DOI’s 2017-22 draft proposed OCS program includes Mid-Atlantic sale

The US Department of the Interior released a draft proposed 2017-22 Outer Continental Shelf management program that included 14 potential oil and gas lease sales in 8 planning areas, including one off South and Mid-Atlantic coastal states.

“Our proposal there is for 2021,” Interior Sec. Sally Jewell said. “That is the soonest that a lease sale could happen. We intentionally scheduled it late in the period so there would be enough time to gather the necessary information and resolve potential conflicts.” The draft calls for a 50-mile buffer zone to be established for that purpose, she said.

Its Jan. 27 release was the first step in a multiyear process that could see significant changes before it becomes final, Jewell told reporters. “It reflects the maximum possible amount,” she said. “During the 5-year period, we’ll work on more specific areas based on resource potential, industry interest, and concerns that are expressed. It becomes like a funnel that steadily narrows.”

In addition to one on the Mid-Atlantic OCS, the draft’s 14 potential lease sales include 10 in the western and central Gulf of Mexico and the portion of the eastern gulf not covered by moratoriums, and three off Alaska in Cook Inlet and the Beaufort and Chukchi seas.

Jewell said the Alaska sales also would occur near the end of the 5-year program to allow enough time to address safety, environmental, and other operating problems which emerged during Shell Offshore Co.’s 2012 attempts to develop its Beaufort and Chukchi seas leases it obtained 4 years earlier.

Activities in the 2017-22 period should not affect Royal Dutch Shell PLC and other producers’ leases from the 2008 sale, she emphasized. “Nothing we’re announcing affects Shell’s plans,” Jewell said. “It has valid existing leases, and we’re working very closely to make sure it operates in a safe and environmentally sensitive way.”

Obama withdraws areas

The draft was released simultaneously with US President Barack Obama’s permanent withdrawal from future oil and gas leasing consideration areas in the Beaufort and Chukchi seas, and the Hanna Shoal region of the Chukchi. Jewell said impacts would be minimal since four of the five areas were deferred previously.

Federal OCS areas off California, Oregon, and Washington were not included because of strong ongoing opposition by residents and governors of those states to new oil and gas activity there, she noted.

Responding to the announcement, US Senate Energy and Natural Resources Committee Chair Lisa Murkowski (R-Alas.) said the proposal and Obama’s withdrawal were more examples of the administration’s short-sighted thinking. “This administration is once again promising Alaskans that it will allow exploration sometime in the future—but not right now,” she said. “Promises will not fill the Trans-Alaska Pipeline.”

Other congressional GOP energy leaders also were critical. “While this plan is a welcome thaw in the administration’s drilling moratorium, it still doesn’t go far enough,” US House Energy and Commerce Committee Chairman Fred Upton (Mich.) said. “Too many of our nation’s energy resources remain under lock and key, and the administration is working to make it even more difficult to access some areas that are currently available.”

Oil and gas trade association officials expressed concerns. “The draft offshore leasing program proposed today completely ignores areas where oil and gas development could create more than half a million new American jobs and generate hundreds of billions of dollars for the government,” American Petroleum Institute Upstream Director Erik Milito said.

Independent Petroleum Association of America Pres. Barry Russell said that while IPAA felt the administration was taking steps in the right direction, it would rather see it keep all federal OCS areas open for exploration.

Encouraged and concerned

National Ocean Industries Association Pres. Randall B. Luthi said NOIA members were encouraged by DOI’s decision to further analyze the South and Mid-Atlantic areas, which have not been included in a leasing program for more than two generations.

“However, we remain disappointed that more areas that are currently off-limits were taken off the table for consideration as part of this 5-year program, and that the total number of lease sales has been reduced from the previous program rather than increased,” he continued. “We also are concerned by additional restrictions in the plan, like the 50-mile buffer zone off the Atlantic [coast].”

US Bureau of Ocean Energy Management Director Regina R. Hopper, who participated in the briefing with Jewell and Assistant Sec. for Land and Minerals Management Janice Schneider, reiterated that DOI is still early in the process of developing a final 2017-22 OCS management program. “The areas we are including are options we may exclude after receiving comments,” she said.

The proposal calls for a slightly different approach in the western, central, and eastern gulf areas available for leasing, Hopper said. Two sales would be held annually there instead of separate yearly sales in the western and central planning areas, she noted.

Schneider said that OCS oil and gas activities during 2017-22 would be governed by new regulations developed after the 2010 Macondo deepwater well blowout and crude oil spill. “We’re developing proposed rules that will upgrade blowout preventer and other requirements, and want to get them on the street as soon as reasonably possible,” she said.

Interior said it also would publish a notice that it is developing a draft environmental impact statement in conjunction with the draft proposed 5-year OCS plan. Comments on both will be taken for 60 days following their publication in the Federal Register.

Contact Nick Snow at nicks@pennwell.com.

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