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February 13, 2012

Oversight Hearing: TX-based energy weighed down by overregulation

February 13, 2012
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This morning, the House Committee on Oversight and Government Reform, chaired by Rep. Darrell Issa (R-Calif.), convened a field hearing in Corpus Christi, TX, to assess the energy boom that is happening in South Texas and along the Gulf Coast.  Among the witnesses scheduled to testify, the prepared remarks of Scott Stanford, Operations Manager for the  Corpus Christi-based Royal Production Company provide real-world evidence that the Obama administration’s bureaucratic bonanza is slowing economic growth and harming small businesses in the energy sector.

Some excerpts from Mr. Sanford’s testimony:

  • “Since the Deepwater Horizon incident, the creation of these new governmental regulatory agencies has generated many new reporting and permitting policies, which in turn has significantly increased the burden on offshore operators.  These burdens translate as direct cost to the bottom line.  The bottom line drives the definition of commercial reserve development.  Since several of these new regulatory policies have been implemented on a broad basis, the proportional cost burden to smaller independents has risen drastically.”
  • “It is not reasonable to assume that a company the size of Royal can implement and maintain a huge safety and environmental program within the exact definitions and time constraints under the rules of this new policy; thus they incurred a large additional cost to do so.  Royal has incurred over $200,000 in the last 12 months alone simply attempting to implement the SEMS program to insure compliance with the new BSEE mandates.”
  • “This giant increase in governmental policing of the industry has resulted in the need for the BOEMRE and BSEE to add many inspectors and a large amount of staff to perform these audits and inspections.  The cost of these added personnel has been laid firmly on the back of the energy operators in the form of increased or new fees for each facility, well, and operated rig in the Gulf of Mexico.”
  • “The federal government has basically taken any control of your plan away from you, the operator, and placed itself in the position of being the only approved path forth.  This was done in the face of an extremely limited staff and one that has limitations on the technical depth of engineering within that limited staff.  The final result comes as a tremendous cost to the industry.”
  • “I would like to see an opportunity for US companies to compete on an equal basis for the development of reserves in the Gulf of Mexico through the elimination of excessive burdens through policy that the federal government has imposed that only the major companies may be able to afford.”
  • “The policies recently implemented, if not changed, may result in the Gulf of Mexico becoming a basin that no one can afford to operate in economically versus other lower cost basins.”

To read all of Mr. Sanford’s testimony, as well as that of other witnesses for today’s important hearing, click here.

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