The Honorable Ken Salazar
Secretary of the Interior
1849 C Street, NW
Washington, DC 20240

Dear Secretary Salazar:

The successful permanent plugging of BP’s Macondo well marks an important milestone in the response to the worst offshore well blowout in U.S. history, a response that was unprecedented in its size, complexity and cost. While we do not know what the long-term economic or environmental consequences of this accident will be, undoubtedly they will be among the largest ever experienced in the United States. As you and the President have made clear, we must do whatever we appropriately can to ensure that events such as the Deepwater Horizon explosion, the loss of life and the loss of well control never occur again. In that regard, Business Roundtable supports your efforts to update regulations, processes and procedures to improve the safety of offshore operations and to be better prepared to respond to incidents if they do occur.

The offshore oil and natural gas industry has responded to the tragic Deepwater Horizon incident by launching industry-wide initiatives designed to improve the safety of deepwater drilling operations, focusing on preventing incidents from happening and preparing to respond aggressively in the event an incident does occur. These initiatives have focused on improving drilling safety; upgrading industry drilling standards, including a renewed focus on ensuring appropriate well design, cementing procedures, blowout preventer inspection, and design review; and establishing new well containment and intervention capability. Coupled with the Department of the Interior’s revised regulatory structure, the enhanced industry capability will make drilling offshore in the U.S. one of the safest in the world.

With the progress that has been made since the April 2010 Deepwater Horizon explosion and oil spill, Business Roundtable now believes firmly that it is time to lift the moratorium that has been imposed on deepwater drilling in the Gulf of Mexico. The continued moratorium in the Gulf threatens thousands of jobs that depend on this vital industry. In 2009, the oil and gas industry in the Gulf of Mexico supported nearly 400,000 jobs both directly and indirectly. Hundreds of machine shops, engineering services, transportation, communications, catering and shipping companies support and depend on activities in the deepwater Gulf of Mexico. Federal, state and local governments stand to lose hundreds of millions of dollars in tax and royalty revenues if the moratorium is not soon lifted. It is not an exaggeration to say that the economic consequences of the moratorium are likely to exceed the economic consequences of the oil spill itself.

In addition to the loss of jobs and tax revenues associated with the moratorium, a continued freeze on deepwater drilling activity also threatens to undo the progress we have made as a nation over the past several years in increasing domestic production of oil. Production in the Outer Continental Shelf currently accounts for 15 percent of the nation’s natural gas and 27 percent of our nation’s domestic supply of oil. About 80 percent of the Gulf oil and 45 percent of natural gas come from deepwater wells. Fifty-eight percent of the active leases in the Gulf of Mexico today are in deep water.

Wood Mackenzie has projected that the U.S. Gulf of Mexico deepwater oil and natural gas production will account for a third of total U.S. production and nearly 95 percent of total offshore production by 2020. A six-month moratorium on new drilling activity could result in a loss of deepwater Gulf production of between 80,000 and 130,000 bb/d according to Wood Mackenzie. An even longer delay could lead to a loss of production equal to about 350,000 barrels of oil per day by 2015. Simply put, the deepwater Gulf of Mexico is vital to our energy security, and we can ill-afford not to develop it.

Business Roundtable believes that enormous progress has been made since the Deepwater Horizon incident. Regulations have been improved, industry capability enhanced and lessons have been learned. We now respectfully request that the moratorium that has been imposed on deepwater drilling activity be lifted so that industry can safely return to work. The livelihoods of tens of thousands depend on it.

Sincerely,

Michael G. Morris
Chairman, President and CEO
American Electric Power Company, Inc.
Chairman, Sustainable Growth Initiative
Business Roundtable

C: Secretary of Energy, Dr. Steven Chu
Senator Jeff Bingaman
Senator Richard Burr
Senator Thad Cochran
Senator John Cornyn
Senator Kay Hagan
Senator Kay Bailey Hutchison
Senator Mary Landrieu
Senator Lisa Murkowski
Senator Jeff Sessions
Senator Richard Shelby
Senator David Vitter
Senator Roger Wicker
Congressman Richard Hastings
Congressman Nick Rahall