We have provided incentives. When this administration took office, one of the first things we did was to extend the existing deep water royalty incentives.

As you know, these incentives have helped bring about the remarkable production in the Gulf of Mexico deep water frontier. Deep water oil production rose 535 percent between 1995 and 2002. Deep water gas production rose 620 percent over those same years.

There are now about 140 deep water discoveries of which about 86 are producing. This has helped to increase total offshore production from slightly less than 1 million barrels per day in 1995 to 1.7 million barrels per day in 2003.

We all recognize that operating in the deep water requires vision, planning and acceptance of risk, and the offshore industry deserves much credit.

It takes considerable business acumen to coordinate the multitude of partnerships required to afford the investment this kind of operating environment requires. We've recently seen some tremendously important examples of this partnering.

Late last year, for example, Anadarko and its partners unveiled the Marco Polo hub, the newest technological marvel that will make the deep waters more hospitable. The Marco Polo oil and gas production platform, the world's deepest offshore tension leg platform, was installed in 4,300 feet of water.

In November, Transocean Inc. and Chevron Texaco set a new world record when the drill ship "Discoverer Deep Seas" spudded an exploration well in 10,011 feet of water in the Alaminos Canyon Block 951 of Chevron Texaco's Toledo prospect in the Gulf of Mexico.

Likewise, another important partnership led by BP is investing more than $1 billion to develop the largest deep water pipeline system in the world. The BP's Mardi Gras transportation system is slated for completion in 2006. This system will serve several fields with many owners.

At 490 miles long and 28 inches in diameter, Mardi Gras will be the highest-capacity deep water pipeline ever built, with the capacity to transport more than 1 million barrels of crude oil a day, and 1.5 billion cubic feet of gas.

The interest in the deep water region is growing with every new discovery. Earlier this month, MMS announced that a record 12 rigs were working in ultra-deep water. This milestone demonstrates how industry continues to focus on new frontiers by overcoming significant technological hurdles.

If current trends continue, as much as 77 percent of daily oil production in the Gulf and 26 percent of daily gas production could come from the deep water Gulf of Mexico by 2006. We at the Interior Department pledge to do as much as we can to ensure we reach this goal.

At the same time, in January, we announced new incentives for development of deep gas under the shelf in the Gulf of Mexico. We expect the incentives to spur new production and save American consumers more than $5 billion during the next decade and create as many as 26,000 jobs.

We have already seen a positive response to these and earlier incentives. At last week's lease sale in the central Gulf of Mexico once again the offshore industry showed resolve by investing in domestic energy production. We view this as a very successful lease, with nearly $370 million in high bids from 83 companies.

While interest in the deep water and ultra-deep water was evident, the most noteworthy item was that 60 percent of the bids were on the shelf. The deep gas royalty relief incentive clearly had an impact on the sale, which reflected keen industry interest in deep gas in shallow waters.

Let me add that as we tackle these technological challenges of tapping into new reserves in the Gulf, we recognize that a strong research program is essential.

As you in industry develop new technologies to explore deeper water and drill deeper into the earth, we at Interior continue working to improve our understanding of the environment in which these activities will occur.

Over the last 20 years, MMS has funded more than $600 million in research. Currently, more than 200 research projects are underway in the Gulf of Mexico, Pacific and Alaska regions.

This year's research priorities include ultra-deep water risers, repair techniques for aging infrastructure, and oil spill response and recovery in Arctic conditions. This research promises to help boost both our energy production and our safety record in offshore waters.

In addition, we have initiated geological research and environmental studies concerning the potential for offshore methane hydrates. This may hold great promise for domestic gas production for future generations. With methane hydrates, we could have hundreds of years of natural gas supply.

According to the Energy Department, if only 1 percent of methane hydrate resources could be made technically and economically recoverable, the United States could more than double its gas resource base. You can imagine what that would mean to our energy security.

Our second goal related to the offshore industry is improving regulatory efficiency to reduce the uncertainty and costs of unnecessary and lengthy government processes.

To meet this goal, we have been working cooperatively with the National Oceanic and Atmospheric Administration to develop new regulations under the Coastal Zone Management Act to provide greater clarity, transparency and predictability for offshore operations.

In particular, we hope to establish clear requirements for applicants and provide a predictable consistency review process aimed at actual projects that may impact the coastal zone.

We also want to eliminate conflict and confusion between the statutory requirements of the Coastal Zone Management Act and the Outer Continental Shelf Lands Act, and maintain a proper balance between state and national interests.

We believe that these improvements will reduce the burdensome exposure to redundant processes faced by applicants, which give rise to costly and unproductive litigation.

In addition, the Minerals Management Service is working with industry representatives to establish effective mitigation to protect marine mammals while development proceeds.

As part of this effort, MMS is conducting a multiyear study to learn more about how sperm whales react to seismic operations and other manmade noise.

The study will provide data necessary for us to have informed consultations with NOAA under the Endangered Species Act and the Marine Mammal Protection Act. The final report will be issued by the summer of 2005.

On yet another front, we are taking steps to deal with the issue of multiple-use of submerged lands. There is little question that imports of liquefied natural gas will have to play a role in meeting the nation's natural gas needs.

We are working with the Coast Guard and other agencies to minimize conflicts with ongoing oil and gas operations.

For example, MMS signed the first Cooperative Agency Agreement with the Coast Guard last year as the permit review process proceeded for the Port Pelican and the Energy Bridge LNG projects.

This agreement allowed MMS to provide input into the National Environmental Policy Act review and to comment on the impact that these ports would have on OCS operations.

We recognize that the permitting of offshore LNG ports is a new activity on the OCS. There are questions about the jurisdiction of the OCS Lands Act and Marine Transportation and Safety Act when these two offshore uses come into conflict.

The Interior Department will continue to work with the offshore industry and consult with other departments to resolve potential conflicts.

The final goal related to the offshore industry is establishing and adhering to clear schedules to allow industry to plan their substantial investments. When we came into office, we recognized the importance of a reliable planning schedule with clear terms and conditions.

We resolved that when we issue a five-year plan, we will stick to it to give you the certainty you need. We have done that, and we will continue to do so in the future. You can be confident that a schedule is a schedule.

These are just some of the steps the administration has taken under the President's National Energy Policy. We are making good progress both onshore and offshore in boosting domestic energy production.

However, there is one area where we all need to do a better job if we are going to ensure our energy security. We need to educate the public better about the impressive environmental and safety record of the energy industry.

I believe at the current time, we have before us what school teachers call a "teachable moment." Energy is in headlines. Americans are beginning to sense that the time of cheap energy is behind us. We are paying record prices at the pump. Natural gas prices have also skyrocketed in recent months. Factory jobs are being lost overseas to places where natural gas costs a tenth of its U.S. price.

In short, consumption is up, and supply is not keeping pace. According to the Energy Information Administration, natural gas consumption is expected to increase by as much as 40 percent by 2025.

During this time, we are engaged in a communications battle that we have too often lost in the past. For too long, opponents of responsible offshore energy production have used the memory of a spill 35 years ago to mislead the public about offshore production today.

It is like holding the automobile industry accountable for a design flaw in a1960s automobile and ignoring the enormous advances in technology and safety since.

We need to let the public know that we have a proven record of producing domestic energy in a way that is environmentally safe.

We need to let people know that over the past 20 years, less than one one-thousandth of a percent of the oil produced in the U.S. waters has been spilled. We need to let them know that natural seeps introduce about 150 times the oil into the environment, compared to offshore operations.

We need to let them know about the National Academy's recent publication "Oil in the Sea." It reported that roughly 63 percent of oil in the sea comes from natural seeps and 32 percent from river runoff, cars and small boats.

About 4 percent comes from tanker transportation and movement of imported oil. Only 1 percent comes from domestic offshore operations.

We need to let them know that the offshore industry has an exceptional employee safety record, even though unfortunately once in a while there are accidents we cannot prevent. The most recent MMS and Bureau of Labor statistics indicate that the offshore industry's injury and illness rate is about 70 percent lower than all of private industry.

I know that many of you have carried this message in the past. But the public still has little understanding that decisions made about supply availability have significant economic consequences. Factory workers creating chemicals and plastics don't realize that offshore energy decisions may determine whether their jobs are exported overseas. They don't understand declining production from existing fields.

You and I know these things. We've got to get the message out to the homeowner who has seen his natural gas bill double or triple in the last year. We've got to get it out to the motorist who now pays $40 to fill up the tank rather than $25.

We've got to get the message out to the businessman who is watching costs skyrocket and profits drop because of higher energy costs. The audience is listening. We've got the message. We need to tell our story.

The President has given us a blueprint to follow with his national energy policy. Offshore energy production is an important component of that blueprint. Working together, we can tell our story. We can fulfill the promise.