OFFSHORE ENERGY OUTLOOK FROM WASHINGTON" PESA Annual Meeting. By Randall Luthi President National Ocean Industries Association. noia.

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1 OFFSHORE ENERGY OUTLOOK FROM WASHINGTON" By Randall Luthi President National Ocean Industries Association

2 HOW THE US VIEWS WASHINGTON Congressional Job Approval 45% 40% 35% 39% Gallup Polls from 2009-Present 30% 25% 20% 15% 10% 20% 24% 13% 13% 10% 17% 14% 5% 0% Mar-09 Jan-11 May-11 Aug-11 Jan-12 Feb-12 Jun Jan

3 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS THINGS YOU DISLIKE VS.

4 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS REPLACEMENT REFS VS.

5 THE WINNER IS A REPLACEMENT REF The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS REPLACEMENT REFS VS. 29% APPROVAL 56% APPROVAL

6 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS TRAFFIC VS.

7 THE WINNER IS TRAFFIC The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS TRAFFIC VS. 34% APPROVAL 56% APPROVAL

8 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS COCKROACHES VS.

9 THE WINNER IS A COCKROACH The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS COCKROACHES VS. 43% APPROVAL 45% APPROVAL

10 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS STILL LESS POPULAR VS. THINGS YOU DISLIKE Root Canals Head Lice Nickleback Colonoscopies DC Pundits Carnies Donald Trump France Genghis Khan Used Car Salesmen Brussels Sprouts

11 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS LOBBYISTS VS.

12 THE WINNER IS CONGRESS The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS LOBBYISTS VS. 48% APPROVAL 30% APPROVAL

13 HOW THE US VIEWS WASHINGTON The Popularity of Congress Today Vs. Things You Love To Hate CONGRESS MORE POPULAR VS. THINGS YOU DISLIKE Telemarketers John Edwards The Kardashians North Korea The Ebola Virus Lindsay Lohan Fidel Castro Playground Bullies Meth Labs Communism

14 WASHINGTON DECISIONS HAVE A DIRECT EFFECT ON THE OFFSHORE INDUSTRY Congress House Senate

15 PREDICTED ENERGY SOURCES Source: U.S Energy Information Administration, Annual Energy Outlook 2012 June 2012

16 US OIL PRODUCTION IS UP OR IS IT? State and Private Production Accounts for 96% of Increase 6 Million barrels per day US Total Non-Federal Federal Offshore Federal Onshore CRS U.S. Crude Oil & Natural Gas Production in Federal and Non-Federal Areas 2013

17 OIL & NATURAL GAS JOBS CONTINUE TO RISE All Employees, 1,000s US Oil and Gas Jobs Bureau of Labor Statistics Job Report Feb In thousands Feb In thousands Percent Change Oil & Gas Extraction % Bureau of Labor Statistics: 2013

18 ESTIMATED OFFSHORE RESOURCES

19 POTENTIAL OFFSHORE ENERGY JOBS

20 THE FIVE YEAR PLAN

21 THE ADMINISTRATION VS. THE HOUSE 5 Year OCS Leasing Plan: The Administration The House GOP 12 Lease Sales 29 Lease Sales No New Access to OCS Opens Atlantic OCS Excludes VA & SC Includes VA & SC with Bi-Partisan Support

22 FEBRUARY 2013 HUFFINGTON POST AUGUST 2012 API POLL 58% OF VOTERS SUPPORT INCREASED OFFSHORE OIL & NATURAL GAS DRILLING Huffington Post/YouGov Poll of 1,000 Adults Feb , % OF VOTERS WOULD SUPPORT CHANGING REGULATION TO ALLOW MORE OFFSHORE OIL & GAS Source: API Telephone Survey of 1,016 Registered Voters, August 9-12, 2012

23 WITH THE RIGHT FEDERAL POLICIES U.S. BECOMES A NET EXPORTER OF NATURAL GAS Source: U.S Energy Information Administration, Annual Energy Outlook 2012 June 2012

24 A LOOK INTO THE CRYSTAL BALL

25 REGULATORY Interim and Final Safety Rule Safety and Environmental Management Systems Rule NTL no N06 Additional Requirements for EP, DPP, DOCD NTL No N10 Additional Requirements Demonstrating Adequate Spill Response and Well Containment NTL No N06 Additional Guidance on Regional Oil Spill Response Plans Well Bore Integrity Well Control Equipment

26 COMING SOON Well Control Equipment (Blow Out Preventers) Safety Culture Recommendations Production Systems Rule

27 DIRECT REGULATION OF CONTRACTORS Four Factors 1. Type of violation 2. Harm or threat of harm of the violation 3. Foreseeability of harm or threat of harm 4. The extent of the contractor s involvement in the violation

28 ACCIDENTS ARE ALWAYS A POSSIBILITY Safety is always a top priority but the industry must always be prepared for the possibility of another accident.

29 COASTAL MARINE SPATIAL PLANNING

30 OFFSHORE WIND DEVELOPMENT IS HIGH ON THE ADMINISTRATIONS AGENDA Two OCS Wind Leases have been issued offshore of Massachusetts and Delaware Interim OCS Wind Leases have been issued for Delaware and New Jersey BOEM has proposed lease areas extending from New Jersey to Rhode Island to Virginia The DOE has launched a Wind Development project as well with 7 projects in six states that include Oregon, Maine, Virginia, New Jersey and Delaware Proposed Atlantic OCS Wind Power Grid by Google backed Atlantic Wind Connection linking NJ, DE, and VA

31 OFFSHORE ENERGY OUTLOOK FROM WASHINGTON By Randall Luthi President National Ocean Industries National Ocean Industries Association