The People of America's Oil and Natural Gas Indusry

Don't Mess with Success

Jane Van Ryan

Jane Van Ryan
Posted April 19, 2010

Many people in Washington and New York apparently have short memories. A case-in-point is the Deepwater Royalty Relief Act, which was passed during the Clinton Administration to encourage energy companies to develop oil and natural gas in the deep waters of the Gulf of the Mexico.

At the time, deepwater drilling technology wasn't mature and the cost was prohibitive. The law made deepwater exploration more attractive by reducing the fees required to access energy resources. By providing a carrot, per se, the law worked.

Companies perfected technologies and invested billions of dollars in producing oil and natural gas in thousands of feet of water and well below the seafloor. The law encouraged the construction of platforms like Perdido, which are producing energy, creating U.S. jobs, and helping to fuel America with domestic oil and natural gas.

Still, critics including The New York Times, continue to insist that the Deepwater Royalty Relief Act is flawed and gives the industry an undeserved windfall.

In a recent editorial, The Times said the law "sloppily written" and threw its support behind a bill to be introduced by Rep. Edward Markey (D-MA) that would force the industry to pay deepwater production royalties that were forgiven under the law.

API's Jack Gerard responded to the editorial in a letter that was published last Friday. As Jack explained, the law accomplished precisely what Congress intended and reaped tremendous financial benefits for the U.S. government:

"...companies paid the government more than $3 billion for the leases, spent $37 billion to develop them, paid billions in production-related taxes, created thousands of jobs and pumped billions into the economy. This should be seen as a clear success."

Jack adds that Markey's bill would send "a counterproductive message to an industry that can and will play a critical role in the recovery of our economy."

ABOUT THE AUTHOR

Jane Van Ryan was formerly senior communications manager and new media advisor at the American Petroleum Institute (API), where she wrote blog posts and produced podcasts and videos. Before coming to API, Jane managed communications for a large science and engineering corporation, and for a top-tier research and engineering university. A few years ago, you might have seen her in your living room when she delivered the news on television. Jane officially retired from API in 2011 and now freelances as an independent communications consultant when not gardening at her farm in Virginia.