 

entities. 

Question 6. We’ve heard the U.S. ranks very high in environmental stewardship. 

How high does the U.S. rank in terms of applying its stewardship policies in such 

a way as to provide certainty to the process of leasing and developing the OCS? 

Answer. The United States has well developed and understood environmental 

laws and regulations which have directed leasing and development in the OCS for 

many decades. US OCS environmental regulatory programs are looked at as models 

by some countries new to offshore energy development. 

The National Environmental Policy Act (NEPA) has provided the framework for 

environmental policymaking since 1969. Minerals Management Service (MMS) produces NEPA documents for each of the major stages of energy development planning—from the overarching 5 Year Leasing Program EIS, through each of the NEPA 

documents for the energy lease sales, exploration, development and production 

plans. The MMS Environmental Studies Program has conducted environmental research in support of the NEPA process for over 35 years. Federal and state agencies 

participate in the NEPA process as cooperating or consulting agencies. And public 

comment is an important part of the process. 

Stewardship is recognized as high in part because of the comprehensive nature 

of the NEPA analysis. Environmental, biological, archaeological, socioeconomic, and 

geological conditions or potential conflicts, or other information that might bear 

upon the potential leasing, exploration, and development of the program area and 

vicinity are considered and addressed. The NEPA process used for leasing and development aides in delivering certainty by providing a balanced forum for early 

identification, avoidance, and resolution of potential conflicts. 
108 

* All figures have been retained in committee files. 

ATTACHMENT I.—OUTER CONTINENTAL SHELF (OCS) RESOURCE ASSESSMENT

PROPOSAL

MAY 1ST, 2009

Congressional and Administration officials have called for an updated resource assessment of the US Outer Continental Shelf (OCS). By far, the most powerful tool 

in assessing oil and gas potential on the OCS is marine seismic data. Current resource assessments are based on data which were acquired 20 to 30 years ago. Seismic technology has improved dramatically in the intervening period, as has the understanding of deepwater exploration potential. New data will provide valuable insights into the crustal structure and geology of the OCS, and help to ′′refresh′′ existing geophysical and well log databases. 

• New seismic data is the enabling technology to help both government and industry deliver timely and more accurate resource assessments on which to base 

a new MMS Five-year Leasing Plan. • Seismic acquisition programs should be scaled appropriately for the different 

phases of evaluation in order to minimize costs and environmental impacts. For 

example: 

—A logical first step is to acquire low-density, two-dimensional (2D) regional 

seismic data via an Environmental Assessment (Note: An EA determines if 

significant impact may occur requiring an Environmental Impact Statement) 

—Areas with greatest exploration potential would be high-graded, and subsequently, high density 2D or three dimensional (3D) seismic would be acquired 

in focused areas where prospectivity is demonstrated. Such activities would 

be part of a Programmatic Environmental Impact Statement (PEIS), which 

could take up to two years to complete and cover multiple Geophysical & Geological (G&G) activities. PEIS should be undertaken in a timely manner along 

the East and West Coasts in support of future exploration activity. 

• If required, a Steering Board of government and industry experts could be 

formed to guide the design and development of the seismic acquisition. This 

would ensure government access to, and input from subject matter experts. 

Regional framework and 2D seismic 

To the best of our knowledge, no significant industry seismic data has been acquired off the US East Coast in 30 years, West Coast and south Alaska in over 20 

years. A regional 2D, long record length (to enable deep imaging) sparsely spaced 

seismic grid will provide much-needed and timely data to enable an improved and 

updated resource assessment. This data will serve to ‘‘refresh’’ and tie existing vintage seismic data, provide insights into deep crustal structure and will enable us 

to better tie existing seismic datasets into a common framework. 

Figure 1* is an example of a ‘‘vintage’’ 2D seismic section compared with a modern (2006) 2D section. These sections are a cross section, or vertical slice, through 

an offshore basin. Please note the detailed geology revealed in the modern 2006 section, where the deeper geology reveals both insights into the crustal structure as 

well as a new play type. 

Timing: This type of survey can be obtained under an Environmental Assessment. 

This would enable the acquisition of new data within 6-12 months, beginning as 

early as 3Q 2009. 

Funding model: Industry could fund the low-density 2D program as a speculative 

seismic shoot and data would be provided at no cost to MMS by the seismic contractor. 

Survey Design: Wide spacing (a seismic line every 50-100 miles). 

Potential Environmental Impacts: Wide seismic line spacing minimizes environmental impacts. Impacts will be addressed in the Environmental Assessment and 

Incidental Harassment Authorization (IHA). Mitigation and monitoring requirements will be identified during consultation processes with US Fish and Wildlife, 

National Marine Fisheries Service and state Coastal Zone Management agencies. 

Typical mitigation during seismic acquisition includes marine mammal observers, 

ramp up procedures and exclusion zones. 

Resource assessment 

Regional evaluation enables geoscientists and engineers to generate an updated 

resource assessment of the oil and gas potential of the OCS. This will help focus 

further exploration activity in the most prospective areas and down-grade/eliminate 
109 

other areas, thus reducing overall cost and environmental impacts of an offshore 

leasing program. New seismic data, combined with global exploration insights 

gained over the past 3 decades, will certainly reveal new exploration concepts. A 

Steering Board of subject matter experts, as mentioned previously, could be utilized 

to ensure robust seismic acquisition. 

Forward timeline, data requirements and links to a 5 year plan 

In the MMS draft 2010-2015 5 year plan, East and West Coast area-wide sales 

will begin in 2012. Area-wide Programmatic Environmental Impact assessments for 

the East and West OCS (including S. Alaska) could be initiated as early as mid2009, and would require at 18-24 months for completion. While a PEIS could not 

be in place for a timely regional assessment of offshore oil and gas resources, this 

would provide a robust environmental assessment in support of future focused 2D 

or 3D seismic. 

New regional seismic, coupled with existing seismic, will not be sufficient to define 

prospects in all areas of the OCS. However, process of high-grading on sparse, widely spaced data, then focusing dense 2D or 3D seismic over the most prospective 

areas is a typical practice of the petroleum industry. This process is efficient in 

terms of time, cost and environmental impact, because it focuses activity into only 

those areas that are deemed as prospective. This could be funded as a ′′speculative′′ 

seismic project, where a number of companies share the costs. The data is owned 

by the acquiring geophysical company, shared with the MMS and can be purchased 

by any interested party. 

ATTACHMENT II.—BP COMMENTS

BP AMERICA INC., 

GULF OF MEXICO EXPLORATION, 

Houston, TX, November 24, 2009. 

Mr. MARSHAL ROSE, 

Chief, Economics Division, Minerals Management Service (MS-4050), 381 Elden 

Street, Herndon, VA. 

Subject: Comments on the Proposed Changes in Lease Terms, Proposed Notice of 

Sale 213, Central Planning Area, Gulf of Mexico 

DEAR MR. ROSE: The Minerals Management Service (MMS) has proposed that oil 

and gas Lease Sale 213 for the Central Gulf of Mexico (GoM) Planning Area be held 

March 17, 2010. The Proposed Notice of Sale 213 published in the Federal Register 

on November 16, 2009 includes a revision of lease terms for the blocks in water 

depths of 400 meters to less than 1600 meters. Under the proposal, blocks in 400 

to 800 meters are proposed to change from an 8-year lease term to a five-year initial 

lease term, where commencement of an exploratory well would extend the lease 

term to eight years. Furthermore, blocks in 800 to less than 1600 meters are proposed to change from a ten-year initial lease term to a seven-year initial lease term, 

where commencement of an exploratory well would extend the lease term to ten 

years. 

Retain current lease terms 

BP America strongly supports a continuation of the regular leasing program in 

the central and western GoM—the region has been safely and reliably producing oil 

and natural gas for the nation for over 50 years. However, we are very concerned 

about reducing lease terms. We urge MMS to reconsider this proposal. We believe 

the appropriate approach is to retain the current lease term structures for these 

waters because they have served the US Government and industry well. Stable and 

predictable leasing structures have encouraged significant investments which have 

led to a dramatic increase in production in the GoM over the past decade. Today, 

the GoM accounts for almost one quarter of the oil produced in the US. Key to the 

success has been a stable leasing program, including lease terms that do not change 

from one sale to another. 

Potential for significant unintended consequences 

We believe that the proposed reduction of lease terms could produce serious unintended detrimental consequences. The proposal will likely impactthe overall 

attractiveness ofthe GoM in comparison with other areas around the world. If the 

region becomes less attractive for investment, this will result in a reduction in revenues to the US Treasury from lower bonus bids on leases, reduced lease rental payments, and lower royalty payments. Furthermore, limiting the terms of leases in 

water depths up to 1600 meters will likely result in the drilling of fewer exploration 

wells. Fewer exploration wells will result in fewer discoveries, fewer development 
110 

projects, and less production. This will cause the US to import more oil from other 

locations where environmental laws are less stringent. The US balance of trade 

would also be negatively impacted, fewer jobs will be created, and US energy and 

national security could be undermined. 

Policies that drive companies to drill additional wells merely to retain or extend 

shortened lease terms will result in a waste of resources simply for the purpose of 

extending the term ofthe lease. This is inconsistent with the Congressional declaration of policy found in §1332 of the Outer Continental Shelf Lands Act, particularly 

Congress’ stated policy of ‘‘. . .expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of 

competition and other national needs. . .’’ This could also lead to inefficiencies in 

the GoM drilling sector and unnecessary environmental risks. 

GoM complexity demands regulatory flexibility 

The GoM is one of the most complex oil and gas basins in the world. This complexity is demonstrated by very deep, subsalt, high pressure and high temperature 

reservoirs that are currently being explored and appraised. It was not until earlier 

in this decade that the industry was able to position exploration wells and appraise 

discoveries in complex subsalt and high pressure strata. The complexity of the subsurface requires long periods of time to acquire and process seismicim ages before 

being able to safely design and execute wells which today take at least a year to 

plan. Therefore, past experiences regarding the timeframes from lease acquisition 

to the first exploration well are not appropriate analogues for the present and the 

future. 

Water depth should not be the only driver 

We believe that water depth should not be the primary driver of lease terms. 

More often than not, it is the subsurface difficulties associated with imaging and 

drilling designs that require industry to need more time to image, plan, and execute 

the drilling of deep water wells. We believe this fact is recognized by MMS, and especially so in the deep water and ultra deep gas plays on the shelf. MMS has issued 

Notices to Lessees and Suspensions of Operations regarding the evaluation, planning and drilling of ultra deep gas wells on the shelf. In doing so, MMS has acknowledged that these operations are as challenging as those in the deep water 

even though the leases are in less than 200 meters of water. 

Technology challenges require time to overcome 

Industry has always operated on the cutting edge of technology. This is more the 

case today than ever before. Due in large part to advances in seismicim aging, deep 

water drilling technology and production systems technology, the industry is able 

to explore previously inaccessible areas of the GoM. The chalenges of operating in 

deeper water, subsalt, and at higher temperatures and pressures are extraordinary. 

The fact remains, new supplies are harder to find, more difficult and more expensive 

to extract and take much more time and resources of all kinds to bring online, not 

less. These facts call for a more flexible leasing program , not one which is more 

restrictive. 

Drilling costs are increasing 

Today, exploration wells cost between $100 and $250 million each and take several years to plan and execute. On average, only one in three exploration wells will 

find sufficient commercial quantities of oil and gas to develop. When discoveries are 

made, the projects that bring them to production often require the development of 

new technology. These projects are hugely expensive and require many years to deliver. This said, the projects are being delivered with a safety and environmental 

record that would be the envy of any industry. 

Next generation of discoveries will require more time 

The next generation of discoveries in the GoM will require more time and more 

investment to move from discovery to production. Today, exploration wells in the 

GoM target reservoirs lying as much as 6 to 7 miles below sea level. Water depth 

is just one element of increased complexity. Subsurface challenges associated with 

seismic imaging and drilling designs have an even more significant impact on the 

time and investment required. As the remaining resources become increasingly difficult to discover, and more challenging and expensive to develop, stable and predictable leasing, regulatory, and fiscal regimes will continue to be important to successful oil and gas resource development. 
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* Graphic has been retained in committee files. 

Ten year lease terms are critical 

Today, the significant amount of uncertainty involved, and the technology and investment required justify the full 10-year lease term. As we move to deeper and 

more chalenging environments, whether they be on the shelf or in deepwaters, there 

is no reasonable logic for shorter lease terms. 

Kaskida example 

With more difficult to image and deeper prospects our recent successes like 

Kaskida clearly demonstrate that it may take a full ten years from the initial lead 

identification and lease acquisition to drill the exploration well . It took ten years 

for us to produce a seismic image of sufficient quality to safely plan and execute 

the exploration well at Kaskida (see timeline below).* We believe this will be a typical timeline for many future GoM prospects. 

New play concepts will be discouraged 

The current ten-year lease term for deepwater areas of the GoM enables industry 

to adequately evaluate new play concepts. Examples include recent success in assessing the Paleogene/Lower Tertiary plays where industry has discovered billions 

of barrels of oil and gas in-place. New play concepts require sufficient time, investment and technology to be properly assessed and tested. Often, one well is selected 

to test a play concept; however, there is a group of related prospects on other leases 

which are dependent upon the outcome of the play test. If lease terms are reduced, 

the incentive to pursue new play concepts will be severely diminished as industry 

will be less likely to test a single prospect in a new play if they do not hold a portfolio of leases with ‘‘follow-on’’ prospectivity. 

Hub developments 

While conventional plays in the GoM mature, field sizes are decreasing. As a result, in order to make a discovery economically viable it is often required that multiple discoveries are tied together into a single hub, or production facility. Such circumstances require that industry has the time and flexibility to mature each of 

these opportunities individually. This concept is demonstrated by BP’s Nakika development, which includes six separate fields tied together into a common host/hub 

facility. None of these fields was economic on its own. However, the hub concept enabled collective development. Under the proposal, industry will be discouraged from 

pursuing such opportunities because ofthe lack of time available to fully explore and 

appraise multiple fields. 

Escalating rental rates 

The Notice also includes new, escalating rental rates for leases in the GoM. BP 

is concerned about what we see as a trend toward higher levels of government take. 

This includes recent increases in royalty rates on leases across the GoM, new taxes 

on GoM production being contemplated by Congress and the administration, and escalating rental rates. These actions, when combined with a reduction in lease terms, 

have the undesired effect of decreasing the competitiveness of the GoM. We urge 

MMS to retain the existing rental rate structure. 

Conclusion 

Technology has been, and will continue to be, the key to our energy future. We 

must continue to invest in exploration and production capability, and in technology 

to meet demand. We must also continue to develop technologies to increase recovery 

of oil and gas from established hydrocarbon positions in the US. To encourage and 

ensure continued success, we must have stable leasing, fiscal, and regulatory policies so that the oil and gas industry can continue to maintain investments which 

create jobs, generate revenues and enhance US energy and national security. 

BP appreciates the opportunity to comment on the Proposed Notice of Sale 213. 

In order to enhance the nation’s economic, energy, and national security, the U.S. 

clearly needs to aggressively expand offshore access and open all available areas to 

oil and gas leasing, exploration and development, rather than limiting the opportunities by reducing lease terms. A dramatic change in policy with regard to lease 

terms, as proposed in the Notice, sends the wrong signal to industry and undermines the confidence built in the leasing program overdecades. Again, BP urges the 
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MMS to reconsider this proposal and retain the current lease term structure. We 

would welcome the opportunity to further discuss our comments. 

Sincerely, 

DAVID I. RAINEY, 

Vice President. 

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