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Opening nearly all federal land to oil and gas drilling — including the Arctic National Wildlife Refuge — would bring modest revenues to the U.S. budget over the next decade, according to a new report by the nonpartisan Congressional Budget Office prepared at the behest of Republican lawmakers.

If opened to drilling, the refuge and parts of the Atlantic, Pacific and Florida coasts together would yield $7 billion over the next decade, the CBO said. That’s less than 5% of the $150 billion the federal budget already stands to get over that period from oil and gas leases on federal land already open to drilling.

The CBO report differs with long-standing assertions by the oil and gas industry and their political allies that opening land currently off-limits to development would channel considerable revenue to federal coffers and help reduce the national debt. Industry and its allies also say that removing drilling limits would free the United States from dependence on foreign oil.

House Budget Committee Chairman Paul D. Ryan (R-Wis.), who requested the report, did not immediately respond to a request for comment. Neither did Rep. Chris Van Hollen of Maryland, the panel’s ranking Democrat.

For its calculations, the CBO cited estimates of 8 billion barrels of oil within the Arctic Refuge. However, the Energy Information Administration — the research and analysis arm of the Energy Department — says the amount is more likely 1.9 billion to 4 billion barrels.

Using the higher estimate, the CBO found that opening the ecologically sensitive wildlife refuge to oil and gas production would yield $5 billion over the next 10 years — 50% to 90% of which would go to Alaska under current law.

Opening more of the American coastline to oil and gas development would yield an additional $2 billion over 10 years, to be divided between federal and state authorities, the CBO said.

“The federal government also would collect royalties if oil and natural gas eventually were produced from those lands, but most royalty payments would not be collected until much later because of the long lag between the initial leasing agreement and the time when production begins,” the CBO said. It estimated those revenues at perhaps $2 billion to $4 billion a year from 2023 to 2035, but called the numbers “quite uncertain.”

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The Obama Administration provided final details for the Central Gulf of Mexico lease sale announced by President Obama in January 2012, as part of his administration’s ongoing focus on expanding safe and responsible production of our domestic energy sources. Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management (BOEM) Director Tommy P. Beaudreau announced the Final Notice of Sale for a June 20, 2012 lease sale that will make available all unleased areas in the Central Gulf of Mexico Planning Area, offshore Louisiana, Mississippi and Alabama, including 7,276 blocks on about 38.6 million acres.

The sale will take place at the Mercedes-Benz Superdome in New Orleans. BOEM estimates the sale could result in the production of over 1 billion barrels of oil and more than 4 trillion cubic feet of natural gas.

“As part of the Obama administration’s all of the above energy strategy, we continue to make millions of acres of federal waters and public lands available for safe and responsible domestic energy exploration and development,” said Secretary of the Interior Ken Salazar. “Holding this lease sale is one of the many administrative steps  we are taking, at the President’s direction, to increase U.S. production, reduce dependence on foreign oil, and incentivize early production on leases that industry holds.”

“The Gulf of Mexico is the crown jewel of the U.S. Outer Continental Shelf, and home to a number of world-class producing basins – including many in deepwater areas that are becoming increasingly accessible with new technology,” said Bureau of Ocean Energy Management Director Tommy P. Beaudreau.  “There have been a number of significant discoveries in the past two years alone, and this sale will continue making significant and promising areas available while encouraging diligent development and providing the taxpayer a fair return.”

The blocks are located from three to about 230 miles offshore, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters) in the Central Gulf of Mexico, a region that BOEM estimates contains close to 31 billion barrels of oil and 134 trillion cubic feet of natural gas that are currently undiscovered and technically recoverable.  The Final Notice of Sale package describes all terms and conditions for Central Gulf Lease Sale 216-222.  These include a range of incentives that encourage prompt development and ensure a fair return to taxpayers, as described in a recent report by the Department of the Interior on the status of Oil and Gas Lease Utilization. These measures include escalating rental rates and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.

BOEM has also increased the minimum bid in deepwater to $100 per acre, up from only $37.50, to ensure that taxpayers receive fair market value for offshore resources and to provide leaseholders with additional impetus to invest in leases that they are more likely to develop. Analysis of the last 15 years of lease sales in the Gulf of Mexico showed that deepwater leases that received high bids of less than $100 per acre, adjusted for energy prices at time of each sale, experienced virtually no exploration and development drilling.

The terms of sale also reflect a series of conditions to ensure an appropriate balance of orderly resource development with protection of the human, marine and coastal environments. These include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region. BOEM completed a supplemental environmental impact statement relating to this sale, which considers the latest available information for the Central Gulf of Mexico Planning Area following the Deepwater Horizon oil spill.  Today, BOEM is also issuing a Record of Decision following that analysis.

For this sale, BOEM has also adopted a stipulation to notify bidders that the terms stated in a February 20, 2012 agreement between Mexico and the United States regarding the exploration and development of oil and natural gas reservoirs along the United States’ and Mexico’s maritime boundary may apply to some of the blocks offered in this sale, should the agreement enter into force.

The Final Notice of Sale information package is available at: http://www.boem.gov/sale-216-222/. Copies can also be requested from the Gulf of Mexico Region’s Public Information Office at 1201 Elmwood Park Boulevard, New Orleans, LA 70123, or at 800-200-GULF (4853).

The Final Notice of Sale and the Notice of Availability of a Record of Decision on a Final Supplemental Environmental Impact Statement for Lease Sale 216/222 are available in the Federal Register at: http://www.archives.gov/federal-register/public-inspection/index.html.

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Visitors to this oil town might be forgiven for wondering whether the BP oil spill and subsequent drilling moratorium ever happened. “Now hiring” signs are plastered on billboards around town, and hotels such as the Crowne Plaza are chock full of seminars training students to work on offshore rigs. Many offshore companies can’t find enough workers for the jobs they’re listing. This parish has the lowest unemployment rate in Louisiana, 4.8%.

Such is the opportunity on the offshore rigs that Sheila Clark, whose husband, Donald, died in the Deepwater Horizon explosion two years ago, said her 22-year-old son recently asked her how she’d feel if he went to work on a rig.

“I can’t stop him,” said Clark, who moved to Baton Rouge after her husband’s death. “He wants to make a good living for himself.”

The Obama administration takes credit for this sea change in an area that was all but closed during a six-month moratorium on offshore drilling in 2010.

“There are politicians who say that if we just drilled more, then gas prices would come down right away,” President Obama said last month in the Rose Garden. “What they don’t say is that we have been drilling more.”

But companies here complain about a sluggish permit process, and say the hiring signs are up because so many workers left town during the moratorium that there’s now a worker shortage. When Mitt Romney came to Louisiana this spring, he picked up on their complaints.

Obama “made it harder to get energy in America and so he shouldn’t be taking credit for that,” Romney said, standing on a natural gas rig.

As gas prices fluctuate and the economy remains stagnant, energy is becoming one of the more contentious issues in the 2012 campaign. House Democrats introduced a bill that would pay for lower-interest student loans by ending tax subsidies to oil companies. Republicans accuse Democrats of hampering energy production by blocking the Keystone pipeline.

Romney spoke to supporters in front of an oil derrick in the swing state of Colorado last week, criticizing Obama for “outdated” energy policies.

“I’m going to open up [the Arctic National Wildlife Refuge]; I’m going to get drilling in the gulf going again; I’m going to make sure we drill for oil in the outer continental shelf,” he said.

Nowhere is the energy issue more sensitive than in the Gulf of Mexico, where environmentalists butt heads with economic development officials after one of the biggest environmental disasters in U.S. history.

The strange thing is, experts say, that despite the politics, Romney and Obama have essentially the same position on offshore drilling.

“They’re not that far apart,” said Cindy Rugeley, an assistant professor of politics at Texas Tech University. “Both of them agree that there should be some degree of drilling offshore.”

Promoting drilling is a little tougher for Obama, who counts environmentalists among his supporters and must tread carefully in Florida, which saw its tourism industry decimated after the oil spill. But administration officials have been vocal in insisting that there’s more offshore drilling going on than there has been in years, part of an “all-of-the-above” energy policy that promotes getting energy from both below-the-ground resources and renewable fuels.

“Since the president took office, domestic oil and gas production has increased each year, with oil production higher than any time in eight years and natural gas production at its highest level ever,” said Clark Stevens, a White House spokesman. The administration has approved more than 500 permits for oil wells, and will hold a 38 million acre lease sale in June, he said.

By the end of April, there were 41 rigs operating offshore in Louisiana, compared to 47 in the week before the spill, according to a count by Baker Hughes, a large oil field company that keeps an official tally. Total federal oil production — offshore and on — has increased by 13% during the first three years of the Obama administration, according to administration data.

In October, the Interior Department completed reorganization of the Minerals Management Service, which had been responsible for regulating drilling, into three separate agencies. Permitting has picked up since then, with 32 drilling permits approved in the Gulf of Mexico in February, the most in one month since May 2007.

The administration points out that in one lease sale in December, it made available 21 million acres of land in the gulf, but the industry leased just 1 million acres.

Critics say the Obama administration has created regulatory uncertainty that’s driven out companies and workers.

“We are really not maximizing the opportunities in the Gulf of Mexico,” said Lori LeBlanc, executive director of the Gulf Economic Survival Team, a Louisiana nonprofit that advocates for more gulf energy production. “Without a predictable process, companies are going to look at other parts of the world.”

Operators submit plans to the government before they can apply for permits, she said, a process that used to take 50 days but now takes, on average, 212.

Obama’s opponents cite statistics that contradict administration figures. LeBlanc’s rig count shows 18 active rigs in the gulf now, down from 27 before the BP spill — any tallies that show otherwise are counting rigs that are not actively operating, she said. She is counting only deep-water rigs; the Baker Hughes number counts all offshore.

“There have been intentional efforts to slow down new production by slowing the permit approval process,” said Garret Graves, director of coastal activities for the state of Louisiana in the administration of Republican Gov. Bobby Jindal. Graves said production was down about 100 million to 200 million barrels a year.

Those in Lafayette are divided over Obama’s record.

“We find there’s a lot of rhetoric coming from the politicians – they say they’re going to lift the moratorium, and then they don’t issue permits,” said Keith Mosing, chief executive of Frank’s International, which provides tools and workers for offshore rigs. He says 80% of the equipment he makes in Lafayette is going overseas.

But Volker Rathmann, president of Collarini Energy Staffing, which finds workers for offshore rigs, said the demand for such workers had tripled in the last year and a half.

“If you take the rhetoric and politics out of it, I don’t think the Obama administration is very far away from what the Republicans are saying,” he said. “If you can spell drilling, you can get a job.”

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Interior Secretary Ken Salazar Tuesday called on Congress to codify new safety regulations imposed on offshore drilling by the Interior Department in the aftermath of the Deepwater Horizon disaster, and to pass legislation needed to implement a new agreement with Mexico on exploiting oil and gas resources in the Gulf of Mexico. In a speech before the National Press Club, Salazar described those two actions as the “low-hanging fruit” of the doable for a Congress he otherwise disparaged as doing little but engage in “fairy tale” energy politics utterly disconnected from reality and the everyday concerns of most Americans.

Salazar said the real divide over energy in America was “between the real energy world and the imagined energy world where you hear cries of ‘drill, drill, drill,’ notwithstanding the fact that most of the (Outer Continental Shelf) resources are open for business, and two-thirds of the public lands that industry has leased are sitting idle.”

“It’s a place where up is down and left is right, where oil shale seems to be mistaken for shale oil, where record profits justify billions in subsidies and where rising U.S. production and falling dependence on foreign oil somehow add up to bad news,” said Salazar. He said that the American people know that “not even Harry Potter can’t wave a wand,” and restore $2-a-gallon gas.

Salazar said that the future of drilling in the Gulf might have been very bleak if the administration had not ably responded to the BP spill.

“Witnessing oil spew into the Gulf of Mexico for 87 days could have easily prompted the public to say: ‘no more, no mas,’” said Salazar. “We had to move quickly and aggressively to strengthen safety standards and environmental protections. We had to ensure that companies drilling in the deepwater were prepared to deal with a blowout. And we had to divide the three conflicting missions of the Minerals Management Service into strong and separate agencies.”

Echoing the call last week of the former members of the federal Oil

Spill Commission, Salazar said Congress “should move immediately to codify the reforms we have implemented.”

“It’s inexcusable that Congress has yet to enact one piece of legislation to make drilling safer,” he said.

He also said Congress should also enact legislation that would enable consummation of an agreement with Mexico on transboundary oil and gas development in the Gulf. It would “terminate a moratorium on drilling along our maritime boundary and provide a framework for new exploration and development in an area the size of Delaware.”

Salazar was asked whether he thought that Sen. David Vitter, R-La., had engaged in an act of “extortion” by blocking a raise bringing Salazar’s pay in line with other Cabinet members until Interior’s permitting for new deepwater wells returned to the pace it had been at before Salazar imposed a moratorium on permitting in the wake of the disaster.

Noting that he had entered the Senate with Vitter in 2004, Salazar said, “I don’t know what his motives were, but I don’t do this job for the money I get paid. I do this job because it’s the best job in the Cabinet and I enjoy fixing things for the American people. We’ve made tremendous progress.”

The Senate Ethics Committee recently dismissed a complaint that Vitter’s behavior amounted to an act of bribery, but sent all senators a letter notifying them that in the future that kind of threat would be viewed as “improper conduct.”

Vitter responded that he would “absolutely place a hold on any raise for him in the future,” but, so as not to run afoul of the Ethics Committee guideline, this time there would be no quid pro quo.

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In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI) reported a rise in the U.S. rig count (number of rigs searching for oil and gas in the country). This can be attributed to an increase in the tally of both oil and natural gas-directed rigs. In particular, the natural gas rig count climbed for only the third time in 2012, while the oil rig count scaled another record high.

The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (RIG), Diamond Offshore (DO), Noble Corp. (NE), Nabors Industries (NBR), Patterson-UTI Energy (PTEN), Helmerich & Payne (HP), etc. in gauging the overall business environment of the oil and gas industry.

Analysis of the Data

Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 1,972 for the week ended April 20, 2012. This was up by 22 from the previous week’s count and represents the fifth increase in the last 10 weeks.

The current nationwide rig count is more than double that of the 6-year low of 876 (in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,800. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending August 29 and September 12.

Rigs engaged in land operations climbed by 19 to 1,904, inland waters activity increased by 1 to 23, while offshore drilling was up by 2 to 45 rigs.

Natural Gas Rig Count: The natural gas rig count – which recently slumped to a 10-year low – increased for just the second time in 15 weeks to 631 (a gain of 7 rigs from the previous week). Despite the weekly improvement, the number of gas-directed rigs is down approximately 33% from its 2011 peak of 936, reached during mid-October.

In fact, the current natural gas rig count remains 61% below its all-time high of 1,606 reached in late summer 2008. In the year-ago period, there were 878 active natural gas rigs.

Oil Rig Count: The oil rig count was up by 15 to 1,337. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year’s rig count of 913. It has recovered strongly from a low of 179 in June 2009, rising almost 7.5 times.

Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 4 remained unchanged from the previous week.

Rig Count by Type: The number of vertical drilling rigs rose by 3 to 571, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) was up by 19 at 1,401. In particular, horizontal rig units – that reached an all-time high of 1,185 in January this year – increased by 10 from last week’s level to 1,155.

To Conclude

Notwithstanding the modest gain registered by the natural gas drilling activity over the last week, it is still down by 303 rigs (or 32%) from the recent highs of 934 in October 28.

Is this bullish for natural gas fundamentals? The answer is “no,” if we look at the U.S. production and the shift in rig composition.

With horizontal rig count – the technology responsible for the abundant gas drilling in domestic shale basins – currently close to its all-time high, output from these fields remains robust. As a result, gas inventories still remain at elevated levels – up some 60% above the benchmark five-year average levels.

Hamstrung by this huge surplus, natural gas prices have dropped approximately 60% from 2011 peak of $4.92 per million Btu (MMBtu) in June to the current level of around $2.00 (referring to spot prices at the Henry Hub, the benchmark supply point in Louisiana). Incidentally, prices hit a 31-month low of $1.85 during last week.

To make matters worse, a near-record mild weather across most of the country curbed natural gas demand for heating all winter, leading to an early beginning for the stock-building season. The grossly oversupplied market continues to pressure commodity prices in the backdrop of sustained strong production

This has forced several natural gas players to announce drilling/volume curtailments. Exploration and production outfits like Ultra Petroleum Corp. (UPL), Talisman Energy Inc. (TLM) and Encana Corp. (ECA) have all reduced their 2012 capital budget to minimize investments in development drilling.

On the other hand, Oklahoma-based Chesapeake Energy Corp. (CHK) – the second-largest U.S. producer of natural gas behind Exxon Mobil Corp. (XOM) – and rival explorer ConocoPhillips (COP)  have opted for production shut-ins to cope with the weak environment for natural gas that is likely to prevail during the year.

However, we feel these planned reductions will not be enough to balance out the massive natural gas supply/demand disparity, and therefore we do not expect much upside in gas prices in the near term. In other words, there appears no reason to believe that the supply overhang will subside and natural gas will be out of the dumpster in 2012.

With natural gas unlikely to witness a durable rebound in prices from their multi-year plight and at the same time crude prices topping $100 a barrel, energy producers are boosting liquids exploration to take advantage of this trend. As a result of movement of rigs away from natural gas towards oil, the tally of liquids-directed rigs has climbed to another 25-year high.

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There’s more friction between the Republican-led House Resources Committee and the Obama administration over the deep-water drilling moratorium the administration ordered after the 2010 BP oil spill in the Gulf of Mexico. Spencer Pederson, spokesman for Committee Chairman Doc Hastings, R-Wash., accused the Interior Department of failing to comply with a subpoena seeking documents about an Interior Department report recommending the moratorium.

View full sizeRusty Costanza, The Times-Picayune archiveThis fabrication yard at the Port of Terrebonne was photographed April 15, 2011, when its hours of operation were reduced as a result of the drilling moratorium.

The report made it seem that some outside experts agreed with the moratorium, which wasn’t the case. The administration blamed it on an inadvertent, late-night editing mistake and corrected the report after the experts complained.

The Interior Department’s inspector general said he could find no evidence the department was seeking to intentionally mislead the public or Congress. The Interior Department’s Congressional and Legislative Affairs Director Christopher Mansour offered 164 pages of documents and said more would be forthcoming this week. He called the committee’s subpoena request an “unnecessary and precipitous step that came despite the department’s “good-faith efforts.” The Interior Department also accused the House committee of wasting resources investigating an issue that was resolved two years ago instead of acting on legislation sought by the Obama administration to “enhance offshore oil and gas enforcement and safety” nearly two years after the BP disaster.

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The Obama administration announced new methods Tuesday to expedite the permitting process for oil-and-gas production on federal lands, but Louisiana congressional Republicans expressed doubts about seeing any progress.

President Barack Obama’s interior secretary, Ken Salazar, discussed the new, online National Oil and Gas Lease Sale System that he said should reduce the review period for drilling permits by two-thirds and speed up the processing of leases.

“As part of President Obama’s all-of-the-above energy strategy, Interior is committed to expanding safe and responsible oil and gas development on public lands and Indian trust lands,” Salazar said.

“This is another significant step forward in the Obama administration’s efforts to reduce the nation’s dependence on imported oil, spur local economies and create jobs.”

But Sen. David Vitter, R-La., and Rep. Bill Cassidy, R-Baton Rouge, both said oil-and-gas production on federal lands decreased in 2011.

So Cassidy said he remains a “little skeptical,” especially with the delays of the proposed Keystone XL pipeline project, from Canada to Gulf Coast that has raised questions among many in the Obama administration.

“I hope this time policy follows the rhetoric,” Cassidy said Tuesday in a phone interview.

Vitter also wrote a column in The Washington Times this week that lambasted the energy policies of Obama and Salazar while pushing for more domestic drilling.

Among other things, Vitter noted that oil production primarily rose during Obama’s first two years in office because most of the projects were already in the works. Now, Vitter contended, production has begun to dip.

In an email response Tuesday, Vitter said the new steps do not go nearly far enough.

“What Secretary Salazar should focus on is rolling back the bureaucratic regulations they’ve proposed on hydraulic fracturing and other onshore drilling,” Vitter stated.

In his column, Vitter argued that permitting in the Gulf of Mexico is still more than 40 percent below the levels prior to the 2010 BP oil leak.

Sen. Mary Landrieu, D-La., said in an email statement that she is pleased with Tuesday’s progress.

“This is a good first step toward creating a clear and efficient permitting system for onshore oil and gas development and reflects the massive increase in shale and unconventional production during the last few years,” Landrieu stated.

She added that the Interior Department and the Bureau of Land Management must continue to improve the permitting process to spur energy independence and job creation.

Marylee Orr, executive director of the Louisiana Environmental Action Network, cautioned the government must only move forward responsibly and safely with the expedited permitting.

Without the needed “responsible enforcement,” she said Tuesday, other parts of the country will suffer similar disasters because of not heeding the lessons of the BP disaster when 11 people were killed as well as countless wildlife and fisheries.

“It’s frustrating that Obama seems to be blamed for everything,” Orr said.

Within the oil industry, Don Briggs, president of the Louisiana Oil and Gas Association, said Tuesday that Obama and Salazar seem to be making a positive step, even if Briggs doubts their motives.

“This is the kind of thing that could help,” Briggs said. “But this is political maneuvering because he (Obama) has taken so much heat for gasoline prices.”

Briggs said some of the current permitting lengths of nearly 300 days are laughable.

As for the ongoing feuding between Salazar and Vitter, the Senate Select Committee on Ethics recently dismissed the ethics complaint against Vitter for previously blocking Salazar from receiving pay raises because of the offshore oil permitting moratorium after the BP leak.

But the committee chastised Vitter in noting that the incident is leading to changing Senate procedures.

“While the Committee found that there was no substantial credible evidence that you (Vitter) violated the law or Senate rules, it did conclude that it is inappropriate to condition support for a Secretary’s personal salary increase directly on his or her performance of a specific official act,” according to the letter signed by committee Chairwoman Barbara Boxer, D-Calif., and Vice Chairman Johnny Isakson, R-Ga.

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A one-year progress report on the Obama administration‘s Blueprint for a Secure Energy Policy offers a sanguine portrait of increased domestic energy production and reduced reliance on foreign oil since the president took office. The report, presented to the president Monday by a Cabinet-level task force, asserted that the administration had brought what Interior Secretary Ken Salazar called, “the sweet spot of America, and that’s the Gulf of Mexico,” safely back to “robust” production.

“Since we put in place new safety standards in the wake of the Gulf oil spill, we have approved more than 400 drilling permits. In fact, we are now permitting at levels seen before the spill, all while meeting these important new standards,” reads the report authored by the secretaries of Interior, Agriculture, Housing and Urban Development, Energy and Transportation, the administrator of the Environmental Protection Agency and Heather Zichal, deputy assistant to the president for energy and climate change.

According to the report: “Domestic oil and natural gas production has increased every year President Obama has been in office. In 2011, U.S. crude oil production reached its highest level since 2003, increasing by an estimated 120,000 barrels per day over 2010 levels to 5.6 million barrels per day. In addition, U.S. natural gas production grew by more than 7 percent in 2011 — the largest year-over-year volumetric increase in history — and easily eclipsed the previous production record set in 1973. Currently, the United States has a record number of oil and gas rigs operating — more than the rest of the world combined.”

Asked at the White House news briefing Monday about critics’ claims that the administration is both taking credit for decisions that were made by the Bush administration, and using increased production on private and state lands to mask its failure to increase production on federal lands, Salazar shot back, “I would say that those attacks are simply wrong.”

“The fact of the matter is that we are producing more from public lands, both oil and gas, both onshore as well as offshore, than at any time in recent memory. And when you look back at the years of 2009, 2010, and 2011, we’ve continued to make millions and millions of acres of the public estate available both on the land, as well as on the sea,” said Salazar. “Even after having dealt with the national crisis of the Deepwater Horizon, the president and his administration have stood up a safe and robust program to continue to explore and develop the sweet spot of America, and that’s the Gulf of Mexico, where about a third of our oil and natural gas come from every year.”

“And today, when we go out to the Gulf, you will find that there are more rigs working there than at any recent time in memory,” said Salazar. “And the fact of the matter is, just in the last 12 months, we’ve issued over 61 permits just to drill in the deepwater, about 100 to drill in the shallow water.”

The American Petroleum Institute replied that “we are hearing a lot about the administration’s leadership in driving oil production up. The fact is that production on federal offshore and onshore areas is down.”

According to API, “There are certainly positives, however, today’s production increases relate to projects begun before the administration came into office and progress happening on state and private lands. The most significant oil production that the administration has control over is the offshore, and that has been restricted to the Gulf.”

API cited figures from the U.S. Energy Information Agency indicating that oil production in the Gulf was down 22% in 2011 and projected to be down 30% in 2012 as compared to production forecasts before the Obama administration imposed a moratorium on deepwater drilling after the BP disaster.

While Salazar described a Gulf teeming with rig activity, API said that “in the Gulf of Mexico, rigs have left to work in other parts of he world taking jobs with them.” It was the same line of attack that Rep. Steve Scalise, R-Jefferson, took in questioning Energy Secretary Steven Chu at a House Energy Committee hearing last week.

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