By Paul Danos, Owner and CEO, Danos, and NOIA chairman 2022-2023
America’s offshore is a remarkable place where the world can turn to for its energy needs of today and tomorrow. While the offshore energy story began in oil and gas production, it has evolved into a diverse hub of energy solutions. Relentless innovation has enabled the offshore energy sector to lead the energy evolution through low-carbon oil and gas, offshore wind, carbon sequestration, hydrogen, and more.
American industry continues to play a crucial role in providing global energy solutions, and we can continue to do so only through the continued safe and responsible development of our domestic offshore oil and gas resources.
In many ways, my family’s company – Danos – and the National Ocean Industries Association (NOIA) share a mirrored trajectory of the offshore energy sector.
Danos is a family-owned and managed energy service provider founded in 1947. It started as a small tugboat company supporting Gulf of Mexico oil and gas operations while conducting business from my grandmother’s kitchen table. Today, Danos has a global presence and has expanded into renewable energy while still offering an extensive range of integrated offshore (and onshore) oil and gas services.
Similarly, NOIA began more than 50 years ago as the voice of the American offshore oil and gas industry in Washington, DC. Today, NOIA is the only national trade association representing the full spectrum of companies involved in the offshore energy transition, including oil and gas, wind, carbon sequestration, and hydrogen.
When you walk into OTC, you’ll see that the oil and gas industry has evolved tremendously since my grandfather founded Danos; the energy transformation is well underway. Many technologies on display are beyond what we could have imagined even ten years ago. Innovation is lowering costs while shrinking an already small carbon footprint and improving safety.
Technology advances mean we can more safely produce oil and gas from deeper depths, withstanding higher temperatures and greater pressures. Innovation in technology resulted in the US Gulf of Mexico producing 1.78 million barrels of oil per day in November 2022, significantly up from the lows of the pandemic.
Gulf of Mexico production is provided for in a smart and sustainable way. Incredibly, just 18 deepwater Gulf of Mexico facilities – the equivalent combined size of nine city blocks – are producing about the same amount of oil as the entire state of North Dakota.
Studies, including from sources such as Wood Mackenzie and the US Department of the Interior, have repeatedly found that global emissions would be higher without Gulf of Mexico oil and gas production. As Wood Mackenzie found, “Removing or handicapping a low emitter hurts the collective global average.” The world needs more American offshore oil and gas projects to help meet society’s energy, economic, and climate demands.
Thankfully, energy production is no longer an “either/or” proposition. Offshore energy production is a “both/and” opportunity underpinned by reliability, affordability, and low-carbon production.
The offshore energy industry has unparalleled expertise and experience deploying and scaling technologies at levels needed to break through new energy frontiers, including achieving decarbonization objectives. This innovative spirit also means greater attention and investment in evolving energy segments, such as offshore wind and offshore carbon capture and storage.
The offshore environment continues to be a unique space. The logistics and skillsets necessary to build something in a marine environment are mindboggling. The energy transition can only continue if the same companies that built up the American offshore oil and gas industry can continue to exist and thrive through new access and new leasing opportunities. Without these companies, no one will be left to build and service new energy projects.
While the US has two Gulf of Mexico lease sales scheduled for 2023, there is no active program in place and no lease sales are scheduled beyond this year. These decisions will affect the entire country by increasing carbon emissions through the outsourcing of production, sending jobs overseas, raising the cost of energy for Americans, weakening national security, and removing a significant source of conservation funding for programs like the Land and Water Conservation Fund which help mitigate climate change impacts.
Without continued US offshore oil and gas leasing, we risk losing high-paying jobs, investments, and spending that supports countless Americans and communities. At the same time, the development and deployment of innovative technologies across the energy sector are at risk. Our industry has the infrastructure, workforce, and capital to spur the low-carbon energy transition, but the simple economic reality is that continued offshore oil and gas leasing is needed to get there.
If American energy policy comes together, the sky is the limit on the energy, economic, and climate solutions our industry can deliver.
