2018 annual washington report

WASHINGTON REPORT VOLUME XLVIII

IN THIS ISSUE Safety in Seas Awards..........1 Congressman Scalise...........2 Secretary Rick Perry............2 Scott Pruitt...........................2

2018 NOIA SPRING MEETING REVIEW The National Ocean Industries Association (NOIA) held its Annual Meeting April 11 to 13, 2018 at the Ritz-Carlton in Washington, D.C., with more than 150 members in attendance.

Joe Balash..............................3 Rear Admiral Linda Fagan...3 Vali R. Nasr...........................3 Gulf of Mexico Panel............4 G&G Panel............................5 Renewables Panel................6 Technology Policy Committee............................7 Public Affairs & Education Committee............................7 Executive Committee & Board of Directors..........8-10 Membership Committee...10 Reception Photos...........11-12

JUNE 2018

Speakers included members of Congress and the Trump Administration, academics, policy leaders and industry executives. Presenters and attendees discussed the policy outlook for the industry, the development of a new Five Year Program, geophysical exploration and the state of permit applications in the Atlantic and business opportunities for U.S. companies in Mexican waters.

2018 SAFETY IN SEAS AWARDS During the meeting, EnVen Energy Corporation and Deepwater Wind were awarded 2018 NOIA Safety in Sea (SIS) Awards. Outgoing NOIA Chairman Dave Welch presented the awards.

EnVen Energy Corporation received the Culture of Safety Award in recognition of its remarkable safety culture transformation between 2013 and 2017. David Carmony, Chief Operations Officer for EnVen Energy accepted the award. EnVen’s integrated approach to cultural transformation included improvements in communication, training, job safety analyses, safety and compliance audits, and incident investigation management. As a result of these improvements, Enven’s Total Recordable Incident Rate saw a 75% improvement.

Deepwater Wind received the Safety Practice Award in recognition of safety innovations during and after the installation of Block Island Wind Farm, including the design and use of a Crew Transfer Vessel (CTV) and a transfer/ascent/ descent system using Self-Retracting Lifeline (SRL) fall-arrest technology. Jeff Grybowski, Chief Executive Officer of Deepwater Wind, accepted the award. Deepwater Wind logged over 40,000 offshore person-hours without a safety incident during Block Island Wind Farm’s first year of operation.

Entries were evaluated by a panel of judges from the U.S. Coast Guard, the Bureau of Safety and Environmental Enforcement, the National Academy of Sciences Transportation Research Board, and an independent industry safety consultant.

The SIS awards are sponsored by Compass Publications Inc.

(L-R) Steve Weyel, Chief Executive Officer, EnVen Energy Corp.; David Carmony, Chief Operating Officer, EnVen Energy Corp.; NOIA Chairman David Welch; and Jeff Grybowski, Chief Executive Officer, Deepwater Wind.

1120 G Street, NW, Suite 900, Washington, DC 20005 Tel 202-347-6900 Fax 202-347-8650 www.noia.org

NOIA ANNUAL MEETING REVIEW GENERAL SPEAKERS

HOUSE MAJORITY WHIP STEVE SCALISE

House Majority Whip Steve Scalise (R-LA)

Following a rousing and heartfelt NOIA welcome, House Majority Whip Steve Scalise gave a wide-ranging and often emotional talk with the NOIA members. Scalise discussed health care, federal budgeting, gun control, tax relief, and of course energy policy. But it was the recount of his near fatal gunshot attack last summer that captivated listeners most.

Scalise talked openly of faith, family and friends that saw him through his ordeal, and how truly grateful he feels to return to a job he loves so dearly. As Whip, his primary job is to find the 218 votes needed to pass the House’s legislative priorities, and he provided his unique perspective on last year’s near miss to repeal the Affordable Care Act and this year’s success on tax relief.

Secretary Rick Perry, Department of Energy

NOIA membership benefited from his policy perspectives, but more than that appreciated welcoming back one of our most steadfast supporters and friends.

SECRETARY RICK PERRY NOIA members also welcomed Secretary of Energy Rick Perry. Speaking on the Trump administration’s energy policies, Perry provided insights on the active role that the Department of Energy plays in global energy markets.

Administrator Scott Pruitt, Environmental Protection Agency

Secretary Perry also drew upon lessons learned as Governor of Texas. Perry believes that most energy shortages are not due to a lack of resources, but instead are a failure of imagination and policy. Likewise, to increase the availability of affordable and reliable energy, Secretary Perry argued that the U.S. should not push through 2

more regulations that favor one source of energy over another, but should create a stable and certain regulatory environment to allow U.S. innovation to thrive.

Secretary Perry also highlighted other initiatives that the Department of Energy is currently undertaking, including projects at the National Labs. One such project that he is especially proud of is the use of the Energy Department’s supercomputers in developing machine learning and artificial intelligence programs to address the national opioid crisis.

ADMINISTRATOR SCOTT PRUITT Environmental Protection Agency (EPA) Administrator Scott Pruitt joined NOIA President Randall Luthi for a friendly, wide-ranging conversation, with time for an audience Q&A. The discussion repeatedly underscored the need for regulatory certainty and broke down the avenues of policy action the EPA is trying to reform in order to provide greater accountability.

Pruitt shared some insight on the reforms to rules reflecting the National Environmental Protection Act (NEPA) that EPA is currently developing. EPA is working to streamline NEPA. Pruitt said that compliance with NEPA currently takes too long, costs companies too much without providing tangible benefits and ignores local input.

Pruitt also spoke on the role of Congress and the trend of the past few administrations to have regulators issue new rules, knowing that similar rules would not pass Congress as legislation. Pruitt also discussed efforts to promote stewardship, over of strict prohibition, when it comes to protecting natural areas.

WASHINGTON REPORT NOIA ANNUAL MEETING REVIEW JOE BALASH Department of the Interior’s Assistant Secretary for Lands & Minerals Management Joe Balash shared an inside look at the priorities within Interior. Balash said that Interior’s mission in 2017 was to roll back bad regulations and now, in 2018, the mission has shifted to reforming the actual regulatory process.

Continued uncertainty and volatility in the domestic energy sector requires dynamic planning efforts on the part of the Coast Guard and its partners to effectively regulate existing and emerging technologies and ensure the safety, security, and environmental stewardship of the Nation’s waterways.

VALI R. NASR Discussing regulatory reform, Balash said “all of the above energy” is a “principle, not a slogan” within his team. The Interior Department is continuing its efforts to ensure regulations are smart, fair and effective in order for the U.S. to have lasting energy dominance. Balash said that it is just as important for Interior to get the process correct, as it is to get the individual regulations right, including the Well Control Rule.

Vali R. Nasr, Dean of the Johns Hopkins School of Advanced and International Studies, joined the NOIA Annual Meeting again, delivering welcome insight and clarity into the ever changing situation in the Middle East.

REAR ADMIRAL LINDA FAGAN

Nasr said the power structure has changed in the last 10 years. Previously, the U.S. co-opted Egypt and Jordan’s foreign policy and Iraq was controlled by Saudi Arabia and other U.S.-friendly Arab countries. Now a significant portion of these dictators are gone, leaving a substantial power vacuum. In addition, since the Arab-American alliance is gone, other actors have stepped into the region. Russia is much more heavily involved, especially in Syria, China has become a larger economic partner for the region and ISIS is an unknown wildcard.

U.S. Coast Guard Deputy Commandant for Operations, Policy and Capabilities, Linda Fagan spoke about the challenges and opportunities facing the offshore oil and gas industry in the various offshore regions of the United States.

She said the prosperity of the Nation is inextricably linked to a safe and efficient Maritime Transportation System. Increased recreational and commercial waterway usage, compounded by growing domestic natural gas extraction and transport, deeper U.S. ports, and the expansion of the Panama and Suez Canals, has placed growing pressure on the Maritime Transportation System.

Finally, Nasr spoke about the diminished role of the Middle East as the global energy provider.

The shale revolution in the U.S. curbed demand for Middle East oil, forcing the Middle East to turn to China as a primary market. He noted that for China this has additional benefits. Most of China’s imports, including its oil, flow through the waters of the Strait of Malacca. Since China fears the U.S. Navy could easily seal off this route during a conflict, China has been building a new Silk Road to link streams of resources, including oil, from the Middle East and Africa to Western China.

In addition, Balash spoke on Interior’s efforts to set page and time limits on the review process of new regulations. This would help the timely development of rules and increase regulatory certainty as rules will no longer be stuck in policy limbo.

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Joe Balash, U.S. Department of the Interior

Rear Admiral Linda Fagan, U.S. Coast Guard

Vali R. Nasr, Johns Hopkins School of Advanced & International Studies

NOIA ANNUAL MEETING REVIEW

(L-R) Carri Lockhart, Senior Vice President Offshore Development & Production, Statoil; Luis Martinez, Chief of Staff, National Agency for Safety, Energy & Environment; Raymundo Piñones, General Director, Mexico Association of Hydrocarbons; Enrique Hildalgo, President ExxonMobil Exploration & Production Mexico; and Martin Stäuble, Vice President Exploration North American & Brazil, Shell.

PANEL SESSIONS MEXICO GULF OF MEXICO CHAPTER III: A MAJOR VIEW

Copies of all presentations mentioned in this report and pictures are available on the NOIA member’s section of the website at noia.org

In the session titled, “Mexico Gulf of Mexico Chapter III: A Major View,” panelists took a look at the rapidly growing offshore oil and gas industry in Mexico’s portion of the Gulf of Mexico. Carri Lockhart, Senior VP Offshore Development & Production of Statoil, moderated the panel. She was joined by: Enrique Hildalgo, President of ExxonMobil Exploration and Production Mexico; Raymundo Piñones, General Director of the Mexico Association of Hydrocarbons (AMEXHI); Luis Martinez, Chief of Staff for the National Agency for Safety, Energy & Environment (ASEA); and Martin Stäuble, Vice President Exploration for North America & Brazil for Shell.

The panelists gave a firsthand account of the challenges and opportunities of offshore Mexico. Luis Martinez said ASEA is working to become more autonomous and independent.

Citing concerns with the upcoming Mexican presidential election, Martinez said that if Mexico is to have a robust oil and natural gas sector, it is imperative that ASEA’s regulators 4

are insulated from short-sighted political decisions that are often driven by election cycles.

Adding to Martinez’s points, Raymundo Piñones said that the time needed for offshore projects varies significantly. In some cases, projects can come online in as little as two years, while in other instances it can take ten or more years.

Political stability, will help producers safely develop projects with more certain timeframes.

Enrique Hildalgo said that his experience in the private sector has led him to believe that Mexico is moving with “remarkable speed” towards a stronger offshore sector due to the dialogue between regulators and private industry.

Martin Stäuble largely agreed with Hildago’s remarks, but added that there is still a substantial gap in infrastructure resources between the U.S. and Mexico. Saying Mexico still has “a mountain we need to climb,” Stäuble said the U.S.’s developed infrastructure still gives it a significant advantage compared to Mexico.

WASHINGTON REPORT NOIA ANNUAL MEETING REVIEW REGULATORY CHALLENGES TO CONTINUED & EXPANDED ACCESS & PRODUCTION The NOIA Geological & Geophysical Committee hosted a panel discussion entitled “Regulatory Challenges to Continued & Expanded Access & Production.” The engaging discussion was moderated by IAGC President Nikki Martin, and featured BP’s Gulf of Mexico and Canada Regional President Starlee Sykes, Deep Gulf Energy CEO Richard Clark, and National Oceanic and Atmospheric Administration (NOAA) Chief of Staff Stuart Levenbach.

The panel focused on seismic permitting challenges in both the Gulf of Mexico and the Atlantic and efforts to remedy obstacles. Starlee and Richard discussed their outlooks for exploration in the Gulf, including the geophysical needs and programs envisioned to support exploration and continued production. The company executives also provided insight on their tactics to manage risk associated with environmental organizations’ push to shift the public and governments’ perception of acceptable risk for E&P projects from potential negligible environmental impacts to absolutely risk free.

The panel uncovered how this leads to tremendous public, regulatory and sometimes litigious pressure to accept potential environmental risk as fact. Richard Clark and Starlee Sykes also provided outlooks on offshore’s overall competitiveness vis-à-vis onshore shale plays going forward, where they see the most value for their data spend, and in which seismic acquisition areas they foresee focusing on in the years ahead.

With the National Marine Fisheries Service (NMFS) being housed within NOAA and holding a very influential role in offshore seismic permitting, Stuart Levenbach provided a valuable regulatory perspective to the conversation.

He summarized the Administration’s initiatives to ensure continued geophysical activities supporting E&P in the U.S. OCS, and updated us on the status of regulatory developments for G&G activities in the Atlantic OCS and GOM. Stuart stressed the Administration’s desire to get the seismic permitting process right so as to insulate against expected litigation challenges.

(L-R) Stuart Levenbach, Chief of Staff, National Oceanic & Atmospheric Administration; Richard Clark, CEO, Deep Gulf Energy; Starlee Sykes, President GOM/Canada Region, BP; Nikki Martin, President, International Association of Geophysical Contractors; and Bryan Dempsey, SVP, Chief Commercial Officer & General Counsel, FairfieldNodal.

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NOIA STAFF Randall Luthi President Faith Burns Executive Assistant to the President Franki Stuntz Senior Vice President, Administration & Membership Ann Chapman Vice President, Conferences & Special Events Nicolette Nye Vice President, Communications & Industry Affairs Jeff Vorberger Vice President, Policy & Governmental Affairs Tim Charters Senior Director, Governmental & Political Affairs Justin Williams Senior Director, Digital & Public Affairs Editor, Washington Report

NOIA ANNUAL MEETING REVIEW Copies of all presentations mentioned in this report and pictures are available on the NOIA member’s section of the website at noia.org

(L-R) Richard Williams, Fugro; Stephanie McCellan, Special Initiative on Offshore Wind; Andrew Cooper, Fugro USA; James Bennett, Bureau of Ocean Energy Management; and Alejandro de Hoz, Avangrid Renewables

OIL & GAS SUPPLY SECTOR OPPORTUNITIES IN OFFSHORE WIND PROJECTS

There are currently 12 Atlantic offshore wind projects in the pipeline.

The Offshore Renewables Committee hosted a special panel on the market opportunities the fast-growing U.S. offshore wind industry offers for the oil and gas supply sector. The panel was moderated by Stephanie McClellan, Director of the Special Initiative on Offshore Wind (SIOW), who also presented a market update of the U.S. offshore wind industry. She cited a Bloomberg report projecting that by 2040, offshore wind costs will slide by 71%, helped by experience, competition and economies of scale.

Alejandro de Hoz, demonstrated the need for a local supply chain in the U.S. offshore wind industry. He said offshore wind represents a huge opportunity for a new supply chain and US. companies can best meet the supply chain needs. Avangrid is developing the Vineyard Wind project offshore Massachusetts and the Kitty Hawk wind project offshore North Carolina.

Panelists included James Bennett, Chief of the Office of Renewable Energy Programs for the Bureau of Ocean Energy Management (BOEM), Alejandro de Hoz, Vice President, U.S. Offshore Wind for Avangrid Renewables and Andrew Cooper, Branch Manager at Fugro USA. James Bennett provided a status update on BOEM’s offshore wind program. Since 2009, BOEM has issued 13 commercial wind energy leases in the Atlantic and has upcoming sales planned in Massachusetts and New York.

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Andrew Cooper provided a real-world example of market opportunity for the U.S. oil and gas supply chain. Fugro has done Geotechnical and Geophysical work for offshore wind projects, including Vineyard Wind and Bay state Wind offshore Massachusetts and South Fork Wind Farm offshore New York.

WASHINGTON REPORT NOIA FALL MEETING REVIEW TECHNOLOGY POLICY COMMITTEE Walter Cruickshank, Acting Director of the Bureau of Ocean Energy Management, and Katharine MacGregor, Principal Deputy Assistant Secretary for Lands and Minerals Management, led a discussion on the offshore regulatory outlook during a session sponsored by the NOIA Technology Policy Committee. Chevron Senior Advisor Greg Kusinski moderated the session.

Kicking the session off, Katharine MacGregor said Interior is “laser-focused” on developing a new Five Year Program that will make the U.S. the most competitive energy producer in the world. She also gave NOIA members an update on several key regulations under review, including Financial Assurance and Bonding, the Air Quality Rule and the Arctic Drilling Rule.

Citing the economic growth and jobs driven by the offshore industry, Walter Cruickshank said the OCS will continue to be a major U.S. economic driver. He added that the Draft Proposed Program will give the government a chance to have a complete analysis of the OCS in 35 years.

Cruickshank also touched on the work between Interior/BOEM with the Department of

Defense (DoD), noting the long track record of successful collaboration between Interior and the DoD.

PUBLIC AFFAIRS & EDUCATION COMMITTEE The Public Affairs & Education Committee held a panel discussion on industry outreach which featured two stalwarts of the industry – Lynne Hackedorn and Robert Moran – and a new comer to the industry – Georgetown student and IPAA/PESA Petroleum Academy Graduate Paige Jefferson. In a session moderated by Halliburton VP for Industry Galen Cobb, the panelists spoke on ways the offshore industry, and companies of varying sizes, could engage in Washington, D.C. and in local communities. Jefferson provided the millennial perspective and spoke on the importance of mobilizing the next generation.

Walter Cruickshank, Bureau of Ocean Energy Management

Katharine MacGregor, U.S. Department of the Interior

(L-R) Lynne Hackedorn; Robert Moran; Paige Jefferson, IPAA/PESA Petroleum Academy, Georgetown University; Galen Cobb, Vice President for Industry Affairs, Halliburton

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NOIA ANNUAL MEETING REVIEW EXECUTIVE COMMITTEE & BOARD OF DIRECTORS NOIA Chairman Dave Welch, chaired the meetings of the Executive Committee and Board of Directors. Initial discussion centered on the industry economic downturn and the impact it is having on our members and NOIA in particular.

Reserve funds built over decades of investing have kept the association financially viable, however, the combination of mergers/acquisitions, bankruptcies and the continuing downturn have had a significantly negative affect on revenues.

Thus, increased effort is required to get dues in, bring lost members back into membership and continue to reach out to prospective members.

NOIA is operating at the lowest level of expenses it can in order to maintain the appropriate level of service to its members. We will continue to be vigilant and look for every cost-cutting opportunity.

Charles Deppe, Principal of the audit firm of Matthews, Carter and Boyce, presented a detailed report of the annual audit conducted this past January. He stated that the audit ran very smoothly, with records in excellent order, no adjustments required, no internal control issues, and a clean audit opinion. He described the process undertaken to perform the audit, and gave a thorough review of the statements.

Copies of all financial statements and reports are available to NOIA members and can be obtained by calling the NOIA office.

President Randall Luthi presented his report on the association’s activities and priorities.

Issues and areas addressed were: • • • • • • •

Financial/Administrative/Membership Government Affairs Personnel NOIA Outreach – Media Social Media Meetings NOIA PAC A copy of Mr. Luthi’s report can be obtained by calling the NOIA office.

Chairman Welch, acting on behalf of NOIA Nominating Committee Chairman, John Gellert, presented a slate of members to be nominated to the Executive Committee and/or Board of Directors. The following were unanimously elected to join those currently serving: Appointed to 1st term on the Board of Directors: Pat Bernard Executive Vice President Superior Energy Services Terry Bonno Senior Vice President, Industry & Community Relations Transocean Tim Duncan President & CEO Talos Loren Fowler Vice President, Sales & Business Development Heerema Marine Contractors US

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WASHINGTON REPORT NOIA ANNUAL MEETING REVIEW Jeff Grybowski Chief Executive Officer Deepwater Wind Rod Larson President & CEO Oceaneering International Kristen Ray General Manager, GOM BHP Martin Stauble Vice President, Exploration North America & Brazil Shell Phil Vollands President Newpark Drilling Fluids Steve Weyel Chief Executive Officer EnVen Energy Reppointed to 2nd term on the Board of Directors: Beau Blake President Blake International Rigs Paul Danos Owner/Executive Danos Lee Jackson Chairman & CEO Jackson Offshore Operators Interim Appointment made to the Board

by NOIA Chairman: Starlee Sykes President, GOM & Canada

BP Appointed to the Executive Committee: Gene Coleman Executive Vice President Murphy Oil Corporation Paul Danos Owner/Executive Danos Mark Hatfield Vice President, GOM Chevron Corporation David de Roode Partner Lockton Partners Senior Vice President Lockton Global Energy & Marine Martin Stauble Vice President, Exploration North America & Brazil Shell The following were elected as officers of the association: Chairman John Gellert Chief Executive Officer SEACOR Marine Holdings Vice Chairman Richard Clark President Deep Gulf Energy Companies Treasurer Bret West Executive Vice President Wells Fargo Energy 9

NOIA ANNUAL MEETING REVIEW Secretary Douglas Polk Vice President, Industry Affairs Vallourec The proposal was unanimously approved.

MEMBERSHIP COMMITTEE Committee Chairman, Erik Oswald, Vice President, Americas, ExxonMobil Exploration Company, chaired the meeting. Much of the discussion focused on the impact to the association as a result of the prolonged industry economic downturn. Revenue from new members joining in 2017 and 2018 has been seriously offset by losses due to merger and acquisition activity, bankruptcies, companies lowering dues rates due to reduced offshore revenue and companies withdrawing from membership in order to reduce costs.

Further discussed was the need to reach out to members lost during this downturn, paying particular attention to membership retention and continuing to work to bring new members into NOIA. There was consensus that while continuing to work to bring new members into NOIA, particular attention must be paid to membership retention as well as outreach to members we have lost during the downturn.

Oswald encouraged members to support the association by attending meetings and paying dues promptly.

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WASHINGTON REPORT

Richard Clark, Deep Gulf Energy; Kenny Lang, Ridgewood Energy

Martin Stäuble, Shell; Kristian Johansen, TGS

Len Paton, PPHB; Carol & John Rynd, Tidewater; Loren Singletary, National Oilwell Varco

Bob Abendschein, Venari Resources; Jonathan Landes, TechnipFMC; Allen Sanders, Anadarko; Amber Tierce, Chevron; Mike Beattie, Anadarko

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NOIA ANNUAL MEETING: APRIL 11-13

WASHINGTON, D.C.

Cornelius Dupré, Dupré Interests; Cathy and Galen Cobb, John Rynd, Tidewater; Judd Baily, Wells Fargo; Samuel Giberga, Hornbeck Offshore; Jim Wicklund, Credit Suisse; David Williams Halliburton; Erik Oswald & Melissa Marquez, ExxonMobil

Selby Bush, BHP; Kristen Ray, BHP; Christy Naquin, South Central Industrial Association

Paul White, Era Helicopters; Bill Moss, Talos Energy

Paul Howes, Newpark Resources; Jamie Vazquez; Rod Larson, Oceaneering International

WASHINGTON, D.C.

NOIA ANNUAL MEETING: APRIL 11-13

Corey Platt, Alliant Energy & Marine, Penny & Cory Kief, Crosby Tugs; Jo Hatcher, Enterprise Offshore Drilling; Tom Hood, Alliant Energy & Marine

Save the Date: NOIA 2018 Fall Meeting October 3-5 Hyatt Regency Hill Country Resort San Antonio, TX Connie Goers, Arena Offshore; Cheryl Powell, EnVen Energy Corp.

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