Salazar Addresses the American Petroleum Institute's Board of Directors

WASHINGTON, DC – Secretary of the Interior Ken Salazar today addressed the American Petroleum Institute's board of directors. Below is the full text of his remarks as prepared:

Thank you, Larry, for that introduction. It is a pleasure to be with you today.

I also want to thank Jack Gerard, for helping bring this event together.

I am here today because you are important partners in America's energy future. You and the men and women who work in the oil and gas industry help fuel our cars, heat our homes, and power our businesses. Oil and natural gas are, and will remain for many years to come, a cornerstone of our nation's energy base.

But America's oil and natural gas supplies are not endless. We sit on 3% of the world's oil reserves. We consume 25% of its oil.

We rely on imports. And, more and more, the readily recoverable oil and gas reserves of our planet are under the control of nationalized oil companies. These companies do not respond to market forces in the same way that yours do. Governments often work through these companies to exert geopolitical pressure on their neighbors. And world markets sit on pins and needles awaiting an OPEC production decision.

Our dependence on foreign oil is as much a dependence on the countries that directly supply our oil as it is a dependence on the markets and forces that can – in a six month period – drive oil up to $147 a barrel and then down to $45 a barrel. It is a dependence on our military to keep oil flowing through the Strait of Hormuz. And it is a dependence on carbon that, for the sake of our planet, we cannot sustain.

The realities of climate change are upon us. For too long we have ignored the true costs of our energy use.

And the American people know that without a comprehensive energy and climate strategy we will fall behind in the 21st century.

We need American energy. American ingenuity. And American courage to tackle our dependence on foreign oil and the growing perils of climate change.

We also need your help.

In his first two months in office, President Obama has made it clear that building a new, comprehensive energy plan for our nation is front and center on his agenda.

Oil, gas, and coal will be part of that plan, but they alone are not enough.

To update an old Winston Churchill adage for the 21st century: “Safety and certainty in energy lie in variety and variety alone.”

Variety in energy means developing alternative energy sources at home. It means giving consumers choices of fuels at the pump. It means giving car buyers the option of plug-in hybrids and advanced battery technologies. It means tackling climate change with new technologies, new policies, and with the urgency it deserves.

And for the Department of the Interior, it means changing how we do business. Opening our doors not just to oil and gas and coal, but also to solar, wind and wave, biofuels, geothermal, and small hydro.

As the managers of one-fifth of the nation's land mass and 1.7 billion acres of ocean off our coasts, the Department of the Interior contributes mightily to our nation's energy supply, but we can do more.

The Bureau of Land Management has identified a total of approximately 20.6 million acres of public land with wind energy potential in the 11 western states and approximately 29.5 million acres with solar energy potential in the six southwestern states.

There are also over 140 million acres of public land in the western states and Alaska with geothermal resource potential.

In addition, we have significant wind and wave potential offshore. The National Renewable Energy Lab has identified more than 1,000 gigawatts of wind potential off the Atlantic coast, and more than 900 gigawatts of wind potential off our Pacific Coast.

Renewable energy companies – including many of the companies in this room – stand ready to develop these resources and are looking for a partner in the federal government. But, with the exception of hydroelectric power, the Department of the Interior has never made large-scale deployment of renewable energy a priority. As a result, there is a backlog of about 200 solar energy applications – of which two are considered fully complete for processing – on BLM lands in the southwestern states. There are another 20 proposed wind development projects on western BLM lands.

These are engineering and construction jobs that would be created if only we were to approve a new solar plant in the desert or a new wind farm on the High Plains. But with no permit, there are no new jobs.

We are changing this and setting the Department on a new path. My first secretarial order creates an initiative for renewable energy generation and transmission on public lands.

I have created an energy and climate change task force within the Department, with leadership from each of the bureaus, that will work together to move our renewable energy and climate change agenda forward.

With the help of the task force, we will measure the potential for solar, wind, geothermal, and biomass energy on public lands across the country.

With this information, we will identify specific renewable energy zones on public lands in the United States where we can rapidly and responsibly move to large-scale production of solar, wind, geothermal, and biomass energy.

And we will assign a high priority to completing the appropriate environmental review and permitting of transmission corridors and right-of-way applications that are necessary to deliver renewable energy generation to consumers. We have to connect the sun of the deserts and the wind of the plains with the places where people live.

Some naysayers in Washington would have you believe that mega scale renewable energy development is unrealistic or can only come at the expense of conventional energy development. Or that by being better stewards of our land, water, and wildlife means we can't responsibly develop oil and gas on public lands. These are false choices.

This year, we will hold over 40 onshore Federal oil and gas lease sales.. Through the Bureau of Land Management, we have already held seven oil and gas lease sales in the last seven weeks. The 830 leases we have offered cover almost 1.2 million acres in the West. The 326 leases that sold generated $32 million in revenue for American taxpayers.

On Wednesday I was in New Orleans, where I opened the bidding in the Central Gulf of Mexico Oil and Gas Lease Sale 208 and visited the Medusa Spar Facility. The area up for lease included the “181 South Area,” which we opened through the Gulf of Mexico Energy Security Act of 2006. I helped craft that legislation when I was in the Senate.

The Central Gulf lease sale is a sensible addition to our nation's energy supplies. We received 476 bids on 348 tracts on more than 1.9 million acres. The high bids totaled more than 700 million dollars.

The Central Gulf is an area in which we have the infrastructure we need. It is an area with proven resources. It is an area that we all agree is appropriate for drilling.

Over the next few weeks, I will be traveling around the country to have open, honest conversations about the OCS. To hear ideas on how we can integrate an offshore energy plan into President Obama's comprehensive energy plan. And to look for common ground.

These conversations will begin with an honest accounting of the information we have, and the information we do not have, about the resources on the outer continental shelf. As a general matter, we know that the oil and gas resources off our coasts are not, unfortunately, enough to meet our nation's energy needs.

We also know that much of America's proven reserves on the outer continental shelf are in areas already open for development. And of the acreage already leased, only one quarter is currently producing.

There are also large portions of the outer continental shelf that have not been leased but for which our data about oil and gas resources is either out of date or doesn't exist. In the Atlantic, our limited seismic data is two or three decades old.

This is a challenge we need your help to address: how do we gather the information the American people, and your industry, need to make wise decisions about the outer continental shelf?

Gathering seismic data, for one, is expensive. How do we manage the costs? Are there areas on the OCS that should be of priority for information collection?

We need the best ideas and common sense solutions. We need an open and candid discussion that moves this debate away from the same old rhetoric… the same old divisions… the same old gridlock.

You can help.

Yes, this Administration is changing how things have been done before. Restoring honesty and fiscal responsibility to the budget. Making hard choices. Seeing where we can get a better deal for the American taxpayer.

But this is not, as some have suggested, a war on the oil and gas industry.

Just as your shareholders expect you to get a fair rate of return on your investments and to be wise stewards of your balance sheets, the American people are asking the same of us as we manage their resources. The GAO confirmed earlier this week that federal government receives one of the lowest shares of revenue for oil and gas resources compared with other countries. And Interior has not systematically re-examined how the federal government is compensated for extraction of oil and gas for over 25 years.

The American people want to know they are getting a fair deal.

That means we are going to take another look at royalty rates. It means that tax breaks that are no longer needed, and which the American people can't afford, will disappear. And it means restoring the trust of the American people in the Department of the Interior. They need to know, and you need to know, that we are serving as honest brokers.

On some matters, we may disagree. I believe, for example, that the previous Administration's decision to allow oil and gas development near national parks in Utah deserves a second look. I believe we should support research and development on oil shale, but that a 5% royalty rate for commercial production is simply too low.

But there are far more areas on which I think we can agree.

In Colorado, I know many oil and gas companies who work closely with local communities to mitigate the impacts of development. We can and should do more to help spread best management practices around the industry.

I believe we can also find common purpose in a vision for land conservation that President Kennedy first dreamed in 1964.

President Kennedy's idea was simple: we should be using the revenues we generate from energy development and the depletion of our natural resources for the protection of other natural resources, including parks, open space, and wildlife habitat.

Under President Kennedy's original vision, offshore energy royalties and revenues were to go to the Land and Water Conservation Fund to help communities build trails and ball fields and to protect America's signature landscapes.

But we have never fulfilled President Kennedy's vision for a conservation royalty. Each year, we have fallen short of the $900 million authorized for the program. Previous administrations and Congresses have diverted the money into the general treasury. Some years, LWCF has almost disappeared.

President Obama is attempting to restore President Kennedy's vision for the Land and Water Conservation Fund. His 2010 budget includes approximately $420 million for LWCF and increases funding each year until we reach $900 million in 2014.

These are the type of initiatives upon which we should embark with common purpose. We all have a stake in responsibly developing America's energy resources. We all have a stake in restoring and protecting our nation's land, water, and wildlife. We can, and should, do both. And you can help.

Now when I took this job to be the Secretary of the Interior, many of my friends asked me why I would leave the Senate. They told me that every decision the Secretary of the Interior either makes one side unhappy, the other side unhappy, or both sides unhappy.

It's a little like dealing with water issues in the West. Where I'm from in Colorado's San Luis Valley, water issues get so contentious that the saying is: “whiskey's for drinking and water's for fighting.”

Over the last few months, that saying could well apply to the debate over our energy policy. Some people seem to want to use energy policy and climate change as wedge issues. To score political points. To distract Americans from our shared vision, and our shared priorities, for the future.

But I built my career in water law and I know where the path of division leads. Unless we pull people together, build consensus, and forge common sense solutions, we will only lose time and ground.

The American people want a comprehensive energy plan. They want a comprehensive climate strategy. They want to move toward energy independence. They want to build a clean energy economy. They want to responsibly develop America's conventional resources. They want a fair deal from that development. And they want honesty and accountability in their government and in the companies with whom we do business.

This is the American energy agenda. This is President Obama's agenda. This is my agenda.

I hope you will work with us to secure our energy future.

Thank you.