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About the American Petroleum Institute (API):

API represents more than 450 oil and natural gas companies,

leaders o a technology-driven industry that supplies most o

Americas energy, supports more than 9.2 million U.S. jobs and

7.5 percent o the U.S. economy, and, since 2000, has invested

nearly $2 trillion in U.S. capital projects to advance all orms

o energy, including alternatives, while reducing the industrys

environmental ootprint.


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Message from thePresident and CEO

Te State o American Energyrepresents the oil and natural gas industrysperspectives on the vital issues surrounding energy and environmental policyat a critical time to our nations economy.

Trough this report, we examine ways in which the oil and natural gas industryis contributing to U.S. economic growth, job creation and energy securityandareas where we will contribute urther. We also provide recommendations on howindustry and policymakers can work together to address our energy and economicchallenges through a combination o industry commitments and investments, as

well as sound legislative and regulatory policies.

API and our member companies remain committed to working with all stakeholdersin pursuing and implementing a thoughtul energy agenda. We look orward to a

productive and successul year.

Sincerely,

Jack Gerard

President and CEO

API


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Table of Contents

4 Overview

8 Energy and the Economy

Te oil and natural gas industry is vital to the nations economy, supportingmore than $1 trillion in annual contributions to the U.S. economy and9.2 million American jobs, and powering economic growth by deliveringaordable, reliable energy to American businesses and amilies alike. Ourindustry can play an even greater role in economic growth and job creationthrough the careul development o more o Americas oil and natural gasresources. We are committed to working with policymakers to supportdecisions that encourage the sae and reliable production o domesticenergy resources.

16 Meeting the Challenges

Our nation needs energy policies that protect the environment and provideor growing the U.S. economy, creating jobs and enhancing energy security.Oil and natural gas companies are at the oreront o developing advancedenergy technologies, increasing energy eciency and diversiying our energyresourcesincluding alternatives and renewables. We are committed toeective partnerships with key stakeholders to establish sound energypolicies and a sustainable uture.

26 Conclusion

The State of American Energy

2


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Overview


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The new year can herald a new ocus on energy policyand our energy

uture. The oil and natural gas industry is committed to providing the

sae, reliable and aordable energy the United States needs to grow the

economy, create jobs and enhance our energy security.

Sensible energy policy is a goal both political parties support, and we

remain committed to working with all policymakers to identiy solutions

that will advance our countrys economic interests and sustain our

way o lie.

Americas oil and natural gas companies will continue to play

a crucial role in the U.S. economy through tremendous

contributions in three key areas:4

Our Role in Economic Growth,Job Creation and Providing

for the Future

Jake B., 5th GraderOne o the 25 million students who ride a

diesel-powered bus to school every day.

Source: Did You Know?, American School Bus Council,

November 2010.

4


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growing the

economy

4The industry supports more

than $1 trillion in annual

contributions to the U.S.economy, or 7.5 percent

o Gross Domestic

Product1 (GDP);

4The industry has invested

$1.66 trillion2 in U.S. capital

projects in the last decade;

4The industry paid $95.6 billion3

in 2008 income taxes alone;

4The industry paid more than

$178 billion4 to the U.S.

government in rent, royalty

and bonus payments rom

1982 through 2009; and

4Increased access to U.S.

oil and natural gas resources

currently o-limits couldgenerate an additional

$1.7 trillion5 in government

revenue over the lie o

the resources.

creating jobs

4The oil and natural gas

industry supports more

than 9.2 million

U.S. jobs;

6

4Developing U.S. oil and

natural gas resources

currently o-limits in the

Outer Continental Shel (OCS),

the Arctic National Wildlie

Reuge (ANWR) and the Rockies

could create 160,000 new

jobs7 by 2030;

4Expanding Marcellus Shale

natural gas development could

add 280,000 jobs8 over the

next decade;

4Greater Canadian oil sands

production could create more

than 340,000 new jobs9 in the

United States alone; and

4Many other opportunities

exist to create jobs through

increased energy production

in the United States.

providing or

the uture

4The United States will

require more energy o all

types, including oil andnatural gas, to meet uture

energy demandsa challenge

and opportunity that will be

met through continued industry

investments in technology

and innovation;

4 The industry has invested

$194 billion10 since 1990

toward improving the

environmental perormance

o its products, acilities

and operations; and

4 The industry has invested

$58.4 billion11 in low-

and zero-carbon emissions

technologies rom 2000 to

2008more than either theederal government or all

other U.S.-based private

industries combined.

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Our nations economic and energy

security depends on our industrys

ability to provide the energy we

need. We encourage policymakers

to recognize the signiicant role o

oil and natural gas in meeting our

energy needs and the industrys

role as an engine o economic

growth and job creation or our

country. We call on policymakers

to encourage domestic energy

growth, which, in turn, will result

in increased government

revenuesand avoid punitive

taxes and overreaching regulations

that could harm economic growth

and energy security.

On the ollowing pages, we examine

areas where the oil and natural gas

industry is part o the solution to

our energy and economic challenges,

and provide recommendations on

how we can meet our energy goals

through a combination o industry

commitments, investments and

eective policies.

Our industry contributes more than $1 trillion to the U.S. economy and

provides most o the energy that heats our homes, uels actories and

oices, and gets people to home and work. Policy decisions seeking

to burden this critical industry with punitive taxes and overly restrictiverules do nothing to boost the economy or enhance energy security.

Instead, they cost jobs, damage the economy and compromise

our national security.

Jack Gerard, October 29, 2010

Bill H., FarmerOne o 2.2 million U.S. armers who depend

on oil and natural gas or ertilizers and uel.

Source: 2007 Census of Agriculture,

United States Department of Agriculture,

issued February 2009.

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Energy and the Economy


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Given worldwide economic and

population growth, U.S. and globalenergy demand are rising signicantly.Tis is encouraging news, since growingdemand leads to additional economicgrowth and a better quality o lie orbillions o people around the world.

An International Energy Agency(IEA) report on energy and povertydemonstrates this point and stresses

just how critical access to modernenergy services is to economic growthand social development. Te report

says that energy access is essentialor the provision o clean water,sanitation and healthcareandprovides great benets to developmentthrough the provision o reliable andecient lighting, heating, cooking,mechanical power, transport andtelecommunication services.

Countries around the world are lookingor aordable and reliable energy topower their economies well into theuture. Te International Energy

Outlook (IEO) 2010 projects that worldenergy consumption will grow nearly 50percent between 2007 and 2035.

Te United States will need energy

rom all commercial energy sources,including ossil uels and renewable andalternative energy supplies, to meetour increased demand. We will alsoneed a greater commitment toincreased energy eciency andconservation. Based on governmentprojections, however, oil and natural gas

will continue to provide more than halo total U.S. and global energy needs in2035and or the oreseeable uture.

Tankully, America has vast domestic

energy resourcesenough oil andnatural gas on ederal lands alone topower 65 million cars or 60 yearsand heat 60 million households or160 years.12

Allowing access to oil

and natural gas resources

currently o-limits would

increase U.S. crude oil

production by as much as

two million barrels per day

in 2030, osetting nearly ah o the nations imports.13

Providing these resources saely to

consumers is a core value o ourindustry, and each day we delivermillions o gallons o oil and billionso cubic eet o natural gas to uel the

American economy and way o lie.Oil and natural gas exploration andproduction have been conducted inthe United States or more than 150years; the industry has a long history odemonstrated saety perormance andtechnological advancement.

New technologies are continuously

being developed that will allow us toeciently and saely recover more oiland natural gas, making our energyresources go arther and last longer.Developing these resources is essentialto economic growth and generatingrevenue or ederal, state andlocal governments.

Energy and the Economy

Future Global Energy Demand(The world will require 49 percent more energy in 2035 than in 2007.)

Source: EIA International Energy Outlook 2010.

Nuclear

Renewables

Natural Gas

Coal

Oil

800

700

600

500

400

300

200

100

0

QuadrillionBTU

1980 2007 2035

1980

2007

2035

5.5%

6.4%

7.4%

2.7%24.8%

19.0%

46.2%

9.9%

22.6%

22.6%

35.3%

13.5%

21.9%

27.9%

30.3%

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Allowing access to oil andnatural gas resources currentlyo-limits could generate anadditional $1.7 trillion ingovernment revenue overthe lie o the resources.

It is clear that the economic growthopportunities associated with oiland natural gas development aresignicant; yet the opportunity costo ailing to develop this energy isnot always well understood.

oo oten policymakers have soughtto raise revenue by taxing the oil andnatural gas industry, but a new studyrom Wood Mackenzie shows thedanger in that approach.

Wood Mackenzie compared theimpacts o two scenarios: the rst

would raise government revenuesrom ees and payments associated

with increased access to areas that arecurrently o-limits to development,and the second would raise govern-ment revenues rom an additional$5 billion per year in taxes on theindustry. Te results show that notall revenue is created equal.

Comparing the total governmentrevenue impact rom the two scenarios(access versus taxes, 2011 to 2025)shows increased access generates anestimated $149 billion in additionalgovernment revenue. Under the highertaxation scenario, net revenues areestimated to decrease by$128 billion.Te negative economic consequenceso higher taxes will, in the long run,more than oset any short-term taxrevenue gains.

More importantly, as millions oAmericans struggle to nd jobs,total additional direct, indirect andinduced jobs in 2025 could exceed400,000 in the increased accessscenario. Te higher tax scenario

would result in a loss o jobs,estimated at almost 170,000 inthe peak job loss year o 2014.

developing

americas energy

resourcesGiven the critical role o oil andnatural gas in driving economic growthhere at home and around the world,

we need policies that encourage newdomestic oil and natural gas produc-tion. While it is true that our nation

will require energy rom abroad tomeet growing demand in the uture,domestic oil and natural gas is vital tocreating jobs, generating governmentrevenue and providing reliable suppliesto American consumers.

Te oil and natural gas industryscurrent impact on the U.S. economyis signicant, supporting more than$1 trillion in contributions to the U.S.economy annually, or 7.5 percent oGDP, and supporting more than9.2 million U.S. jobs.

Economic contributions rom theoil and natural gas industry include:

In 2008, the U.S. Interior Department(DOI) distributed a record $23.4

billion to the ederal government,states and Native American tribesrom on- and oshore energyproduction. Nearly $22 billioncame rom oil and naturalgas production;14

Oil and natural gas companies paid$95.6 billion in 2008 income taxesand $1 trillion15 in total incometaxes rom 1980 through 2008;

Oil and natural gas companies paidmore than $178 billion16 to thegovernment in rent, royalty and bonuspayments rom 1982 through 2009;

Te industry paid $30 billion17in land use ees to ederal, state andlocal governments in 2008 and 2009,over $5 billion18 more than the2009 budgeted discretionaryspending or the Departmento Energy (DOE);

Te oil and natural gas industryprovides the U.S. reasury,on average, with well over$20 million19 each day; and

Te industry has invested nearly$2 trillion in U.S. capital projectsin the last decade.

Industry EmploymentLabor Income( $ millions)

Value Added( $ millions)

Direct Impact o the Oil and Natural Gas Industry 2,123,291 199,344 456,971

Indirectand Induced Impacts on Other Industries 7,114,090 358,916 580,089

Services 3,399,474 149,462 181,720

Wholesale and Retail Trade 1,174,762 49,711 80,915

Finance, Insurance, Real Estate, Rental and Leasing 828,904 47,487 73,322

Manuacturing 680,834 49,936 73,322

Transportation and Warehousing 276,492 13,892 18,746

Construction 220,923 11,185 13,722

Inormation 165,859 15,206 29,324

Agriculture 122,542, 2,193 5,197

Utilities 26,272 4,309 14,652

Mining 10,898 1,037 2,068

Other 207,130 14,499 16,122

Total Impact 9,237,381 558,260 1,037,060

As a % of U.S. Total 5.2% 6.3% 7.5%

The Economic Impacts o the Oil and Natural GasIndustry on the U.S. Economy in 2007 by Industry

9

Source: PricewaterhouseCoopers, The Economic Impacts of the Oil and Natural Gas Industry on the U.S. Economy,September 2009.


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10

Tese taxes, royalties, rental paymentsand other revenues und community

needs, including roads, schools andparks. Furthermore, millions o

Americans benet rom the strongeconomic perormance o Americanoil and natural gas companies, romownership in the companies throughpension plans, mutual unds, IRAsand 401k plans.

Tousands o U.S. businesses largeand small depend on oil and naturalgas operations. Te industry supportsbusinesses well outside the Gul

regionvendors that provide servicesto Gul operations are located as araway as Pennsylvania and Illinois.

As one o the largest employers in thecountry, a strong American oil andnatural gas industry is a key driver o jobcreation throughout the U.S. economy.

o put this in perspective:

Te number o people directlyemployed by the oil and natural gasindustry2.1 millionis larger thanthe populations o 15 states.20 And aGallup poll rom last year ound thatenergy-producing states are among thebest in job creation.21

For example, North Dakota hasbeen breaking oil production records

and sits atop Gallups Job CreationIndex. Te Index also shows that theenergy-producing states o Louisiana,Oklahoma and exas are in the top 10state job markets or the rst hal o2010, as they were in 2008 and 2009.

Alaska, another state where energydevelopment is crucial, made the listin addition to Pennsylvania and WestVirginiatwo states that saw 57,000new jobs last year rom MarcellusShale development.22

Developing domestic oiland natural gas resources willhelp meet growing demand,create jobs, provide revenueto ederal and state governments,and enhance the nations energysecurity. Our industry remainscommitted to reliably providingthe energy our nation needsin a sae, environmentallysound manner.

U.S. Census Bureau, Annual Estimates o the Resident Population or the

United States, Regions, States, and Puerto Rico: April 1, 2000 to July 1, 2009

(NST-EST2009-01).

AK

DE

HI

ID

ME

MT

ND

NE

NH

NM

RI

SD

VT

WV

WY

Source: SONECON, The Distribution of Ownership of U.S. Oil

and Natural Gas Companies,September 2007.

Who Owns Big Oil? (Holdings o Oil Stocks, 2007)


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11

With approximately 30 percent o thenations total domestic oil productionand 13 percent o domestic naturalgas production coming rom theGul o Mexico,23 oshore resourcesare essential to our nations energyportolio. Additionally, deepwater

areas o the Gul will continue to play amajor role in our nations energy uture.

Looking ahead:

Te eastern Gul o Mexico alonecould hold 3.8 billion barrels ooil and 21.5 trillion cubic eeto natural gas.24

Opening the Atlantic coastlinecould make available another3.8 billionbarrels o oil and 37trillion cubic eeto natural gas.25

Te U.S. Geological Survey (USGS)estimates that the National Petro-leum Reserve in Alaska and adjacentstate waters hold 896 million barrelso undiscovered oil and about 53trillion cubic eeto undiscoverednatural gas.

10.5 billion barrels o oil areestimated to exist along thePacic coast.26

And these estimates are most likelyconservative given the industrysproven ability to advance technologiesthat over time enable us to producemuch more than originally projected.

Similar to oshore development,production o resources rom ederallands onshore is essential to providingthe oil and natural gas necessary tomeet our growing energy demand.North Dakotas Bakken Shale depositis one o the astest-growing oil-pro-

ducing areas in the United Stateswith 80 million barrels produced in2009.27 I the government opened upaccess to non-park ederal land in both

Alaska and a portion o the RockyMountain States, the United Statescould produce an additional 1.125million barrels o oiland 2.4billion cubic eeto natural gasper day in 2030.28

With oil use projected to grow in the coming decades, America deinitely

needs its oshore resources on the Outer Continental Shel...the

government needs to redouble its eorts to expand oil and gas

development as well as alternative energy sources i this country

is to ensure that it has adequate energy supplies. This would stimulate

the economy, provide well-paying jobs and reduce dependence on

imported uel.

J. Allen Wampler, Former Assistant Secretary or Fossil Fuels,

U.S. Department o Energy, May 8, 2010

Pacifc Oshore

10.5 Bbl18.3 Tc

Alaska Onshore18.8 Bbl

85.1Tc

Alaska Oshore23.6 Bbl

132.1 Tc

Lower 48, Onshore11.7 Bbl

145.9 Tc

Atlantic Oshore3.8 Bbl

37.0 Tc

Gul Oshore/Deepwater44.9 Bbl

232.5 Tc

116.4 billion barrels is enough oil to power

over 65 million cars or 60 years.

650.9 trillion cubic eet is enough natural gasto heat 60 million homes or 160 years.

*Figures may not add exactly to total due to rounding.

Source: MMS,BLM and API calculations.

U.S. Crude Oil (Bbl) and Natural Gas (Tc) Resources(Undiscovered Technically Recoverable Federal Resources)*


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Weve got, I think, broad agreement that weve got terriic

natural gas resources in this country. Are we doing everything

we can to develop those?

President Barack Obama, November 4, 2010

U.S. Shale Plays

According to an MI study, clean-

burning natural gas is predicted todouble its share o the energy market,rom 20 percent to 40 percent,by 2040.29 In recent years, in act,

America has been dubbed the SaudiArabia o natural gas.

Tis same MI study says theUnited States has a signicant naturalgas resource base (including shalegas), thought to exceed 2,000 trillioncubic eetenough to meet 100percento current domestic demand

or nearly a century. Developing thisdomestic natural gas will mean billionso dollars in government revenue andreductions in greenhouse gas emissions.

According to a Deutsche Bank ClimateChange Advisors report,30 natural gasused or electricity production hassignicant cost advantages or

consumers versus alternatives, and

will produce up to 60 percentewergreenhouse gas emissions than aconventional coal-red plant.

New combinations andrenements in technologiesor natural gas discoveryand development havecreated an opportunityto access this domestic,clean-burning energysource or our nationand urther enhance

our economic andenergy security.

Tanhee G., ChemistOne o 9.2 million Americans whose job is

supported by the oil and natural gas industry.

Source: The Economic Impacts of the Oil and Natural Gas

Industry on the U.S. Economy, PricewaterhouseCoopers LLP,

September 2009.

Source: EIA based on data rom various published studies.


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13

Marcellus Shale natural gasproduction alone could add

$6 billion in new tax revenuesto local, state and ederal gov-ernments over the next decade.31

Hydraulic racturinga 60-year-oldtechnology or extracting oil andnatural gas rom deep undergroundshale ormationsis enabling accessto massive new supplies. Tis process,combined with horizontal drilling,has led to new nds and improvedour ability to access more o our

natural gas resources that will helpgenerate electricity, heat homes andpower vehicles or generations to come.

Our industry has a long history oworking with ederal, state and localregulators to address environmentalprotection. API has developed standardsand best practice documents ornatural gas drilling to ensure saeand environmentally responsibleoperationsand we are continuously

making improvements. Tese robustdocuments cover all aspects o opera-tions, including hydraulic racturing,

well materials and construction, saedisposition o fuids, water testing, andchemical recordkeeping and reporting.

In addition to natural gas rom shaleormations, the DOE conservativelyestimates that oil shale reserves in

Colorado, Utah and Wyoming contain800 billion barrels32 o recoverable

oilmore than three times the provenreserves o Saudi Arabia.

Increased oil shale productioncould add as many as 100,000new jobs rom a 2 million-barrel-per-day oil shale industry.33

Te DOE estimates that, inaddition to tax revenues, ederaland state governments couldreceive royalties and lease pay-

ments topping $2 billion a year.Tese domestic on- and oshore oiland natural gas resources are vital toour nation, but they are not the onlynearby resources that can provide theenergy and jobs our nation needs.

With vast reserves second only toSaudi Arabia, Canadas abundantand reliable oil sands are crucial toimproving U.S. energy security andmeeting energy demand.

Canada is our nations top supplier oimported oil and oers a close, reliable,sae and readily available supply osecure energy that can be transportedinto the United States via pipeline.Tere are economic and nationalsecurity benets to importing oilrom a riendly, nearby neighborlike Canada.

DSS AU

Extent o Devonian shale;area in gray shows the MarcellusShale (including Millboro Shale)

Sources: Marcellus Shale as data rom de Witt and others, 1993.

Marcellus Isopach (eet)

050100150200250

The Marcellus Shale Assessment Unit. The area assessed is generally to the east o the DSS AU.

The MAU includes the Millboro Shale in Southwestern Virginia and adjacent Virginia.

Saudi Arabia

proved reserves

(267 billion Bbls)

Potential recoverable

rom Western

U.S. Oil Shale

(800 Billion Bbls)

Oil Reserves o Saudi Arabia

vs. Western U.S. Oil Shale

0

200

400

600

800

1000

BillionsBbls


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14

According to a Canadian EnergyResearch Institute (CERI) study, greaterproduction o Canadas oil sands isexpected to stimulate economic activityin both countries, creating more than340,000 new jobs in the United Statesalone. As production and investment

rise, the demand or U.S. goods andservices also increasesadding anestimated $34 billion to the U.S.GDP in 2015 and $42.2 billionin 2025.34

By 2025, Canadian oil sandsproduction is expected torise rom about 1.4 millionbarrels per day to about 3.5million barrels per dayandthe economic impact o this

development is a boon orthe U.S. economy.35

From an environmental impactsperspective, a Cambridge EnergyResearch Associates (CERA) study ndsthat lie cycle greenhouse gas emissions(GHG) rom oil sands are not muchdierent than other heavy crudesalready rened in the United States.36Since 1990, GHG emissions associated

with every barrel o oil sands crudeproduced have been reduced by 39percent,37 according to the Canadiangovernment. Furthermore, transportingoil sands crudes to the United Statesvia pipeline generates ewer emissionsthan shipping oil rom overseasby tanker.

creating jobsIncreased domestic oil and naturalgas development means billions odollars in revenues and U.S. economic

growthand growing the U.S.

economy leads to the creationo American jobs.

In addition to the 9.2 million U.S.jobs supported by our industry,allowing access to oil and natural gas

resources currently o-limits couldcreate an additional 160,000 jobsby 2030.

Tis doesnt take into account thehundreds o thousands o jobs thatcould be created rom increased

development o natural gas romshale ormations or oil sands:

Marcellus Shale natural

gas production could create

280,000 new American jobs

over the next decade. And

according to CERI, greater

production o Canadas oil

sands could create more than

340,000 new jobs in the

United States.

Aordable and reliable domestic

energy is critical or our nation andsupports U.S. business activity.Te industry employs 2.1 million

U.S. workers exploring, producing,rening, transporting and marketingoil and natural gasand supportsan additional 7.1 millionjobs38

through the purchases o othergoods and services that support theindustrys operations. Equipment

suppliers, construction companies,management specialists and oodservice businesses are all tied to theindustry. Tese businesses, in turn,purchase other goods and servicesthat support other jobs throughoutthe nation.

Finally, industry jobs are highlydesirable: in 2008 and 2009, oil andnatural gas industry salaries in theexploration and production sectors

were more than double the national

average or all U.S. jobs.39

Te oil and natural gas industry canenhance Americas energy security andhelp solve our economic problems byincreasing production o our nationsvast oil and natural gas resources.More access to oil and natural gas willmean more energy or America, more

well-paying jobs, and trillions odollars o much-needed revenue that

will help ederal, state and localgovernments pay or critical services.


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15

Meeting the Challenges


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16

Meeting the Challenges

API and our member companies are

committed to working with policy-makers to pursue a thoughtul,commonsense energy agendaonethat promotes U.S. economic growth,

job creation and sae, reliable,aordable energy or the uture.

We will do our part, and weare hopeul that our nationsleaders will work togetherwith all key stakeholders todevelop solutions to our

economic, energy andenvironmental challenges.

what the industry

is doingTe U.S. oil and natural gas industryhas always had a strong saetyperormance record, and we continueto improve upon it.

Dating back to 1924, API establisheda process or the development ostandards and best practices ocusingon the saety o our workers.

Following the Gul oil spill, ourindustry demonstrated its commitmentto ensuring the saety o our operationsand committed an unprecedented levelo response to help stop the leak, cleanup the oil and restore communities. Wehave taken considerable steps to signi-

cantly improve saety and to advance spillresponse capabilities. We have createdindustry-wide task orces to identiyand learn rom any gaps in operationsor practices, and recommendations

rom these task orces have already

helped improve the industrys saetyperormance.

Te industry ollows and constantlyimproves best practices or saeoperations, including training,operational procedures, equipmentimprovements, industry standardsand technology. We will continue

working with the Department o theInterior and Bureau o Ocean EnergyManagement, Regulation andEnorcement (BOEMRE) in their

eorts to move orward with energydevelopment in the Gul.

In addition to oshore saety, API andU.S. reners have continued our workon raising rening saety through newand improved industry standards,increased training and drills, andimproved audit programs. Weve alsoreviewed and claried procedures orrenery start-ups, operationsand maintenance.

Further, we have created a series o

renery personnel certication examsto improve operations, repair andmaintenance; reduce the potentialor inspection delays rom regulatoryrequirements; and provide a continuedhigh level o saety through the useo inspectors specialized in processequipment. Te program promotescontinuously improved perormanceand establishes a uniorm nationalprogram that assists state and localgovernments in regulations.

We have redoubled our commitmentto saety and response practices.

We owe it to our employees and to thenation that has placed its trust in us toresponsibly develop oil and natural gas.

Worker saety is a core value in theoil and natural gas industryandprocess saety management is essentialto the protection o employees,contractors and the communitiesin which our companies operate.

The conclusion that this is an unregulated industry is not correct.

It is a very highly regulated industry. That doesnt mean there isnt

enough room or improvement.

Interior Secretary Ken Salazar on oil and natural gas regulation,

May 18, 2010

16


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17

In addition, APIs WorkSae programensures worker and contractor training

with regard to industry saety standards.Tis program oers a standardizedexamination covering the latest industrysaety practices and training on keysaety issues ound at job sites.

Trough APIs eorts and initiatives,we are investing the necessary resourcesto train our workorce on sae equipmentoperation as well as proper inspectionand maintenance procedures. Inconjunction with key stakeholdersand other experts, we have developedand maintained more than 500 saeoperating and equipment standardsand work practices. Te oil and naturalgas industry is working with stake-holders and government at all levels

to continuously improve process andworker saety.

API and our members have alsopartnered with labor unions to createthe Oil and Natural Gas IndustryLabor-Management Committee,

which works to promote industryjob retention and growth.

In the communities where weoperate and live, the protection oour environmentand o Americas

energy utureremains paramountwhen exploring or natural resources.

We need to enhance developmentoadvanced energy technologiesto remain on the cutting edge oexploring or, nding and producingenergy resources. As an industry andas a nation, we need a greater commit-ment to increased energy efciency.

And we need to diversiy our energyresources, drawing upon the ullrange o energy sources, including

alternatives and renewables.

Developing Advanced

Technologies

Te oil and natural gas industry isocused on developing and deliveringreliable and aordable energy suppliesto American consumers and businesses.

Te technology used in oil and naturalgas development has dramaticallytransormed how energy resourcesare ound and produced.

Advances in computing power,miniaturization, seismic and drillingtechnology, and robotics have givenus the tools or recovering our nationsvaluable resources while enhancingsaety, eciency and environmentalprotection. Geologists now havethe ability to see and surveyunderground oil and naturalgas deposits, improvingexploration success ratesand production capability.

A pillar o the domestic workorce is skilled industrial labor.

The (Oil and Natural Gas Industry Labor-Management) committee will

support policies that protect and promote job security and growth...

Mark H. Ayers, President,AFL-CIO Building and Construction Trades Department, June 19, 2009

Bobby S., GeologistOne o 9.2 million Americans whose job is


Source: The Economic Impacts of the Oil

and Natural Gas Industry on the U.S. Economy,

PricewaterhouseCoopers LLP,

September 2009.

17


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18

o date, our companies have investedhundreds o billions o dollars in the

technology that enables Americasoil and natural gas companies toaccess more resources more eciently,

with signicantly less impact onthe environment.

Our industry is a leader in technologyand innovation; oil and natural gascompanies are at the oreront o:

Employing technologies such ascogenerationthe re-use o excessheat rom renery processes to

produce additional energytobecome more ecient, reducingboth energy use and emissions;

Developing carbon capture andstorage technology, or CCS,to reduce carbon dioxide (CO

2)

emissions by storing them under-ground, a process also used to assistin the recovery o oil and natural gas;

Utilizing advanced drillingtechnologies such as 4-D visualiza-tion (using seismic imaging) anddirectional drilling to more accuratelysee underground and pinpointenergy resources; and

Researching, developing andmarketing alternative energies,including solar, geothermal, biouels,uel cells, hydrogen power and

wind energy.

Te industry has invested:

$194 billion since 1990 towardimproving the environmentalperormance o its products,acilities and operations; and

$58.4 billion in low- and zero-carbonemissions technologies rom 2000 to2008more than either the ederalgovernment or all other U.S.-basedprivate industries combined.

Tese investments have already reapedsignicant rewards: a study ound that

GHG emissions rom the U.S. oil andnatural gas industry were reducedrom baseline projections by more than48 million metric tons o carbondioxide equivalent rom 2007 to 2008,a reduction comparable to taking9.7 million cars o the roads.40

Oil and Natural

Gas Industry

Federal

Government

Carbon Mitigation Investment by Investor Group(2000-2008)

Other Private

Industries

$58.4

Billion

(44%)$55.3

Billion(42%)

$19.2

Billion(14%)

$133 Billion

Source: T2 & Associates and CEE, June 2009.

$25.0

U.S. Environmental Expenditures since 1990(by sector*)

$20.0

$15.0

$10.0

$5.0

$0.0

Exploration and Production Transportation Refning Marketing R&D and Corporate Programs

*Remediation & Spills expenditures are included in the sector numbers and are reported data only.

The remaining sector expenditures are estimated or the entire industry.

Source: API Statistics, Environmental Expenditures by Oil and Gas Industry, February 2010.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


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19

Diversiying our

Energy Resources

While providing the oil and naturalgas needed to uel our economy nowand in the uture, companies are alsopioneers in developing and expandingthe use o alternative and renewableorms o energyrom geothermalto wind, rom solar to biouels, romhydrogen power to the lithium ionbattery or next-generation cars.

One study ound that U.S.-basedoil and natural gas company invest-ments in renewable energy accountedor nearly one-ourth o the moneyinvested in renewables by all U.S.-based private industry and the ederalgovernment over the past nine years.More than $6.7 billion went toward thedevelopment o energy sources such as

wind, biouels and solar power.41

Te oil and natural gas industry alsoaccounts or 73 percento all theNorth American investments madein uel substitution technologiessince 2000more than $21 billiondeveloping substitute uels, such asliqueed natural gas and reducingugitive methane emissions.

Further, the nations air quality has im-proved markedly over the past severaldecades. It would take 100 o todayscars to equal the air emissions rom

just one car rom the 1970s, thanks toimprovements in both advanced auto-mobile technology and the introduc-tion o cleaner burning gasoline, andmajor changes in diesel uel.42

In June 2006, industry reners beganreducing the amount o sulur indiesel uel to make Ultra-Low SulurDiesel (ULSD), which has supplantedtraditional diesel uel ormulationsduring a transition period determinedby the Environmental Protection

Agency (EPA).

According to a study on heavy-dutydiesel engines used in large trucksand buses, the uel/engine combi-nation is reducing most pollutantsrom tailpipes by more than 90percent. Te ne particulate matter(soot) emission has been reduced by99 percentrom the allowable levelin 2004, and is even 90 percentlower than 2007 requirements.43

Other air emissions are also much

below the required levels. Nitrogenoxide, which can contribute to theormation o smog, is 10 percentbelow the required level.

...the industry has increased reinery eiciency and reduced emissions

through the use o combined heat and power technology...this relects

our ongoing commitment to improving environmental perormance even

as we produce more energy, more eiciently to power our economy and

improve our lives.

Jack Gerard, October 22, 2010

Do Kim C., HomeownerOne o the 168 million Americans who keeps her

home warm thanks to oil and natural gas.

Source: Short Term Energy Outlook Table WF.01,

U.S. Energy Information Administration, October 2010.

19


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Improving Efciency

In addition to investments in renewableenergy and advanced uels, we mustalso recognize that the greatest newenergy source available or use is thereduced demand brought about bygreater energy eciency and conser-vation. We use about hal as muchenergy today or every dollar o GDPas we did back in 1973.44

Looking orward, our nation must takeenergy eciency even more seriously,and the oil and natural gas industry isdoing its part. 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 203 5

18.00

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00

History Forecast

Future U.S. Energy Demand per Dollar o GDP Growing Efciency

Source: AEIA, International Energy Outlook 2010.

Thou

sandBTUperChained(2000)Dollar

250

200

150

100

50

0

Number o Refneries Declines but Capacity Expands

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

*Operable as o January 1st o each year.

Source: EIA, Petroleum Supply Annual.

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

NumberoRefneries*

*Operable Capacity*Thousands o Barrels Per Day

hrough such technologies ascombined heat and power, alsoknown as cogenerationthe re-useo excess heat rom renery processesto produce additional energyreners

are becoming more ecient, reducingboth energy use and emissions.

Since 1985, U.S. rening capacity hasincreased by11 percent,45 and whileincreasing capacity, reneries alsoinvested $108 billion since 1990 tomake cleaner burning uels. Moreover,a number o reners are expandingand upgrading equipment to handleincreased processing o heavier crudeoils, including oil derived romCanadian oil sands.

20


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21

what policymakers

should doConsistent government orecastspredict that the United States will requiremore energy rom all sources in theuture; however, oil and natural gas willcontinue to meet the majority o ourenergy needs in the coming decades.First and oremost, we must responsiblyexplore or and produce Americasown natural resources. Our economicand energy security depend upon aregulatory system that supports domesticenergy production and providescertainty or U.S. investments so that

jobs and revenues stay here in theUnited States.

While the ederal government andindustry have taken signicant steps toimprove saety and address questionsraised by the incident in the Gul, itnow requires an eective partnershipbetween government and industryto expeditiously approve pendingplans and permits in the Gul oMexico and Alaska. We must alsotake the additional steps necessary tomove orward with production o ouroil and natural gas resources, including:

completing the necessary environmentalanalyses and recommencing oshoreleasing. Responsible developmento our domestic energy resourcestoday will ensure we will be able tomeet tomorrows energy needs.

Policymakers should encourageinvestment and allow the responsibledevelopment o our nations vastdomestic energy resources, which

will create well-paying jobs and spureconomic growth. Te administrationsannouncement reversing its decision to

open new areas and maintain existingareas or oshore oil and natural gasexploration was disapointing. It willcost jobs, stife economic growth andundermine our energy security. We arecommitted to working with policy-makers to reocus our nations energyagenda. We need to get back on trackand support domestic production othe energy America needs.

Develop Americas

Energy Resources

Congress and the administrationshould support increased develop-ment o North Americas oil andnatural gas resources, includingederal lands both on- and oshore,vast shale gas resources andCanadian oil sands. Specically,policymakers should:

Offshore Drilling

Re-examine and reconsider limits tooshore exploration and productionin the eastern Gul o Mexico, andin the Atlantic and Pacic;

Expeditiously process and approvedrilling plans and permits orpending and uture lease areas;

Ensure that there are adequatenumbers o trained personneland sucient resources in place toenorce drilling rules and regulations;

Support exploration in Alaska;

Support and encourage Atlanticseismic studies to obtain a moreaccurate picture o oil and natural

gas reserves, leading to utureexploration and development;

Move orward with the permittingplans and lease sale or oshoreVirginia; and

Maintain the fexibility necessaryor well design and equipmentstandards. Saety and engineeringexperts must consider the uniquecharacteristics o each individual

well site and are in the best position

to determine technology needs andsituation specics.


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22

Natural Gas

Recognize the environmental,economic and eciency benetso natural gas;

Policymakers should oster a levelplaying eld that ensures all energyoptions are ree to compete inan open market, rather thanapproaches that oreclose optionsthrough an arbitrary selection o

winners and losers.

Allow states to continue

their eective regulation ohydraulic racturing;

Congress should await completiono EPAs hydraulic racturingstudy beore considering whetheradditional regulations arenecessary.

Support hydraulic racturing, whichhas been saely used in one million

wells over the past 60 years, has aproven track record and provides or

tremendous economic potential onew natural gas nds;

Avoid unnecessary legislation oronerous regulations that couldhave dire economic consequences:killing jobs, impeding naturalgas development and threateningour economy.

Canadian Oil Sands

Promote and advance supportivepolicies and a regulatory environ-ment that will accommodate growthor and ree trade o Canadian oilsands and related products; and

Support the approval o key pipelineand rening inrastructure projectsthat will help create jobs in both theUnited States and Canada.

Oil Sands Areas in Alberta

Source: Alberta Department o Energy.


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23

Avoid Punitive

New Energy Taxes

With policies that create and sustaina level playing eld or all energyoptions, the oil and natural gasindustry will create new jobs andhelp uel the nations economy.Conversely, adding billions odollars in new and punitive taxeson our industry will have adevastating impact on American

jobs and economic growth.

Te oil and natural gas industry

pays more than its air share in taxes.Over the last ve years, industryearnings have been in line withU.S. manuacturing industriesaveraging just 7 cents or everydollar o salesand oil and naturalgas companies payan eectivetax rate o 48.4 percentcomparedto 28.1 percent or all other S&PIndustrial companies.46

Yet, there are nearly annual calls orbillions o dollars o increased taxes

on the oil and natural gas industry.Te continued threat o new taxes andees each year creates an uncertain busi-ness environment or U.S. companies.

According to studies by WoodMackenzie and Louisiana StateUniversity economist Dr. JosephMason, some o the taxproposals could:

Reduce domestic production byas much as 600,000 barrels ooil equivalentper day;

Put an estimated $15 billion incapital at risk in 2011 alone andalmost $130 billion over the

next 10 years;

Put 165,000 jobs47 at riskin 2020;and

Reduce wages by$68 billionnationwide.48

Tis is no surprise: historically,higher taxes have resulted in lessdomestic energy, and restrained suppliesoten lead to higher energy costs orconsumers. In todays economy, thatcould not only stife recovery and

growth, but also result in ewer jobsand leave Americans more dependenton oreign energy sources. Americansoverwhelmingly oppose raising taxeson Americas oil and natural gasindustry, and most agree higher taxescould threaten jobs. In a recent HarrisInteractive poll o 1,000 U.S. voters,60 percentopposed an increase intaxes on the industry, with 40 percentstrongly opposing such a move.

In addition, with 15 million Americans

unemployed and millions moreunderemployed, 54 percento votersear that raising industry taxes coulddestroy jobs across the country.49

Americans understand that raisingtaxes on an industry that provides mosto their energy and supports morethan 9.2 million jobs is not good or

them, their local community or thenational economy.

Raising energy taxes could eliminateAmerican jobs and hurt businesses,discourage investment in energyproduction, compromise energy

security and decrease U.S. competitive-ness abroad. Adding research anddevelopment incentives or renewableand alternative energy is a good idea,but not at the expense o oil andnatural gas companies via higher taxes.

Policymakers should pursue tax policiesthat encourage U.S. businesses to growand invest, creating new jobs here athome and making U.S. companiesmore competitive around the world.Tis agenda should support invest-

ments in new energy projects, as well as:

Support oil companies ability toexpense Intangible Drilling Costs;

Continue to make the Section 199manuacturing deduction and theDual Capacity ax Credit availableto all businesses, including oil andnatural gas companies;

Support a viable oil spill liabilitytrust und. Unreasonable increasesin liability limits would threatenthe viability o oshore operations,signicantly reduce U.S. produc-tion, put 145,000 jobs at riskandthreaten our energy security;50 and

Encourage energy policies thatcreate and protect U.S. jobs andenergy security.

...current tax preerences or oil and gas procedures are hardly subsides.

They are instead methods that allow private companies to keep more o

the money they earn while providing low-cost energy to the American

consumer...(tax penalties on the oil and natural gas industry) is not

punishing ossil uel producers as much as American consumers.

Mackubin Thomas Owens, Proessor o National Security Aairs,

Naval War College; Editor, Orbis, February 16, 2010

Income Tax Expense asShare o Net Income BeoreIncome Taxes (2009)

Source: Compustat North America

Database (January 2010 update).

Oil and Natural

Gas Industry

S&P Industries Ex Oil

& Gas Companies

28.1%

48.4%


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24

national ambient air quality standards

(naaqs)/higher ozone standards

Ground-level ozone is one o sixpollutants regulated by National

Ambient Air Quality Standards(NAAQS)standards set by EPA

to monitor and regulate air pollutantsconsidered harmul to public health.NAAQS are reviewed on a ve-yearcycle; nevertheless, EPA is pushingorward with a planned nal rule onlythree years ater its previous review,despite the act that no new data existon which to base new standards.

Despite a recent six-month post-ponement, EPA has indicated it willtighten ozone standards so close tocurrent background levels that not even

pristine areas like Yellowstone NationalPark could comply with the proposedair quality standards.

More stringent standards would becostly, unattainable and unnecessaryand impose a severe burden on Americanmanuacturers, the U.S. economy,and American jobs and consumers.

A Manuacturers Alliance/MAPI studynds that the proposal could result inthe loss o7.3 million U.S. jobs by2020; add $1 trillion in new regulatory

costs per year between 2020 and 2030;and sharply reduce the nations produc-tivity. GDP could be reduced by$676.8billionor 3.6 percentin 2020.51

EPA should withdraw its rule-making and allow the normalve-year review o the ozonestandard to continue.

gasoline-ethanol blends (E15)

Te oil and natural gas industrysupports the responsible developmento ethanol and other alternative uelsthat can contribute as economic,reliable and aordable energy options

in the marketplace. However, EPAsrecent approval o a waiver thatallows or 15 percent ethanol blendsin gasoline (E15), up rom 10 percentor 2007 and newer vehicles only, ispremature, lacks statutory authorityand puts consumers at risk.

Ongoing testing by our industry,automakers and the DOE to determine

whether E15 is sae is not yet complete.Results so ar have revealed potentialsaety and perormance problems

that could aect consumers and theinvestments theyve made in theirautomobiles.52 Tus, the partial waivercould threaten vehicle perormance andthe environment, void warranties, con-use consumersand possibly create apublic backlash against renewable uels.

EPA should extend itsreview six months or moreto allow scientic testing tobe completed. Approving the

use o E15 without adequateand complete testing putsAmerican consumers at risk.

greenhouse gas emissions

regulation (ghg)

As o this writing, EPA rules regulatingGHG emissions under the Clean Air

Act are scheduled to go into eecton Jan. 2, 2011. Tese rules could

impose a signicant burden on theU.S. economy, requiring substantialinvestments and diverting capital thatmight otherwise create jobs and assistour economic recovery. More than sixmillion businesses could be requiredto obtain permits to expand or merelycontinue operating. State agenciescharged with issuing permits couldbe swamped, leading to long delaysin business growth and job creation.

API believes any climate

policy must be establishedby Congress and shouldincorporate the principleso a air, efcient and market-based strategy that minimizesthe burden on consumersand jobs.

Smart Energy Policy = Sound Economic Principles

Because o the interconnectedness o energy to all aspects o our economy, energy policy and regulatory decisions havean enormous potential impact on Americans and their ability to nd jobs and purchase goods.

Burdensome and unnecessary proposals could erode industry environmental and eciency gains and have unintendedconsequences or the U.S. economy, including sharply raising energy costs, reducing household buying power and resulting

in the destruction o millions o American jobs.

Yet the EPA is moving orward with a number o proposed regulations that could impact our ability to deliver energy resources, costmillions o jobs, hurt consumers and put U.S. businesses at a competitive disadvantage globally.


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Conclusion


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26

Policy Choices Needed to Ensure

Future Energy Security

Our leaders must pursue a thoughtul, commonsense energy agenda that

promotes U.S. job creation, economic growth and energy securityand

avoids harmul taxes or regulations. We encourage policymakers to:

4Increase energy production by supporting policies that promote

all energy sources;

4Pursue policies that encourage investment in new energy projects

and provide market-based solutions to meet energy demand;

4Reject new energy taxes and turn aside unnecessary regulations

on oil and natural gas development; and

4Abandon eorts by the EPA to regulate greenhouse gases under the

Clean Air Act; instead, allow Congress to establish and incorporate

principles o a air, eicient and market-based climate strategy that

minimizes the burden on consumers and jobs.

Conclusion


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27

Oil and natural gas have been and willcontinue to be engines o economicdevelopment around the world. For atleast the next several decades, we willcontinue to rely on oil and natural gasto meet growing energy demand, evenas we improve energy eciency, and

as renewables and alternatives playan increasingly important role in achanging energy landscape.

A vital link exists between the oiland natural gas industry and theU.S. economy. Te industry supportsmore than 9.2 million U.S. jobs andmore than $1 trillion in economiccontributions. Developing U.S. oiland natural gas resources currentlyo-limits could create hundreds othousands o new jobs and generate

more than $1.7 trillion in newgovernment revenue.

Given this energy reality, in themonths and years ahead, the nationhas important decisions to makeabout its energy uture. What we needtodayand tomorroware policychoices that increase, not decrease,energy production.

Choosing to decrease domesticproductionincluding higherenergy taxes and unnecessaryregulationsonly contributes tovolatile prices, slower economicgrowth and American job losses.

We need commonsense policies and

regulations administered eciently,and sound and air tax policies thatallow American companies to competeon an even ooting around the world.

We need increased access to whereoil and natural gas are ound, whileprotecting national parks and ragileecosystems. Government policiesshould harmonize our energy andenvironmental goals, encouragingresponsible development that creates

jobs and helps drive our economy.

Our nations history is replete withshort-term xes and searches orsilver bullets to solve our energychallenges. Price controls, limitationson oil and natural gas development,picking winners and losers amonguels, and increasing taxes have all beentried by governmentbut we haveailed to develop a comprehensivenational energy policy to benet

American consumers and businesses.

We should learn rom the pastandtake some positive steps to ensure wemeet Americas energy needs in thedecades ahead. As a society, we cannotremain passive to energy, the environ-ment or economic growth. Each willall short o its ullest promise, absent

constructive industry-governmentpartnerships committed to providingour nation with a workable energysecurity policy.

We need a public policy rameworkto ensure uture energy security orour nation. We need policymakers whounderstand the energy realities and theenergy challenges we ace. We need toget it right on energy. oo much is atstake or our nation to do otherwise.

We essentially have two choices:

4Choice #1Encourage more domestic oil and natural gas production to

help meet uture demand, putting more Americans to work

and delivering substantial government revenue to beneft

all Americans; or

Choice #2Accept policies that discourage development at home,

orcing us to import more energy. That means spending

more overseas or oil and natural gas, weakening U.S.

energy security, reducing U.S. jobs and diminishing

U.S. economic growth.

Melva T., Lease RecordsOne o 9.2 million Americans whose job is


Source: The Economic Impacts of the Oil and Natural Gas

Industry on the U.S. Economy, PricewaterhouseCoopers LLP,

September 2009.

27


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28

1 PricewaterhouseCoopers LLP, Te Economic Impacts o the Oil and Natural Gas Industry on the U.S. Economy: Employment,Labor Income and Value Added,September 8, 2009.

2 Oil and Gas Journal, Capital Spending Outlook, 2001-2010 (Spring).3 Energy Inormation Administration, Form EIA-28(Financial Reporting System).4 MMS, Oce o Natural Resources Revenue (ONRR).5 ICF International, Strengthening Our Economy: Te Untapped U.S. Oil and Gas Resources,December 5, 2008.6 PricewaterhouseCoopers LLP, Te Economic Impacts o the Oil and Natural Gas Industry on the U.S. Economy: Employment, Labor Income

and Value Added,September 8, 2009.7 ICF International, Strengthening Our Economy: Te Untapped U.S. Oil and Gas Resources,December 5, 2008.8 imothy J. Considine, Ph.D., Natural Resource Economics, Te Economic Impacts o the Marcellus Shale: Implications or New York,

Pennsylvania, and West Virginia,July 2010.9 Canadian Energy Research Institute, Te Impacts o Canadian Oil Sands Development on the United States Economy,October 2009.

10 API Statistics, Environmental Expenditures by Oil and Gas Industry, February 2010.11 2 and Associates, Emission Reductions Associated with U.S. Oil and Gas Industry Investments in Greenhouse Gas Mitigation

echnologies,March 2010.12 MMS, BLM, and API calculations.13 ICF International, Strengthening Our Economy: Te Untapped U.S. Oil and Gas Resources,December 5, 2008.14 Minerals Management Service (BOEMRE), November 20, 2008.15 EIA, Energy Finance Data ables, -12. Income axes,

http://tonto.eia.doe.gov/capps/rs/excel.cm?tableNumber=12&startYear=1977&endYear=2008.16 Oce o Natural Resources Revenue, http://www.onrr.gov/ onrrWebStats/deault.aspx.17 US DO, Federal Highway Administration, Highway Statistics,http://www.hwa.dot.gov/policy/ohpi/hss/hsspubs.cm

(data compiled by API using schedule MF-1, http://www.irs.gov/pub/irs-soi/histab20.xls.)

18 Budget o the United States Government, Fiscal Year 2009, http://www.gpoaccess.gov/usbudget/y09/pd/budget/tables.pd.19 BOEMRE and API calculations.20 U.S. Census Bureau, Annual Estimates o the Resident Population or the United States, Regions, States, and Puerto Rico:

April 1, 2000 to July 1, 2009.21 Gallup, Poll: Energy, Federal Government States Provide Best Job Markets,July 21, 2010.22 imothy J. Considine, Ph.D., Natural Resource Economics, Te Economic Impacts o the Marcellus Shale: Implications or New York,

Pennsylvania, and West Virginia,July 2010.23 EIA, Special Report: Gul o Mexico Fact Sheet.October 25, 2010.24 MMS, 2006 Planning Area Resources Addendum to Assessment o Undiscovered echnically Recoverable Oil and Gas Resources

o the Nations OCS.25 MMS, 2006 Planning Area Resources Addendum to Assessment o Undiscovered echnically Recoverable Oil and Gas Resources

o the Nations OCS.26 MMS, 2006 Planning Area Resources Addendum to Assessment o Undiscovered echnically Recoverable Oil and Gas Resources

o the Nations OCS.

Sources


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29

27 WSJ, Oil Industry Booms - In North Dakota. February 26, 2010,http://online.wsj.com/article/SB10001424052748703795004575087623756596514.html.

28 ICF International, Strengthening Our Economy: Te Untapped U.S. Oil and Gas Resources,December 5, 2008.29 MI Energy Initiative, Te Future o Natural Gas,June 2010.30 Deutsche Bank Climate Change Advisors, Natural Gas and Renewables: A Secure Low Carbon Future Energy Plan

or the United States,November 17, 2010.31 imothy J. Considine, Ph.D., Natural Resource Economics, Te Economic Impacts o the Marcellus Shale: Implications or New York,

Pennsylvania, and West Virginia,July 2010.32 BLM, Western Oil Shale Potential: 800 Billion Barrels o Recoverable Oil,July 22, 2008.33 National Center or Policy Analysis, Oil rom Stone: Securing Americas Energy Future,July 9, 2009.34 Canadian Energy Research Institute, Te Impact o Canadian Oil Sands Development o the United States Economy.October 2009.35 Canadian Association o Petroleum Producers, Te Oil Sands Fact Book,October 7, 2010.

36 Cambridge Energy Research Associates, Growth in the Canadian Oil Sands,2009.37 Canadian Association o Petroleum Producers, Te Oil Sands Fact Book,October 7, 2010.38 PricewaterhouseCoopers LLP, Te Economic Impacts o the Oil And Natural Gas Industry on the U.S. Economy: Employment, Labor Income

And Value Added,September 8, 2009.39 United States Department o Labor, Quarterly Census o Employment and Wages, 2008-2009.

40 2 and Associates, Emission Reductions Associated with U.S. Oil and Gas Industry Investments in Greenhouse Gas Mitigationechnologies,March 2010.

41 2 and Associates, Key Investments in Greenhouse Gas Mitigation echnologies by Energy Firms, Other Industry and theFederal Government,June 15, 2009.

42 Auto Alliance, Clean Car Facts,http://www.autoalliance.org/INDEX.CFM?OBJECID=EF278000-6806-11DF-B63D000C296BA163.

43

Health Eects Institute, Extensive Emissions ests o Newest Diesel ruck and Bus EnginesFinds Dramatically Lower Emissions o Key Pollutants,July 18, 2009.44 EIA,Annual Energy Review 2010and EIA, Annual Energy Outlook 2010.45 EIA Refning Capacity Report, June 25, 2010.46 Compustat North America Database (January 2010 update).47 API Comments based on Wood Mackenzie, Evaluation o Proposed ax Changes on the US Oil & Gas Industry,August 2010.48 Dr. Joseph Mason, Te Regional and National Economic Impact o Repealing the Section 199 ax Deduction and Dual Capacity ax Credit

or Oil and Gas Producers,September 13, 2010.49 Harris Interactive poll, November 29, 2010, http://www.api.org/Newsroom/poll-oppose-taxes.cm.50 API Calculations based on IMPLAN modeling.51 Manuacturers Alliance/MAPI, September 2010.

52 Coordinating Research Council, Research Program on Intermediate Ethanol Blends,http://www.crcao.org/news/Mid%20Level%20Ethanol%20program/index.html.


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