Energy Independence: How Burdensome Regulations Are Crushing Offshore Small Energy Producers (House Small Business subcommittee hearing, September 28, 2023)
Summary
Transcript of the House Small Business Subcommittee on Rural Development, Energy, and Supply Chains hearing Energy Independence: How Burdensome Regulations Are Crushing Offshore Small Energy Producers, on September 28, 2023, published as Small Business Committee Document Number 118–028. Subcommittee Chairman Wesley Hunt presided, and Representative Marie Gluesenkamp Perez also gave an opening statement. Witnesses were Mike Minarovic of Arena Energy, Paul Danos of Danos, LLC for the National Ocean Industries Association, Alex Epstein of the Center for Industrial Progress, and Kathleen Nisbet Moncy of Goose Point Oyster. The appendix includes an amicus brief and Judge Cain's order in the Lease Sale 261 case and material from Oceana and the SBA Office of Advocacy.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Energy Independence: How Burdensome Regulations Are Crushing Offshore Small Energy Producers (House Small Business subcommittee hearing, September 28, 2023).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/energy-independence-how-burdensome-regulations-are-crushing-offshore-s-f63884e4f7/
, SHA-256 21836b08f3a0fcf1cce693eca5579924a8e96a93e2c62f4b97e7b2d1b1e4f0d0.Full text
ENERGY INDEPENDENCE: HOW BURDENSOME
REGULATIONS ARE CRUSHING OFFSHORE
SMALL ENERGY PRODUCERS
HEARING
BEFORE THE
SUBCOMMITTEE ON RURAL
DEVELOPMENT,
ENERGY, AND SUPPLY CHAINS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
HEARING HELD
SEPTEMBER 28, 2023
Small Business Committee Document Number 118–028
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
53–335 WASHINGTON : 2024
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
BLAINE LUETKEMEYER, Missouri
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
MARIA SALAZAR, Florida
TRACEY MANN, Kansas
JAKE ELLZEY, Texas
MARC MOLINARO, New York
MARK ALFORD, Missouri
ELI CRANE, Arizona
AARON BEAN, Florida
WESLEY HUNT, Texas
NICK LALOTA, New York
NYDIA VELÁZQUEZ, New York, Ranking Member
JARED GOLDEN, Maine
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
GREG LANDSMAN, Ohio
MORGAN MCGARVEY, Kentucky
MARIE GLUESENKAMP PEREZ, Washington
HILLARY SCHOLTEN, Michigan
SHRI THANEDAR, Michigan
JUDY CHU, California
SHARICE DAVIDS, Kansas
CHRIS PAPPAS, New Hampshire
BEN JOHNSON, Majority Staff Director
MELISSA JUNG, Minority Staff Director
(II)
CONTENTS
OPENING STATEMENTS
Page
Hon. Wesley Hunt .................................................................................................... 1
Hon. Marie Gluesenkamp Perez ............................................................................. 3
WITNESSES
Mike Minarovic, Chief Executive Officer, Arena Energy, LLC ............................ 6
Paul Danos, Chairman of the Board, Owner & Chief Executive Officer, Danos,
LLC, testifying on behalf of National Ocean Industries Association ............... 8
Alex Epstein, President and Founder, Center for Industrial Progress ............... 10
Kathleen Nisbet Moncy, Chief Operating Officer, Goose Point Oyster ............... 12
APPENDIX
Prepared Statements:
Mike Minarovic, Chief Executive Officer, Arena Energy, LLC ..................... 27
Paul Danos, Chairman of the Board, Owner & Chief Executive Officer,
Danos, LLC, testifying on behalf of National Ocean Industries Associa-
tion ................................................................................................................. 39
Alex Epstein, President and Founder, Center for Industrial Progress ........ 50
Kathleen Nisbet Moncy, Chief Operating Officer, Goose Point Oyster ........ 81
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Amicus Brief on Lease Sale 261 ...................................................................... 83
Judge Cain Order in Lease Sale 261 case ...................................................... 102
Oceana Protecting the World’s Oceans ........................................................... 132
SFAA - The Surety & Fidelity Association of America ................................. 136
State of Louisiana Financial Assurance ......................................................... 146
U.S. Small Business Administration Office of Advocacy ............................... 239
(III)
ENERGY INDEPENDENCE: HOW BURDENSOME
REGULATIONS ARE CRUSHING SMALL
OFFSHORE ENERGY PRODUCERS
THURSDAY, SEPTEMBER 28, 2023
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON RURAL DEVELOPMENT,
ENERGY, AND SUPPLY CHAINS,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:04 a.m., in Room
2360, Rayburn House Office Building, Hon. Wesley Hunt [chairman
of the Subcommittee] presiding.
Present: Representatives Hunt, Luetkemeyer, Meuser, Stauber,
Mann, Gluesenkamp Perez, and Golden.
Also Present: Representative Williams.
Chairman HUNT. Good morning, everyone. If you do not mind
will you please stand for the Pledge of Allegiance?
I pledge allegiance to the flag of the United States of America.
And to the Republic for which it stands, one nation, under God, in-
divisible and justice for all.
Good morning, everyone. I now call the Subcommittee on Rural
Development, Energy, and Supply Chains to order.
Without objection, the Chair is authorized to declare a recess of
the Committee at any time.
The Committee is here today to hear testimony about the role of
small businesses in our domestic energy production and the regu-
latory hurdles drillers and service providers are facing today.
I want to thank you all for being with us here today and I am
looking forward to today’s conversation.
I now recognize myself for my opening statement.
First, I want to thank all of our witnesses for being here today,
this morning. I understand you traveled pretty far to be here and
we appreciate your time. This is a very important issue. It is near
and dear to my heart being in Houston, the energy capital of the
world. Energy corridors in my district makes me the energy con-
gressman of the entire world. I tell myself that every morning
when I wake up. It makes myself feel better.
We have had an issue with the oil and gas industry I think for
the last couple of years. We are seeing gas prices soaring and I
think it is time for us as a country to unleash American energy.
I have spoken to many of you in person and no one has an issue
with renewable energy. No one has an issue with the next abun-
(1)
2
dant, affordable source for the future but I think we have an un-
derstanding that we cannot get there without us.
Domestic oil and gas is the lifeblood of our economy. And when
American energy production is strong our country is strong. Our al-
lies are strong. American families are strong. The world is a
stronger and a better place.
Independent oil and gas producers are feeling the negative im-
pacts of regulatory hurdles every single day. It is not just regu-
latory issues; it is also the higher tax rates that we are paying and
I am sure you will discuss that here in a little bit.
A recent example evolves around BOEM’s institution of a new
rule in June regarding the capital reserve requirements for Outer
Continental Shelf oil and gas leases and grantees. Requirements
such as having an investment grade credit rating, which are large,
upfront expenses for any small business place additional burdens
exclusively on smaller, offshore oil and gas companies. BOEM’s
rule further tips the scale in favor of large companies and small
businesses lack the same luxury of access to capital and credit.
Another rule we will focus on today is NOAA’s Rice’s whale
rule—I am not going to have Nessie today. Do not worry about
that—which places undue burdens on offshore operators. The Na-
tional Oceanic and Atmospheric Administration’s expansive rule
about the Rice’s whale limits oil exploration and dramatically in-
creases cost for producers in the Gulf. This rule continues numer-
ous anti-oil and gas provision which the sole aim of dismantling
our country’s offshore production. All over a possible sighting of a
Rice’s whale almost a decade ago.
As a candidate for president, Joe Biden made a campaign prom-
ise to end fossil fuels. As president, his administration has worked
every day to do just that. As I said earlier, it is not about ending
our industry; it is about finding ways to unleash American energy.
We need more electrons in the world, not fewer.
I represent Congressional District 38 here in Texas. As I told
you, and I will probably say it three more times, Energy Congress-
man of the World. That is something that is very important to me,
and if you are looking at the international and the safety of the
world, it is literally relying in the hands of energy production.
Look at what is happening in Russia and the Ukraine. Look at
what is happening all over the world. We have the opportunity to
lift nations and countries out of poverty by just giving them Amer-
ican oil and gas.
But these oppressive rules and regulations are being forced upon
our domestic oil and gas producers and are crushing production, fu-
ture investment, and the benefits that American consumers could
enjoy if we were energy dominant once again. And I am confident
that we will get there.
It is my opinion that the word ‘‘transition’’ is a myth. There is
no transition. It is only energy addition. Over the course of the
next decade we are going to add 2 to 3 billion more people to this
earth. Last year we had the highest demand on earth for oil and
gas, and being from Houston and that Houston heat, I am not
going back. I will continue to turn on my air conditioning; other-
wise, I will not be very comfortable in Houston at all.
3
We should be talking about energy addition, not transition. And
again, this is an ‘‘all hands on deck’’ approach.
I want to thank you all for being here this morning. Greatly ap-
preciate it. Thank you for your time. I look forward to having a
very spirited debate and discussion.
I now recognize Ranking Member Ms. Gluesenkamp Perez for
her opening statement. And thank you, ma’am, for being here.
Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chairman.
The success of our small businesses and the economic security of
working families relies on abundant sources of affordable energy.
As we all know, the high cost of oil and gas over the past 18
months has caused significant financial distress to many families,
particularly those in rural communities like mine where we have
to drive significant distances to access simple services. That is why
I am supportive of efforts to make our nation more energy inde-
pendent and take advantage of the wealth of natural resources
available to power our economy long into the future.
Unfortunately, many of the sources of energy that we rely on are
vulnerable to foreign manipulation. Just 2 weeks ago we saw Rus-
sia and Saudi Arabia collude to continue production cuts through
the end of the year. As a result, oil prices spiked. And despite the
record amount of oil being produced in the U.S. right now, gas
prices remain elevated for most of the consumers. This is because
the price of oil is set on a global market as a global commodity.
And no matter how much is produced at home, it will still be vul-
nerable to manipulation by dictators and despites abroad.
But what is clear is that while we transition to more sustainable
and cost-effective renewable energy, we still need oil and gas in the
meantime.
One potential source of oil and gas is found off our shores. Unfor-
tunately, the process of extracting it comes with significant trade-
offs, particularly for coastal communities. We know that as offshore
oil and gas infrastructure ages it can corrode and release harmful
chemicals into the water. Idle and unplugged wells can leak oil
that is toxic to fish, shellfish, and marine life, harming local fisher-
men and rural economies. In the event of large spills, oil can reach
the shore, polluting beaches and threatening coastal tourism.
One study found the Deep Water Horizon spill cost tourism and
fishing industries in Alabama, Louisiana, Mississippi, and Florida
between $15 and $30 billion. This is why I opposed offshore drilling
off the coast of Washington, and my first amendment as a Member
of Congress was to prohibit drilling off the shore of Oregon and
Washington that would adversely affect our fisheries.
We are here today to discuss new actions by the Bureau of Ocean
Energy Management (BOEM) to better understand these tradeoffs
to both protect coastal communities and shield taxpayers from in-
curring additional costs when oil companies that drill offshore go
bust.
New proposed financial insurance regulations would require oil
and gas companies conducting business offshore to cover the costs
of decommissioning upfront in the event their companies go bank-
rupt. While decommissioning wells is already required by law, com-
panies often seek to shirk their duties to do so. As a result, it is
taxpayers who are often left with the expense.
4
According to the GAO, the Department of Interior held less than
$3 billion in bonds to cover the estimated cost of $38.2 billion for
decommissioning these wells in 2015. While I sincerely sympathize
with the concerns of my colleagues that this could negatively im-
pact independent oil producers, it is essential that our regulations
address the real cost of offshore drilling and ensure those costs are
borne by the companies that profit from the practice, not taxpayers
and coastal communities. I hope this regulation will adequately
protect coastal communities from any downstream consequences of
offshore drilling.
With that, I thank all of the witnesses for joining us and look for-
ward to a productive conversation.
Thank you. I yield back.
Chairman HUNT. Thank you, ma’am.
With that I would like to recognize our Full Committee Chair,
Mr. Roger Williams from Texas for his opening statement.
Mr. WILLIAMS. Thank you. And good morning to all our wit-
nesses. We appreciate you being here today.
I want to thank Chairman Hunt for holding today’s hearing and
we greatly appreciate all of your time.
You know, it is no secret that the Biden administration has been
at war with the oil and gas industry since day one. Countless regu-
lations have created a burdensome environment for our nation’s
small oil and gas producers that are a critical component of our do-
mestic energy supply. Some of the regulations that we will be dis-
cussing today are a continuation of this trend that is doing nothing
but crippling and harming our independent oil and gas producers.
Our small businesses across every industry are the engines of
our economy and without them America will struggle and has
struggled. Requirements like obtaining an investment grade credit
rating are expensive and put small businesses at a competitive dis-
advantage.
So as Americans are facing extremely high inflation and energy
prices we need to be making it easier. I repeat, easier, not more
difficult for domestic energy companies to succeed.
I look forward to hearing from our witnesses today. And with
that, Mr. Chairman Hunt, I want to thank you again, and I want
to thank our witnesses for being with us. And I yield my time back.
Chairman HUNT. Thank you, Chairman Williams.
At this time I would like to introduce our witnesses that are with
us today.
Our first witness is Mr. Mike Minarovic. He is the CEO of Arena
Energy, cofounded by Mr. Minarovic in 1999. Arena Energy focuses
on pursuing the lower risk expiration and production opportunities
that remain in the Gulf after 50 years of drilling by larger oil com-
panies. Since the company startup in 1999, it has invested over $7
billion in the Gulf of Mexico and has paid production royalties of
over $1.4 billion to the U.S. Treasury. Mr. Minarovic is a graduate
of the University of Texas in Austin. They are having a pretty good
football season this year, sir. And his Bachelor of Science in Petro-
leum Engineering. Mr. Minarovic, thank you so much for joining us
today. We greatly appreciate it. We will look forward to your testi-
mony, sir.
5
Our second witness is Mr. Paul Danos, who serves as Chairman
of the Board for NOIA, the National Ocean Industries Association.
Founded in 1972, NOIA represents all facets of the domestic energy
related industries. Mr. Danos was reelected as Chairman of the
Board this past May. Mr. Danos is also the owner and CEO of
Danos LLC, a family-owned and managed energy services provider.
He joined the company in 2005 and has been the co-CEO through
2020. Mr. Danos graduated from Louisiana State University with
a bachelor of science in finance and then went to Stanford Univer-
sity Graduate School of Business where he earned his MBA. Mr.
Danos, thank you so much for being here today. Greatly appreciate
it. Thank you so much for your time.
Our third witness is Mr. Alex Epstein. He is a philosopher, jour-
nalist, and author that has covered the energy industry for over 2
decades and is the founder and president of the Center for Indus-
trial Progress based on San Diego, California. The Center for In-
dustrial Progress was founded by Mr. Epstein in 2011 to offer a
positive, pro-human alternative to the Green Movement. He is the
author of the Moral Case for Fossil Fuels and New York Times
Best Seller arguing that human flourishing and progress requires
the use of more fossil fuels, not less. Mr. Epstein has spoken to em-
ployees and leaders and dozens of Fortune 500 energy companies,
including Exxon, Mobil, Chevron, and Phillips 66. He has also
made his moral case for fossil fuels at dozens of campuses includ-
ing Harvard, Yale, Stanford, and Duke. Mr. Epstein graduated
from Duke University with a bachelor of arts in philosophy. Mr.
Epstein, thank you, sir, for being here. Greatly appreciate your
time.
I now recognize the Ranking Member to introduce the minority
witness for today’s hearing.
Ms. GLUESENKAMP PEREZ. I am pleased to introduce our
final witness today, Ms. Kathleen Nisbet Moncy. Ms. Nisbet Moncy
is a native of Willapa Bay in my district where she is a second gen-
eration oyster farmer. Working as chief organizing officer at her
family’s business Goose Point Oysters, she grew up in a family
business farming oysters and working in the processing plant be-
fore attending college at the University of Hawaii at Hilo where
she studied marine biology and Spanish. After college, she returned
to her family business and has worked there for the past 15 years.
Throughout her time working for Goose Point Oysters, she has
worked with a variety of organizations such as serving on the
board of the Pacific Coast Shellfish Growers Association and estab-
lishing the Willapa Bay Grays Harbor Ecosystem Collaborative.
She is currently the president of the Willapa-Grays Harbor Grow-
ers Association with the mission to uphold the legacy of environ-
mental stewardship and water quality through sustainable shell-
fish farming. Thank you, Ms. Nisbet Moncy for taking the time out
of your schedule and traveling all the way to D.C. to testify today.
We are truly honored to have somebody that really works for a liv-
ing and represents their community in the best ways. Thank you
so much.
Chairman HUNT. Thank you for being here.
Thank you, ma’am.
6
Before recognizing the witnesses I would like to remind them
that their oral testimony is restricted to 5 minutes in length. If you
see the light turn red in front of you it means your 5 minutes have
concluded and you should wrap up your testimony.
I now recognize Mr. Minarovic for his 5 minute opening remarks.
STATEMENTS OF MIKE MINAROVIC, CHIEF EXECUTIVE OFFI-
CER, ARENA ENERGY, LLC; PAUL DANOS, CHAIRMAN OF THE
BOARD, OWNER & CHIEF EXECUTIVE OFFICER, DANOS, LLC;
ALEX EPSTEIN, PRESIDENT AND FOUNDER, CETER FOR IN-
DUSTRIAL PROGRESS; KATHLEEN NISBET MONCY, CHIEF
OPERATING OFFICER, GOOSE POINT OYSTER
STATEMENT OF MIKE MINAROVIC, CHIEF EXECUTIVE
OFFICER, ARENA ENERGY, LLC
Mr. MINAROVIC. Thank you, Chairman Hunt, and Ranking
Member Gluesenkamp Perez, for the opportunity to testify this
morning.
My name is Mike Minarovic, CEO of Arena Energy. We are an
offshore exploration production company focused on the Gulf of
Mexico, one of the most active drillers in the Gulf of Mexico. Over
the past 24 years, as Chairman Hunt mentioned, we have invested
$7 billion in the Gulf and paid the federal government over $1.4
billion in royalties. Last year alone we paid the federal government
$230 million in combined royalties and corporate taxes.
I also speak to you today on behalf of the Gulf Energy Alliance.
It is a coalition of independent Gulf producers. Although we are not
household names, independents are the backbone of the offshore in-
dustry, producing 35 percent of the oil and natural gas from this
basin.
I am here to discuss a new regulation recently proposed by the
Department of Interior. This hearing is the appropriate place to
discuss this issue as the Bureau of Ocean Energy Management,
also known as BOEM, stated that 76 percent of the businesses op-
erating offshore are defined as small businesses. This totals 407
businesses according to BOEM, and this rule poses an existential
threat to those companies.
Also, the SBA Office of Advocacy submitted a very strong letter
denouncing BOEM’s proposed rule. BOEM repeatedly states that
the goal of this new rule is the protection of the American tax-
payers from exposure to financial loss associated with offshore de-
commissioning. We firmly believe that it is the primary responsi-
bility of the current operators to abandon their platforms and wells
and that taxpayers should never be responsible for abandonment
obligations.
Arena and GEA are willing to work with BOEM to find a solu-
tion to achieve that goal but this rule as currently drafted is a mas-
sive overreach to a limited problem. It is devastating for small
businesses and it is completely unworkable in its current form.
BOEM states that the cases where taxpayers have actually paid
costs for decommissioning are rare and that since 2009, more than
30 corporate bankruptcies have occurred involving offshore oil and
gas leases with unbonded decommissioning liability is $7.5 billion.
Those are big numbers.
7
So how much has been paid by the American taxpayer for their
abandonment obligations in the Gulf? Well, that was not addressed
in the rule. But in July of 2023, BOEM communicated to the House
Subcommittee on Energy and Mineral Resources that U.S. tax-
payers have incurred obligations totaling $58 million net of bonds.
Fifty-eight million dollar total after more than 30 recent bank-
ruptcies.
Again, the American taxpayers should never pay for offshore
abandonment obligations.
But to put this in perspective, in the last 20 years, offshore oil
and gas production has generated $124 billion in royalty and leased
bonuses for the U.S. Treasury, $6 billion a year, $500 million a
month on average. And how has the taxpayer been protected? By
law, by regulation, and by practice. All current and previous own-
ers stand in front of the taxpayer and remain collectively respon-
sible for decommissioning obligations. Selling a property in no way
relieves the previous owner of its continuing decommissioning obli-
gations.
To address the $58 million in taxpayer exposure BOEM now
seeks an additional $9.2 billion in new bonding which would cost
small businesses in the Gulf $5.7 billion over the next 20 years.
Those are BOEM’s own numbers. We feel they are much higher
than that. That money could be used to invest in projects and actu-
ally decommission these platforms and wells. Overkill barely be-
gins to describe BOEM’s solution.
But you do not need to believe an oil and gas guy. The comment
letters have been submitted. This is what the State of Louisiana
said. ‘‘The proposed rule falls within the unpleasant category of a
solution in search of a problem.’’
In reality, there is no problem within taxpayer funded decommis-
sioning. There is certainly no problem that would justify evis-
cerating the oil and gas industry. The SBA Office of Advocacy said
that BOEM’s analysis intentionally ignores joint and several liabil-
ity as the way that the taxpayers are protected from these un-
funded liabilities. It presumes that small businesses impose a sig-
nificant risk to the taxpayer despite the full backing of companies
that BOEM has already exempted. As a result, small businesses
are not only disproportionately harmed by the proposal, but only
small businesses are harmed by the proposal. And the Surety and
Fidelity Association of America, which is a trade organization of
more than 400 companies that writes 98 percent of the surety and
fidelity bonds in the United States and are the group that BOEM
is looking to to solve this problem, what do they say about it? They
fear that the proposed regulations might have unforeseen and pos-
sible negative consequences leading to an uptick in bankruptcies
among small independent operators ultimately worsening unfunded
decommissioning liabilities. Such financial failures will have cas-
cading negative impacts that undermine BOEM’s stated purpose
for increasing access to these bonds and alleviating the burden on
the taxpayer.
Given the increased risk in the market created by recent bank-
ruptcy rulings, the proposed regulations could have an even strong-
er, chilling effect on the surety industry’s appetite to participate.
8
As is, players are already exiting the marketplace, further exacer-
bating capacity concerns.
This rule is not workable. The group they are looking to for a so-
lution says it will not work. Additionally, CAC Specialty, which is
a surety bonding brokerage firm said, ‘‘Like a Greek tragedy, the
BOEM’s actions could expediate the outcomes that it wished to
avoid.’’ And once again the State of Louisiana said, it is Louisiana’s
view that supplemental bonding is unnecessary. As long as a cred-
it-worthy party exists in the chain of title there exists no meaning-
ful decommissioning burden on the federal government.
The solution resides in the BOEM’s own analysis. The proposed
rule states that if BOEM were to take into account the financial
capacity of the predecessor lessees, the financial burden on small
companies would be substantially reduced compared to that result-
ing from the proposed rule. And this would mitigate the impact of
the proposed rule on small businesses.
We remain optimistic that we can work together to create a sen-
sible solution that truly protects the taxpayer and maintains a
strong and viable small business community along the Gulf Coast.
Thank you.
Chairman HUNT. Thank you, Mr. Minarovic.
I now recognize Mr. Danos for his 5 minutes. Thank you, sir.
STATEMENT OF PAUL DANOS, CHAIRMAN OF THE BOARD,
OWNER AND CHIEF EXECUTIVE OFFICER, DANOS LLC, TES-
TIFYING ON BEHALF OF NATIONAL OCEAN INDUSTRIES AS-
SOCIATION
Mr. DANOS. Thank you, Chairman Hunt, Ranking Member
Gluesenkamp Perez, and Members of the Subcommittee. Thank
you for having me here today to testify.
My name is Paul Danos. I am president and CEO of Danos, LLC.
We are a 76-year-old family business headquartered in south Lou-
isiana. I am also the Chair of the National Ocean Industries Asso-
ciation, which for more than 50 years has represented the all seg-
ments of the offshore industry, including oil and gas, offshore wind,
offshore minerals, and offshore carbon sequestration.
So in 1947, my grandfather started our company. He had one
partner. So there were two of them. That is definitely a small busi-
ness. And most of the work happened at my grandmother’s kitchen
table and a boat offshore. They sort of took turns between the table
and the boat offshore. And we have done a pretty good job of pre-
serving history. We put a book out kind of capturing some of our
history last year on the 75th year anniversary. And there are some
great stories about why the founders of our company started this
business. And it was certainly like many entrepreneurs they want-
ed to better themselves. They had an opportunity to do that. But
also for their extended family and their community. And that is the
fabric of our economy and so many small businesses. People who
take a risk. My grandfather borrowed $2,000 from his sister,
bought a boat, and got started. And took that risk and provide jobs
to people in an industry that provides just an amazingly valuable
service, the innovation and quality of life that we enjoy because of
the affordable and reliable energy that comes from oil and gas
woven into that fabric of our small business and so many others.
9
So today I am here, our footprint has grown in our company. I
am representing my family and certainly our employees for our
business but the employees for our industry which total about
370,000 direct and indirect employees for the offshore oil and gas.
So I bring a message from the employees. I spend time at crew
changes and offshore locations, some of our land locations talking
to our folks.
And kind of two things that I would like to convey on behalf of
our people and our industry. First, I hope you realize the massive
impact that the regulation that comes out of Washington has on
the people on the frontlines; the frontline heroes who are providing
that reliable and affordable energy for our country. And I know,
sometimes we can get disconnected and it is words on paper and
it is legislation and it is regulatory acts, but at the end of the day
we are talking about real people on the front lines who are making
this work happen. So I represent them and just want to just again,
you know, make sure that we understand the impact that happens
on families, on people.
And then the second thing is just when we talk about any policy
that limits the production of oil and gas here in the U.S., I would
say that is bad for our country. We have some of the lowest carbon
intensity barrels in the world produced in the Gulf of Mexico. An
ICF study that came out recently said that the average carbon in-
tensity of barrels produced in the Gulf of Mexico are 46 percent
lower than the average of the rest of the world in terms of carbon
intensity. So when we restrict supply here in the Gulf—and we
have to understand something about oil and gas demand and the
way it works—it is a fungible resource. It is abundant around the
world. So if we restrict supply, sort of like squeezing a balloon, that
supply will show up somewhere else and it will be produced some-
where else. And most often it is going to be places like Venezuela,
Iran, Russia.
So first what we are going to do is we are going to send those
barrels there. And those are higher carbon barrels. So it is a nega-
tive impact on the world’s environment. We also send those jobs
somewhere else; right? Back to those guys, those people, men and
women on the front lines. When we restrict supply here in the
U.S., we are sending those jobs, we are sending the royalties that
Mr. Minarovic talked about, $6 billion in royalties every year. We
are sending those to other counties. And then we are giving up our
energy security at the same time. So the idea of moving barrels
outside of our country, producing them elsewhere is bad policy.
Limiting production here in the U.S. is bad policy.
So what do we need? We need good regulations. Part of why the
barrels that we produce in the U.S. are low carbon barrels is be-
cause of the way we produce. The regulations that we have worked
together within industry and regulators over the decades that are
common sense, that protect our environment, protect our people,
protect our costs.
I am from a place called Cut Off, Louisiana. It is a coastal south
Louisiana community. I grew up fishing and enjoying the coast.
Some of the best places to fish are around platforms and old plat-
forms. I had my daughter and my wife in the Gulf of Mexico fishing
on an old platform early this summer. We had a fantastic experi-
10
ence. So we can co-exist environmentally but we need common
sense policy. We need a regulatory environment that promotes
good, common sense regulations and policy to protect our environ-
ment but encourage domestic production.
So I look forward to the conversation that we will have today and
any questions that we have going forward. Thanks again.
Chairman HUNT. Thank you, Mr. Danos.
I now recognize Mr. Epstein for his 5 minutes for your opening
remarks. Thank you, sir.
STATEMENT OF ALEX EPSTEIN, PRESIDENT, CENTER FOR
INDUSTRIAL PROGRESS
Mr. EPSTEIN. Thank you.
So my name is Alex Epstein. I am a philosopher and energy ex-
pert representing only myself, and everything I say today is my
own independent conclusion, not influenced by anyone from any in-
dustry including the fossil fuel industry but which I am a very big
admirer of that industry for reasons you will see.
Because energy is a major input in every business, the lower cost
and more reliable energy is, the lower cost and more reliable every-
thing is. The higher cost and less reliable energy is, the higher cost
and less reliable everything is, and the less efficient and less com-
petitive U.S. businesses are, including small businesses.
Today we are hearing how irrational policies are crippling one
area of the energy business: offshore oil production, which provides
almost one-sixth of our domestic oil production, production without
which gasoline would be far more expensive. And I am from Cali-
fornia where we are around $7 right now, and it would be far, far
less secure. So it is really crucial to have this production.
But today I would like to put the irrational attack on offshore
drilling in its broader context, which is that it is just a tiny piece
of today’s rabidly irrational global anti-fossil fuel agenda, an agen-
da that poses as rational and scientific but is actually the exact op-
posite.
So the dozens of discrete attacks of the Biden administration on
the fossil fuel industry, they are not isolated incidents. They are all
attempts to impose an agenda that says fossil fuel use must be es-
sentially eliminated by the year 2050, which is now very, very
close.
At the beginning of his administration, President Biden an-
nounced a U.S. ‘‘whole of government’’ approach to climate change,
which in practice means an overarching commitment to rapidly
eliminate fossil fuels. Every agency was told figure out new ways
to attack fossil fuels. And that is what they have done.
The Biden administration is systematically committed to attack-
ing fossil fuels on four fronts.
So the first front of attack is fossil fuel investment. Fossil fuel
investments are long-term commitments that require confidence in
a payoff. Our government, often colluding with activists, inces-
santly discourages fossil fuel investments, directly and by threat-
ening the industry’s future, like running on ‘‘I guarantee you we
are going to end fossil fuel’’ and then being elected president. The
federal government has been a major driver of ESG anti-fossil fuel
climate policies with regulators pressuring financial institutions to
11
declare their commitment to getting off fossil fuels. The SEC’s re-
cent ‘‘climate disclosure rules’’ so called are taking the damage to
the next level.
Now, front two of the attack is on fossil fuel production are com-
mon. So punishing restrictions and onerous taxes specifically on
fossil fuel production are common across developed countries, un-
fortunately. And these suppress supply from the freest nations on
the globe. And unfortunately, we are leading this right now.
One of the many punishments President Biden has inflicted on
the supposedly preferred fossil fuel industry, which the opposite is
true, was his early moratorium on issuing oil and gas leases on fed-
eral lands. And the Biden administration continues to delay and
decline holding lease sales.
Now, the third front of the attack on fossil fuels is fossil fuel
transport. One of the most effective ways of punishing the fossil
fuel industry has been attacking critical transport infrastructure,
including pipelines and export/import facilities with delays, regula-
tions, and lawsuits.
Now, we all know about Keystone XL, which has been hugely de-
structive, but perhaps the most destructive way of singling out fos-
sil fuel transport for punishment has been killing natural gas pipe-
lines. We have a virtually limitless supply of natural gas in this
country, particularly in Appalachia, and we have an incredible abil-
ity to ramp up production quickly. But we are blocking pipeline
after pipeline.
Now, the final front of the attack on fossil fuels is punishing fos-
sil fuel use. So our government’s ‘‘whole of government attack’’ on
fossil fuels seeks out every way it can to punish fossil fuel use.
Perhaps the most destructive and underdiscussed form of this is
punishing reliable fossil fueled electricity generation and thereby
destroying our grid.
So as a Californian, I am well aware of the costs of punishing
fossil fuel electricity generation. Gavin Newsom and others pre-
maturely shutting down vital fossil fuel plants led to devastating
statewide blackouts in 2020. And 5 days after pledging to all EVs
by 2035, Newsom told us there was not enough power to charge or
EVs. From his administration, ‘‘avoid using major appliances and
charging electric vehicles.’’
Nationally, we are in an electricity crisis with reliable power
plants shutting down far faster than they are being built. And the
Biden EPA insanely plans to make things much worse with seven
policies that gravely threaten 10 to 20 percent of our reliable capac-
ity in the next 7 years.
So every one of these hundreds of actions the Biden administra-
tion is taking in terms of its ‘‘whole of government’’ approach is
harmful to American businesses, including small businesses who
have to struggle with higher energy costs and lower reliability.
Now, the final thing I want to address quickly is just the lie that
solar and wind can rapidly replace fossil fuels. If this were true
they would not need massive government preferences of their own
and they would not need massive government punishments of fossil
fuels. And if solar and wind could actually replace fossil fuels,
China, which dominates the production of solar and wind compo-
nents, would not be using coal to produce these components and
12
they would not have 300 planned new coal plants—new coal
plants—more than all we have in the United States right now to
last over 40 years.
So if you are thinking we are going to have more security with
this stuff, we are not going to have much energy and it is all going
to be dependent on China.
So what I want to encourage everyone here to do, particularly
small businesses and politicians, pro-freedom politicians, is use
your powerful voices to advocate for liberating all forms of energy,
including fossil fuels, not limited to fossil fuels, so that America
and the world can be a better place. Thank you very much.
Chairman HUNT. Thank you, Mr. Epstein.
I now recognize Ms. Nisbet Moncy for her 5 minute opening re-
marks. Thank you for being here.
STATEMENT OF KATHLEEN NISBET MONCY, CHIEF
OPERATING OFFICER, GOOSE POINT OYSTERS
Ms. NISBET MONCY. Thank you, Chairman Hunt, Ranking
Member Gluesenkamp Perez, and Members of the Subcommittee
for this opportunity to testify today. My name is Kathleen Nisbet
Moncy. I am the COO of Goose Point Oysters. I am a second-gen-
eration shellfish farmer and a mother to five children.
Our company is located in the heart of Willapa Bay, Washington,
where we own 2,000 acres of tidelands. Willapa Bay is one of two
coastal estuaries in Washington that produce over 25 percent of the
nation’s oysters.
The shellfish industry in Willapa Bay and the surrounding areas
generates a tremendous economic impact. As the largest private
employer in Pacific County, local shellfish farmers in Pacific Coun-
ty and Grays Harbor are responsible for nearly 2,000 family-wage
jobs, and contribute to over $102 million in economic impact.
Shellfish farmers, while they are the largest private employer in
our county, our tidelands are the backbone of our area. We are lo-
cally owned and our tidelands are passed down from generation to
generation. We have a family farm that has been farming there for
over 150 years.
Shellfish farming in Washington State predates statehood. We
are the backbone of our community in supporting local schools, pro-
viding employment and, participating in community programs.
Shellfish farming is a way of life in our community.
The ecosystem in which we farm is of upmost importance to us,
as shellfish farmers we depend on clean water and a healthy habi-
tat. A single submerged oyster will filter up to 7 gallons of water
an hour, our responsibility is to protect that clean water. We are
dedicated to managing the health of our ecosystem, and as a result
are regarded as one of the healthiest working estuaries in the U.S.
I would promote stricter regulations on offshore energy no matter
what the company size is. Our oceans are extremely fragile envi-
ronments, and shellfish farmers feel even the slightest changes in
our ocean conditions. The most recent one we have been struggling
with is ocean acidification. It came up in 2008, and according to
NOAA, we are going to continue to see shifts in ocean acidification
into the future.
13
Some of the negative impacts of ocean acidification on farmers
have been pH shifts, lack of calcium in the water, and harmful
algal blooms. We must continue to fight for our waters and learn
how to evolve with the changes instead of adding more complica-
tions with offshore energy.
Along with more stringent regulations for offshore energy, there
also must be adequate funds set aside for any disasters or even
small leaks that would arise. The Gulf was not prepared for the oil
spill it endured years ago and the shellfish industry is still im-
paired due to it. We should learn from the mistakes and ensure
that they do not happen again.
As an example we have been working with the State of Mis-
sissippi to assist them in creating hatchery systems so they can re-
build their reefs because the industry down there is still struggling
today. We have sustainable farming mechanism in Willapa Bay
and they are trying to mimic that down in the Gulf States. Know-
ing how to sustainably farm shellfish will provide a consistent food
source for the future and water quality is a key part of that.
An oil spill off of our coast would destroy our estuaries and the
communities that are supported by them. Based on the way the
waters flow, we get two full tidal fluctuations of water a day, any-
thing that happens off of our coastline would enter into our estu-
aries and have a significant impact on shellfish, crab, eel grass,
and other species that live there.
Besides some of the local issues that would arise with offshore
energy, our location does not have adequate services to respond to
a spill. The Willapa Bay entrance and channels have not been
properly managed for decades by the Department of Army Corps
and would pose a danger for any type of response team. There is
no positive scenario for our fragile ecosystems if there were to be
any sort of spill off of our coastline.
Along with the impacts to shellfish in our coastal estuaries, we
must also consider the Dungeness crab and salmon fishing commu-
nities. Shellfish tidelands are the rearing habitat for Dungeness
crab. Dungeness crab fishing grounds are directly located off the
Washington and Oregon Coast. Access to these fishing grounds is
currently limited and further limitations would risk the livelihood
of the fleet and the communities that process and sell the seafood.
The cumulative impacts to the fishing grounds would make it near
impossible for future generations to be successful in the fishing in-
dustry. We should be focused on increasing seafood production in
the U.S. instead of polluting the very waters that provide it.
In conclusion, I would not support reduced regulations to offshore
energy at the risk of the livelihoods of our rural communities.
Shellfish is a sustainable seafood that has a huge benefit by pro-
viding many ecosystem services, including purifying the water, re-
ducing carbon and many other essential services in the areas we
farm. Our fishing communities must be able to retain the available
fishing grounds for the success of their industry so we must stand
up and protect the waters from contamination and be responsible
stewards of the ecosystems in which we work in.
Thank you for your time.
Chairman HUNT. Thank you, so much for being here.
And again, I want to thank the witnesses.
14
We now move to the Member questions for the under 5 minute
rule.
I recognize myself for 5 minutes.
The first question is for you, Mr. Minarovic. The Financial Assur-
ance Rule is said to be put in place to protect the taxpayers. Is
there currently a real risk to the taxpayer to be held accountable
for these costs? And if so, what would you propose as a solution?
Mr. MINAROVIC. Thank you, Chairman Hunt.
You know, I think this is really important. And I have got a
graphic that I think is in front of each of you that helps explain
this complicated issue. As Ranking Member Gluesenkamp Perez
mentioned, the BOEM estimates that current abandonment obliga-
tions are from the Rule $42.9 billion. I think her estimate was in
the high 30s from a 2015 study.
What you need to understand in order to understand the expo-
sure to the taxpayer is it is broken up into these three buckets
here. The dark green is investment grade companies. The govern-
ment is exempting that. Their numbers suggest that is $22.6 billion
of the abandonment. The bottom number in red is noninvestment
grade companies, both current and prior owners. No investment
grade company in the chain of title totals $750 million. That is
where we really need to focus our efforts here, and the GEA and
Arena Energy support additional bonding associated with prop-
erties with no investment grade companies in the chain of title.
The thing that is really critical is the box in between, $19.5 bil-
lion. This is where a previous owner has an investment grade rat-
ing. And thing is that the government has stated that under this
proposed rule the government retains the authority to pursue pred-
ecessor lessees for the performance of decommissioning obligation.
When a company sells an asset they remain in the chain of title.
That is what protects the taxpayer. Any company that owns or pre-
viously owned leases is responsible. If Arena sold its assets to an-
other company, we would stay in the chain of title and be respon-
sible for that abandonment. That is what protects the taxpayer. So
none of these dark green boxes or light green boxes should be con-
sidered for bonding. The only risk to the taxpayer is this red box
and that is what has really resulted in such a small loss relative
to the exposure in the Gulf.
Chairman HUNT. Thank you, sir.
This question is for you, Mr. Danos. America energy companies
are leaders in innovation and produce the cleanest oil and gas in
the entire world. And I know. I have been on these rigs and I have
seen them actually personally. How would the rule on the Rice’s
whale and others like it affect the industry’s ability to operate at
its full capacity and reach its full potential?
Mr. DANOS. Thank you, Chairman. It is a great question.
Any new regulation needs to make sense. It needs to be balanced
across all stakeholders and in terms of what it is trying to do. And
it needs to be effective. And I think the Rice’s whale, for instance,
a couple of notes about that. There is very little data that exists
that we have the Rice’s whale in the area that was originally
pulled out of the last lease sale. So the balance, the effective com-
ponents of that regulation just really did not add up.
15
And one thing related to marine operations that I think is really
important to point out when we think about balancing the different
stakeholders, oftentimes in the Gulf of Mexico what we do is we op-
erate vessels at night so that we can do the higher risk work that
we do on the platforms during the day. So with the Rice’s whale
regulation prohibiting vessels from moving at night what you are
doing is you are flipping that on its head. And the unintended con-
sequence of that is that the people who work for my company and
other small businesses and large businesses in the Gulf of Mexico,
we are increasing the risk to those people with the work that they
are doing because they would have to move more of that work at
night as opposed to doing it during the daylight hours. And there
is plenty of work that goes on at night but again, we are increasing
that exposure. So that is something that needs to be thoroughly ex-
amined and thought out as we proceed.
Chairman HUNT. Thank you so much.
Mr. Epstein, my last question is for you. What do you think of
Biden’s energy policy, and is it good for the country? You are al-
lowed to take a little bit more time here if you would like. I am
not going to need 45 seconds.
Mr. EPSTEIN. I addressed a lot of it. I mean, the thing people
need to get is the danger of this whole of government approach be-
cause it really has a terrorizing effect on industry because industry
knows that it is not just any given individual restriction that is a
problem; it is that the government is literally trying to shut them
down. You see this happening with coal right now where the gov-
ernment is trying to shut down all of our coal plants which are pre-
venting us from the abyss right now. We have catastrophic reli-
ability problems and now we have Mike Bloomberg who I offered
to publicly debate so far has not stood up yet. Jordan Peterson of-
fered to host. So Mike, let’s do it.
But he is spending $500 million on top of billions of other dollars
to shut down our coal plants and he is not willing to publicly de-
fend it.
One other thing. Since the UAW is in the news right now, how
are you going to get higher wages if you have Joe Biden pressuring
companies to sell vehicles where they are losing billions of dollars?
Companies do not give higher wages when they are losing billions
of dollars due to forced policies by the government. So those are
just two specific examples but the ‘‘whole of government’’ approach
is the overall disaster.
Chairman HUNT. Thank you very much.
I now recognize the Ranking Member for 5 minutes for questions.
Thank you, ma’am.
Ms. GLUESENKAMP PEREZ. Ms. Nisbet Moncy, you high-
lighted in your testimony the vital role oysters play in filtering
water in Willapa Bay. Can you explain the fragility in the system
and the outcome to even minor changes in water quality?
Ms. NISBET MONCY. Yes, I would love to do so.
Shellfish are filter feeders and as a result are a product of their
environment which make them very susceptible to environmental
changes. Most recently, due to climate change and ocean acidifica-
tion, we are seeing an increase in harmful algal blooms or HABs
in our estuaries which are having a direct impact on the produc-
16
tivity of our shellfish beds. We are noticing that after a harmful
algal bloom event the oysters and other shellfish will perish within
2 to 6 weeks.
Therefore if we have pollution coming into our water ways, our
shellfish, eelgrass, Dungeness crab, salmon and other species will
be negatively impacted. For many decades we have been the con-
tinued stewards of the estuaries collaborating with upland timber
companies, private home owners and mills to mitigate impacts and
protect our clean water.
Ms. GLUESENKAMP PEREZ. So any minor spill would have a
negative impact?
Ms. NISBET MONCY. Any minor spill would have a significant
negative impact.
Ms. GLUESENKAMP PEREZ. So fishing off the coast is an im-
portant implication of our economy alongside oyster fishing in the
bay. Could you explain any form of offshore energy production that
Washington endangers commercial fishing industry?
Ms. NISBET MONCY. Currently, there is a limited amount of
area that our commercial fishermen can fish, with the introduction
of offshore energy you reduce the areas even further. So whether
it is a platform, wind energy, or even cables underground, you are
disrupting the Dungeness fishing grounds. Any infrastructure im-
pacts fishing off our coastline. The fisheries are very strictly man-
aged and cannot withstand any further reduction in the available
area to fish.
Ms. GLUESENKAMP PEREZ. Yeah. We were talking in the ele-
vator on the way here and we have talked out in the bay. People
from more urban communities or other parts, they assume nothing
is going on. There is this arrogance of like there is nothing going
on out there. Like, we will just like move it somewhere where it
is not in my view shed. Or it is somebody else’s problem. And I
think this loss of a sense of agency and determination in our rural
communities, what happens here, how we prefer to make our liveli-
hoods. So I am deeply grateful for your advocacy of a way of life
that I think is critical to our culture as Americans and as Washing-
tonians.
So farming oysters is one of the most sustainable sources of sea-
food. Not only purifying the water but also absorbing and seques-
tering carbon emissions. Can you talk about the importance of sus-
tainability broadly? Because this is not just about dollars and cents
but to your business and to your philosophy as a business owner?
Ms. NISBET MONCY. Yes, for us it is our way of life. We have
always had the mentality that if you take care of the estuaries in
which you work, that they will take care of you. We sustainably
farm our products. We have hatcheries that produce our own seed
which we plant and cultivate to be harvested. We are considered
a sustainable seafood not a wild fishery.
Our perspective is not just that of a shellfish farmer but as a
community member with everyone else who works in and around
the estuary, if we all collaborate our ecosystems will flourish. We
want to retain the rights to be able to continue what we are doing
for generations to come. While it has been very difficult with cli-
mate change and OA (ocean acidification), we continue to figure out
how to evolve. We are huge proponents of finding solutions and
17
must have a voice at the table when rules are being made, espe-
cially here in DC. I recognize, I am a small fish in a big pond but
the pond has ripple effects and those can cripple our industry and
the communities we support. Making sure that we are being smart
with our regulations and understanding the impacts they will have
down the road is key.
Ms. GLUESENKAMP PEREZ. It feels like a lot of industries you
can sort of take the money and run. But it feels like, what I really
value about our shellfish growers is when you talk about the
generational wealth, you are talking about the health of the estu-
ary. That is where the money is. That is where the culture and the
community is is in the actual rootedness and health of your eco-
system.
So I cannot say how grateful I am to all the smart, hardworking
people who have chosen to make and continue to make their family
livelihoods in these rural communities. And thank you. Sincerely,
thank you for taking time away from your family and your busi-
ness to be here today.
Ms. NISBET MONCY. Thank you.
Chairman HUNT. Thank you, Ranking Member.
I now recognize Representative Meuser from the great state of
Pennsylvania for 5 minutes.
Mr. MEUSER. Thanks. Thank you, Chairman, very much. Thank
you very much to our witnesses for your work, your business, and
for taking the trip being here with us.
So Mr. Minarovic—how do we pronounce that?
Mr. MINAROVIC. Minarovic.
Mr. MEUSER. Minarovic, thank you.
You have got a business. You have got perhaps family members
and you have a small business. And that business is important to
you?
Mr. MINAROVIC. Yes, sir.
Mr. MEUSER. Okay. So we have small businesses here. Some in
the energy sector. Some in other industries. I do not think it is up
to this Committee to decide who is more important. You know, that
is just me.
So this BOEM rule, when it perhaps goes into effect, you called
it existential to you and to, you know, I am just reading here, the
billions of dollars and other small businesses that will be wiped
out. Existential means wiped out.
Mr. MINAROVIC. Absolutely.
Mr. MEUSER. Okay. You are a highly regulated business obvi-
ously; right?
Mr. MINAROVIC. Absolutely.
Mr. MEUSER. Yeah. And have there been any problems lately?
I mean, I come from the Marcellus shale region, a new part of my
district. You can go to a rig site, the level of regulation which is
great. That is how it should be in the United States. And even out-
door rig sites, it is like walking into a clean room.
Mr. MINAROVIC. Right.
Mr. MEUSER. It is perfect; right? There have not been issues.
So, and that is a good thing. There should not be. And so that is
the way it should be.
18
So in your business, I expect, not abiding by some of the pollut-
ant control requirements which I am all for because this is the
United States. We want to do things better than every other coun-
try. But if you were to cross those regulations that would also be
existential to your business, would it not?
Mr. MINAROVIC. Absolutely. Yes, sir.
Mr. MEUSER. Okay. so this BOEM, we will work on this be-
cause once again these sort of government actions hurt those that
supposedly it is trying to help. By increasing the level of bonds that
you need to secure, you expressed it in your opening testimony, but
is it completely impossible under the current rules?
Mr. MINAROVIC. Yes, sir. Let me respond to your first state-
ment.
It is absolutely the case that we are a heavily regulated industry.
The Gulf of Mexico has been heavily regulated for 75 years. The
federal waters of the Gulf of Mexico. And there is no better place
to get our oil than the Gulf of Mexico.
Mr. MEUSER. Not Venezuela? Not Russia?
Mr. MINAROVIC. It is going to be a lot cleaner coming from the
Gulf of Mexico.
Mr. MEUSER. Do you think the Middle East, do you think they
have got the same pollutant controls as the United States of Amer-
ica?
Mr. MINAROVIC. Lets get our barrels from the place where the
states that surround it—Mississippi, Alabama, Texas, and Lou-
isiana support it. Lets get our barrels from the place that the fed-
eral government gets a royalty check.
Mr. MEUSER. How about Venezuela? Do you think Venezuela’s
standards——
Mr. MINAROVIC. Absolutely not.
Mr. MEUSER. We live in a round world; right?
Mr. MINAROVIC. Absolutely.
Mr. MEUSER. So those pollutants cause problems everywhere?
Mr. MINAROVIC. Ranking Member Gluesenkamp Perez said
that, you know, people do not realize if you do not do it here it is
going to be done somewhere else. Things move around. If we are
going to get our oil from somewhere—Iran, Venezuela, Russia,
Iraq——
Mr. MEUSER. And what about the costs associated with all this?
By losing our energy independence, forget about energy dominance.
Mr. MINAROVIC. Yes, sir.
Mr. MEUSER. Okay, with gasoline 5 bucks a gallon, $4 a gallon,
$7 a gallon out in Pennsylvania making us highly vulnerable to
world events. I mean, man, we should have learned that when you
and I were kids in the ‘70s. Right? World events. I mean, Ukraine,
you name is. OPEC decides to cut back, leaves us, completely
wrecks our economy, causes inflation.
Mr. MINAROVIC. Absolutely.
Mr. MEUSER. Or partially causes inflation. That and wildly ex-
cessive spending. Hurts small business. Hurts the oyster business.
Right? As your costs go way up you just cannot pass all that along.
So, yes. So I would say we are in a devolving initiative. What we
should be focused on is energy dominance with the highest levels
of pollutant controls. You could probably handle that. Right?
19
Mr. MINAROVIC. Absolutely.
Mr. MEUSER. I mean, as opposed to having to follow this BOEM
rule?
Mr. MINAROVIC. Absolutely. We need to do that. I mean, oil
prices are being driven by supply and demand imbalances. Any-
thing we do to restrict domestic production is going to have an im-
pact on the world oil price ultimately. And that is going to be a re-
gressive tax on the lower income people of this country. We need
to move to alternatives. We need to move to all the above. The best
of the above is the right answer. And we need to pursue every-
thing. But we cannot limit fossil fuels. We are going to impair our
country and our economy.
Mr. MEUSER. We are going to go to work for you.
Mr. Danos and then Mr. Epstein and then, I am sorry, Ms.—I
should know—Ms. Moncy. I am running out of time but I was just
going to ask what came out of Washington that harmed you the
most and what has come out of Washington that has helped you
the most? And maybe we could follow up with that afterwards if
we have a second round.
I yield back, Mr. Chairman.
Chairman HUNT. Thank you so much.
I now recognize Representative Golden from Maine for 5 min-
utes.
Mr. GOLDEN. Thank you.
Ms. Nisbet Moncy, I know most of the hearing is focused on oil
and gas and I wanted to talk a little bit about BOEM and offshore
wind development. As an oyster farmer specifically, do you have
any concerns about offshore wind development and how could it im-
pact local aquaculture operations?
Ms. NISBET MONCY. Yes, I do. The proposals that they are
working on in Oregon and off the Washington coast, we are not
proponents of those. Our current cost of power that we have from
hydro in the northwest is about 4 cents per kilowatt-hour that goes
into our PUDs. The cost for wind would be about a dollar. You are
looking at a significant increase across the board for power to those
of us who live in the Northwest, and it has been shown that there
is zero net gain of wind energy off of our coastline. By the time you
install it, run it, and decommission it, there is really no added ben-
efit for our region to have offshore power based on the cost of all
those components. Our PUDs provide power to other areas such as
California and profit significantly. As for the fishing grounds, you
are looking at limiting the area available to fish in our region. The
infrastructure required for the windmills such as cables, diesel/oil
tanks and increased boat traffic all elevate the risk to our fishing
grounds and estuaries.
Mr. GOLDEN. Do you have any concerns that it could also be po-
tentially harmful to the ecosystem?
Ms. NISBET MONCY. Any sort of offshore spill without a proper
response would have a negative impact on our communities.
Mr. GOLDEN. Offshore wind that is.
Ms. NISBET MONCY. Offshore windmills still have diesel on
them and must be serviced so you will increase the boat traffic in
our area. There have been several ships that have run aground on
the Columbia River bar so if you increase boat traffic to be more
20
than what it currently is, you increase the risk of a spill. We cur-
rently do not have an adequate response team to the Willapa Bay
entrance if there were to be any sort of spill.
Mr. GOLDEN. For aquaculture communities and also fisheries in
your region, do you feel like BOEM has been a good partner in
hearing your concerns? Is there any evidence that they are working
to address those concerns?
Ms. NISBET MONCY. In our region specifically there has not
been a direct nexus. No. Down in southern Oregon with the Crab
Fisherman Association there has been a nexus with BOEM.
Mr. GOLDEN. Okay. Thank you. That is helpful.
I guess I will try, Mr. Epstein, but anyone else is welcome to try
and answer this. And this comes from a genuine place. I am not
contesting that some of the policies you see coming out of the
White House are concerning on oil and gas production here domes-
tically. You see some good things like approval of Willow up in
Alaska and then at the same time you see the cancellation of per-
mits for leases up in Alaska. Sometimes going in the right direc-
tion; other times, not. So at the same time I have seen no shortage
of reports that oil and gas production in the United States is up
rather than down currently compared to let’s say 2020. Is that true
or is that not true?
Mr. EPSTEIN. I mean, 2020 is very misleading selected time.
Mr. GOLDEN. Sure. I said general.
Mr. EPSTEIN. So in general——
Mr. GOLDEN. You pick your years. Is oil/gas production in the
United States up or down?
Mr. EPSTEIN. It is lower. Well, it just depends on your starting
date but it is up lower than it should be if we were free. So all of
these things are, you have to look at it, what is the opportunity
cost.
Mr. GOLDEN. Sure. I agree.
Mr. EPSTEIN. So in this case we have a global anti-fossil fuel
movement that is trying to bring us to net zero, which essentially
means the elimination of fossil fuel.
Mr. GOLDEN. Have we ever produced more oil and gas in the
United States than we are today?
Mr. EPSTEIN. I am not exactly sure year to year but the point
is if you look at what has happened, by slowing the growth of oil
and gas in a world that needs far more energy, we have caused a
global energy crisis. And yet this administration and this global
movement is trying to eliminate it. So the net zero movement has
not even succeeded at reducing fossil fuels. They have only suc-
ceeded at slowing the growth. And already, we have this huge vul-
nerability to the Russia-Ukraine situation. Already, we have these
cost increases. So that should be a wakeup call that this whole
agenda is ill conceived and if you want to address emissions you
should instead do so with energy freedom.
Mr. GOLDEN. We are running out of time. I just want to be
clear just that—I am on your side, buddy. Like I want all of the
above, I want America to be an energy——
Mr. EPSTEIN. So will you condemn the Biden energy agenda?
Mr. GOLDEN. I just told you—wow, you are asking me questions
now. It is like you came here with an agenda yourself, my friend.
21
Mr. EPSTEIN. I am just a curious guy.
Mr. GOLDEN. What I would say is that I think that this admin-
istration is governing over an increase in oil and gas production
while simultaneously seemingly unwilling to celebrate that which
they should be celebrating. And I would agree with you that some
of their policies as I stated earlier as an example up in Alaska are
the wrong calls. And I would condemn that.
Mr. EPSTEIN. Thank you.
Mr. GOLDEN. Thank you.
Chairman HUNT. Thank you so much.
I now recognize Representative Stauber from Minnesota for 5
minutes. Thank you, sir.
Mr. STAUBER. Thank you very much for holding this hearing.
You know, since taking office, President Biden has sought to shut
down the oil and gas industry at every turn putting our economy
and energy security at risk. The week President Biden took office,
gas on average was $1.87 a gallon in my home district in Min-
nesota. Today, it is nearing $4 a gallon and President Biden did
that. Rather than develop our abundant resources here safely
where we have the greatest environmental labor standards, this
administration would rather beg OPEC, Saudi Arabia, and others
for more oil. This administration’s model on energy and mining is
clear. Anywhere but America, any worker but American.
The Biden administration has completely neglected its duty to
support oil and gas development and has failed to properly carry
out an offshore leasing plan. Even to the point that my democratic
colleagues had to force the Biden administration to do so in the In-
flation Reduction Act last year. And still, this administration is
failing to follow along. Rather than offering a robust lease sale, this
administration tried to subvert the law and pull millions of acres
from the proposal for lease sale 261 due to unfounded concerns
over the Rice’s whale. Luckily, the Western District of Louisiana
has intervened in which Judge James Cain stated was ‘‘a
weaponization of the Endangered Species Act.’’ After litigation and
delay form this administration and the environmental activists,
they teamed up with the courts and have directed the lease sale
to move forward without the administration’s ridiculous conditions
by early November. I was proud to join Chairman Hunt and sev-
eral of my republican colleagues in filing an Amicus brief in this
case.
Mr. Chair, I ask unanimous consent to enter into the record a
copy of this brief, as well as a copy of the District Judge Cain’s
September 21 order.
Chairman HUNT. Without objection.
Mr. STAUBER. Mr. Minarovic, can you share with the Com-
mittee the history of transactions for offshore properties and how
smaller producers like Arena Energy came to own properties they
are developing in the Gulf of Mexico today?
Mr. MINAROVIC. Thank you, sir. I appreciate the question. It
is very important to this rule.
As major oil companies develop this basin in the ‘60s, ‘70s, and
‘80s, they installed thousands of platforms, 7,000 in total, drilled
50,000 wells in the Gulf of Mexico. At some point those assets de-
plete to a point that they are not important to those big companies.
22
And they have a choice to produce them and develop them or to
abandon themselves. Most of them chose to sell them in the mar-
ketplace. When a company decides to sell, it knows that it stays in
the chain of title. There is no question about that, so it is well-es-
tablished in regs and law and in practice. No one is fighting that
by the companies that sold. And so when they do that, they sell to
a private company like ours or a small public company, they put
in a certain amount of protection, some bonding, a total of about
$3 billion of additional private bonds are in place. For instance,
Arena has about 600 million of abandonment obligations and we
have 400 million of private bonds. The rule that BOEM is pro-
posing does not even account for that 400 million of bonds.
And then additionally, the reason those bonds are put in place
is because the seller, the bigger company, recognizes that they have
an ongoing chain of title liability for abandoning those assets. So
there is a negotiation that takes place. The selling company decides
do they want more insurance? Do they want more purchase price?
Because the more insurance they want, the lower the purchase
price. It goes back and forth. Ultimately, they decide what risk
they want to take. The first thing they need to do is make sure
they have a good buyer that is going to carry through on their obli-
gations but that is how it happens.
Mr. STAUBER. So what is a workable solution in your eyes? One
that protects the American taxpayers from decommissioning liabil-
ities without putting an undue burden on offshore operators? What
is your——
Mr. MINAROVIC. Well, it really falls out of what I just said on
these transactions. And it goes back to that red box that I pre-
sented earlier. These are the properties that are really the tax-
payer risk. We need to address those. We need to bond those. We
need to make sure that the government is protected. We should not
have taxpayer losses associated with those assets.
The SBA recognized this. And again, this is a Small Business
Subcommittee meeting and SBA said the BOEM should narrowly
tailor this rule to cover only those liabilities for which there is no
predecessor leaseholders that BOEM considers creditworthy. That
is it. That fixes the problem right there.
Mr. STAUBER. Thank you.
Mr. Danos, real quick. If lease sale 261 moved forward as the
Biden administration and the environmental activists had hoped,
what kind of impact would the conditions around the Rice’s whale
have on oil and gas companies’ ability to operate in the Gulf of
Mexico?
Mr. DANOS. It would be significant. There is a significant por-
tion of the lease sale that was carved out. And again, the question
is we are making policy related to one sighting of one whale. So
let me say this about the Rice’s whale. The oil and gas industry
is in favor of protecting the Rice’s whale. There is a known habitat
area for the Rice’s whale that has protection and we should main-
tain that. But the area that we are carving our or it is being carved
out by the administration is an area where there is not good
science that the whale is there and it is a huge impact.
Mr. STAUBER. Thank you very much, Mr. Chairman. My time
is up and I yield.
23
Chairman HUNT. Thank you so much.
I now recognize Chairman Williams from Texas for 5 minutes.
Mr. WILLIAMS. Thank you, Mr. Chair. And I want to thank
again the witnesses for being here today.
Full disclosure, I am a car dealer in Texas so I guess I can say
I deal with oil and gas quite a bit.
The Gulf of Mexico produces the cleanest barrels of oil on the
planet. Instead of acknowledging that, this administration, the
Biden administration is more interested in virtual signaling and
has placed burdensome regulations and attempted to restrict the
sale of oil and gas leases in the Gulf.
Mr. Minarovic, you highlight the irony that the compliance costs,
the administration rules, and the BOEM rule in particular has re-
quired your company’s capital to be used for compliance as opposed
to decommissioning efforts.
The question is, if regulation and compliance costs were elimi-
nated could you elaborate on how your company would use this ad-
ditional capital? Because we see this government regulating, regu-
lating, regulating, taking capital away from what we can do to cre-
ate jobs. So could you talk about that?
Mr. MINAROVIC. Yes, sir. Thank you, Chairman Williams. It is
an important issue.
Obviously, every extra dollar that we spend on regulations—and
there needs to be a level of regulations—but every extra dollar we
spend on that is a dollar that we cannot invest in these properties,
continue their life, and also, investment that we can make in de-
commissioning of these assets over time. And some of the issues
that we got into over the last decade with 30 bankruptcies related
to overregulation of those companies and their inability to perform
in that environment.
Mr. WILLIAMS. One of the things that my colleague, Mr.
Stauber likes to talk about is the Biden administration has come
in and brought $75 billion worth of regulations. This is a real prob-
lem. This administration’s attempts to rapidly do away with and
punish the use of fossil fuel is harming Americans.
Mr. Epstein, you highlight the anti-fossil fuel agenda—reliable
fossil fuels in states like California which is often under threat of
rolling blackouts. So should the federal government adopt these
policies at large? And what do you think will happen to the U.S.
energy supply and our electric grid?
Mr. EPSTEIN. So should they adopt California energy policies?
Oh, man. It is rough. I mean, you saw part of what happened in
2020 was we saw that other neighboring states were starting to im-
port our policies but they did not realize we have a parasitical pol-
icy. So we shut down reliable power plants and then we depend on
our neighbors. But the neighbors said, hey, we want to look good
and we are going to do that, too. But then we had a heat wave,
the wind died down, of course, and then we did not have enough
power from our neighbors. So, no, it is a parasitical thing. And in
general, anyone who claims to be net zero or anything like that is
lying. And these are not things that can scale at all. So we need
to recognize that fossil fuels are essential for decades to come, and
if you want alternatives you need to do things like liberate nuclear.
Liberate mining. I think Representative Stauber know, I mean,
24
look at the Biden administration saying, hey, we have got an amaz-
ing mining property in Minnesota. Let’s ban mining on that for 20
years and become even more dependent on China for crucial min-
erals. So we need energy freedom, not net zero.
Mr. WILLIAMS. All right. The Biden administration has
prioritized regulations that hurt the United States energy security.
That is what we are talking about.
Mr. Danos, in your testimony you highlight that the environ-
mental stewardship and energy process are not mutually exclusive.
So can you quickly elaborate on how you believe the Biden admin-
istration has missed the nark on this balancing act?
Mr. DANOS. Yes. Thank you, Mr. Williams.
Again, we have a long history in the Gulf of Mexico of regula-
tions that are common sense and support good production of afford-
able, low cost energy, reliable energy. And we have worked that
way together for a long time. And today what we are seeing is the
president getting up and saying that he wants to end production
on federal lands; right? And this maybe goes back to why produc-
tion is higher today, and Mr. Golden, it was a great question. Much
of the increase in production is coming from state lands. A lot of
that is coming from the Permian Basis in Texas. So those are not
federal lands. And a lot of these investment decisions were years
back. Right? So what we need going forward is predictability and
reliability so that those multimillion, even billion dollar invest-
ments that will create a higher production in the future and we
have that certainty going forward and the regulatory environment
is a big part of that.
Mr. WILLIAMS. In the time I have got left, Ms. Moncy, I am
from Texas so I listened to your testimony. You have got quite an
industry. Do you also in your industry run into the regulations,
this massive amount of regulations the Biden administration is
putting on Main Street America? I am in the car business. We see
it in the oil industry. Do you see it, too, in your industry, the regu-
lations?
Ms. NISBET MONCY. We have seen regulations change in our
industry as well. Yes.
Mr. WILLIAMS. And it probably affects the cost of goods sold for
you, too?
Ms. NISBET MONCY. We do have impacts associated with that.
Mr. WILLIAMS. Okay.
Mr. Chairman, I yield my time back. Thank you.
Chairman HUNT. Thank you so much. I think we are good here.
We are not going to do another round if I am not mistaken. And
I want to thank you all so much for being here.
I want to say this, Ms. Moncy, thank you so much for being here.
I have learned a lot about your industry. I actually had no idea.
This is why I love this job. And I have been on Mr. Minarovic’s
rigs. I have spoken to you, sir. We have done interviews together
in the past, and I would love to come see your operation as well
to learn more about it and to see exactly how we can all coincide
and live together.
What is really important to us, and what is really important to
me is, as you have heard from these gentlemen, it is an ‘‘all hands
on deck’’ approach is what is necessary. We cannot restrict any
25
electrons in the discussion. This is not up to the government to
pick winners and losers. This is about supplying, not just the
United States, not just Texas where I am from, not just California,
but supplying the entire world with affordable, clean, and abun-
dant energy from our country that does it better than anywhere
else in the entire world. From somebody that spent 2 years in
Saudi Arabia when I was deployed there, and they have an abun-
dance of resources there, let me tell you. But I was also told that
the Marcellus shale is actually known as the Saudi Arabia of nat-
ural gas. To put that in perspective, there is no such thing as an
endless amount of fossil fuels but Saudi Arabia is pretty doggone
close to it. And the fact that we are sitting on the Marcellus shale,
part of it runs into New York, and we cannot drill for any of it is
actually ridiculous. We as a country have got to get out of our own
echo chamber and we forget sometimes and in this country we have
champagne problems. I can tell you that China and India, Taylor
Swift is pretty popular right now. Oh, Tay Tay. I feel sorry for
Travis right now. But we do. And if you look at what is happening
in China, India, and Russia, a lot of these countries of the Middle
East, OPEC countries, Iran, they really do not care about the
world’s climate at all. I am a military guy. I have seen it. This
country cares immensely. And while we should continue to lead
from the front in this, we also have got to realize that we are the
bridge. Oil and gas, natural gas, energy, we are the bridge and it
is everything.
I visited almost every single energy company in my district, and
there are a lot of them. And I can tell you I have never heard a
single executive say anything disparaging about renewable energy.
I have heard nothing but actually I want to reinvest in it. Let’s
talk more about nuclear. Let’s talk more about hydrogen. I have
heard nothing but those things. And I can attest to that. It is gen-
uine. It is real. It is not just corporate, big oil trying to spin off
their ideas for world dominance because they really want to keep
this going forward. These companies are actually literally investing
in these renewable energy sources because I have seen their books.
And I have seen what they are trying to actively do. I just want
to make sure that we are smart about it, that we are savvy about
it, and we do it in a way where I can continue to eat oysters be-
cause I love oysters. I had some last night and I am not going to
stop eating them. And no, I do not want to ruin your business and
your ecosystem for your small business. And also, sir, I want you
to continue to strive to provide reliable and clean energy for our
country.
So with that said, thank you all so much for being here. Greatly
appreciate it. I think at some point we will have you back. To me
this is the most important issue that we are facing in our world
today.
And without objection, Members have 5 days to submit addi-
tional materials and written questions for the witnesses to the
Chair which will be forwarded to the witness. I ask the witness to
please respond promptly.
If there is no further business, without objection the Committee
is adjourned. And thank you so much.
[Whereupon, at 11:18 a.m., the subcommittee was adjourned.]
APPENDIX
(27)
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
Æ
File and source
- File
- CHRG-118hhrg53335.pdf
- Size
- 16,378,040 bytes
- SHA-256
- 21836b08f3a0fcf1cce693eca5579924a8e96a93e2c62f4b97e7b2d1b1e4f0d0
- Our copy
- CHRG-118hhrg53335.pdf
- Original
- www.govinfo.gov