Big Oil's `Rock Star' in Congress Runs Rig Tours for Support

Congressman Steve Scalise is one of the oil industry's busiest tour guides in Congress.

(Bloomberg) - Congressman Steve Scalise leaned over the railing of the Chevron Corp. oil platform floating in inky blue waters 250 miles off the Louisiana coast and marveled to a cluster of lawmakers that it produces 75,000 barrels of crude every day.

Scalise is one of the oil industry’s busiest tour guides in Congress. Eight times, he’s lured colleagues onto helicopters bound for remote drilling rigs and production facilities in the Gulf of Mexico. His motive: to persuade even Democrats to overturn Obama administration rules that will add costs to offshore drilling.

“Some bureaucrat in Washington that’s never drilled before comes up with this standard and says ‘This is how you drill every well in the Gulf,’” Scalise told his colleagues. “It makes absolutely no sense.”

For oil and gas companies plumbing Gulf waters, Scalise is an evangelist of growing importance. First elected in 2008 to finish the term of Bobby Jindal, who became Louisiana’s governor, Scalise climbed the Republican leadership ladder and has emerged as the oil industry’s leading congressional ally -- a role that’s taken on new significance in an uncertain presidential election year.

‘Special Interest’

Republican presidents are usually reliable supporters of the oil industry, but the party’s 2016 front-runner, real estate developer Donald Trump, has disparaged the sector as a “special interest.” Democratic challengers Hillary Clinton and Bernie Sanders, meanwhile, have courted environmentalists with promises to block offshore drilling in the Arctic and Atlantic.

Scalise, 50, the third most powerful Republican in the House, represents a southeastern Louisiana district that encompasses the full chain of oil and gas development -- from upstream production to downstream refining, and the pipelines and terminals that connect the two. Energy interests have helped fund Scalise’s legislative career, with the industry giving $204,750 to his 2016 re-election bid so far, according to the Center for Responsive Politics, a Washington campaign watchdog.

The biggest of those donors are employees, lobbyists and political action committees associated with Hess Corp., Pioneer Natural Resources and Koch Industries Inc.

‘Rock Star’

“He’s a rock star on our stuff, there’s no question about it,” said Stephen Brown, vice president of federal government affairs for Tesoro Corp., which refines and markets petroleum products. “He’s probably your go-to person for the oil and gas industry. If he can’t be for it, it’s not going to happen.”

Scalise’s rise was almost derailed two years ago after the disclosure of a 2002 speech to a white supremacist group, an episode that could have sunk any lawmaker’s career. But he said that making the speech had been a mistake and was able to persevere, now serving in a Republican leadership team headed by House Speaker  Paul Ryan.

That’s turned out to be good news for the oil industry at a time when it can use some friends in Washington.

On April 14, the Obama administration issued sweeping new regulations on offshore drilling, imposing tough requirements for coastal wells and the emergency equipment meant to keep them in check. The new rule comes almost six years after the blowout of a BP Plc well in the Gulf triggered an explosion that killed 11 workers and unleashed the worst oil spill in the U.S.

Exxon Mobil Corp., Chevron, Anadarko Petroleum Corp. and other oil companies had lobbied against the mandates, warning they would impose potentially tens of billions of dollars in new costs and may pare drilling in the Gulf of Mexico, which accounts for about 17 percent of U.S. crude production.

Drilling Rules

Back in Washington, Scalise coordinated a congressional attack on the rules by enlisting Republican committee chairmen to hold hearings and send a letter insisting the regulations be proposed anew. Now that the Obama administration has rebuffed the request, they’re ready to fight.

After the rule was published, Scalise minced no words in blasting it as an "overly-prescriptive" regulation "that will increase costs and threatens to decrease safety and kill thousands of jobs." Scalise said "everything is on the table" for chipping away at it in Congress, even as oil companies and industry trade groups mull their own legal attack.

Now that rule is out, they will still be looking " to move forward with legislation, including riders in our appropriations bills, to reverse it.”

Scalise’s job as the House majority whip requires him to build support for Republicans’ legislative priorities, counting votes and cajoling colleagues to back individual bills. That allowed him to play a major role helping the oil industry secure a monumental legislative victory in 2015: the repeal of a decades-old ban blocking crude exports.

Export Ban

Scalise was an ambassador for the measure in meetings with House leaders, including Ryan, a Wisconsin Republican. He collaborated with Texas Representatives Joe Barton, a Republican, and Henry Cuellar, a Democrat, to lure supporters.

“Scalise, from his leadership job, was assembling whip meetings on the Hill, and he wasn’t just bringing in Republicans, he was bringing in Democrats,” said Louis Finkel, executive vice president of the American Petroleum Institute.

Scalise doesn’t use the bombast and arm-twisting that were hallmarks of some of his predecessors, including former House Majority Whip and Speaker Tom DeLay of Texas, nicknamed “the Hammer” for his demanding insistence that fellow Republicans fall in line.

Avoiding Conflict

In fact, some oil industry leaders say Scalise isn’t combative enough.

“If you’re Steve Scalise, and your entire social network -- lobbyists, staffers and fellow members -- all tell you to avoid conflict, you’re going to avoid conflict,” said Michael McKenna, a Republican strategist and lobbyist for Koch Companies Public Sector, Suez and other clients. “The thing that DeLay and Newt Gingrich got instinctively is this is the game we’re in. We’re in the conflict game.”

At least one of Scalise’s ideas has provoked conflict: a non-binding resolution asserting that a carbon tax would be “detrimental” to American families and businesses. The measure, which could reach a floor vote later this year, is supported by nearly two dozen free-market advocacy groups but is viewed warily by Exxon Mobil Corp. and the API.

Floating Platform

Some lawmakers undertake fact-finding missions to the beaches of Cuba and Thailand, but the seven joining Scalise in April had a decidedly less glamorous destination: Chevron’s 75,000-ton Jack/St. Malo production facility. For just over a year, the platform has been sucking crude from rock 27,000 feet under the surface of the sea.

As a Sikorsky S-92 helicopter thudded over canals snaking through once-lush green marsh on the 90-minute trip to the platform, Scalise ticked off the benefits of offshore drilling. Salt water is eating away at Louisiana’s coastal wetlands and driving the disappearance of a football field worth of land every hour, he said. The state has vowed to dedicate its share of federal revenues from offshore oil and gas development to coastal restoration.

“Drilling in the Gulf of Mexico actually will help us restore these wetlands,” Scalise told his colleagues.

Once on the platform, where lawmakers donned hardhats and ear plugs, Scalise outlined the dangers of managing offshore drilling from Washington.

“When they’re drilling, things change dynamically; you want to be able to respond to it on the spot, you don’t want to be worried that you’re violating some federal regulation that’s unmanageable,” he said. “In the meantime, you get a blowout, and they’re going to blame you, and you say ‘Look, I’m trying to comply with the stupid rule.’”

Warm Crude

The issue might have been theoretical for some of the lawmakers who accompanied Scalise offshore. But cradling an 8-ounce vial of warm, freshly extracted crude oil -- and touching the top of the 24-inch pipeline that will ferry it 137 miles (220 km) away for refining -- brought it into focus.

“It’s different than just hearing about it. Actually coming to see it gives me a completely different perspective,” said Representative Marc Veasey, a second-term lawmaker from Texas and one of two Democrats on Scalise’s excursion. “To see what these guys do each and every day really makes you appreciate that we can go put gas in our tank and turn on the lights –- and the work that goes into making sure we have those things.”

Visiting oilfields and processing facilities is as valuable for freshman lawmakers from non-producing areas as it is for congressional veterans with major energy businesses in their districts, API’s Finkel said.

“When you better educate these folks who have been generally supportive, they become great ambassadors and can tell other members they’ve been there, they’ve seen it,” Finkel said. “The more members that are getting that first hand, practical life experience of seeing this stuff, that really carries a lot of weight when members are talking to one another.”

To contact the reporter on this story: Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Elizabeth Wasserman

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