'The new normal'

Oil and gas exploration and production in the Gulf of Mexico will some day return to pre-BP spill levels, the president of Chevron North America Exploration and Production Company, Gary Luquette said Thursday.

But the rigorous permitting, safety and verification requirements imposed after the April 2010 BP disaster are here to stay, Gary Luquette said during an interview with The Daily Advertiser before the Greater Lafayette Chamber of Commerce annual banquet, where he was keynote speaker.

"It's a new normal," Luquette said.

The industry hasn't found its stride since the Deepwater Horizon platform operated by BP off the coast of Louisiana exploded and sunk, creating the largest oil spill in U.S. history.
That disaster, which killed

11 workers, led the federal government to impose a six-month moratorium on deepwater drilling that was followed by more stringent permitting and safety regulations.

"I think activity levels can and will return to pre-Macondo (spill) levels," he said. "The effort and rigor in getting permits approved won't return."

Luquette said that's a good thing for Louisiana and the industry. The BP disaster tainted the entire industry.

Tighter permitting, regulations and oversight will help the industry rebuild public trust, he said.

The "new normal" may be too costly for some of the small independent companies to survive, Luquette said.

"In the end," he said, "the standards are going up. It's your responsibility to enact them."

The Gulf of Mexico is still a major source of oil and natural gas and Chevron maintains a presence there, in deepwater and shallow water, said Luquette, a 1978 civil engineering graduate of UL Lafayette.

More than half of the company's 2012 budget is allocated to Gulf of Mexico activity. Today, Chevron has 10 rigs operating in shallow water, he said.

Lafayette plays an important role in the industry with numerous supply and service companies operating here.

Chevron alone has 300 workers in its Lafayette office and another 300 or so working offshore out of the Lafayette office, Luquette said.

President Obama said last week in his State of the Union address that he wants to end "subsidies" to the oil and gas industry which makes billions of dollars in profits. Luquette said the energy industry creates jobs and creates wealth for the federal government.

In 2011, the oil and gas industry paid $86 million a day to the federal government in royalties, rents and tax revenue, he said. The industry also employs more than nine million either directly or indirectly.

The industry doesn't need bailouts and such, just a level-playing field, the same so-called subsidies and breaks the federal government provides other U.S. industries and those from foreign nations, Luquette said.