Volume XXXIV, Number 4 April 27, 2006 Offshore Companies Gather in Washington NOIA Welcomes for 2006 NOIA Annual Meeting New Members From March 28 – 30, NOIA members, spous- on the state of party politics overall. The es and guests gathered at the Ritz-Carlton Democrats do not exist as a party, in his Scorpion Offshore Ltd. Hotel in Washington, DC. The three day gath- estimation, but are instead a loose collection Houston, Texas ering featured a number of prominent general of interest groups. The Republican Party session speakers and working committee ses- is organized, by contrast, but there is much Cobalt International sions, as well as numerous opportunities to less of a clear sense of who the front-runner Energy L.P. connect with other industry representatives will be for 2008. John McCain is not per- Houston, Texas and government offi cials. ceived by many in the organization as being a “true” Republican. Thus, the disorganized Chris Matthews Democratic Party already has a presumptive INSIDE THIS ISSUE Over breakfast, NOIA members were treated nominee, but the organized GOP has a very to a vigorous analysis of the current political murky road to 2008. landscape by Chris Matthews, host of NBC’s Offshore Companies Gather Chris Matthews Show and Hardball. Looking Finally, Matthews pointed out that a historical in Washington for 2006 NOIA ahead to the 2008 Presidential Election, Mat- look at the pattern of elections shows that Annual Meeting ... page 1 thews predicted that Hillary Clinton stands a voters focus on “fi xing” the current problem 60 percent chance of winning the Democratic at the time of election. The “problem” in NOIA Annual Meeting Business Party’s nomination, but only a 40 percent 2008 is perceived to be a political environment Committee Summaries ... page 2 likelihood of being able to convert that into plagued by confl icting goals and a sense of a successful general election. the need to move beyond rigid approaches to the challenges facing the nation. As a result, MMS Publishes Revised Incident Matthews proffered two insights into the (Continued on page 3) Reporting Requirements for a changing role of women in politics as the Safer Offshore Environment ... basis for his prediction. First, he acknowl- page 4 edged that the glass ceiling has moved up signifi cantly in the last decade or so, with an Annual Meeting Photos ... page 6 increasing number of women winning seats in the Senate and House of Representatives. At the same time, however, few women have Minerals Management Service taken over the governorships of major states, Industry Awards Recognizes Leading indicating that Senator Clinton might face a Corporations ... page 13 similar challenge in her bid to move from a legislative body to the Executive Branch. MMS Issues Proposed Notice of Western Gulf Lease Sale 200 ... Moving beyond the politics of the individual page 14 candidates, Matthews shared his perspective NBC Political Commentator Chris Matthews addresses the NOIA membership.

NOIA’S MISSION IS TO SECURE RELIABLE ACCESS TO THE NATION’S VALUABLE OFFSHORE ENERGY RESOURCES IN ORDER THAT THEY MAY BE DEVELOPED, PRODUCED AND SUPPLIED IN AN ENVIRONMENTALLY RESPONSIBLE MANNER. page 2 NOIA Annual Meeting - Working Committee Summaries In addition to the substantive focus of most sessions, three Com- Jon Marshall of GlobalSantaFe completed his tenure as Chairman, mittees met during the 2006 Annual Meeting to address the business handing it over to Chris Seaver of Hydril, who will serve for one of the Association itself. year. Larry Dickerson of Diamond Offshore was elected Vice Chairman of NOIA. Mark Pease of Anadarko, Christopher Gaut Board of Directors of Halliburton, and Melody Meyer of Chevron were elected to the NOIA President Tom Fry provided a synopsis of NOIA’s work over Executive Committee the past year, detailing many of the strategies and achievements that are discussed in further detail in the main meeting summary. Six current Directors were re-elected to serve second terms: Thomas Chance of C&C Technologies, Carl Davis of Davis Lynch, Shel In addition, NOIA Board members voted on the annual changes Erikson of Cooper Cameron, Paul Kelly of Rowan, Robert Long of in leadership on the Executive Committee and the Board itself. Transocean, and Doug Otten of Nexen Petroleum. National Ocean Industries Association Ten new members were voted to their fi rst terms on the NOIA Board: Annell Bay of Shell, Alan Breaud of Breaud & Meyers, Bill 1120 G Street NW, Suite 900 Chiles of Offshore Logistics (Bristow), Bill Coates of Schlumberger, Washington, D.C. 20005 Hank Danos of Danos & Curole, Kirk Headley of American Pollu- Phone: 202.347.6900 tion Control, Howard Hughes of Oil States Industries, Rich Kruger Fax: 202.347.8650 of ExxonMobil, Bob Potter of FMC, and Doug Wall of Baker www.noia.org Hughes.

Tom Fry Finance Committee President The NOIA Finance Committee meeting was chaired by NOIA Trea- Franki Stuntz, surer Allen Parks, Partner, Parks Paton Hoepfl & Brown. Chief Administrative Officer Director, Member Development The committee received a report from the independent audit fi rm of Matthews, Carter and Boyce, P.C., relative to the 2005 Audit and Kim Harb NOIA’s fi nancial position. The Association received an unqualifi ed, Director clean opinion. Noteworthy among items discussed were: Policy and Government Affairs • NOIA realized $340,000 in income over expenses in 2005. • 90% of dues received were expended toward Program services Nolty Theriot Director • Expenses were under budget for year. Congressional Affairs • Dues collection exceeded budgeted goal due to excellent member de- velopment results and some companies increasing their dues level. Michael Kearns Director, Public Affairs The committee also reviewed in-house Financial Statements to Feb- Editor, Washington Report ruary 28, 2006. They show that dues income as well as expenses are on target for the year to date. Jeff Krauss Director, External Affairs Copies of NOIA’s full audit report and any in-house fi nancial state- Ann Chapman, ments are available to all members and can be obtained by calling Meetings Manager the NOIA offi ce. Membership Committee Kimberly Friesen, The meeting of NOIA’s Membership Committee was chaired by Administrative Associate, Dave Lawrence, Executive Vice President E & P, Shell Exploration Assistant to the President & Production Company.

(Continued on page 3) page 3

Annual Meeting 2006 (continued from Page 1) the 2008 election will go to the candidate best felt to be able to fi x At the same time, Peterson chided the oil and natural gas industry this, someone like Richard Nixon was in 1968: smart, but not likable, for its timidity, charging that we ought to be much more active about politically sensitive, yet diffi cult to work with. spreading the good news of our safety record.

John Peterson “How long do you have to do well,” Peterson asked, “operating without In an impassioned address, Congressman John Peterson of Pennsylva- a major spill, surviving hurricanes, not losing any life offshore before nia described why a legislator from inland Pennsylvania would seek to you are willing to brag about it?” open the Outer Continental Shelf to oil and gas development. For him – and perhaps for the nearly 150 co-sponsors to his legislation – the Peterson also encouraged the industry to support legislation like his OCS represents a chance to enhance America’s competitiveness. The that seeks to lift restrictions on natural gas production only. He recog- nation has to compete in a global market, yet our policies that lock up nized that oil companies may not fi nd this ideal, but he reminded us that natural resources from development have made us less competitive. we have a real chance to win on this issue, and he urged support As a result, our manufacturers suffer, our jobs move overseas, and the average American is left holding the “short end of the stick.” “We cannot grow the economy if we choke off domestic energy sup- ply and leave ourselves vulnerable to foreign disruption. This is going Congressman Peterson went on to argue that no one state should to be my focus from this day forward,” he promised. have a right to dictate the nation’s overall energy policy. In particular, he called attention to the state of Florida which uses 255 times the Charlie Cook energy resources that it produces, while at the same time blocking After encouraging NOIA members to participate in the NOIA Political the production of OCS resources that could be used by other states’ Action Committee, political analyst Charlie Cook provided the NOIA economies. membership with an in-depth handicapping of both the upcoming 2006 mid-term elections and the evolving fi eld of candidates of both He added, further, that energy supply limitations must be solved by parties for the 2008 Presidential election. government because it was caused by government. It is government policy that limits OCS production, and it is the federal government Cook described the 2006 elections as one of the most confounding to – acting on behalf of all the states – that should fi x the problem. predict in his experience. Looking at it from a “macro-political” per- (Continued on page 5)

NOIA Annual Meeting - Working Committee Summaries (continued from Page 2)

The committee fi rst reviewed a re-cap of membership activity for NOIA has also moved strongly toward meeting a goal set in 2005 calendar year 2005. Results were: to bring more operating companies into membership. A signifi cant • 21 new members for revenue totaling $143,400. number of the new members in 2005 and to date in 2006 are operat- • 10 voluntary dues increases for new revenue of $117,050. ing companies and have been joined by the addition of some large • 9 cancellations due to non-payment of dues, for a loss of $23,900. service and supply companies. • 3 mergers, resulting in a revenue loss of $30,600. • Net gain to NOIA of $205,950. A large list of prospective members was discussed and prioritized, and the membership was asked to continue to assist Tom Fry and The committee then reviewed member development results through Franki Stuntz in their prospective member efforts by suggesting ad- March 15, 2006. Lawrence noted that this could be a record year in ditional companies/personnel to be visited and helping to coordinate new member development. Results to date: appointments for them. • 10 new members, resulting in new revenue of $105,975. • 6 voluntary dues increases for new revenue of $59,900. Lawrence reminded the membership that every NOIA member is • 5 cancellations, costing $37,100 in revenue. considered to be part of the Membership Committee. He asked all • 1 merger, leading to a revenue loss of $32,700. to help in the efforts to strengthen NOIA by reaching out to industry • Net gain to NOIA to date : $ 96,075 peers who should be part of this association. page 4 MMS Publishes Revised Incident Reporting Requirements for a Safer Offshore Working Environment The Minerals Management Service (MMS) recently published a fi nal The revised regulations will also continue to require that operators, rule in the Federal Register that revises requirements for reporting lessees, easement holders, pipeline right-of-way holders, and other incidents associated with oil, natural gas and other mineral operations permit holders report all serious accidents, any death or serious injury, on the Outer Continental Shelf (OCS). The revised regulation requires and all fi res, explosions, and blowouts. reporting of incidents that result in less serious consequences but have the potential for more serious outcomes. During the preparation of the rule, NOIA joined an industry coalition submitting comments the rule. While not all of these comments were The fi nal rule entitled “Oil and Gas and Sulphur Operations in the accepted, NOIA is pleased to note that there have been improvements Outer Continental Shelf—Incident Reporting Requirements” revises from the draft rule. NOIA will track the rule’s implementation and regulations at 30 CFR Part 250 to clarify the Bureau’s incident report- encourage the Coast Guard and MMS to continue to work together ing requirements by providing more precise reporting defi nitions, to develop a single reporting mechanism that will satisfy both agen- thresholds, and timeframes. MMS hopes that these clarifi cations will cies’ needs without increasing the reporting burden on individual improve its capability to identify incident trends and evaluate the safety operators. and environmental performance of OCS operations. This fi nal rule becomes effective July 17, 2006. If you have any ques- tions, please contact Kim Harb at (202) 347-6900 or [email protected]. NOIA Annual Meeting Speaker Photos

Political analyst Charlie Cook detailed the Secretary of Energy Samuel Bodman evolving 2006 and 2008 election seasons. addresses the NOIA membership. Congressman John Peterson (R-PA) describes his interest in lifting all offshore moratoria on natural gas production.

Michael Binyon of the Times John Engler of NAM speaks Former Senator John Breaux Congressman Charlie Melancon of London provides a glimpse of the necessary cooperation speaks to NOIA members about (D-LA) makes the case for revenue into the power politics of energy between his association and the challenges facing Louisana. sharing for coastal, energy- production and distribution. NOIA producing states. page 5

Annual Meeting 2006 (continued from Page 3) spective, the picture looks grim for the Republican Party. Historically, a description of MMS’s current Draft Proposed Program and noted when approval ratings for Congress dip below 40 percent, the majority that NOIA had been successful in convincing MMS to seek informa- party loses an average of 29 seats. With Congressional approval ratings tion on all areas of the OCS, where last time the scoping notice only currently at about 27 percent, the stage would appear to be set for a sought information on a much more limited acreage. turnover. However, Cook explained, this “macro-political” model only accurately predicts outcomes once-in-fi ve times, usually when there is For the current round, NOIA helped generate thousands of public a groundswell that develops for change as election day nears. comments in support of expanding access to offshore acreage, includ- ing consideration of those areas currently under moratoria. NOIA Four-out-of-fi ve times, the more accurate prediction is one made will continue to urge its members to comment on every phase of the from a “micro-political” perspective, which examines each race indi- Plan as it continues through its process. vidually. Here, it appears that the Republicans will hold the Senate and the House, albeit with slimmer margins. This is largely because Jeff Krauss, Director of External Affairs, offered an overview of the incumbents hold such a tremendous advantage over challengers, with state-level outreach program initiated since his arrival at NOIA last 97 – 99 percent of incumbents holding on to their seats. The net fall. In January, NOIA launched a strategy to improve its “grasstops” result of 2006 is therefore likely to be a Congress that is even more advocacy effort to states. This advocacy campaign seeks to educate closely divided and less likely to undertake any major policy initiatives state legislators throughout the nation on the importance of access in the 110th session. to the Outer Continental Shelf for exploration and development of the nation’s valuable offshore resources. Over the past four months, Turning to the 2008 Presidential race, Cook noted that this is the fi rst NOIA has worked to build coalitions with various end-user groups time in 80 years with no sitting President or Vice President in the mix. in numerous states throughout the nation, and through them energize The race is wide open on both sides. the legislatures to act.

For the Republicans, there are 3 “camps” with different likely frontrun- In the Midwest states, NOIA is working with the agriculture and ners. “Secular Republicans” favoring fi scal responsibility and national agribusiness community along with the chemical industry, to reach security will likely back Senator John McCain, while “Sacred Republi- legislators and policy makers. NOIA is also working with state cans” will turn to Senator Rick Santorum or Arkansas Governor Mike farm bureaus, manufacturing associations, and chambers of com- Huckabee in backing a cultural values platform. In between the two, we merce along the Atlantic seaboard, the Southeast and out West. In all can expect to see a competition for the vote of “Hybrid Republicans” these states, coalition members are pursuing one of two tracks: secure whose platform will draw on parts of each of the other camps, with passage of joint resolutions or generate leadership letters urging support likely to rally around Virginia Senator George Allen. development of offshore energy resources and the revocation of the Administrative withdrawals and Congressional moratoria on offshore For the Democrats, there are two camps, according to Cook. The fi rst energy development. Upon completion of either, copies are then will back Senator Hillary Rodham Clinton and the second will be made sent to the members of the state’s congressional delegation and the up of everyone who believes her unable to win a national election. This President of the United States. will give rise to an alternative candidate for the Democrats, possibly centered around former Virginia Governor Mark Warner. To date, NOIA’s outreach has resulted in four resolutions that have been introduced in Idaho, Utah, Oklahoma and Tennes- Government Affairs Committee see. In addition, Utah and Arizona have sent leadership letters to the Committee Chairman Charles Fabrikant of Seacor Holdings opened Administration to lift the moratoria on the nation’s Outer Continen- the session by noting that only a few years ago there was little activ- tal Shelf. Several others states have resolutions or letters pending. ity in Washington on OCS issues. Today, that situation has changed, with numerous initiatives ongoing in the House of Representatives, Finally, Nolty Theriot, Director of Congressional Affairs, gave a the Senate, and within the Administration. review of the status of pending legislation in Congress on OCS is- sues. A number of bills have been introduced: Senators Bingaman Kim Harb, Director of Policy and Government Affairs, led a discussion (D-NM) and Domenici (R-NM) are seeking to open large tracts of the among NOIA members of the preparation of the Minerals Manage- original Lease Sale 181 Area to leasing within a year; Representative ment Service’s (MMS’s) 5-Year Program for 2007-2012. Harb offered (Continued on page 14) page 6 2006 NOIA Annual Meeting Washington, DC

Al & Charlotte Erxleben, El Paso Production Rita Rodriguez and Carl Thorne, ENSCO Company; Steve Manz, Hercules Offshore International; Dave Lawrence, Shell International

Brandt Dufrene, Oceanic Fleet; Sam & Jill Howard and Becky Hughes, Karen and Gilbert Giberga, Hornbeck Offshore Nance, Oil States Industries

Tom Wertz, M-I Swaco; Rich Kruger, ExxonMobil Burt & Jodi Adams, Oil & Gas Rental Services; Production Company; Dave Welch, Stone Energy Holly & Larry McRae, Nexen Petroleum; new Corporation; Mark Pease, Anadarko Petroleum members Diane & Ross Keogh, Petsec Energy Company page 7 2006 NOIA Annual Meeting Washington, DC

Brady Como, Delmar Systems; Cornelius Dupre’, Larry and Holly McRae, Nexen Petroleum USA; Dupre Interests; former Senator John Breaux Doug Polk, VAM PTS

NOIA Chairman Chris Seaver, Hydril New members Joy & Dave Gibbs, Medco Energi, Company; Beverly & George Boyadjieff, U.S.; Dixie & Tom Wertz, M-I Swaco Retired Varco International; Howard Hughes, Oil States Industries

Doug & Pauline Wall, Baker Hughes; Kim & Jerry & Cathy Gauche, National Oilwell Varco; Jim Melody Meyer, Chevron Corporation Looke, Walter Oil & Gas Corporation page 8 2006 NOIA Annual Meeting Washington, DC

Bruce Hatton, J. Ray McDermott; Todd Hornbeck, Gary & Susan Hanna, TETRA Technologies Hornbeck Offshore Services; Ken Wells OMSA; Peter Atkinson, Global Industries Ltd.

Laj Carroll, BJ Services Co.; Dick Alario, Key Paul & Melissa Doyle, Fairways Offshore Energy Services; Dave Sellers, Edison Chouest Exploration Offshore; Kenny Lang, BP

NOIA Treasurer Allen Parks, Parks Paton Former NOIA Chairmen Boysie Bollinger, Bollinger Hoepfl & Brown; Louis Schneider, Edison Shipyard; Richard & Becky Currence, retired Chouest Offshore; Allen Brooks, PPHB Tidewater; Richard & Mathilde Currence, Rigdon Marine page 9 2006 NOIA Annual Meeting Washington, DC

Brady Como, Delmar Systems; Lisa & Gordon Terry & Henrietta Hall, Superior Energy Services; Wilkinson, J. Ray McDermott, S.A. Otto Candies, Otto Candies, LLC

Alan Breaud, Breaud & Meyers; Carl Thorne, Rita Therese Hollek, Kerr-McGee Oil & Gas; Patrick Rodriguez, ENSCO International; Bill Chiles, and and Paula McCarthy, Natco Group Inc. Mark Duncan, Bristow Group

Kirby & Susan Arceneaux, Offshore Energy Don & Wilson Jackson, IPS; Rich Kruger, Services; Mary Flores, W & T Offshore; Nolan & ExxonMobil Production Company Tarrol Roberts, Cameron page 10 2006 NOIA Annual Meeting Washington, DC

Gerald & Candace Schlief, ATP Oil & Gas; Kevin Cappy & Darlene Bisso, Bisso Marine Williams, BJ Services Co Company

Jane & Ken Blanchard, Superior Energy Services Bill Flores, W & T Offshore; Dave Hager, Kerr-McGee Corporation

Cappy Bisso, Bisso Marine; Senator David Tom & Carol Ballantine, Newpark Vitter; Bob Alario, PHI; Hank Danos, Danos Resources; Senator David Vitter & Curole; Darlene Bisso; Boysie Bollinger, Bollinger Shipyards page 11 2006 NOIA Annual Meeting Washington, DC

Melody Meyer, Chevron Corporation; Dave Sandi Gresham, Heerema Marine Contractors; Lawrence, Shell Exploration & Production Darrell & Therese Hollek, Kerr-McGee Corporation; Company; MMS Director, Johnnie Burton Denny Bullard, Pioneer Natural Resources

George Foster, Foster Marketing Communications; new members Jacqueline & Bob Long, Transocean Inc., Richard Higham, Acteon Group Limited; Grant Kevin Williams, BJ Services; Jennings, Teledyne RD Instruments Jon Marshall, GlobalSantaFe

Kirby Arcenaux, Offshore Energy Services; Boysie Bollinger, Bollinger Shipyards; Jay Collins, Bruce Gresham, Heerema Marine Contractors Oceaneering International; Len Paton, Parks Paton Hoepfl & Brown page 12 2006 NOIA Annual Meeting Washington, DC

New Member Tom Fina, Howrey LLP; new Former NOIA Chairman Carl & Rosella member Dennis Duffy, Cape Wind Associates; Thorne, ENSCO International; Donna & Cris Bob Nolan, Adams & Reese Gaut, Halliburton

Ronnie Murphy, Venture Transport Logistics; Lois & Carl Davis, Davis-Lynch Inc.; Toby Dave Sellers, Edison Chouest; Jim Looke, Mogabgab, EDG Walter Oil & Gas Corporation

Save the Date!!

The NOIA 2006 Fall Meeting will be held at The Breakers in Palm Beach on November 2 - 4, 2006.

Please plan to join us for what will surely be an insightful and enjoyable session with a particular focus on the 2006 Midterm Elections, scheduled to take place just three days later. page 13

Minerals Management Service Industry Awards Recognizes Leading Corporations At an awards ceremony crowded with industry and government representatives in Houston on April 25, the Minerals Management Service (MMS) offered public recognition to companies and individuals who have delivered exceptional achievements in offshore safety, as well as in revenue management. NOIA members fi gured prominently in the fi nal tally, and a special mention was made of the recent conferral of the NOIA 2006 Safety in Seas Award to MI-SWACO.

Acting Interior Secretary Lynn Scarlett presided over the MMS Industry Awards, which conferred several categories of awards: the Corporate Leadership Award (CORLA), which recognizes individuals who work closely with MMS to improve revenue collection and processes for offshore development; the Safety Award for Excellence (SAFE), which recognizes outstanding safety and pollution prevention achievement by offshore oil and gas operators and contractors; the Mineral Revenues Stewardship Award, which recognizes companies that demonstrate exceptional compliance with mineral revenues laws and Federal fi nancial requirements; and the Safe Operations and Accurate Reporting Award (SOAR), in recognition of the industry entity that demonstrates the highest commitment to safety, stewardship and resource management.

The winners in each category are listed below:

2005 CORLA winners T. David Bond, Chevron North America Exploration and Production Ricky Allan Britt, Chevron USA Inc. Molly Conrad, Crazy Mountain, Inc. J. Keith Couvillion, Chevron USA Inc. Gregg H. Falgout, Island Operating Company, Inc. George “Doug” Foster, Diamond Offshore Drilling, Inc. Linda J. Gilmer, BP America Production Company Merrill Jacobs, Clean Seas, LLC Daniel May and Tamica Whorton, Enterprise Products Operating, L.P. Robert J. Moore and Morris LaRubbio, Cinergy Marketing & Trading, LP Wes Morgan, Rowan Drilling Company, Inc. Clyde Self, Wood Group Production Services Michael E. Watters, Shell Pipeline Pamela Williams, Shell Exploration and Production Company

2005 SOAR Award winner Exxon Mobil Corporation

2005 SAFE Award winners Newfi eld Exploration Company Nexen Petroleum USA Inc. TODCO Baker Energy

2005 Mineral Revenues Stewardship Award winners Exxon Mobil Corporation Walter Oil and Gas Corporation Energen Corporation Kennecott Energy Company page 14

Annual Meeting 2006 (continued from Page 5) Peterson (R-PA) has secured over 130 co-sponsors for his bill to lift to tap the Strategic Petroleum Reserve and waive fuel blend standards all moratoria on offshore natural gas production; Representative Jindal where appropriate. (R-LA) is shepherding an effort to provide states with an option to opt in or out of offshore production near their shores in exchange for a Johnnie Burton share of the royalty revenue generated. NOIA is working closely with Acting Assistant Secretary of Land and Minerals Management for Congressional staff, members, and other trade associations to ensure the Department of the Interior Johnnie Burton was welcomed back the fi nal versions accurately refl ect the specifi c needs and interests of to speak before the NOIA membership this year, and her comments the offshore industry. detailed some of the public perception challenges facing the Depart- ment and the industry overall. Samuel Bodman In a lunchtime address, U.S. Secretary of Energy Samuel Bodman “While we are all together in a tremendous effort to rebuild and ex- took a few moments to congratulate MI-SWACO on their winning pand the infrastructure that brings such vital energy supplies to the of the 2006 Safety in Seas Award. (See page 15 for more details nation,” Burton contended, “there remains very little understanding on Safety in Seas.) Afterward, the Secretary turned his attention to among the public at large about the intricacies of energy production detailing the Bush Administration’s current energy policy priorities. and supply.” The Administration, he explained, still supports leasing in the Arctic National Wildlife Refuge and working with coastal states to increase Nevertheless, Burton sees potential to increase the percentage of access to the Outer Continental Shelf as ways to reduce reliance on domestic production from the Outer Continental Shelf to 40 percent imported oil and gas. of oil and 26 percent of natural gas in the next eight years.

Bodman said reducing US reliance on unstable foreign oil and gas sup- Secretary Burton also described the Draft Proposed 5-Year leas- plies has been a cornerstone of Bush’s energy policy for some time. ing Program that had been released in February. In particular, she The “advanced energy initiative,” which Bush announced in his State highlighted the inclusion of new areas under consideration, such as of the Union address, increases funding for clean energy programs and in Alaska and off the coast of Virginia. Their inclusion was a rec- research at the Department of Energy by 22%, the secretary said. ognition of the longstanding policy of President Bush and former Interior Secretary Norton that the state’s expressed interest is the key In order to fund this Initiative, however, the Administration has chosen to changing Presidential withdrawals. to not seek funding for research and development projects for the oil and gas industry, adding that current price levels are incentive enough Secretary Burton also elaborated on the recent change to the Minerals for companies in this industry to fund these projects on their own. Management Service’s planning area boundaries and on the legislative efforts underway to open up parts of the Lease Sale 181 Area. Since NOIA members are so engaged in the development of the new MMS 5-Year Program, Bodman offered comments as well on Secretary Burton described the Interior Department’s ongoing efforts the work being done on this issue at the Department of the Interior. to establish a leasing and permitting regime for alternative energy proj- Noting that average natural gas prices have more than doubled since ects on the Outer Continental Shelf. She indicated that wind projects, the Department of the Interior began to develop the present 5-year which are most feasible in the short-term, are the Department’s fi rst OCS Plan in 2000, Secretary Bodman indicated that the Administration focus, though there are evolving confl icts over whether the Federal knows it must take, “any steps we can… to expand our future access Electricity Regulatory Commission has jurisdiction over wave and to nearby supplies will have an immediate, positive impact on markets tidal/current projects if they are classifi ed as hydroelectricity. and should help hold down future price increases.” Finally, Secretary Burton thanked the industry for its tireless efforts Turning to the topic of Gulf Coast restoration as the hurricane season to rebuild after the hurricanes of 2005 and indicated that MMS con- draws near, Secretary Bodman urged the oil and gas industry to fi nd tinues to improve how industry and regulators can best protect the ways to cooperate more across company lines to speed reconstruction. infrastructure, the people, the environment and the nation’s access to Bodman added that if hurricanes damage the Gulf Coast’s energy these vital energy resources in the coming season. infrastructure again in 2006, the Administration will be ready again Michael Binyon (Continued on page 15) page 15 T M-I SWACO, LLC awarded the 2006 NOIA Safety in Seas Award M-I SWACO, LLC. was awarded the 2006 National Ocean Industries of the company’s dramatic overall improvement of the safe capture Association (NOIA) Safety in Seas Award on March 29, an annual and disposal of drill cuttings through its CleanCut™ technology in award presented since 1978 recognizing outstanding contribution to its operations throughout the world. (Drill cuttings are the mixture the improvement of safe operating procedures in the ocean indus- of rock pieces and drilling fl uids produced as a waste product when tries. The Award was delivered by Amos Bussmann of Compass drilling an oil or gas well. Drill cuttings must be contained offshore Publications to Loren K. Carroll, MI-SWACO President and CEO. and disposed of properly.) Carroll and MI-SWACO were later congratulated on the Award by Energy Secretary Samuel Bodman and the Interior Department’s CleanCut™ contains and ships the drill cuttings to shore for proper Acting Assistant Secretary for Land & Minerals Management, John- disposal using bulk pneumatic transfer technology. The cuttings nie Burton. are contained in a sealed system and conveyed by compressed air to storage silos and then to supply boats for transfer. This technology M-I SWACO’s award-winning nomination was selected by a blue- eliminates the need for transfer in box-like containers via crane. As ribbon panel of judges from the U.S. Coast Guard, the Minerals a result, CleanCut™ technology cuts the hazards to personnel from Management Service and the National Academy of Sciences’ Marine rig-to-ship hoisting and drastically reduces the possibility of the drill Board. The judges awarded the prestigious honor in recognition cuttings being spilled into the marine environment.

MI-SWACO CEO Loren Carroll received Tom Wertz and Loren Carroll of MI-SWACO MI-SWACO CEO Loren Carroll the 2006 NOIA Safety in Seas Award being congratulated by Acting Assistant congratulated by Energy Secretary from Amos Bussmann of Compass Secretary of the Interior for Land & Minerals Samuel Bodman Publications Management Johnnie Burton

Annual Meeting 2006 (continued from Page 14)

After focusing so intently on matters of domestic policy for two days, Russia’s Pacifi c Coast will fi rst stretch. In its southern region, Russia the NOIA membership turned to the international realm in a session is vying with the United States, Turkey, Georgia and Azerbaijan, each with Michael Binyon, diplomatic editor of the Times of London. advocating for their own preferred routes for natural gas transmission Binyon offered an insight into what he termed “the great game” of to ports in either the Black Sea or the Mediterranean. pipeline politics, which is part geopolitical strategy, part economic competition, and entirely based on the allocation of strategic energy The point is that energy supply has become a tool of power to be used resources. in the realpolitik of nations where these issues were once decided by military force calculations. As the major economies of the world compete more actively for scarce resources, according to Binyon, countries who control not only the Charlie Melancon production but also the transportation of those resources are able to The Democratic Congressman from Louisiana visited with the NOIA exert increased infl uence in the global arena. Russia presents the prime membership to argue that we urgently need more politicians who example, particularly with respect to natural gas pipelines. Russia’s re- will battle on issues rather than on personal politics. Congressman cent showdown with Ukraine over natural gas prices led to a shutdown Melancon cited Louisiana and the politics of offshore development in deliveries to Western European countries and a showdown between as an example of issue-based lawmaking rather than one that divides Germany, France and Moscow. Similarly, Russia is playing China and purely on partisan lines. Japan off of one another, gaining concessions from each while it delays deciding into which country a pipeline under construction to (Continued on page 16) page 16

Annual Meeting 2006 (continued from Page 15) The development of revenue sharing proposals in Congress that would In addition, his comments underscored the importance of the efforts give coastal states that support offshore production a share of revenue undertaken by NOIA to work with end user groups and state-level that now goes to the Federal Treasury is a case in point. Melancon leaders to broaden the energy policy debate. The implications for the said that he is a cosponsor of Congressman Peterson’s legislation to broader economy, the potential impact on jobs creation, the ability of lift the moratoria on natural gas production, but has real concerns state leaders to infl uence their federal counterparts, and the needs of about Congressman Jindal’s and Congressman Pombo’s Offshore the agricultural community are as intimately involved in OCS policy State Options Act. Principally, he is worried that the minutiae of making as are the traditional voices of the industry and the environ- that legislation will doom the ability of Louisiana to secure suffi cient mental movement. revenue sharing. He contends that coastal states like Louisiana should receive 50 percent of the royalties from offshore production, as is the Technology Policy / Public Affairs and Education Commit- case with onshore production. Such a provision would allow Louisiana tees to fund its own redevelopment of South Louisiana after last year’s As the start of the 2006 Hurricane Season on June 1 approaches, storm damage, rather than relying on a FEMA reconstruction effort these two Committees met in joint session to undertake the creation he decried as ineffective and an obstacle to progress. of a special publication. Envisioned as an educational package of materials, it will explain how offshore production works, what happens John Engler during the preparation for a storm, details after-storm procedures, and Underscoring its growing cooperation with the end users of energy, offer statistics from past hurricane seasons. There will be a special NOIA members next met with former Governor John Engler, who emphasis on “lessons learned” in order to stress that the industry is is now the President of the National Association of Manufacturers committed to continuous improvements to our already enviable safety (NAM). Governor Engler explained how the manufacturing base in record. The package of materials will also include a library of stock the United States considers energy supply to be a critical issue for its industry images and a list of media contacts who are willing to com- viability moving forward. The United States, he explained, has gone ment during future storm crises. from having energy supply as a strategic asset to a situation where limited access has become a fundamental liability for companies In addition, the Committees heard a report from Burt Adams of Oil operating domestically. and Gas Rental Services in his capacity on the Board of the Ocean Star. This educational institution teaches kids about the technological Industry is reacting to this reality by doing everything possible to frontiers pushed every day by the offshore industry, and is currently improve its effi ciency, but must do more to increase access to energy undertaking an expansion plan to improve its outreach and impact. supply. He explained that NOIA and NAM are working hard to edu- cate decision makers around the country on the larger implications If you have any questions about any part of the NOIA Annual Meet- for the economy of restricted OCS access. ing, please call us at (202) 347-6900. And mark your calendars for the next NOIA Meeting, which will be held at The Breakers in Palm John Breaux Beach on November 2-4, 2006. We hope to see you there! At the request of Louisiana Governor Kathleen Blanco, John Breaux came to speak to the assembled NOIA members to reiterate the case for revenue sharing and its importance to the post-hurricane recovery.

MMS Issues Proposed Notice of Western Gulf Lease Sale 200

The Minerals Management Service (MMS) announced in the Federal of Mexico Outer Continental Shelf planning area, which is offshore Register the availability of the Proposed Notice of Lease Sale 200, an Texas and in the deeper waters offshore Louisiana. The blocks are offshore oil and gas lease sale in the western Gulf of Mexico, sched- located from nine to about 210 miles offshore in water depths of four uled for August 16, 2006. to more than 3,425 meters. MMS estimates the proposed lease sale could result in the production of 136 to 262 million barrels of oil and The proposed lease sale 200 encompasses about 3,787 unleased 0.81 to 1.44 trillion cubic feet of natural gas. blocks covering approximately 20.4 million acres in the western Gulf