1

About the American Petroleum Institute (API): API represents nearly 500 oil and natural gas companies, leaders of a technology-driven industry that supplies most of Americas energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to the federal government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives and renewables.

Message from the President and CEO

The 2012 State of American Energy represents the oil and natural gas industrys perspectives on the vital issues surrounding our countrys energy policy. This report highlights the industrys significant contributions to the U.S. economy and the American way of life, while outlining clear policy and regulatory recommendations that, if enacted, would allow the industry to create even more jobs, accelerate U.S. economic growth, further strengthen our energy security, and generate additional revenues for federal, state and local governments. With these goals in mind, API and its member companies are committed to working with policymakers to address the nations current challenges. We look forward to another productive and successful year.

Jack N. Gerard President and CEO API

Table of Contents
5 Overview 9 Energy and the Economy
The oil and natural gas industrys impact on the U.S. economy is significant, supporting nearly 9.2 million American jobs and 7.7 percent of all U.S. gross domestic product (GDP), and delivering more than $86 million a day in revenue to the federal government. With increased access to Americas vast energy resources, the industry can contribute even more.

27 Meeting the Challenges

Since 2000, the U.S. oil and natural gas industry has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives and renewables, to ensure America has reliable and affordable energy for decades to come. In addition, the industry has remained focused on safety and invested in technologies to ensure the responsible exploration and production of energy.

37 Policy Perspectives
API supports common sense, comprehensive energy policies that foster job growth, increase government revenue, and ensure U.S. energy security. By implementing five strategic recommendations, the industry and policymakers can work together to create American jobs and achieve U.S. energy and economic security.

39 Conclusion Special Sections

16 Getting the Offshore Industry Back to Work 23 Oil Sands and the Keystone XL Pipeline 26 Regulatory Burdens Facing U.S. Refineries 32 The Shale Revolution 41 Energy by the Numbers

Overview

At the start of 2012, high unemployment and stagnant economic growth continue to plague the nation. The oil and natural gas industry stands ready to address these challenges head-on by creating well-paying jobs, stimulating economic growth, and generating government revenuesall while improving Americas energy security. Thankfully, these critical goals can be achieved with sensible energy policies. That is why Americas oil and natural gas industry is eager to work with policymakers to:

Create Jobs Stimulate the Economy Secure Future Energy

Rico M.
Superintendent, Refinery Technical Training

Create Jobs
Marcellus Shale development alone could create 76,000 jobs in Pennsylvania, 20,000 jobs in New York and 17,000 jobs in West Virginia by 2015. Development of Ohios Utica Shale could support more than 204,000 jobs in just four years as well. Developing Canadian oil sands and creating sufficient pipeline capacity, including expansion of the Keystone XL pipeline, could create more than 500,000 U.S. jobs by 2035. Overall, the oil and natural gas industry could create 1.4 million jobs by 2030in addition to the 9.2 million American jobs it already supports.

Stimulate the Economy

The industry pays the federal government approximately $86 million a dayor about $31 billion a year in rents, royalties, bonuses and corporate taxes. In 2009, the oil and natural gas industry supported $1.1 trillion in U.S. economic activityor 7.7 percent of Americas gross domestic product. With policies that encourage development and an efficient regulatory process, the industry could provide an additional $800 billion in government revenue through 2030.

Secure Future Energy

Since 2000, the U.S. oil and natural gas industry has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives and renewables. The industry could increase oil and natural gas production by up to 76 percent in 2030 with access to additional areas both offshore and onshore. With the right policies to encourage domestic oil and natural gas development, American and Canadian energy supplies could provide 100 percent of U.S. liquid fuel needs within 15 years. Domestic refineries compete with product imports; therefore, policies that maintain a viable domestic refining industry are a matter of national and economic security.

The U.S. oil and natural gas industry provides safe, affordable and reliable energy to sustain and foster economic growth and maintain the American way of life. Congress and the administration have the power to spur economic activity and increase government revenues in five key areas: 1. Increasing Access to Oil and Natural Gas Resources 2. Ensuring Common Sense Regulations 3. Improving and Accelerating the Leasing and Permitting Process 4. Approving Pipeline Infrastructure for Canadian Oil Sands 5. Avoiding Punitive New Taxes On the following pages, API explains how these strategic recommendations can help bring America closer to achieving its goals of energy and economic security through a combination of effective policies and industry commitments and investments.

Fredrica C.
Marketing Coordinator

Energy and the Economy

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Energy and the Economy

Introduction
At the start of 2012, our nations economy faces significant headwinds: the unemployment rate is stubbornly high around 8.6 percentwith more than 25 million Americans unemployed or underemployedand net job growth during the last six months remained flat.1 The Energy Information Administration (EIA) forecasts that real growth in the U.S. economy will average between 2.2 percent and 3.9 percent through 2035, with the unemployment rate not returning to its pre-recession average of 5.2 percent until 2022.2 Over the next 25 years, the U.S. population is projected to increase by about one-thirdfrom just over 300 million to almost 400 million people.3 The EIA projects the United States will need more than 16 percent additional energy by 2035energy to sustain and aid our countrys economic recovery, to heat the homes and power the cars of a growing population, and to help American businesses create new technologies, goods and medicines for that population.4 Renewable sources of energy, including wind, solar and biomass, are expected to provide 13 percent of Americas energy supply in 2035, up from 8 percent in 2009.5 This growth is encouraging; renewable energy sources are an important part of Americas future energy mix. Further developments and new technologies to advance energy efficiency will also play a critical role in maximizing future resources. By 2035, the total volume of fossil fuelsincluding oil, natural gas and coalused in the United States will increase, and 78 percent of Americas energy will come from fossil fuels, according to the EIA.6 In particular, oil will remain the principal source for U.S. transportation fuel.7 It currently accounts for more than 95 percent of the energy that powers U.S. automobiles, airplanes and ships, and will continue to fuel the rising number of motor vehiclesexpected to grow 30 percent from nearly 230 million today, to more than 300 million by 2035.8,9

These trends are not limited to the United States. With global economic and population growth, worldwide energy consumption is expected to increase by 45 percent through 2035, according to the EIAs 2011 International Energy Outlook (IEO).10 Because growing energy demand translates to economic growth and a better quality of life for the now roughly 7 billion people around the world1.3 billion of whom currently live without electricitythese trends demonstrate global progress.11 Energy for All, the International Energy Agency (IEA) report on energy and poverty, states that every advanced economy has required secure access to modern sources of energy to underpin its development and growing prosperity.12 The report continues: In developing countries, access to affordable and reliable energy services is fundamental to reducing poverty and improving health, increasing productivity, enhancing competitiveness and promoting economic growth.13 As countries around the world look for affordable and reliable sources of energy to power their economies, fossil fuels will continue to play leading roles well into the futureand oil and natural gas will continue to meet more than half of global and U.S. energy demand in 2035, as it does today.14

Benefits of Energy Development

The oil and natural gas industrys impact on the U.S. economy is significant. The industry supports nearly 9.2 million American jobs and 7.7 percent of U.S. gross domestic product, and delivers more than $86 million a day in revenue to the federal government.15,16 And with increased access to U.S. domestic energy resources, it can do even more. Given the critical role of oil and natural gas in driving economic growth and improving the standard of living here at home and around the world, we need policies that encourage domestic oil and natural gas productionand in the process create jobs, raise government revenues, boost the economy, and strengthen U.S. energy security.

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Future Global Energy Demand

800 700 600 500 Nuclear Renewables Natural Gas Coal Oil

The world will require 45 percent more energy in 2035 than it did in 2011.
2035 6.7% 2011 5.4% 1990
400 300 200 Quadrillion BTU 100

14.2%

10.9% 22.3%

22.7%

5.7% 9.1% 21.2% 25.2%

27.2% 28.2%

33.2% 38.8%

29.3%

Source: EIA, International Energy Outlook 2011, Table A2.

Future U.S. Energy Demand

Hydro Biomass and Renewables Nuclear Coal Natural Gas Oil

The United States will require 16 percent more energy in 2035 than it did in 2011.
2035* 2.7% 10.7% 8.0% 21.3% 20.8% 23.9% 24.9% 40
Quadrillion BTU

120 100 80 60

2011 2.6% 5.9% 8.5%

1980 3.3% 3.7% 3.5% 19.7% 25.9%

33.2% 20 0 43.8% 36.8%

*Excludes non-biogenic municipal waste and net electricity imports. Source: EIA, Annual Energy Outlook 2011, Table A1 and A17.

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Job Creation
The beauty of the oil and gas boom is that multipliers arent needed to predict job growth. Its happening right before our eyes. And it stands to reason thateven more jobs would be created as the industry invested to exploit other areas with new technology and production methods.
The Wall Street Journal Editorial November 201117

Job Creation in the United States

A few examples of the industrys tremendous job creation potential include: Opening federal areas currently off-limits in portions of the Rocky Mountains, along with other policies that encourage development, could create more than 85,000 jobs in Colorado by 2030.25 Increasing access to federal areas within the Gulf of Mexico could result in up to 100,000 new jobs in Florida by 2016.26 Creating more efficient regulatory policies and allowing access to new federal areas in Alaska could create an additional 123,000 jobs by 2030.27 Exploration and production in the Atlantic Outer Continental Shelf (OCS) could create 140,000 jobs by 2030.28 Developing the Marcellus Shale could create 76,000 jobs in Pennsylvania, 20,000 jobs in New York and 17,000 jobs in West Virginia by 2015.29,30 Development of Ohios Utica Shale could support more than 204,000 jobs by 2015 due to exploration, leasing, drilling and connector pipeline construction.31 Developing Canadian oil sands and creating sufficient pipeline capacity, including the Keystone XL pipeline, could generate more than 500,000 jobs by 2035.32

The oil and natural gas industry currently supports 5.3 percent of total U.S. employment.18 To put this in perspective, the number of jobs supported by the upstream oil and natural gas industry segment alone in 20102.2 millionis larger than the populations of 15 states.19,20 In addition: One out of every five new jobs created between 2003 and 2011 was in the oil and natural gas industry;21 A Gallup poll found that energy-producing states ranked among the highest in terms of job creation in the first half of 2011, as they did in 2010;22 and By 2030, the upstream oil and natural gas industry segment could support an additional 500,000 jobs under current U.S. energy policies.23

Now consider the projections of a recent Wood Mackenzie study, which found that the industry could add nearly 1.4 million jobs by 2030or almost three times the number of new jobs currently projectedif the United States adopts policies that encourage development of domestic oil and natural gas resources and facilitate Canadian oil sands production, including construction of the necessary pipeline infrastructure and other related projects.24

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Jobs in the oil and natural gas industry represent a wide range of blue collar and highly-skilled professions, many of them well-paying.33 In fact, average oil and natural gas industry exploration and production wages are more than double the national average.34 The industry also employs professionals that most people do not normally associate with the industry, such as botanists and marine biologists, even zoologists and veterinarians. In addition to creating jobs, in 2009 (the last full year for which data is available), the oil and natural gas industry paid $176 billion to its 2.2 million U.S. direct employees in wages and salaries, plus benefits and payments to oil and natural gas leaseholders.35 The amount of total wages supported by the industry rises to almost $500 billion when indirect and induced wages are included.36 Oil and natural gas companies invest in cutting-edge technology and can offer fulfilling careers to Americas next generation of engineers, geophysicists, chemists, earth scientists, geologists, climate experts and explorers. These individuals, working with the best technologies, find and recover oil and natural gas to help secure Americas energy future. To ensure that we are building a skilled workforce for the industry, API and its members have partnered with labor unions to create the Oil and Natural Gas Industry Labor-Management Committee, a partnership that works to create and protect jobs in the industry, as well as to identify areas for additional skills training.

The people of the U.S. oil and natural gas industry are the backbone of our economy. They provide most of the nations energy, spurring job growth across America. Even during times of economic recession, the oil and natural gas industry stands strong.
Jack Gerard API President and CEO May 201138

The Lowest Unemployment Rate in America: North Dakota

Look no further than North Dakota for evidence of the industrys job creation potential. The state leads Gallups Job Creation Index, thanks to record-breaking energy production numbers.39 At roughly 3 percent, North Dakota has the nations lowest unemployment ratewith 10 counties boasting unemployment rates below 2 percent far below the national average of nearly 9 percent.40,41 The state government currently enjoys a surplus of $1 billion.42 North Dakotas booming economy is also good news for its workers, who, in the first quarter of 2011, led the nation with a nearly 7 percent growth in personal income.43 The story of North Dakota is one of how ever-improving technologyin this case horizontal drilling and hydraulic fracturing that helped tap the resources in the Bakken formationcan turn what was thought to be a marginal oil or natural gas field into one of the fastest-growing oilproducing areas in the country. With vast natural resources and the right development policies in place, North Dakota produces more than twice as much energy as its 700,000 residents can use, exporting the rest to other states.44

[Natural gas] will fuel our generating plants, heat our homes and power our states economic engine for generations to come. This growing industry will also provide new career opportunities that will give our children a reason to stay here in Pennsylvania. We are going to do this safely and were going to do it right, because energy equals jobs.
Tom Corbett Governor of Pennsylvania October 201137

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Economic Growth
While other states are forced to tackle budget shortfalls, job losses, and cuts to critical services, we are providing added tax relief, unprecedented improvements in infrastructure, the continued building of our reserves, and additional funding for education, health, human services, safety and many other quality-of-life improvementsthe energy industry has long provided a major opportunity.
Jack Dalrymple Governor of North Dakota 45 January 2011

Or enough money to fund six government agencies this year: the Department of Energy, Department of Agriculture, Department of Commerce, Department of Education, Department of Labor and Department of Transportation.51

Since 1954, offshore production alone has generated more than $100 billion in federal government revenue through lease sales and royalties, among other payments, with an additional $77 billion paid in bonus bids.52 And when a lease is not under production, companies must still pay billions of dollars in rent to the government.

Paying Our Fair Share and More

As part of the $86 million paid to the federal government a day in taxes, rental payments, bonus bids and royalties, the oil and natural gas industry paid an effective tax rate of 41.1 percent in 2010, well above the 26.5 percent effective tax rate paid by other S&P companies.53 Misguided proposals to further increase taxes on the oil and natural gas industry would have the unintended and detrimental effect of slashing government revenues by $128 billion in 2035 and jeopardizing 170,000 U.S. jobs in 2014.54 It is also important to note that the oil and natural gas industrys earnings over the last five years have been in line with the rest of the U.S. manufacturing sectoraveraging 9.5 cents of net income for every dollar of sales, compared with the rest of the U.S. manufacturing sector, which has earned an average of 10 cents per dollar of sales.55

With the ability to create an additional 1.4 million jobs by 2030, the oil and natural gas industry can, and should, be part of the solution to the national jobs crisis and deficit reduction. Americas $15 trillion national debt continues to rise, and solutions must be found to pay down the debt while reducing the annual budget deficit.46 A compelling way to pay the debt is to generate government revenue through lease sales and royalty payments by developing proven reserves of fossil fuels located on public lands, both offshore and onshore, that are owned by the American people. The oil and natural gas industry pays the federal government approximately $86 million a dayor about $31 billion a yearin rents, royalties, bonuses, lease payments and corporate taxes.47 On top of these payments, the industry directly contributed an estimated $470 billion to the U.S. economy in spending, wages and dividendsan economic stimulus that occurs every year without an act of Congress.48 To put this in perspective, $470 billion is: More than half the size of the 2009 federal stimulus package;49 More than 50 percent of the money required to fund the U.S. governments medical care spending, including Medicare and Medicaid, in 2011;50

Another iconic California company, Apple, earns about what we earn. But Apple has profit margins two times Chevrons, and an effective tax rate one-third less, about 28 percent. Yet, we dont hear calls for tax increases on Apple or the tech sector, nor should we.
John S. Watson Chevron Chairman and CEO October 201156

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Thats a significant contribution toward U.S. deficit reduction goals, and this could be just the beginning. A recent study by Wood Mackenzie shows that with pro-development energy policies, the oil and natural gas industry could generate an additional $36 billion by 2015on top of its current contributionsand a full $800 billion by 2030 through lease sales, royalties, production fees and taxes.57 The industrys indirect contributions to the economy make the energy stimulus even larger. In 2009 (the last full year for which data is available), the oil and natural gas industry supported an estimated $1.1 trillion of the U.S. economyor 7.7 percent of Americas gross domestic productthrough spending and investments supporting U.S. manufacturing, transportation, technology and accounting services, among others.58 With expanded access to Americas federal lands and offshore areas, the industry could contribute even more to Americas future, with total revenue for the government over the life of all U.S. resources potentially greater than $4 trillionmore than 25 percent of our national debt.59

The natural gas and oil industry is vital to the U.S. economy, generating millions of high-paying jobs and providing tax revenues to federal, state, and local governments.
National Petroleum Council September 201160

Who Benefits from Big Oil?

Revenues from oil and natural gas industry royalties and taxes at both the national and state levelsmeet local community needs by funding roads, schools, parks and other initiatives. Furthermore, millions of Americans benefit from the strong economic performance of U.S. oil and natural gas companies through their ownership of the companies stock in their pension plans, mutual funds, IRAs and 401K plans. Oil and natural gas stocks are some of the best investments in public employee pension funds. More than 90 percent of oil and natural gas stocks are owned in the form of mutual funds or retirement funds, such as pensions and 401Ks or by private investors. These stocks distributed $35 billion in dividends to American shareholders in 2010 alone.61 A 2011 SONECON study of 17 states covering roughly half of all U.S. public state and local employees found that, on average, oil and natural gas stocks comprise 4.6 percent of state pension fund assets, yet provide 15.7 percent of the returnsa ratio of 3.4 to 1. Thats great news for the retirement security of millions of Americans, including retired firefighters, teachers and police officers.62

Who Owns Big Oil?

Holdings of Oil Stocks, 2011
6.6% Other Institutional Investors 2.8% Corporate Management of Oil Companies 20.6% Asset Management Companies (Including Mutual Funds)
17.7% IRAs 21.1% Individual Investors 31.2% Pension Funds

These revenues reflect significant domestic energy production and are a critical revenue stream for governmentsparticularly in light of current economic conditions. The revenues will also support much-needed projects that create American jobsthroughout the United States, critical infrastructure improvements and funding for education.
Ken Salazar Secretary of the Interior November 201163

Source: Who Owns Americas Oil and Natural Gas Companies, SONECON, October 2011.

SPECIAL SECTION

GETTING THE OFFSHORE INDUSTRY BACK TO WORK

Our $65 trillion global economy rests on a very big and complex energy foundation. And its governed by two laws. One is the law of long lead-times. Because of the scale and nature of energy, it doesnt change overnight. And the second is the law of scale. To be significant, it has to be large.
Daniel Yergin IHS Cambridge Energy Research Associates Chairman October 201164

Reduce the number of delayed projects by two-thirds; Reduce the average time that projects are delayed by four months; Increase capital and operating expenditures in the Gulf by more than $15 billion over the next four years; Increase employment supported by Gulf operations by between 22,000 and 60,000 jobs over the next four years; and Increase Gulf oil production by 13 percent by 2017or 350,000 barrels per dayand natural gas by 1.3 billion cubic feet per day compared to current trends.70

Oil and natural gas development of the Gulf of Mexico and the Outer Continental Shelf (OCS) is imperative to meeting current and future U.S. energy demand. In the OCS Lands Act, Congress declared the OCS to be a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development. Extensive investment is required to bring these vital domestic resources to market, and U.S. offshore oil and natural gas development accounts for about 6 percent of global offshore capital investment worldwide.65 In a promising sign that offshore industry operations could soon return to pre-moratorium production levels, the Bureau of Ocean Energy Management (BOEM) held an oil and natural gas lease sale in December 2011the first in the Gulf of Mexico since March 2010that generated more than $300 million in high bids for the government, but included changes, such as shortened lease timelines and a doubled minimum bid for deepwater leases, that served to discourage investment in and ultimately production of oil and natural gas.66,67 Permitting uncertainty and delays are also discouraging investment in the Gulf, and as much as 680,000 barrels of oil equivalent a day could be at risk in 2019 as permitting delays cause projects to become economically unviable.68 The BOEM and Bureau of Safety and Environmental Enforcement (BSEE) are now fully funded and have increased inspection fees by $52 million, at least 50 percent of which is dedicated to expeditious review of permits.69 The government should prioritize and ensure its ability to maintain high permitting levels. A return to pre-moratorium permitting rates, at a minimum, would:

Efficient leasing and permitting processes mean increased production in the future, since the process of producing oil and natural gas is a lengthy one. One example is Anadarkos Independence Hub, a natural gas facility located in 8,000 feet of water about 120 miles from Mississippi.71 The lease was purchased in December 2001. The first exploratory well was drilled in 2003, with first production seen in mid-2007.72 The Hub is expected to surpass 1 trillion cubic feet of cumulative natural gas production early this year.73 Given the complexities of individual projects and the infrastructure needed to get the resources to market, it oftentimes takes even longer to begin producing. The story is the same in Alaska. For example, Shell has been prepared to explore in Alaskas OCS since 2005 and has paid more than $2 billion for hundreds of leases.74 Shell also invested an additional $1.5 billion to prepare an exploration program that protects the surrounding environment.75 Yet regulatory and legal challenges have prevented the company from drilling a single well on these leasessome of which the government characterized as inactiveduring a period when Shell has been able to drill more than 400 exploration wells elsewhere around the world.76 The development of oil and natural gas resources in Alaskas OCS alone could: Create an annual average of almost 55,000 new jobs and $145 billion in new payroll amounts nationally; Generate a total of $193 billion in government revenue through 2057; and Produce almost 10 billion barrels of oil and 15 trillion cubic feet of natural gas.77

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SPECIAL SECTION

Lost Capital Investment from Rig Movements Outside of the U.S. Gulf of Mexico
The energy markets are constantly looking for signals to guide todays investment strategies for meeting Americas growing demand. Planning and investment cannot be turned on and off with the flip of a switch without entailing huge, potentially non-recoverable costs and delaying urgently needed projects. For an industry that must manage such huge risks and long lead times, it is crucial for the government to provide an energy policy and tax framework, as well as efficient leasing and permitting processes, that encourage investment, rather than discourage it.

GETTING THE OFFSHORE INDUSTRY BACK TO WORK

$21.4 billion in investments lost

North Sea 3 Future Projects $4.2 Billion

South America 3 Rigs $5.5 Billion

West Africa 4 Rigs $6.1 Billion Egypt 3 Rigs $4.4 Billion

Asia Pacific 1 Rig $1.2 Billion

Source: Quest Offshore Resources, Inc. 2011.

Unfortunately, as a result of the moratorium and uncertainty about future permitting, 11 drilling rigs, representing 14 projects, have left the Gulf of Mexico since April 2010.78 These rigs have gone to countries such as Brazil, Egypt and Angolataking a cumulative $21.4 billion of associated lost U.S. capital and operating investment with them.79 In addition: An estimated 91,000 jobs were lost as a result of the moratorium in 2011;80 An estimated $18.3 billion of previously planned capital and operating expenditures did not occur in 2010 and 2011;81 and The EIA projects that Gulf oil production will be down more than 12 percent in 2012 over 2010.82

Oil is a global commodity. It will go to where it is welcomed and the capital investments and jobs will go with it.
Jack Gerard API President and CEO March 201183

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Energy Security
Richard Nixon talked about freeing ourselves from dependence on foreign oil. And every president since that time has talked about freeing ourselves from dependence on foreign oil. Politicians of every stripe have promised energy independence, but that promise has so far gone unmet.
President Barack Obama March 201184

industrys ability to reliably provide these supplies is fundamental to U.S. national and energy security. Within 15 years, American and Canadian energy supplies could provide 100 percent of U.S. liquid fuel needs with increased biofuels development and the implementation of four straightforward policies: Providing access to U.S. oil and natural gas reserves that are currently off-limits; Returning the Gulf of Mexico permitting rates to pre-moratorium levels, at a minimum; Resisting calls for imposition of unnecessary new regulatory requirements on oil and natural gas development; and Partnering with Canada to develop new pipeline capacity to export Canadian crude to the United States, including approval of the Keystone XL pipeline.85

With current global uncertainty and turmoil in oil and natural gas producing regions, America needs to regain control of its energy future by increasing oil and natural gas production here at home. Greater domestic production provides U.S. families and businesses a buffer against supply disruptions, and the oil and natural gas

U.S. Supplies of Crude Oil 2010

14,633 Thousand Bbls per Day

U.S. Imports of Crude Oil 2010

9,121 Thousand Bbls per Day

16% Other

21% Canada

38% United States

12% Saudi Arabia

3% Brazil 4% Angola

62% Imports

10% Venezuela 12% Mexico 11% Nigeria

3% Russia 5% Iraq

4% Algeria
Source: EIA, Petroleum Supply Monthly, February 2011.

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Enacting these policies could increase North American oil and natural gas production from 18.5 million barrels of oil equivalent a day in 2010 to 32.6 million barrels of oil equivalent a day by 2030a 76 percent increase.86 Domestic policies that increase access to areas currently off-limitsincluding portions of the Rocky Mountains, New York, the Eastern Gulf of Mexico, Atlantic OCS, Pacific OCS and offshore Alaskawould have the largest impact, potentially raising domestic oil and natural gas production by more than an additional 10 million barrels of oil equivalent a day by 2030.87 Approval of the Keystone XL pipeline expansion would also provide a significant boost to U.S. energy security, bringing an extra 830,000 barrels of oil per day to U.S. refineries to processequal to about half of what is currently imported from the Persian Gulf and up to 22 percent of forecasted OPEC imports.88,89 The Department of the Interior recently asserted that under its current policies, the United States is in a good position to meet its future energy needs.90 Although oil and natural gas production is increasing today, this surge is largely attributable to the development of oil and natural gas from shale resources on private lands in states such as North Dakota, Pennsylvania, Texas, Arkansas and Louisiana; leasing and development on public lands and federal waters initiated many years ago; and the industrys own ability to increase production through the use of improved technology.91 Despite the potential benefits and numerous polls showing the majority of Americans support increased access to domestic oil and natural gas resources, many policies currently delay or outright prohibit resource development through a slow permitting pace, uncertainty caused by proposals for burdensome tax increases and costly and redundant regulations.92,93 America needs public policy decisions today that bring long-term supply and stability to the marketplace.

U.S. Liquid Fuel Supply 2010

Imports from Rest of the World 38%

United States and Canada 62%

U.S. Projected Liquid Fuel Supply 2030

Current Policy

Imports from Rest of the World 30%

United States and Canada 70%

U.S. Potential Liquid Fuel Supply 2030

Expanded Access Policy

United States and Canada 100%

Source: API calculations based on EIA data and Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012-2030), September 7, 2011.

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The two vulnerabilities of the [United States] as a global superpower have been its dependence on imported oil and its current account deficit. Now it may be in the process of resolving both of those.
Edward L. Morse Former Deputy Assistant Secretary of State for International Energy Policy November 201194

Developing and Providing Americas Energy Resources

If our shale gas resources are included, the United States has the most technically recoverable oil and natural gas resources in the world: 24 percent more than Saudi Arabia, more than 7 times that of Brazil and 10 times more than China.101 As large as these resources are, they do not even include the roughly 900 billion barrels of American unconventional oil resources, such as those found in shale plays in western Colorado, Utah and Wyoming.102 Furthermore, these resource estimates do not include the 81 billion to 125 billion technically recoverable barrels of oil in older American oil fields that the National Energy Technology Laboratory Report stated could be produced using next-generation technology-enhanced recovery.103 And these estimates are just the beginning, as domestic resources are likely to be even larger. The last comprehensive geologic survey of U.S. oil and natural gas resources was derived from industry activity in the late 1970s and early 1980s using outdated technology. The industry has a track record of producing much more than original estimates project, thanks to advanced technologies that continue to improve Americas ability to find and produce domestic oil and natural gas resources. In fact, technologies and advanced drilling techniques, such as 3D and 4D seismic technology, hydraulic fracturing and flex rigs, are opening access to resources previously thought unrecoverable both offshore and onshore.

America faces increased global competition for oil supplies over the next few decades, with global demand for oil expected to increase by 30 percent by 2035.95 In light of these dramatic worldwide dynamics, the United States can regain control over its energy security only through sound domestic energy policies. For example, with the right policies, the United States could bring an additional 8.6 million barrels of oil a day to the market from secure U.S. and Canadian supplies by 2030.96 Instead, President Obama asked Saudi Arabia to increase its oil output in May 2011, and he visited Brazil in March 2011 to encourage offshore drilling there and promise that America would be one of your best customers.97,98 At the same time, Cuba has started offshore development closer to homeexploratory wells are planned for early 2012 in Cuban waters a mere 60 miles from the Florida Keys.99 Plans are also underway to explore off of the coast of the Bahamas in 2012as close as 40 miles from Floridas coast.100 What makes sense for other nations also makes sense for the United States, and America needs to do as much to encourage domestic production as it has to encourage global production. Instead of urging other countries to produce more energy for America to import, policymakers should boost development of our own oil and natural gas resources right here at home. The oil and natural gas industry improves lives in every city, county and state in the nation. In addition to providing millions of jobs for hardworking Americans, the oil and natural gas industry contributes billions of dollars to the U.S. economyall while helping to ensure a continuous supply of energy for U.S. families and businesses and increasing American energy security.

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Offshore Undiscovered Technically Recoverable Federal Resources*

Oil (Bbl) and Natural Gas (Tcf)

Washington/Oregon

0.4 Bbl 2.28 Tcf 2.08 Bbl 3.58 Tcf 2.31 Bbl 2.41 Tcf 1.5 Bbl 15.13 Tcf Mid-Atlantic 1.91 Bbl 17.99 Tcf

Northern California

North Atlantic

Central California

5.58 Bbl Southern California 9.75 Tcf 0.41 Bbl 3.86 Tcf 30.32 Bbl 144.77 Tcf Western Gulf of Mexico 10.7 Bbl 66.25 Tcf Central Gulf of Mexico South Atlantic 0.02 Bbl 0.02 Tcf Straits of Florida

Norton Basin St. Matthew-Hall Navarin Basin Aleutian Basin Bowers Basin

Chukchi Sea 15.38 Bbl 76.77 Tcf Hope Basin

Beaufort Sea 8.22 Bbl 27.64 Tcf Cook Inlet 1.01 Bbl 1.20 Tcf Gulf of Alaska

Eastern Gulf of Mexico 1.40 Bbl 7.44 Tcf 2.48 Bbl 13.77 Tcf

Aleutian Arc St. George Basin

Kodiak

Shumagh

North Aleutian Basin 0.75 Bbl 8.62 Tcf

Off-Limits Open

*These resources, totaling 86 billion barrels of oil and 420 trillion cubic feet of natural gas, are just a portion of whats potentially available for develoment and do not include proven reserves. Source: Minerals Management Service and Department of the Interior.

Offshore
Americas vast proven reserves and undiscovered resources offshore are estimated at nearly 101 billion barrels of oil and 480 trillion cubic feet of natural gas in federal areas spanning the Atlantic and Pacific Oceans, as well as the Gulf of Mexico, and the Chukchi and Beaufort Seas, according to the former Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).104 To put this into perspective: 101 billion barrels of oil is enough oil to power 10 million cars for 348 years; and 480 trillion cubic feet of natural gas is enough to heat 10 million homes for nearly 656 years.105

And these are conservative figures: the original government estimates stated that the Gulf of Mexico contained 15 billion barrels of oil, but the most recent projections have increased to 72 billion barrels.106,107 Alaskas North Slope oilfield has produced more than 16 billion barrels of oil and natural gas liquids, and is still producing, although government agencies originally forecast the region would produce no more than 10 billion barrels.108,109 While often marginalized, areas off the Atlantic and Pacific coasts contain an estimated 14.3 billion barrels of oil and 55 trillion cubic feet of natural gas.110 By 2030, Atlantic and Pacific OCS development alone could support more than 260,000 jobs, generate $27 billion in government revenue per year ($171 billion cumulative), and produce 2.7 million barrels of oil equivalent a day.111

22

Onshore
Onshore, roughly 33 states hold an estimated 88.6 billion barrels of oil and 654.3 trillion cubic feet of natural gas, according to the Bureau of Land Management (BLM).112 To put this into perspective: 88.6 billion barrels of oil is enough to power 10 million cars for 305 years; and 654.3 trillion cubic feet of natural gas is enough to heat 10 million homes for nearly 894 years.113

Canadian oil sands are also important to U.S. economic security. Currently, at least 2,400 U.S. companies in 49 states, representing the technology, service and manufacturing sectors, among others, contribute to the development of Canadian oil sands either by supporting expansion of U.S. pipeline and refining infrastructure or by supplying goods and services to Canadian operations.120 Increased development of Canadian oil sands is expected to add up to $46 billion to U.S. GDP in 2035 alone, and for every dollar America spends on Canadian oil, up to 90 cents is returned to the United States by Canadians through the purchase of U.S. goods and services.121,122 Expansion of the Keystone XL pipeline, still awaiting approval after several years of review, could create 20,000 construction jobs over the next two years and make it possible to realize an additional 500,000 U.S. jobs in 2035 through oil sands development.123,124 The Keystone XL pipeline expansion, which would increase transportation of Canadian oil to U.S. refineries, could also eventually bring as much as 830,000 barrels of oil per day to the United Statesfrom which refined products could fuel more than 11 million cars per day.125,126

Again, these estimates are conservative. For example, the Texas shale formation known as Eagle Ford is one of about 20 new onshore fields that could collectively increase U.S. oil output by 25 percent within a decade, as reported by The New York Times.114 And in the Bakken formation of North Dakota and Montana, the U.S. Geological Survey now says 3 billion to 4 billion barrels of undiscovered oil are available25 times more than the original estimate made in 1995.115 New oil and natural gas development onshorethrough expanded access to portions of the Rocky Mountains, increased shale development and streamlined regulatory policies, among other changescould create an additional 700,000 jobs, generate more than $12 billion in government revenue and produce 3 million barrels of oil equivalent a day by 2030.116

Our membersthe men and women who build and maintain our nations energy infrastructure continue to suffer from one of the highest unemployment rates in the economy. They fail to understand a process whereby, on the one hand, pressure is exerted to pass a jobs bill in order to put skilled craft Americans back to work repairing and re-building our nations infrastructure, and then, on the other hand, an endless progression of regulatory foot-dragging is prolonged that keeps 20,000 Americans from getting to work on the Keystone XL pipeline.
Mark Ayers Building and Construction Trades Department President AFL-CIO December 2011127

Oil Sands
Oil sands are another abundant source of North American energy found primarily in large formations in Canada, whose reserves are surpassed only by those of Saudi Arabia and Venezuela.117 Our neighbor to the north is one of the United States strongest allies, a top trading partnerand the largest supplier of imported oil and natural gas to the United States. Oil from Canadian oil sands has been transported to and refined in the United States for decades and currently accounts for more than 1 million barrels per day of U.S. oil imports.118 Further development of these vast reserves is essential to Americas energy security and reducing U.S. dependence on imports from geopolitically unstable regions. Cambridge Energy Research Associates projects Canada could supply 5 million barrels of oil a day to the United States in 2030or one in every four barrels Americans are projected to consume.119

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If lawmakers cannot reach an agreement on approving the pipeline...then we are definitely in a period of decline in terms of our global leadership and in terms of our ability to compete in the 21st century.
General Jim Jones Former National Security Advisor to President Obama December 2011128

The United States and Canada enjoy the largest trading partnership across the longest peaceful border in the world. Getting more U.S. energy from a friendly, democratic North American neighbor would reduce U.S. reliance on energy resources from less stable regions. The Keystone XL pipeline expansion could also eventually bring as much as half the oil the United States imports from the Persian Gulf today.129,130 Currently, the lack of sufficient pipeline capacity from Canada constricts Gulf Coast refineries access to an essential market of available oil. Expanding pipeline capacity would allow U.S. infrastructure to begin to catch up with growing production in Canada and the Bakken formation in North Dakota and Montana as well as give domestic refineries more supply flexibility.131 In 2010, Canada exported 90 percent of its oil to the United States, more than half of which is derived from oil sands.132,133 Without increased access to U.S. markets through expanded pipeline capacity, Canadian oil sands producers would likely turn to Asian markets through a pipeline to Canadas west coast to export their increasing production.134,135 U.S. Gulf Coast refiners would then continue to draw on current suppliers, although some, such as Mexico and Venezuela, are struggling to maintain production volumes and other suppliers would be needed.136

If approved, the Keystone XL pipeline would be built to the most advanced specifications and monitored and maintained by state-of-the-art technologies. Pipelines have long been recognized as one of the safest, most reliable and well-regulated ways to move crude oil and petroleum products. Moreover, the Canadian government has stringent controls in place to protect the surrounding environment as oil is extracted. The U.S. governments own three-year analysis and environmental review confirmed that the Keystone XL pipeline would have a degree of safety over any other, offering a safe, practical way to bring more Canadian oil to U.S. refineries in the Gulf Coast states.137 Overall, U.S. families and businesses would benefit from the potentially lower energy prices and stability that an enhanced Canadian pipeline network could provide as oil supplies become more flexible and readily available.138 Indeed, a recent survey showed that 80 percent of Americans believe that U.S. government policies should support the use of oil from Canada and should allow pipelines to transport the oil into America.139 Federal or state regulations that delay or prevent increased transportation of Canadian oil to U.S. refineries are counter to this overwhelming support and could weaken Americas energy security.

OIL SANDS AND THE KEYSTONE XL PIPELINE

Having dedicated our lives to protecting and serving this great country, we feel it is incumbent upon us to reinforce how vital the Keystone XL Pipeline is to reducing Americas dependence on oil from less stable regions of the world. One only needs to consider the recent events unfolding in the Middle East to understand the vulnerabilities our nation faces and the need for a more domestic, secure supply of oil from a friendly and reliable trading partner such as Canada.
A group of more than 60 U.S. Marine Corps, Air Force, Army and Navy veterans in a letter to Secretary of State Hillary Clinton March 2011140

Chris S.
Manager, Pipeline Services

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Refineries
Domestic refineries are strategic U.S. assets and are critical to future American jobs, economic growth and energy security. Maintaining a strong domestic refining industry is vital as the refining industry transforms crude oil into products fundamental to our way of life. For 150 years, refiners have provided gasoline to power our automobiles; asphalt for our roads; fuel for our planes; diesel for our trucks, tractors and railroads; bunker fuel oil to ship American products; and heating oil to warm our homes. In addition to the fuels that keep America and its military moving, the refining industry provides the petrochemical building blocks that keep other American manufacturers and industries producing millions of consumer products that Americans depend on every single day. The refining industry is one of Americas largest manufacturing sectorsmore than 50 companies own and operate refineries in 32 states.141,142 And although no new refineries have been built in the United States in the last 35 years, major investments in existing refineries during this time have steadily increased their capacity while improving worker safety, efficiency, environmental performance and refineries ability to produce high-quality products.143 Thanks to this strategic investment, the United States has the largest refining capacity in the world. According to the EIAs 2011 Refinery Capacity Report, U.S. capacity is 17.7 million barrels per day from 148 refineries.144 U.S. refining capacity accounts for 21 percent of global capacityalmost double that of the second-largest refining country, China, which has 9.4 million barrels per day of capacity.145 In fact, U.S. refining capacity has increased 13 percent since 1985 even though there are 75 fewer refineries today.146 Moreover, a number of refineries are expanding and upgrading equipment to increase processing of heavier crude oils, including oil derived from Canadian oil sands. America currently consumes 19 million barrels of oil equivalent a dayapproximately 23 percent of global demand.147 The U.S. refining sector manufactures nearly 90 percent of the gasoline consumed in America, powering the nearly 230 million cars and trucks on the road today, and a similar number of smaller engines, with billions of gallons of clean, high quality fuel.148 American consumers expect and deserve ready access to reliable, clean, affordable fuels and products derived from oil and natural gasand the United States needs sensible policies that preserve a robust domestic refining industry to ensure that supply.

Theres a lot of Life in Oil and Natural Gas

From the time a persons digital alarm clock rings in the morning to the time lights are out at night, oil and natural gas touch Americans lives in ways large and small. Millions of products get their start from oil or natural gas.149 The U.S. refining industry manufactures the essential petrochemical building blocks for millions of products in which oil and natural gas is found, including:150 At the dinner table. Not only is clean and efficient natural gas used for cooking, but also many foods depend on itnatural gas is used to make ammonia, a major component of the fertilizers farmers use to grow their crops. At home. From PVC plumbing, carpeting and vinyl floors, to the paint on the walls and foams for bedding and furniture, as well as televisionsall begin as oil and natural gas. At the department store. Synthetic fabrics, plastics, lipstick, lotions, nail polish, makeup, hair sprays and gels are all derived from oil or natural gas in one way or another. At the doctors office. Oil and natural gas contribute to overall U.S. health and well-being, through a myriad of medicines, medical supplies and health and safety productsincluding aspirin and artificial heart valves, joints and limbs. At the police station. Oil and natural gas helps produce Kevlar, the lightweight fiber thats five times stronger than steel and protects American police officers, firefighters and the men and women in the U.S. armed forces. At the auto dealership. Todays motor vehicles have many parts made from plastic, including the fenders, fuel tanks and dashboards. Lighter parts mean lighter vehicles, and these plastics increase fuel efficiency to help reduce overall gasoline consumption. At cruising altitude. Carbon fiber composite makes an aircrafts structure lighter and more fuel efficient. For example, about 50 percent of the Boeing 787 Dreamliners primary structure is made of modern composite materials that began as oil or natural gas.

Without oil and natural gas, America would not have the plastics and polymers used in everything from cellphones and iPads to the ink printed on this pageor the computer screen used to read it online. Petrochemicals make 21st century communications possible.151 Petrochemicals also make alternative energies possible: plastics derived from oil and natural gas are used in wind turbine blades as well as solar panels.

25

Number of U.S. Refineries Declines but Capacity Expands

250

*Operable Capacity Thousands of Barrels Per Day

20,000 18,000 16,000 14,000

200

Number of Refineries*

150

12,000 10,000

100

8,000 6,000

50

4,000 2,000

*Operable as of January 1st of each year. Source: EIA, Petroleum Supply Annual.

0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

We will continue to eliminate unjustified regulatory costsand thus to strengthen our economy.
Cass Sunstein, Office of Information and Regulatory Affairs Administrator White House Office of Management and Budget August 2011152

Obstacles to Energy Development

Despite the clear benefits of developing U.S. oil and natural gas resources, the industry still faces many public policy obstacles. As it stands, 85 percent of Americas offshore acreage is off-limits to development, and 60 percent of federal onshore lands are off-limits.153 Increased access to these resources and regions is essential to strengthening the U.S. economy and energy security. The industry simply needs government approval to begin the exploration processcompleting new seismic surveys and drilling exploratory wellsto gather updated information and understand potential domestic resources. Yet energy policy to date has denied the opportunity to even begin to gather this information. And without planned lease sales in areas that have been kept off-limits, companies have little incentive to pursue these important pre-production activities and gather new information on the potential for development in these frontier areas. Other barriers to industry progress are overly burdensome regulations and sluggish leasing and permitting processeseven though the president himself has called for the elimination of federal regulations that overly impede those businesses that are trying to create jobs.154 For example, the Environmental Protection Agencys (EPA) proposed rule covering new regulations for

emissions from oil and natural gas drilling operations take a one-size-fits-all approach to regulating an industry that varies greatly in the type, size and complexity of operations in different regions. The proposals target all wells, including those developed with hydraulic fracturing, which account for up to 95 percent of wells drilled today and 67 percent of natural gas production.155 Whats more, approximately 90 percent of future natural gas wells will require this technology.156 On top of the economic costs of implementation, it would take years to manufacture the equipment needed for regulatory compliance, test the technology, and train operators to use it. If impractical, unnecessarily stringent, or excessively costly, the final EPA regulations could depress domestic energy production, cost jobs, hurt consumers, and reduce revenue to the government.157 The oil and natural gas industry needs regulatory, permitting and leasing processes that are thorough, efficient and predictable. That means allowing for exploration and production of much-needed energy resources and ensuring that development takes place in a responsible and sustainable way, without unnecessary regulatory impediments or delays.

Given the broad supportit is astonishing that you [Secretary Ken Salazar] have put forward a [Five-Year Outer Continental Shelf Oil and Gas Leasing Program] that locks up Virginias coastal waters from future offshore energy developmentdirectly ignoring the resolve of the majority of Virginians on this issue.
Eight Virginia Congressmen in a letter to Secretary of the Interior Ken Salazar November 2011158

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REGULATORY BURDENS FACING U.S. REFINERIES

Americas refineries are vital to the U.S. workforce, economy and energy security. For them to remain viable, the United States needs a regulatory structure that protects the environment while allowing the refining industry to remain competitive in the worldwide market. U.S. refineries face a maze of new potential regulations that threaten their viability, including first-time regulations for refinery greenhouse gas (GHG) emissions; new uniform standards for industrial processes; and Tier 3 rulemaking that could unnecessarily reduce sulfur levels and fuel volatility in gasoline, among many others. An outstanding regulatory compliance record has made American refineries among the cleanest, safest and most efficient in the world. In fact, over the last 30 years, total emissions from six principal air pollutants dropped by 67 percent.159 The industry remains committed to meeting regulatory requirements while producing cleaner fuels but the government must also adopt a more reasonable approach to regulations. According to a study by Wood Mackenzie, U.S. refiners face increasing global competitiveness and numerous regulatory challenges. With weak margins, the proposed regulatory and permitting process could threaten: Closures of nearly 30 refineries, or 17 percent of refining capacity; 92,500 high-paying and skilled jobs (direct, indirect, induced), representing $14 billion per year in labor income; and $48 billion per year in additional economic contributions.160

Increasing refinery carbon dioxide emissions by up to 7.4 million tons a year because of the additional processing and energy needed to manufacture the new fuel blend.161

Not only might Americans bear the consequence of such increased costs, but refinery closings would result in lost jobs, put local economies at risk, and weaken U.S. energy security. These are costly sacrifices, particularly considering that the EPA has yet to demonstrate the extent to which Tier 3 measures or other requirements would lead to environmental improvements. The high and very real costs of complying with overreaching federal and state regulations with uncertain benefitssome already approved and others under considerationcould weaken the U.S. domestic refining industry, forcing it and millions of American jobs abroad to countries with less burdensome regulations while increasing U.S. dependence on imported oil and refined products, reducing national security.

Peggy L.
Land Tech

As it stands, refineries are already incentivized to install energy-efficient controls and practices, making the EPAs efforts to regulate GHG emissions an unnecessary burden on an industry that has proven its willingness to cooperate. According to a study by Baker and OBrien, one proposed new requirementthe Tier 3 rulemaking could have several consequences, including: Increasing the cost of gasoline production by up to 25 cents per gallon; Leading to the closure of up to seven U.S. refineries, forcing the United States to double its gasoline imports; and

26

Meeting the Challenges

27

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Meeting the Challenges

API and its member companies are committed to working with policymakers to pursue a thoughtful, comprehensive energy agendaone that promotes U.S. job creation, economic growth and safe, reliable, affordable energy for the future.

Offshore Safety
Since the Gulf oil spill, the industry has raised the bar on offshore safety. The industry continues to work with BOEM and BSEE to ensure that enhanced operations and effective regulations are in place so that the nations oil and natural gas resources can be developed in a safe and environmentally responsible manner. API and its member companies created the Center for Offshore Safety, an independent, industry-funded body that brings together the best minds and expertise to help operators strive for and maintain the highest levels of safety performance. The Center draws on lessons learned from successful and existing safety programs, applying the best elements of these programs to accommodate the unique challenges of offshore oil and natural gas operations. In response to the Gulf spill, the industry moved quickly to apply the lessons learned. Since early 2011, two companiesthe Marine Well Containment Corporation and the Helix Well Containment Grouphave had the containment technology and response capability in place to address the challenges of capping a well if it were releasing oil thousands of feet below the waters surface. Additionally, the industry continues to sponsor projects to study and enhance technologies for responding to the possibility of an oil spill. Electronic navigation and physical oceanographic systems also help safeguard our environment and are a large part of the reason why 97 percent of oil delivered by tankers during the last decade reached its U.S. destination without incident.162 New technologies and better training demonstrate the industry is a global leader in spill prevention. Spills are rare, but if they do happen, the oil and natural gas industry and the U.S. government work together to employ the worlds leading response capabilities and minimize environmental harm. Under federal law, all companies with offshore facilities must file oil spill contingency plans with BSEE and emergency response plans with the U.S. Coast Guard. Federal and state agencies regularly conduct drills and inspections to ensure response capabilities are maintained at a high level.

Industry Strides in and Commitment to Safety

Americas oil and natural gas industry has a long-standing commitment to safety and environmental protection, with more than 600 standards covering every aspect of the oil and natural gas business: exploration and production, refining, measurement operations, marketing and pipeline operations. Since 1924, API has served as the standard-setting body for the oil and natural gas industry. Introducing and establishing safe operational procedures throughout the industry, the API standards program is accredited by the American National Standards Institutethe same organization that accredits programs at U.S. national laboratories. These standards and Recommended Practices (RPs) are the go-to safety resource for manufacturers, engineers, scientists and researchers in search of gold standard specifications, guidance documents and technical reports. The API standards and the overriding commitment to safety underpin every aspect of industry operations quite literally from wells to wheels. Upstream and downstream, from the platform to the pipeline, the refinery, the terminal and the tank truck, and all the way to the nozzle on the gasoline dispenser, the oil and natural gas industry works to keep workers, consumers, surrounding communities and the environment safe.

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The industry funds Oil Spill Response Organizations (OSROs) that rapidly deploy spill response vessels, skimmers, booms and dispersants should a spill occur. OSROs maintain an extensive inventory of owned response equipment that is stored and maintained at pre-position sites across the United States. These entities have increased their resources and capabilities since the Gulf spill, and along with individual companies, they continue to ensure spill response equipment is available and properly maintained and that employees are adequately trained. API has also issued a number of bulletins to help better prepare for hurricanes and bring production back online both offshore and onshore. The industry takes many steps to prepare for a storm: Days in advance of a tropical storm or hurricane, companies evacuate all non-essential personnel and begin the process of shutting down production. Many offshore drilling rigs are equipped with GPS locator systems, which allow federal officials and drilling contractors to remotely monitor the rigs location before, during and after a hurricane. After a storm has passed and it is safe to fly, operators will initiate flyovers of offshore and onshore facilities to evaluate damage from the air. Once safety concerns are addressed, operators will send assessment crews to offshore facilities to physically assess the facilities for damage. If facilities and pipelines are undamaged, operators will begin restarting production. Drilling rigs will commence operations.

Hydraulic Fracturing
Increased oil and natural gas development using advanced drilling techniques, such as horizontal drilling and hydraulic fracturing, has raised questions regarding the safety and environmental impact of the industrys practices in local communities. To help address these questions as part of the industrys ongoing commitment to safety, API built on existing expertise to develop a set of five standards that specifically address hydraulic fracturingfrom well construction and water management to surface impacts and environmental protection, as well as guidance for the industry on how to be a good neighbor.

Hydraulic [fracturing] can be done in a safe way, in an environmentally responsible way.

Ken Salazar Secretary of the Interior October 2011163

These new standards were highlighted at an API-hosted two-day Commitment to Excellence in Hydraulic Fracturing workshop in Pittsburgh in October 2011. The workshop brought together key stakeholders including oil and natural gas industry experts, academics, state officials and regulatorsto examine safety standards, industry communication and local community practices. Similar workshops will be held in shale communities across the United States this year.

Onshore Safety
Onshore, the industry has a number of programs to enhance worker safety and spill prevention. API standards and guidance documents have been used for decades with effective oversight by state regulators.

Jonas D.
Skilled Craft Laborer

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Hydraulic Fracturing Regulation

Regulators and geophysical experts agree that the likelihood of properly injected fracturing fluid reaching drinking water through fractures is remote where there is a large depth separation between drinking water sources and the producing zone.
Shale Gas Subcommittee of the Secretary of Energy Advisory Board August 2011165

A comprehensive set of federal, state and local laws addresses every aspect of exploration and production operations. These include well design, location, spacing, operation, water and waste management and disposal, air emissions, wildlife protection, surface impacts, and health and safety. Federal laws that govern environmental aspects of natural gas drilling include:164 The Clean Water Act (CWA) regulates discharges of pollutants to surface water and storm water runoff. The Safe Drinking Water Act (SDWA) specifically regulates the injection of fluid wastes (produced water) under the ground. The Clean Air Act (CAA) sets rules for air emissions from engines, gas processing equipment, tanks and other sources associated with production and drilling activities. The National Environmental Policy Act (NEPA) requires environmental impact assessments for development of federal lands. Occupational Safety and Health Act (OSHA) sets safety standards with which employers must comply to protect their employees. Also requires Material Safety Data Sheets be maintained and readily available for employee use covering chemicals used on location. Emergency Planning and Community Right-to-Know Act (EPCRA) requires storage of regulated chemicals above certain quantities be reported to local and state emergency responders on an annual basis.

Groundwater Protection through Proper Well Construction

In addition to government oversight, new industry standards are continuously evaluated to advance operations and practices.

Industry best practices and transparent operations have played a key role in effective state regulation, with 184 API standards cited more than 3,300 times by state regulators.166 EPA Administrator Lisa Jackson and state regulators have repeated that state-based regulation has proven successful for safe industry operations, and the good news is that studies by the EPA and the Ground Water Protection Council have found no direct link between hydraulic fracturing operations and groundwater impacts.167

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Typical Shale Fracturing Mixture Makeup

The fluid from the hydraulic fracturing process is nearly

TYPICAL ADDITIVES USED IN FRACTURING FLUID and in common household items

99.5%

WATER & SAND.

To create productive natural gas wells, companies force fluid thousands of feet below the surface at high pressure to crack shale rock and release trapped natural gas. This extraction technique is called hydraulic fracturing. The fluid used in the process is made up almost entirely of water and sand. However, it also includes a very small percentage of chemical additives that help make the process work. Source: DOE, GWPC, Modern Shale Gas Development in the United States, A Primer, 2009.

Multiple safety measures are taken to ensure protection of surrounding groundwater resources: hydraulic fracturing wells are drilled at depths far below where usable groundwater is likely to be found, in addition to steel casing and surrounding layers of cement that are installed to provide multiple safety barriers. Past performance has shown that the industry is committed to responsibly and safely managing the impacts of hydraulic fracturing, and will continue to do so in the future to provide American jobs, economic growth and energy security through increased oil and natural gas production.

Ive yet to see a single impact of [fracturing] actually directly communicating with fresh groundwater resources. Again and again and again, I never see a single incidence of [fracturing] causing this direct communication that we keep hearing about.
Scott Perry Director of the Bureau of Oil and Gas Management Pennsylvania Department of Environmental Protection June 2011168

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THE SHALE REVOLUTION

In an August 2011 brief, the EIA announced that development of shale gas plays had become a game changer for the U.S. natural gas market, noting that the United States has enough natural gas to meet 100 years of its demand.169,170 The industry agrees that this is an important, abundant domestic resource. And by combining innovative developments in directional drilling with hydraulic fracturing technology, it has been able to unlock massive new supplies of oil and natural gas from dense deposits of shale. These technologies have been used in more than 1 million U.S. wells, and have safely produced more than 7 billion barrels of oil and 600 trillion cubic feet of natural gas.171 Between 2000 and 2006, production of natural gas from U.S. shale formations grew by an average of 17 percent per year, and by an average of 48 percent per year from 2006 to 2010.172 This development of natural gas from shale resources is responsible for: Supporting 600,000 jobs in 2010 and could support more than 1.6 million jobs by 2035; Contributing more than $76 billion to U.S. GDP in 2010, which could triple to $231 billion in 2035; and Contributing $18.6 billion in federal, state and local government tax and federal royalty revenues, which could more than triple to $57 billion by 2035 generating more than $933 billion in federal, state, and local tax and royalty revenues over the next 25 years on a cumulative basis.173

Thats good news, since clean-burning natural gas will play an increasingly important role in U.S. transportation and electricity generation.178 To help meet this rising demand, the oil and natural gas industry invested nearly $38 billion in natural gas development from shale between 2000 and 2010, with those capital investments expected to grow to nearly $1.9 trillion between 2010 and 2035.179,180 In a recent Deloitte Survey, 8 out of 10 Americans link natural gas with job creation and economic revival.181 Indeed, this shale energy revolution is also a game changer for U.S. families, as increased natural gas production from shale resources could save American families an average of $926 per year between 2012 and 2015, rising to more than $2,000 per household in 2035 as a result of lower natural gas prices.182 It could also provide a much-needed renaissance for U.S. manufacturing businesses. According to a recent study by PricewaterhouseCoopers, this affordable energy and the demand for products used to extract the resources could: Reduce U.S. manufacturers natural gas expenses by as much as $11.6 billion annually through 2025; and Create 1 million more manufacturing jobs by 2025.183

Increased domestic production would also improve U.S. competitiveness and strengthen energy security for all Americans. Whats more, the United States could produce more natural gas than it consumes and even become a net exporter of natural gas by 2035helping other nations reduce their carbon emissions while offsetting some of the U.S. trade deficit, a win-win for the environment and a boost to the American economy.184 Greater access to onshore shale resources and improving the regulatory process should be a top priority, as it will boost Americas ability to generate electricity, heat homes and power vehicles for generations to comewhile creating much-needed new jobs, increasing government revenues, and strengthening U.S. energy security.

This is only the beginning, as the EIA projects that total national gas production from shale could grow by almost threefold from 2009 to 2035.174 Thanks to increased domestic production, natural gas imports are expected to shrink to 1 percent over that same time period, from roughly 12 percent today.175 By 2035, natural gas from shale is expected to represent 60 percent of all U.S. natural gas production and 46 percent of total U.S. natural gas consumption, compared to 14 percent in 2009.176,177

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SPECIAL SECTION

Shale Gas Plays, Lower 48 States

THE SHALE REVOLUTION

Shale Gas Plays Basins Stacked Plays Shallowest/Youngest Mid-Depth/Mid-Age Deepest/Oldest

Source: EIA based on data from various published studies, updated May 28, 2009.

Refinery Safety
U.S. refiners have maintained a strong safety record despite a challenging work environment that involves heavy equipment, hazardous materials and operations at high temperatures and high pressure. According to Bureau of Labor Statistics data, a refinery employee is up to five times less likely to be injured on the job than employees in other manufacturing sectors.185 The injury rate has steadily decreased, including a decline of 40 percent since 2003 for job-related injuries and illnesses.186 The low incidence of refinery injuries is not only a result of the industrys adherence to rigorous safety standards, but also its ongoing integration of new, improving technology, its engagement with local communities, and its thoroughly trained workforce. Refineries use technological advances, including cutting-edge control centers and emergency shut-down mechanisms, to comply with and complement industry standards. Control rooms are designed to monitor equipment and give up-to-the-second readings on activity

throughout the refinery, while automatically running some processes and allowing operators and engineers to make manual adjustments as needed. API has also issued several standards to address and improve refinery safety. For example, a new standard is being implemented that will enable refiners to benchmark their process safety performance against the industry as a whole and will help improve refining safety overall. Other safety-related documents issued or under development cover topics such as enhanced fire-proofing and fire protection, minimizing fixed refinery equipment corrosion, and preventing storage tank overfill. Because nearly half of all U.S. refining capacity is situated on the Gulf Coast, refineries must also be prepared to respond to violent storms and hurricanes. To this end, these refineries must have extensive plans detailing emergency procedures, mechanisms for alerting and instructing employees and processes for safely shutting down the plant and evacuating all non-essential personnel. Guidelines are also in place for post-hurricane inspections, as equipment must be thoroughly examined for damage.
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Other advanced preparations include: Securing back-up generators and working with federal, state and local governments to ensure that refineries and pipelines are considered critical infrastructure for back-up power purposes; Designating procedures for food, water, transportation and other emergency supplies and services; and Reinforcing onshore buildings and elevated equipment to minimize potential flood damage.

creates a fairer process for enforcement hearings, doubles to $2 million the maximum fine for safety violations, and increases the number of pipeline inspectors.187 The industry is committed to developing this nations vast energy pipeline infrastructure in the safest manner possible. Since 2001, the number of pipeline spills per 1,000 miles has fallen by 59 percent, and the ultimate goal is zero accidents.188 Every incident or release is incentive to improve technology, training, operations procedures, and industry standards and best practices.

Pipeline Safety
From production platforms to refineries and distribution terminals, oil, refined products and natural gas move through 500,000 miles of pipelines that operate 365 days a year with a strong and improving record of safe, efficient and reliable transportation of the energy products needed to support the U.S. economy. Pipelines are constructed to meet rigorous safety standards overseen by the Federal Energy Regulatory Commission and the Pipeline and Hazardous Materials Safety Administration, a branch of the Department of Transportation. And to ensure the safe transport of oil and natural gas, API and other industry standards and certifications, as well as a number of federal and state regulations, play an important role in all aspects of pipeline operations, including construction, technology and personnel. The composition of the pipeline itself is a key factor in facilitating safety. Today, pipelines are typically made from newer, high-strength steel. Advances have also been made in new welding practices to ensure pipe joints are properly connected. It is common practice to pressure test pipelines to 25 percent more than their intended operating pressure before they go into service. Even with the most sophisticated designs and equipment in place, oil and natural gas pipelines are constantly monitored24 hours a day, 365 days a yearthrough an array of sensors, controls and computer systems. From high-tech control rooms, engineers monitor real-time information on the rate of flow, pressure and speed of transport. In fact, API and the Association of Oil Pipe Lines (AOPL) worked with Congress to pass a bipartisan pipeline safety bill in December 2011 that authorizes Pipeline and Hazardous Materials Safety Administration programs through 2015, strengthens state excavation damage prevention programs by removing some local exemptions,

Developing Advanced Technologies

Since 2000, the U.S. oil and natural gas industry has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives and renewablesan amount more than two and a half times the 2009 federal stimulus package, or roughly $6,400 for each American citizen.189 The industry is developing alternative technologies that will play an increasingly important role in our energy future even as it continues supplying the oil and natural gas that will be our nations primary energy source for decades to come.190

Industry Investment in Carbon Mitigation

Between 2000 and 2010, the U.S. oil and natural gas industry invested $71 billion in technologies that reduce GHG emissions, far more than the federal government ($43 billion), and almost as much as the rest of private industry combined ($74 billion).191 Investments in GHG mitigation technologies by all groupsthe oil and natural gas industry, the rest of the private sector and the federal governmenttotaled $188 billion between 2000 and 2010.192 The industry also directly reduced GHG emissions by almost 56 million metric tons of CO2 equivalent between 2009 and 2010.193 These reductions included fuel substitution, both for lower carbon and renewable energy sources; reduced flaring and fugitive emissions; and improved efficiency, such as combined heat and power. The industrys emission reductions equate to taking more than 11 million cars off the road.194

35

Carbon Mitigation Investment by Investor Group

2000-2010 $188 Billion (2010 $)

Diversifying Resources
The industrys investment in emerging technology is significantinvestments include more than $9 billion in non-hydrocarbon technologies from 2000 to 2010, which accounted for one in every five dollars invested in non-hydrocarbon energy technologies from all sources.197 Wind energy and biofuels ranked at the top of the oil and natural gas industrys non-hydrocarbon investments.198 For example, one company produces sugarcane ethanol that emits up to 70 percent less CO2 than standard gasoline across the entire lifecycle.199 Another is developing nextgeneration biofuels from photosynthetic algae and has already developed advanced polymers for lithium ion batteries to help power the next generation of hybrid electric cars.200, 201 The EIA projects that renewables will meet only about 13 percent of the nations energy needs in 2035 while oil and natural gas will supply about 55 percent.202 Advancing renewable energy technology will continue to be important, but secure sources of oil and natural gas will be essential to U.S. economic growth and energy security for decades to come.

$71.1 Billion (38%)

$73.7 Billion (39%)

$43.4 Billion (23%)

Oil and Natural Gas Industry

Other Private Industries

Federal Government

Source: T2 & Associates, Key Investments in Greenhouse Gas Mitigation Technologies from 2000 Through 2010 by Energy Firms, Other Industry and the Federal Government. October 2011.

Carbon Mitigation Investment by Investor Group

2000-2010
$102.5 Billion
$20.8 (20%)

$43.1 (42%)

Improving Efficiency
$46.2 Billion
$15.6 (34%) $21.5 (47%) $23.5 (61%) $9.1 (20%) $1.2 Billion

$38.3 Billion
$5.8 (15%) $9.0 (24%)

$38.5 (38%)

End-Use

Non-Hydrocarbon

Fuel Substitution

Enabling

Because of increasing global energy demand, the United States must consider all sources of energy and options for reducing our energy consumption. Energy efficiency is the cleanest, quickest and most cost-effective way to extend todays energy supply into the future. The efficient use of energy is not only a core value of the oil and natural gas industry, its also a daily practice. Today, the United States uses about half as much energy for every dollar of GDP as it did in 1980.203 Energy efficiency helps energy companies manage costs, which in turn strengthens competitiveness and brings more affordable energy products to Americans. Energy efficiency also helps improve the oil and natural gas industrys environmental performance by reducing GHG emissions. Technological advances, such as 3D seismic visualization and directional or horizontal drilling, also drive energy efficiency by enabling oil and natural gas companies to access resources more precisely and with less impact on the environment. Seismic technology gives us eyes underground so we know exactly where to drill.

Federal Government Other Private Industries Oil and Natural Gas Industry
Source: T2 & Associates, Key Investments in Greenhouse Gas Mitigation Technologies from 2000 Through 2010 by Energy Firms, Other Industry and the Federal Government. October 2011.

U.S. refineries invest in leading-edge, world-class technologiesmuch of it developed in the United Statesto maintain competitiveness and environmental performance. The refining sector has invested about $128 billion since 1990 to make the cleanest-burning fuels in the world, meeting stringent Clean Air Act standards.195,196

36

It used to take a 20-acre drill site to access an area of one square mile underground. Today, 80 square miles can be accessed with a drill site as small as two acres, and half as many wells are needed to produce the same amount of energy as 20 years ago. In addition, submersible, remotely operated vehicles help deepwater operators install, inspect and repair underwater facilities with less energy use. Other remote-control technologies allow offshore production platforms to operate unmanned, saving energy and money. Many oil and natural gas companies have achieved greater efficiency by improving their plants, refineries and overall operations. For example, one company operating in the San Juan Basin modified its procedures to increase efficiency. As a result, the company saved 4.47 million cubic feet of natural gas per day and reduced GHG emissions by more than 106,000 tons of CO2 in 2009 and 2010.204 Technologies such as combined heat and power (CHP) also known as cogeneration, which uses excess heat from refinery processes to produce additional energyare also helping refiners become more efficient, reducing both energy use and emissions. According to the EPA, a CHP system can produce the same electrical and thermal output at 75 percent fuel conversion efficiencycompared with 49 percent efficiency for separate heat and power.205 This technology represents more than a 50 percent gain in overall efficiency, resulting in 35 percent in fuel savings.206 And across the industry, U.S. refineries, pipelines and terminals are using better sensors to detect and prevent fuel and emission leaks. This keeps temperatures, pressures and operational conditions stable and less energy-intensive. Through these investments, improvements in carbon mitigation and energy efficiency will help secure the energy and economic futures of Americans for generations to come.

even though the total number of vehicle miles driven nearly doubled.208 Through industry-government partnerships, these changes were accomplished while U.S. GDP has increased 127 percentno small feat.209 Energy companies have produced cleaner gasoline and diesel fuels to enable these advances. Fuel changes have included: Twice reformulating gasoline nationwideand three times in Californiato reduce smog and air pollution; Introducing lead-free gasoline nationwide for cars and trucks; Reducing sulfur in gasoline by 90 percent to enable cars to emit 95 percent fewer emissions; and Reducing sulfur in diesel by 97 percent to enable 90 percent lower emitting diesel truck, bus and non-road engines.

Since 1990, the U.S. refining industry has spent about $128 billion on environmental upgrades, including those to produce cleaner fuels.210 Americas refineries will continue to produce the cleaner fuels U.S. customers want, as ultimately the success of any new fuel or vehicle depends on consumer acceptance. Oil and natural gas companies are leading the research and development of many new types of fuels, and stand ready to work with all stakeholders to ensure that future fuels and vehicles meet societys needs for mobility, affordability and environmental performance.

Lynne H.
Vice President, Government and Public Affairs

Cleaner Vehicles, Cleaner Fuels

In recent decades, the oil and auto industries have made great improvements in vehicle efficiency and emissions reductions. New cars today emit 98 to 99 percent less pollution for each mile driven than their 1970 counterparts, thanks to advances in fuel and vehicle technology.207 As a result, total emissions from six principal air pollutants dropped by 67 percent over the last 30 years

37

Policy Perspectives

38

Policy Perspectives
API supports common sense, comprehensive energy policies that foster job growth, increase government revenue, and ensure U.S. energy security, while avoiding burdensome regulations and detrimental taxes. We encourage policymakers to: 1. Increase Access to Oil and Natural Gas Resources Open federal areas that are currently off-limits to exploration and development, including: 2. Eastern Gulf of Mexico; Alaska offshore; Atlantic Outer Continental Shelf; Pacific Outer Continental Shelf; Alaska National Wildlife Refuge 1002 Area; National Petroleum Reserve Alaska; and Portions of the Rocky Mountains.

3.

Improve and Accelerate the Leasing and Permitting Process Ensure that permitting levels allow the industry to develop all offshore and onshore resources in a timely manner. Increase the rate of permitting offshore in the Gulf of Mexico to provide the certainty to attract investment, replenish leasing inventories, and ensure that companies can build new rigs and keep them working in the Gulf so that the Gulf can continue to serve as a key source of U.S. production. Ensure that the vast multiple-use acreage managed by BLM is available for leasing. Ensure that BLM completes project-level environmental analysis in a timely manner, rather than the multi-year delays currently experienced by some onshore projects.

4.

Approve Pipeline Infrastructure for Canadian Oil Sands Approve the Keystone XL pipeline expansion and future additional pipeline infrastructure. Allow Gulf refineries to access Canadian oil markets to retain U.S. refinery jobs.

Lift the drilling moratorium in New York.

Ensure Common Sense Regulations Ensure that the environmental regulation of natural gas development in shale natural gas and oil plays is not duplicative or unduly burdensomeand that state-level regulation is relied upon for its flexibility to deal with unique local issues. Ensure that the EPA regulates within its authority and bases its regulatory efforts on sound science, seeking stakeholder input, credibly considering the costs and benefits. Prevent the regulation of GHG emissions through Clean Air Act programs that were not intended by Congress to address climate change. Align the Renewable Fuels Standard with the existing U.S. motor vehicle fleets capacity to safely use biofuels and the biofuel industrys ability to produce them. 5.

Avoid Punitive New Taxes Maintain standard business cost-recovery measures for the oil and natural gas industry.

If these positive energy policies are followed, U.S. oil and natural gas production could generate more than 1.4 million new jobs, $800 billion in additional cumulative government revenue, and make 10 million barrels worth of added daily oil and natural gas available by 2030all while making America more energy secure by providing 100 percent of U.S. liquid fuel needs from North American sources within 15 years.

Conclusion

40

Conclusion
There has been much discussion in Washington about how to address persistently high unemployment and increase revenues to the federal government, while still leading our country to higher economic growth. The oil and natural gas industry is prepared to do all three, and moreby providing the secure sources of affordable and reliable energy that protect our national security. We will continue to encourage the president, Congress and the regulatory agencies to choose the path that can lead to those positive outcomes and put the United States on the right energy and economic track. This path means increasing access to Americas domestic resources so we can create jobs, raise government revenues, and produce even more of the energy we use right here at home. The other path leads to negative outcomes due to increasing taxesby removing standard business deductions, not just for the U.S. oil and natural gas industry but for specific companies within the industryunnecessary and duplicative regulations, and policies that restrain the development of our energy resources. There is a choice when it comes to the policies that will help shape Americas energy futuretwo paths that we can take. One path leads to more jobs, higher government revenues and greater U.S. energy securitywhich can be achieved by increasing oil and natural gas development right here at home. The other path would put jobs, revenues and our energy security at risk. For the industry, our nations economy and the American people, the choice seems clear. Its a choice were ready to make.

Americas Choice 2020

increase
oil & natural gas development

raise
oil & natural gas taxes

jobs

+ 1,100,000 jobs

jobs

- 48,000 jobs

government revenue
+ $127 billion

government revenue
- $29 billion

energy production

+ 4 million barrels worth of oil and natural gas per day

energy production

- 700,000 barrels worth of oil and natural gas per day

Source: Wood Mackenzie Energy Consulting, http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf; and http://www.api.org/policy/tax/recentstudiesandresearch/upload/SOAE_Wood_Mackenzie_Access_vs_Taxes.pdf.

Americas Choice 2030

increase
oil & natural gas development

raise
oil & natural gas taxes

jobs

+ 1,400,000 jobs

jobs

- 22,000 jobs

government revenue
+ $800 billion

government revenue
- $223 billion

energy production

+ 10 million barrels worth of oil and natural gas per day

energy production

- 280,000 barrels worth of oil and natural gas per day

Source: Wood Mackenzie Energy Consulting, http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf; and http://www.api.org/policy/tax/recentstudiesandresearch/upload/SOAE_Wood_Mackenzie_Access_vs_Taxes.pdf.

Energy by the Numbers

The oil and natural gas industry by the numbers:

9.2 Million
Number of direct, indirect and induced jobs supported by the U.S. oil and natural gas industry.

1.4 million
number of jobs created by 2030
With the right government policies in place to expand access to domestic natural resources.

2 barrels

Amount of oil the average U.S. citizen uses per month.

62%
Percentage of U.S. energy demand met by oil and natural gas.

$86 million
Daily amount companies pay to the federal government in corporate taxes, royalty payments, rents and bonus fees.

$266 billion
U.S. Capital

Projects

$ $

$176 Billion

$ $

Wages paid to U.S. employees, plus benefits and payments to oil and natural gas leaseholders in 2009.

Amount the industry invested in new U.S. capital projects in 2010.

42

NOTES

43

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

16 17 18

19 20 21 22 23 24 25 26 27 28 29

30 31

32 33 34 35 36 37 38 39

40 41 42 43 44

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Energy Information Administration, International Energy Outlook 2011, September 2011. Available at: http://www.eia.gov/forecasts/ieo/. Birol, Faith, Energy for All: Financing Access for the Poor Presentation, Energy for All Conference, Oslo, October 10-11, 2011. Available at: http://www.iea.org/ weo/Files/presentation_oslo_oct11.pdf. International Energy Agency, Energy for All: Financing Access for the Poor Special Early Excerpt of the World Energy Outlook 2011, October 2011. Available at: http://www.iea.org/Papers/2011/weo2011_energy_for_all.pdf. Ibid. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. PricewaterhouseCoopers, The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy in 2009: Employment, Labor Income, and Value Added, May 2011. Available at: http://www.scribd.com/doc/54535552/The-Economic-Impacts-of-the-Oil-and-NaturalGas-Industry-on-the-U-S-Economy-in-2009. 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Available at: http://www.census.gov/popest/data/index.html. Editorial Board, The Non-Green Jobs Boom: Forget clean energy. Oil and gas are boosting U.S. employment, The Wall Street Journal, November 28, 2011. Available at: http://online.wsj.com/article/SB10001424052970204190704577024510087261078.html?KEYWORDS=non-green. Gallup Poll, Energy States Lead in Job Creation, Financial States Struggle, July 19, 2011; Energy, Federal Government States Provide Best Job Markets, July 21, 2010. Available at: http://www.gallup.com/poll/149072/energy-states-lead-job-creation-financial-states-struggle.aspx. Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Available at: http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf. Ibid. Ibid. Ibid. Ibid. Ibid. Considine, Watson and Blumsack, The Pennsylvania Marcellus Natural Gas Industry: Status, Economic Impacts and Future Potential, Pennsylvania State University College of Earth and Mineral Sciences Department of Energy and Engineering, July 20, 2011. Available at: http://marcelluscoalition.org/wp-content/uploads/2011/07/Final-2011-PA-Marcellus-Economic-Impacts.pdf. Considine, Timothy J., The Economic Impacts of the Marcellus Shale: Implications for New York, Pennsylvania, and West Virginia, Natural Resources Economics, Inc., July 14, 2010. Available at: http://www.api.org/policy/exploration/hydraulicfracturing/upload/API%20Economic%20Impacts%20Marcellus%20Shale.pdf. Kleinzhenz & Associates, Ohios Natural Gas and Crude Oil Exploration and Production Industry and the Emerging Utica Gas Formation Economic Impact Study, September 2011. Available at: http://www.oogeep.org/downloads/file/Economic%20Impact%20Study/Ohio%20Natural%20Gas%20and%20Crude%20Oil%20 Industry%20Economic%20Impact%20Study%20September%202011.pdf. Canadian Energy Research Institute, Economic Impacts of Staged Development of Oil Sands Projects in Alberta (2010 2035), June 2011. Available at: http:// www.api.org/aboutoilgas/oilsands/upload/Economic_Impacts_of_Staged_Development.pdf. Bureau of Labor Statistics, Quarterly Census of Employment and Wages. Ibid. PricewaterhouseCoopers, The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy in 2009: Employment, Labor Income, and Value Added, May 2011. Available at: http://www.scribd.com/doc/54535552/The-Economic-Impacts-of-the-Oil-and-Natural-Gas-Industry-on-the-U-S-Economy-in-2009. Ibid. Press Release, Governor Corbett Announces Plans to Implement Key Recommendations of Marcellus Shale Advisory Commission, Office of Pennsylvania Governor Tom Corbett, October 3, 2011. Available at: http://www.governor.state.pa.us/portal/server.pt?open=18&objID=1201686&mode=2. Press Release, New Study: U.S. oil and natural gas industry stays strong through recession, API, May 3, 2011. Available at: http://www.api.org/Newsroom/ oil-industry-strong.cfm. Gallup Poll, Energy States Lead in Job Creation, Financial States Struggle, July 19, 2011; Energy, Federal Government States Provide Best Job Markets, July 21, 2010. Available at: http://www.gallup.com/poll/149072/energy-states-lead-job-creation-financial-states-struggle.aspx and http://www.gallup.com/poll/141464/ energy-federal-government-states-provide-best-job-markets.aspx. Job Service North Dakota, Labor Force Estimates, November 21, 2011. Available at: http://www.ndworkforceintelligence.com/admin/gsipub/htmlarea/uploads/ lmi_maplauscntyunemprate201110.pdf. Bureau of Labor Statistics, Unemployment Rates for States, November 22, 2011. Available at: http://www.bls.gov/web/laus/laumstrk.htm. Cauchon, Dennis, North Dakota economy booms, population soars, USA Today, March 17, 2011. Available at: http://www.usatoday.com/news/nation/census/201103-16-north-dakota-census_N.htm. Press Release, State Personal Income: First Quarter 2011, Bureau of Economic Analysis, June 22, 2011. Available at: http://www.bea.gov/ newsreleases/regional/spi/2011/pdf/spi0611.pdf. Energy Information Administration, State Energy Profile: North Dakota, November 2011. Available at: http://www.eia.gov/state/state-energy-profiles.cfm?sid=ND.

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

Dalrymple, Jack, 2011 State of the State Address, Office of the Governor of the State of North Dakota, January 4, 2011. Available at: http://governor.nd.gov/events/2011-state-state-address. Department of the Treasury, Financial Management Service, Bureau of the Public Debt. Available at: http://www.treasurydirect.gov/NP/BPDLogin?application=np. API calculation based on EIA and DOI data. API calculation based on compilation of public data, independent analysis and corporate annual reports. Internal Revenue Service, The American Recovery and Reinvestment Act of 2009: Information Center, October 31, 2011. Available at: www.irs.gov/recovery. Budget of the United States Government, Fiscal Year 2012, Historical Tables, Table 11.3OUTLAYS FOR PAYMENTS FOR INDIVIDUALS BY CATEGORY AND MAJOR PROGRAM: 19402016. Available at: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist.pdf. Budget of the United States Government, Fiscal Year 2012, Historical Tables, Table 4.1OUTLAYS BY AGENCY: 19622016. Available at: http://www.whitehouse. gov/sites/default/files/omb/budget/fy2012/assets/hist.pdf. Department of the Interior, Office of Natural Resources Revenue; Bureau of Ocean Energy Management. Based on company filings with the federal government as reported by the U.S. Census Bureau and the Oil & Gas Journal. Wood Mackenzie, Energy Policy at a Crossroads: An Assessment of the Impacts of Increased Access versus Higher Taxes on U.S. Oil and Natural Gas Production, Government Revenue, and Employment, June 24, 2011. Available at: http://www.scribd.com/doc/58894728/An-Assessment-of-the-Impacts-of-Increased-Accessversus-Higher-Taxes-on-U-S-Oil-and-Natural-Gas-Production-Government-Revenue-and-Employment. Based on company filings with the federal government as reported by the Census Bureau and the Oil & Gas Journal. Watson, John S., The Imperative of Affordable Energy, Speech delivered to the Peterson Institute for International Economics, October 19, 2011. Available at: http://dailyresourcehunter.com/energy-renaissance-john-watson-ceo-chevron/. Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Available at: http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf. PricewaterhouseCoopers, The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy in 2009: Employment, Labor Income, and Value Added, May 2011. Available at: http://www.scribd.com/doc/54535552/The-Economic-Impacts-of-the-Oil-and-NaturalGas-Industry-on-the-U-S-Economy-in-2009. ICF International, Strengthening Our Economy: The Untapped U.S. Oil and Gas Resources, December 5, 2008. Available at: http://www.scribd.com/doc/15446000/Strengthening-Our-Economy-The-Untapped-US-Oil-and-Gas-Resources. National Petroleum Council, Prudent Development: Realizing the Potential of North Americas Abundant Natural Gas and Oil Resources, September 15, 2011. Available at: http://www.npc.org/Prudent_Development.html. Standard and Poors Research Insight. SONECON, The Financial Contribution of Oil and Natural Gas Company: Investments to Major Public Pension Plans in Seventeen States, 2005 2009, June 2011. http://www.api.org/Newsroom/upload/Report_Public_Pension_Funds_in_17states.pdf. Press Release, Interior Distributes $11.2 Billion in Energy Revenues to State, Tribal and Federal Governments: FY2011 receipts a $2 billion increase over previous year, Department of the Interior, November 7, 2011. Available at: http://www.doi.gov/news/pressreleases/InteriorDistributes-11-pt-2-Billion-in-Energy-Revenues-to-State-Tribal-and-Federal-Governments.cfm. Rothkopf, David, A Slow-Motion Revolution That Is Changing the World: An interview with Daniel Yergin, Foreign Policy, October 4, 2011. Available at: http:// www.foreignpolicy.com/articles/2011/10/04/daniel_yergin_interview?page=0,1. Quest Offshore, The State of the Offshore U.S. Oil and Gas Industry: An in-depth study of the outlook of the industry investment flows offshore, December 2011. Available at: http://bit.ly/rVZSct. Press Release, Western Gulf of Mexico Lease Sale 218 Attracts More Than $337 Million in High Bids, Department of the Interior, December 14, 2011. Available at: http://www.doi.gov/news/pressreleases/Western-Gulf-of-Mexico-Lease-Sale-218-Attracts-More-Than-337-MillionDollars-in-High-Bids.cfm. Milito, Erik, Press briefing teleconference on offshore five-year plan proposal, American Petroleum Institute, November 15, 2011. Wood Mackenzie, The Impact of Gulf of Mexico Deepwater Permit Delays on U.S. Oil and Natural Gas Production, Investment, and Government Revenue, December 2010. U.S. House of Representatives Appropriations Committee, Summary: Fiscal Year 2012 Final Consolidated Appropriations Bill, December 15, 2011. Available at: http://appropriations.house.gov/UploadedFiles/12_14_11_FY_12_Final_Bill_Detailed_Summary.pdf. Quest Offshore, The State of the Offshore U.S. Oil and Gas Industry: An in-depth study of the outlook of the industry investment flows offshore, December 2011. Available at: http://bit.ly/rVZSct. Deepwater Producing, Anadarko Petroleum Corporation. Available at: http://www.anadarko.com/Operations/Pages/DeepwaterProducing.aspx. Ibid. Ibid. Odum, Marvin, Clear roles, Clear responsibilities, Clear results, Speech delivered to the U.S. Chamber of Commerce National Chamber Foundation CEO Leadership Series, July 28, 2011. Available at: http://www.shell.com/home/content/media/speeches_and_webcasts/2011/ marvin_odum_chamber_commerce_28072011.html. Ibid. Ibid. Northern Economics and the Institute for Social and Economic Research at the University of Alaska, Potential National-Level Benefits of Alaska OCS Development, February 2011. Available at: http://www.northerneconomics.com/pdfs/ShellOCS/National%20Effects%20Report%20FINAL.pdf. Quest Offshore, The State of the Offshore U.S. Oil and Gas Industry: An in-depth study of the outlook of the industry investment flows offshore, December 2011. Available at: http://bit.ly/rVZSct. Ibid. Ibid. Ibid. Energy Information Administration, Annual Energy Outlook 2010, May 11, 2010. Available at: http://www.eia.gov/oiaf/archive/aeo10/aeoref_tab.html. Press Release, API: Administration Implements New Hurdle for Vital Pipeline, API, March 15, 2011. Available at: http://www.api.org/Newsroom/ new-hurdle-pipeline.cfm. Press Release, Remarks by the President on Americas Energy Security, Office of the White House Press Secretary, March 30, 2011. Available at: http://www.whitehouse.gov/the-press-office/2011/03/30/remarks-president-americas-energy-security. API calculations based on EIA data and Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Available at: http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf. Ibid. U.S. Department of State, Keystone XL Pipeline Project, 2011. Available at: http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/.

45

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

Press Release, Secretary Salazar Announces 2012-2017 Offshore Oil and Gas Development Program, Department of the Interior, November 8, 2011. Available at: http://www.doi.gov/news/pressreleases/Secretary-Salazar-Announces-2012-2017-Offshore-Oil-and-Gas-Development-Program.cfm. Milito, Erik, Opening Statement as Prepared for Delivery: Press briefing teleconference on offshore five-year plan proposal, American Petroleum Institute, November 15, 2011. Available at: http://www.api.org/Newsroom/testimony/upload/press-briefing-opening-statement-milito-offshore-five-year-plan-November-2011.pdf. Saad, Lydia, U.S. Oil Drilling Gains Favor with Americans; Support for offshore drilling and oil exploration in Alaska reach new highs, Gallup, March 14, 2011. Available at: http://www.gallup.com/poll/146615/Oil-Drilling-Gains-Favor-Americans.aspx. CNBC, API: Oil Release Makes Little Sense, June 23, 2011. Available at: http://video.cnbc.com/gallery/?video=3000028938#eyJ2aWQiOiIz MDAwMDI4OTM4IiwiZW5jVmlkIjoidDFhMzlhejhBUWxVenlMc1BRbXJiZz09IiwidlRhYiI6ImluZm8iLCJ2UGFnZSI6MSwiZ05hdiI6 WyJcdTAwYTBMYXRlc3QgVmlkZW8iXSwiZ1NlY3QiOiJBTEwiLCJnUGFnZSI6IjEiLCJzeW0iOiIiLCJzZWFyY2giOiIifQ==. Crooks, Ed, American Oil Independence: The Pendulum Swings, Financial Times, November 1, 2011. Available at: http://www.ft.com/intl/cms/s/0/65bfd07a-03b311e1-bbc5-00144feabdc0.html. Energy Information Administration, International Energy Outlook 2011, September 2011. Available at: http://www.eia.gov/forecasts/ieo/. Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Available at: http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf. Boselli, Muriel, OPEC Urged By Oil Agency to Increase Production, Help Recovery, Reuters, May 19, 2011. Available at: http://www.huffingtonpost.com/2011/05/19/oil-agency-iea-urges-opec_n_864152.html. Editorial Board, Obama: Drill, Brazil, Drill! Investors Business Daily, March 21, 2011. Available at: http://news.investors.com/ Article/566719/201103211908/Obama-Drill-Brazil-Drill.htm. Goode, Darren, Cuba Drilling Next Hurdle for U.S., Politico, September 27, 2011. Available at: http://www.politico.com/news/stories/0911/64547.html. Gibson, William E., Bahamas oil wells may imperil Florida, The South Florida Sun Sentinel, December 4, 2011. Available at: http://articles.sun-sentinel.com/201112-04/news/fl-bahamas-oil-drilling-cuba-waters-20111204_1_deepwater-horizon-oil-spill-drilling. Congressional Research Service, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary (R40872), November 30, 2010, Table 5 Total Fossil Fuel Reserves of Selected Nations and Table 6 Reserves of Fossil Fuels Plus Technically Recoverable Undiscovered Oil and Natural Gas. Available at: http://epw.senate. gov/public/index.cfm?FuseAction=Files.View&FileStore_id=04212e22-c1b3-41f2-b0ba-0da5eaead952. Congressional Research Service, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary (R40872), November 30, 2010, Sub-Economic Oil and Natural Gas Resources, Shale Oil, and Heavy Oil. Available at: http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=04212e22-c1b3-41f2-b0ba0da5eaead952. U.S. Department of Energy, National Energy Technology Laboratory, Storing CO2 and Producing Domestic Crude Oil with Next Generation CO2-EOR Technology (DOE/NETL-2010/1417), April 30, 2010. Available at: http://www.tenaskatrailblazer.com/pdfs/library/StoringCO2NexGenEOR10.pdf. Bureau of Ocean Energy Management, Regulation and Enforcement [Formerly the Minerals Management Service, Offshore Minerals Management Program], Report to Congress: Comprehensive Inventory of U.S. OCS Oil and Natural Gas Resources Energy Policy Act of 2005 Section 357, February 2006, Table 1(a): Total Endowment of Technically Recoverable Oil and Gas on the OCS, 2006. Available at: http://www.boemre.gov/revaldiv/PDFs/InventoryRTC.pdf. API calculations based on BOEMRE data. Bureau of Ocean Energy Management, Regulation and Enforcement [Formerly the Minerals Management Service, Offshore Minerals Management Program], Report to Congress: Comprehensive Inventory of U.S. OCS Oil and Natural Gas Resources Energy Policy Act of 2005 Section 357, February 2006, Table 1(a): Total Endowment of Technically Recoverable Oil and Gas on the OCS, 2006. Available at: http://www.boemre.gov/revaldiv/PDFs/InventoryRTC.pdf. ICF International, Strengthening Our Economy: The Untapped U.S. Oil and Gas Resources, December 5, 2008. Available at: http://www.api.org/Newsroom/upload/Access_Study_Final_Report_12_8_08.pdf. Division of Oil and Gas State of Alaska, 2009 Alaska Oil and Gas Report, November 2009. Available at: http://dog.dnr.alaska.gov/products/publications/annual/2009_annual_report/updated_2009_annual_report/Annual%20Report%202009%20Updated%205-18-10.pdf. ConocoPhillips, Artic Energy for Today and Tomorrow, April 2006. Available at: http://alaska.conocophillips.com/EN/about/publications/Documents/ArcticEnergy.pdf. Bureau of Ocean Energy Management, Regulation and Enforcement [Formerly the Minerals Management Service, Offshore Minerals Management Program], Report to Congress: Comprehensive Inventory of U.S. OCS Oil and Natural Gas Resources Energy Policy Act of 2005 Section 357, February 2006, Table 1(a): Total Endowment of Technically Recoverable Oil and Gas on the OCS, 2006. Available at: http://www.boemre.gov/revaldiv/PDFs/InventoryRTC.pdf. Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Available at: http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf. Bureau of Land Management, Inventory of Onshore Federal Oil and Natural Gas Resources and Restrictions to their Development, May 21, 2008. Available at: http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/EPCA_III.html. API calculations based on BLM data. Krauss, Clifford, Shale Boom in Texas Could Increase U.S. Oil Output, New York Times, May 27, 2011. Available at: http://www.nytimes.com/2011/05/28/business/energy-environment/28shale.html?_r=2&pagewanted=all. Press Release, 3 to 4.3 Billion Barrels of Technically Recoverable Oil Assessed in North Dakota and Montanas Bakken Formation25 Times More Than 1995 Estimate, U.S. Geological Survey, April 10, 2008. Available at: http://www.usgs.gov/newsroom/article.asp?ID=1911. Wood Mackenzie, U.S. Supply Forecast and Potential Jobs and Economic Impacts (2012 2030), September 7, 2011. Available at: http://www.api.org/Newsroom/upload/API-US_Supply_Economic_Forecast.pdf. Congressional Research Service, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary (R40872), November 30, 2010, Table 5 Total Fossil Fuel Reserves of Selected Nations and Table 6 Reserves of Fossil Fuels Plus Technically Recoverable Undiscovered Oil and Natural Gas. Available at: http://epw.senate. gov/public/index.cfm?FuseAction=Files.View&FileStore_id=04212e22-c1b3-41f2-b0ba-0da5eaead952. IHS CERA Inc., The Role of the Canadian Oil Sands in the U.S. Market: Energy Security, Changing Supply Trends, and the Keystone XL Pipeline, June 2011. Available at: http://a1024.g.akamai.net/f/1024/13859/1d/ihsgroup.download.akamai.com/13859/ihs/cera/The-Role-of-the-Canadian-Oils-Sands-in-the-US-Market.pdf. IHS CERA Inc., The Role of Canadian Oil Sands in U.S. Oil Supply, April 2010. Available at: http://www2.cera.com/Oil_Sands_SR_042110.pdf. Collyer, Dave, Speaking Notes for Keystone XL National Interest Public Hearings, Canadian Association of Petroleum Producers, October 7, 2011. Available at: http://www.capp.ca/getdoc.aspx?dt=PDF&docID=196778. Canadian Energy Research Institute, Economic Impacts of Staged Development of Oil Sands Projects in Alberta (2010 2035), June 2011. Available at: http:// www.api.org/aboutoilgas/oilsands/upload/Economic_Impacts_of_Staged_Development.pdf. Calculated by the Embassy of Canada using data from U.S. Census Bureau and Statistics Canada. TransCanada, Keystone Pipeline Project, 2011. Available at: http://www.transcanada.com/keystone.html. Canadian Energy Research Institute, Economic Impacts of Staged Development of Oil Sands Projects in Alberta (2010 2035), June 2011. Available at: http:// www.api.org/aboutoilgas/oilsands/upload/Economic_Impacts_of_Staged_Development.pdf. U.S. Department of State, Keystone XL Pipeline Project, 2011. Available at: http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open. API calculations based on EIA and Federal Highway Administration data. Press Release, Americas Workers Need the Keystone XL Pipeline, Support Calls to Expedite Its Approval, Oil and Natural Gas Industry Labor-Management Committee, December 2, 2011. Available at: http://c3362702.r2.cf0.rackcdn.com/ONGILMC_KXL_statement_02DEC2011_FINAL2.pdf.

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Goodman, Lee-Anne, Obamas one-time national security chief says Keystone XL deserves green light, Canadian Business, December 16, 2011. Available at: http:// www.canadianbusiness.com/article/62476--obama-s-one-time-national-security-chief-says-keystone-xl-deserves-green-light. U.S. Department of State, Keystone XL Pipeline Project, 2011. Available at: http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. Burkhard, James, U.S. Energy Security: The Significance of Canadas Oil Sands, Testimony before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Energy and Power, May 23, 2011. Available at: http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/052311/ Burkhard.pdf. Energy Information Administration, Country Profile: Canada, April 2011. Available at: http://www.eia.gov/countries/cab.cfm?fips=CA. Canadian Association of Petroleum Producers, 2011 Canadian Crude Oil Forecast and Market Outlook, June 2, 2011. Available at: http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/2011-Oil-Forecast.aspx#bWwAEbeBvXBt. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. Burkhard, James, U.S. Energy Security: The Significance of Canadas Oil Sands, Testimony before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Energy and Power, May 23, 2011. Available at: http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/052311/ Burkhard.pdf. Ibid. U.S. Department of State, Final Environmental Impact Statement for the Keystone XL Pipeline Project, August 26, 2011. Available at: http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open. Burkhard, James, U.S. Energy Security: The Significance of Canadas Oil Sands, Testimony before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Energy and Power, May 23, 2011. Available at: http://republicans.energycommerce.house.gov/Media/file/ Hearings/Energy/052311/Burkhard.pdf. Harris Interactive Poll, What America is Thinking on Energy Issues: Keystone XL Pipeline, November 1, 2011. Available at: http://www.api.org/Newsroom/upload/Keystone_XL_Pipeline_Interview_Schedule_11-3-11.pdf. Lopez, Admiral T. Joseph, Dula, Hernandez, Miller et al., Letter to Secretary of State Hillary Clinton, March 4, 2011. Available at: http://www.api.org/Newsroom/upload/US_Vets_KXL_Letter_030411.pdf. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. Ibid. Ibid. Energy Information Administration, Refinery Capacity Report, 2011. Available at: http://www.eia.gov/petroleum/refinerycapacity/. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. Energy Information Administration, Refinery Capacity Report, 2011. Available at: http://www.eia.gov/petroleum/refinerycapacity/. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. Energy Information Administration, Annual Energy Outlook 2011, April 2011, Table 40. Available at: http://www.eia.gov/forecasts/aeo/. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. API, Theres a lot of Life in Oil and Natural Gas, 2009. Available at: http://www.api.org/classroom/tools/upload/LifeInOilandNaturalGas.pdf. National Petrochemical & Refiners Association, Annual Report, 2011. Available at: http://www.npra.org/about/AR2011.pdf. Sunstein, Cass, Washington Is Eliminating Red Tape: New reforms will save Americans billions without sacrificing public health or safety, The Wall Street Journal, August 23, 2011. Available at: http://online.wsj.com/article/SB10001424053111903596904576518652783101190.html. U.S. Departments of the Interior, Agriculture, and Energy, Inventory of Onshore Federal Oil and Natural Gas Resources and Restrictions to Their Development, 2008. Available at: http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION_/energy/EPCA_Text_PDF. Par.18155.File.dat/Executive%20Summary%20text.pdf. Executive Order No. 13,563, Improving Regulation and Regulatory Review, 76 Fed. Reg. 3821, January 18, 2011; Presidents Memorandum on Regulatory Flexibility, Small Business, and Job Creation, 76 Fed. Reg. 3827, January 18, 2011. National Petroleum Council, Prudent Development: Realizing the Potential of North Americas Abundant Natural Gas and Oil Resources, September 15, 2011. Available at: http://www.npc.org/Prudent_Development.html. Tredia, Matt and Chris Poole, The Evolution of Hydraulic Fracturing and its Effect on Frac Pump Technology, Upstream Pumping Solutions, Spring 2010. Available at: http://www.upstreampumping.com/article/well-completion-stimulation/evolution-hydraulic-fracturing-and-its-effect-frac-pump-technolo. Feldman, Howard, Opening Statement as Prepared for Delivery: Press briefing teleconference on proposed oil and gas emission rules, American Petroleum Institute, December 1, 2011. Available at: http://www.api.org/Newsroom/testimony/upload/press_briefing_opening_statement_feldman_oil_and_gas_rules_ December_20111-2.pdf. Members included Congressmen Rob Wittman (VA-1), Scott Rigell (VA-2), J. Randy Forbes (VA-4), Robert Hurt (VA-5), Bob Goodlatte (VA-6), Eric Cantor (VA-7), Morgan Griffith (VA-9) and Frank Wolf (VA-10). Press Release, Virginia Members Call on Interior Department to Reconsider Commonwealth Offshore Energy Development Ban, Office of U.S. Representative Scott Rigell (VA-2), November 16, 2011. Available at: http://rigell.house.gov/news/email/show.aspx?ID=GUXZQNH5BCWRLM4DU5HOG5NJCA. Environmental Protection Agency, Air Quality Trends, November 29, 2011. Available at: http://www.epa.gov/airtrends/aqtrends.html. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. Baker & OBrien Incorporated, Potential Supply and Cost Impacts of Lower Sulfur, Lower RVP Gasoline, July 2011. Available at: http://www.bakerobrien.com/ documents/Letter%20API%20Report%20-%20New%20Format%20-%20Sept%202011.pdf. The International Tanker Owners Pollution Federation Limited, http://www.itopf.com/information-services/data-and-statistics/statistics/index.html. See Figure 6. Cook, Dave, Interior Secretary Salazar says Obama administration transformed U.S. energy future, The Christian Science Monitor, October 17, 2011. Available at: http://www.csmonitor.com/USA/Politics/monitor_breakfast/2011/1017/Interior-Secretary-Salazar-says-Obama-administration-transformed-US-energy-future. American Exploration and Production Council, The Real Facts about Fracture Stimulation: The Technology Behind Americas New Natural Gas Supplies, April 14, 2010. Available at: http://www.axpc.us/natural/pdf/100414.pdf. Shale Gas Subcommittee of the Secretary of Energy Advisory Board, The SEAB Shale Gas Production Subcommittee Ninety-Day Report, August 11, 2011. Available at: www.shalegas.energy.gov/resources/111811_final_report.pdf. Press Release, API supports DOE dialogue on Americas vast natural gas resources, API, June 2, 2011. Available at: http://www.api.org/Newsroom/api-supports-doe.cfm. Assuras, Thalia, The Mix: EPA Administrator Lisa Jackson, energyNOW!, November 11, 2011. Available at: http://www.energynow.com/video/2011/11/18/mixepa-administrator-lisa-jackson. Whieldon, Esther, Regulators say fracking not as dangerous to water quality as thought, Platts, June 28, 2011. Available at: http://www.platts.com/ RSSFeedDetailedNews/RSSFeed/NaturalGas/6232714.

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Energy Information Administration, Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays, July 8, 2011. Available at: http://www.eia.gov/analysis/studies/usshalegas/. Energy Information Administration, What is shale gas and why is it important? August 4, 2011. Available at: http://www.eia.gov/energy_in_brief/about_shale_gas.cfm. API Primer, Hydraulic Fracturing: Unlocking Americas Natural Gas Resources, July 19, 2010. Available at: http://www.api.org/policy/ exploration/hydraulicfracturing/upload/HYDRAULIC_FRACTURING_PRIMER.pdf. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. IHS Global Insight, The Economic and Employment Contributions of Shale Gas in the United States, December 2011. Available at: http://www.energyindepth.org/wp-content/uploads/2011/12/Shale-Gas-Economic-Impact-Dec-2011_EMB1.pdf. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. Ibid. IHS Global Insight, The Economic and Employment Contributions of Shale Gas in the United States, December 2011. Available at: http://www.energyindepth.org/wp-content/uploads/2011/12/Shale-Gas-Economic-Impact-Dec-2011_EMB1.pdf. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. Massachusetts Institute of Technology Energy Initiative, The Future of Natural Gas: An Interdisciplinary MIT Study, 2010, p. 25; Figure 3.3b Energy Mix under Climate Policy, Mean Natural Gas Resources - Total Energy Use (qBtu) Available at: http://web.mit.edu/mitei/research/studies/report-natural-gas.pdf. T2 & Associates, Key Investments in Greenhouse Gas Mitigation Technologies from 2000 through 2010 by Energy Firms, Other Industry and the Federal Government, October 2011. Available at: http://www.api.org/ehs/climate/new/upload/2011_api_ghg_investment.pdf. IHS Global Insight, The Economic and Employment Contributions of Shale Gas in the United States, December 2011. Available at: http://www.energyindepth.org/wp-content/uploads/2011/12/Shale-Gas-Economic-Impact-Dec-2011_EMB1.pdf. Deloitte survey, Benefits of Shale Gas Outweigh Risks; 8 in 10 Americans Also Connect Natural Gas with Jobs: Deloitte Survey, Deloitte Center for Energy Solutions, December 15, 2011. Available at: http://finance.yahoo.com/news/benefits-shale-gas-outweigh-risks-143000040.html. IHS Global Insight, The Economic and Employment Contributions of Shale Gas in the United States, December 2011. Available at: http://www.energyindepth.org/wp-content/uploads/2011/12/Shale-Gas-Economic-Impact-Dec-2011_EMB1.pdf. PricewaterhouseCoopers, Shale Gas: A Renaissance in US Manufacturing? December 2011. Available at: http://www.pwc.com/en_US/us/industrial-products/assets/ shale-gas.pdf. Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. API, Workplace Injuries and Illnesses Safety (WIIS) Report 20032009, August 2011. Available at: http://www.api.org/statistics/accessapi/surveys/upload/ WORKPLACE_SAFETY_2003-2009_FinalHires.pdf. Ibid. Press Release, API applauds passage of new pipeline safety legislation, API, December 14, 2011. Available at: http://www.api.org/Newsroom/pipeline-legislation.cfm. Allegro Energy Consulting, Ten Years of Progress: Pipeline Performance Tracking System 1999 2009, April 12, 2011. Available at: http://www.api.org/meetings/topics/pipeline/upload/Ten_Years_of_Progress_Pipeline_Performance_Tracking_System_Cheryl_Trench.pdf. Texas Society of Certified Public Accountants, Analysis of Legislative Proposals to Repeal Certain Tax Treatments of Domestic Oil and Gas Exploration and Development, March 2011. Available at: http://www.tscpa.org/Content/Files/pdf/About%20TSCPA/TaskForces/ OGAnalysisLegProposals0311.pdf. Isakower, Kyle, Opening Statement as Prepared for Delivery: Press briefing teleconference on industry investments in GHG mitigation technologies, American Petroleum Institute, October 20, 2011. Available at: http://www.api.org/Newsroom/testimony/upload/ isakower_ghg_mitigation_press_remarks.pdf. T2 & Associates, Key Investments in Greenhouse Gas Mitigation Technologies from 2000 through 2010 by Energy Firms, Other Industry and the Federal Government, October 2011. Available at: http://www.api.org/ehs/climate/new/upload/2011_api_ghg_investment.pdf. Ibid. Ibid. Ibid. API, Environmental Expenditures by the U.S. Oil and Natural Gas Industry (1990-2010), December 2011. Available at: http://www.api.org/statistics/accessapi/ surveys/upload/EnvironmentalExpenditures.pdf. Wood Mackenzie, Outsourcing U.S. Refining? Making the Case for a Strong Domestic Refining Industry, June 2011. Available at: http://www.api.org/aboutoilgas/sectors/refining/upload/API_Case_for_US_Refining_WoodMackenzieReport.pdf. T2 & Associates, Key Investments in Greenhouse Gas Mitigation Technologies from 2000 through 2010 by Energy Firms, Other Industry and the Federal Government, October 2011. Available at: http://www.api.org/ehs/climate/new/upload/2011_api_ghg_investment.pdf. Ibid. Mitchell, Hugh, The energy challenge and the need for new talent, Royal Dutch Shell plc., September 26, 2011. Available at: http://www.shell.com/home/content/ media/speeches_and_webcasts/2011/mitchell_edinburgh_26092011.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+shell_speeches+ %28Royal+Dutch+Shell+plc+speeches%29. Jacobs, Emil, Algae biofuels update, ExxonMobils Perspectives, April 21, 2011. Available at: http://www.exxonmobilperspectives.com/2011/04/21/algae-biofuels-update/. Cohen, Ken, Driving for better efficiency, fewer emissions, ExxonMobils Perspectives, November 8, 2010. Available at: http://www.exxonmobilperspectives.com/2010/11/08/driving-for-better-efficiency-fewer-emissions/ Energy Information Administration, Annual Energy Outlook 2011, April 2011. Available at: http://www.eia.gov/forecasts/aeo/. Ibid. Article, Taking aim: Energy Efficiency projects by E&P business combine to improve environmental performance, ConocoPhillips Spirit Magazine, Third Quarter 2011. Environmental Protection Agency Combined Heat and Power Partnership, Catalog of CHP Technologies, December 2008. Figure 1: CHP versus Separate Heat and Power (SHP) Production. Available at: http://epa.gov/chp/documents/catalog_chptech_intro.pdf. Ibid. Jackson, Lisa, Remarks to Growth Energy, As Prepared, September 13, 2010. Available at: http://yosemite.epa.gov/opa/admpress.nsf/12a744ff56dbff858525759000 4750b6/7e31b0be71b9df578525779e00545d0a!OpenDocument. Environmental Protection Agency, Air Quality Trends, November 29, 2011. Available at: http://www.epa.gov/airtrends/aqtrends.html. Ibid. API, Environmental Expenditures by the U.S. Oil and Natural Gas Industry (1990-2010), December 2011. Available at: http://www.api.org/statistics/accessapi/ surveys/upload/EnvironmentalExpenditures.pdf.

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