Predicting future action from the nation’s capital is not typically crystal clear, but one thing is certain: there will be more regulation.

The energy industry should expect rules concerning well control equipment, specifically BOPs, safety culture recommendations, and production system rules for operators in the US Outer Continental Shelf (OCS), according to Randall Luthi, president of the National Ocean Industries Association. Direct regulation of contractors – who could face penalties depending on the type of violation committed and associated level of harm and threat posed – also is forthcoming by the Bureau of Safety and Environmental Enforcement.

Speaking on “Washington Politics: Offshore Consequences” during OTC 2013, Luthi told a crowd gathered May 7 that he believes overall production in the Gulf of Mexico will continue to pick up. And communication between regulators and the industry appears to have improved following the Deepwater Horizon accident.

“I think the regulators have a much better understanding of what is expected, and industry has a much better understanding of what the federal regulators are looking for. This is being done through increased communication,” Luthi said. “I cannot underline the importance of the ability for industry and the regulators to communicate. The federal agency can only regulate the industry well if it understands that industry well.”

Meanwhile, in the US Congress several pieces of proposed legislation are making their way through the legislative process.

Luthi spoke of an effort to increase the amount of revenue coastal states receive from offshore oil and gas development. He called the Fixing America’s Inequities with Revenues (FAIR) Act, proposed jointly by US Sen. Mary Landrieu (D-La.) and Sen. Lisa Murkowski (R-Alaska), a good thing but noted the government would have to come up with a way to make up the lost federal revenue. The act would give 37.5% off offshore revenue to the states.

“Probably the best way to make up that lost revenue is to actually increase the areas that are available for offshore development,” Luthi said. “That could be the eastern Gulf of Mexico, … unlikely that it will be California. You could increase sales off Alaska. But that is one of the reasons that we think the FAIR Act is a good idea.”

Those efforts could include opening the Atlantic Ocean to drilling. The move has been gaining support as government officials including governors in Virginia, South Carolina, and North Carolina push to open waters off their coasts to drilling, since the decision could give the economy a boost by creating jobs.

The current five-year OCS leasing program for 2012 to 2017 does not provide for lease sales in the Atlantic, despite the great potential that is out there, Luthi said.

“It doesn’t look at new areas in the Atlantic, the Pacific, or even the eastern Gulf of Mexico. And it only provides for two sales off the coast of Alaska near the end of the five-year program.”

The House-approved version of the five-year lease plan would have included 29 lease sales compared to the Obama administration’s 12 and would have opened the Atlantic to drilling, Luthi said.

He pointed to a Huffington Post poll that showed 58% of Americans favor offshore drilling. The same poll showed 50% of the respondents said they believe offshore technology was safe and that spills are rare accidents. A 2012 American Petroleum Institute poll indicated that 73% of voters would support increased offshore exploration, Luthi said.

“The administration is not completely deaf to these kinds of numbers. They are in the process of finalizing a programmatic environmental impact statement (EIS), which is one of the first steps you take in opening up a new area,” Luthi said. The EIS is for geological and geophysical testing in the mid-Atlantic and south Atlantic and is due in 3Q 2013, although the date may be pushed to early February.

“That is a first step. It’s a step that is necessary, but it could have mixed results,” Luthi said. “I fear without the realistic promise of a lease sale that the G&G [geological and geophysical] companies checking will not have a client which will buy the data.”

While the move could be called progress, there are emerging threats to the industry. Among them is litigation. Luthi said that just about every part of the OCS is being impacted by litigation in different areas, including exploration planning and permitting, among others. But the biggest threat to shutting down offshore development is litigation involving seismic activities. His presentation included a short video by Oceana that aims to discourage the use of seismic airgun testing. The video highlights marine life with hopes that the Atlantic will not be opened for drilling.

“That is the kind of PR we are up against in the offshore industry,” Luthi said. “Offshore seismic is the first step. We see the same types of attacks and concerns being raised about hydraulic fracturing. It is a campaign. It is something that we all need to be aware of. We all need to be able to find the facts and be able to tell our neighbors, tell our congressmen what the truth is and what the facts are.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.