Businesses want access to coastal waters for gas, oil exploring
Pittsburgh Business Times - by Kent Hoover
High natural gas prices pushed manufacturers like Hudapack Metal Treating to become more energy efficient.
Hudapack, which heats steel parts to make them stronger, rebuilt its furnaces to recapture much of the natural gas they use. The Elkhorn, Wis.-based company reduced its natural gas usage by more than 30 percent at one plant, even as its sales hit record highs.
Natural gas prices are well below their peaks of a year ago, but Hudapack president Gary Huss said that doesn't mean manufacturers can return to their old energy-wasting ways.
"That's BS," Huss said. "We as manufacturers have to be wearing our green hats on a regular basis too."
Natural gas prices are "still substantially higher than they need to be," he said. They're subject to the whims of the weather, speculators and Congress, which has restricted U.S. production of natural gas by making most of the Outer Continental Shelf off limits.
Business groups want Congress to open more of America's coastal waters to oil and natural gas exploration. That's needed, they say, in order to ensure that the supply of these fossil fuels isn't interrupted. The United States now imports 60 percent of the oil it consumes and 16 percent of its natural gas.
"Increasing domestic production is an important component of breaking our dependence on foreign oil," said Bruce Josten, executive vice president of the U.S. Chamber of Commerce.
Congress last year opened up an additional area in the Gulf of Mexico for oil and natural gas exploration, and President Bush recently approved drilling in Alaska's Bristol Bay.
Business groups say the new Democratic-controlled House, however, took a step in the opposite direction by repealing
tax breaks for oil and natural gas companies, and raising royalty rates for offshore leases.
"This measure would increase energy costs and discourage investment in domestic energy infrastructure and supply," said John Engler, president of the National Association of Manufacturers.
No 'Political will'
The prospects for Senate action on the bill are unclear. A recent Senate hearing, however, highlighted both the promise and the problems of opening more coastal waters to oil and natural gas exploration.
The Outer Continental Shelf (OCS) contains 86 billion barrels of oil and 420 trillion cubic feet of natural gas, estimates the Department of Interior's Minerals Management Service. The actual amounts may be much higher, said Stephen Allred, the department's assistant secretary for land and minerals management.
"We have a huge inventory that we have not touched," said Sen. Pete Domenici, a New Mexico Republican.
"There are potentially major discoveries out there," said J. Larry Nichols, chairman and CEO of Devon Energy Corp. in Oklahoma City.
But there are plenty of people who oppose lifting the moratorium on coastal drilling. Sen. Jeff Bingaman, a New Mexico Democrat who chairs the Senate Energy and Natural Resources Committee, said there isn't "the political will" to open more areas.
"Our time and efforts are better spent focusing on areas that are already available in the Gulf of Mexico, and on alternatives to OCS production, such as renewables, energy efficiency and conservation, biofuels, new technologies and opportunities for enhanced oil and gas recovery,"
he said.
Coastal states oppose drilling
Environmentalists oppose expanded offshore drilling, as do officials from coastal states like Florida whose beaches attract millions of tourists.
Oil drilling "is still a dirty industry that is prone to accidents," said Athan Manuel, director of the lands management program for the Sierra Club.
One out of every six jobs in New Jersey is related to its coastal zone, said Lisa Jackson, commissioner of that state's Department of Environmental Protection.
Oil wells off the coast of Florida, however, would be a good thing, said Bill Weir, president of Winter Park, Fla.-based
Accord Industries, which uses natural gas to make PVC pipes.
"It would not affect tourism one iota," Weir said, noting that drilling already is occurring in much of the Gulf of Mexico and off the coast of Cuba.
khoover@bizjournals.com | (703) 258-0845
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