Chevron Executive Speaks to Congress About the Outer Continental Shelf

Gary Luquette

By Gary Luquette, President
Chevron North America Exploration and Production Company

Statement Delivered to the House Committee on Natural Resources

Washington D.C., Feb. 25, 2009

Mr. Chairman, Ranking Member Hastings and members of the Committee: My name is Gary Luquette, President of Chevron North America Exploration and Production Company. I have the honor today of representing Chevron's 28,000 employees that live and work in the U.S. before your committee today.

Our nation is confronting serious economic challenges. I appreciate this opportunity to share with your committee how the oil and gas industry and Chevron can assist our nation in the economic recovery process. There are two ways the industry can help: By enhancing America's energy security and by creating more jobs and more revenue for federal, state and local governments.

To the urgent goal of addressing both energy and economy, I'll speak briefly about two things: Why the development of the Outer Continental Shelf [OCS], including the former moratoria areas, is essential, and how we can do it in a responsible and sustainable way.

First: OCS development is essential because America needs the energy. While energy demand is down today due to the economic slowdown, we know that energy demand will grow longer term. Today's decisions should help us prepare for, not jeopardize, tomorrow's economic growth.

To prepare for tomorrow's energy growth, and meet our nation's increasing long-term energy demand, we must recognize we're not in an either/or situation. We need more conservation. We need more alternatives and renewables. And we need more conventional energy such as oil and natural gas. We need more of all forms of energy.

Every major study of America's energy future agrees that even with the most aggressive development of alternatives and renewables — oil and gas will make up the dominant share of the energy mix for decades to come.

Given the projected increase in energy demand, we need access to our secure and reliable resources in the U.S., including the OCS. The good news is: the potential of the OCS is significant.

By 2025, OCS production could add 1 million barrels of oil per day to our energy portfolio. And, based on our experience in the Gulf of Mexico, with the introduction of new technology, that amount should dramatically increase.

Every barrel produced in the U.S. increases our energy security and reduces our dependence on less reliable sources. Of course, this also helps the U.S. economy by keeping U.S. dollars and jobs here at home.

So, to sum up why developing the OCS is essential: America needs the energy. America needs the jobs. And America needs the economic boost that development will provide.

My second point is about how we can develop the OCS in a responsible and sustainable way. We in the oil and gas industry appreciate this fact that our ability to continue to operate depends on doing exactly this.

I will focus on three of the seven policy recommendations contained in my written testimony today.

First, we should sustain the 2008 decision to open up the majority of the OCS. Again, developing these resources will boost our economy, improve our energy security and reduce our vulnerability to imports from abroad.

Second, we should guide future leasing by using the comprehensive and time-tested Minerals Management Service's 5-year plan leasing process. As an early part of the process, the MMS should support and encourage the gathering of new, state-of-the-art geophysical data so we, as a nation, can understand the true extent of the OCS's resource potential. Then, and only then, we can make informed leasing and development decisions.

Third, we should incentivize states to support OCS production by allowing all coastal states where there is new production to have an increased share in revenues and royalties and revenues.

To conclude, I'm proud of my 30 years of service to my industry. I can assure you that Chevron and all of our employees will continue to apply our best efforts to provide energy that is vital to our nation. Reliable and affordable energy is a pillar of America's economic stability and strength. Developing America's own oil and gas resources can supply even more of the jobs and energy we need and boost the American economy.

But ladies and gentlemen, to strengthen America's energy pillar — and help stimulate our economic recovery — it's vital that we act now.

Thank you.

Updated: February 2009