Second Mid-Atlantic sale needed in next OCS plan, House panel told

The US Department of the Interior should schedule a second Mid-Atlantic Outer Continental Shelf oil and gas lease sale—and hold it earlier than in 2021—as it prepares its final 2017-22 OCS management plan, witnesses told a US House Natural Resources subcommittee.

“The timing and number of lease sales in the Mid- and South Atlantic planning areas increase investment risk for both the oil and gas producers and the states,” North Carolina Gov. Pat McCrory (R) told the Energy and Mineral Resources Subcommittee on Apr. 15. “At least two lease sales, including one in the 2018-19 timeframe, are necessary.”

Mark Shuster, executive vice-president for upstream Americas exploration at Shell Oil Co., said, “For frontier areas, like the Atlantic, holding one sale early in the program and one later will allow companies to continue evaluating the resource in calculated stages, which is a lengthy process.”

Robert Hobbs, chief executive at Houston geophysical services company TGS, said, “Because the first sale is not planned until 2021 and only one is scheduled, [the US Bureau of Ocean Energy Management] has lost any flexibility if the sale is postponed for any reason.”

But Abigail Ross Hopper, director of BOEM, which oversees OCS leasing, noted that more time is needed to complete fresh seismic surveys, ensure activity does not interfere with US Department of Defense operations, and develop the necessary industry infrastructure.

“The decision to offer one lease sale in the Atlantic is predicated on its being a frontier area where there hasn’t been a sale since 1983,” Hopper said. “We believe it’s important to understand the resource before having a sale.”

Engaging stakeholders

This involves more than simply transplanting well-established policies from the Gulf of Mexico, Hopper said. “We’ve tried to engage stakeholders up and down the East Coast about not only leasing, but also seismic surveying. [DOD] also will be involved.”

Hopper said BOEM’s July 2014 Record of Decision for the programmatic environmental impact statement for Atlantic seismic activities includes stringent mitigation measures to protect marine life and the environment.

She said, “Several permits are currently under BOEM’s consideration for conducting G&G surveys that, if approved, will provide critical new information to inform potential future leasing decisions.”

Hopper said the draft proposed plan’s single Mid-Atlantic sale would be for areas at least 50 miles off the coasts of Virginia, North Carolina, South Carolina, and Georgia. The buffer is intended to minimize multiple use conflicts, such as those from DOD and the National Oceanic and Atmospheric Administration, as well as renewable energy activities, commercial and recreational fishing, critical wildlife habitat needs, and other environmental concerns, she said.

But McCrory questioned whether a buffer that only Virginia requested would work for all four states. “I believe it has unique characteristics which make this necessary, but that’s not the case in North Carolina,” he testified. “A one-size-fits-all inclusion zone is not the way to protect marine animals and minimalize conflicts.”

Certainty is needed

North Carolina’s governor also said states need more certainty to budget and plan for future infrastructure needs. “Onshore infrastructure such as roads, ports, and processing systems require substantial investment and take many years to develop,” he said.

McCrory listed many Mid-Atlantic state and local officials who support offshore oil and gas development. Emilie F. Swearingen, a member of Kure Beach, NC’s, town council, opposes it. Oil spill impacts would be devastating and long-lasting, she warned. “But there’s a greater potential harm, and that’s industrialization,” Swearingen said. “The land-based infrastructure for offshore drilling is not pretty. Our coastal economy depends more on tourism.”

But Chett C. Chiasson, the Greater Lafourche Port Commission’s executive director, said the Louisiana community of Port Fourchon has benefited significantly from the gulf’s offshore oil and gas industry without losing its recreational appeal.

“We’re a fishing community first, and have grown into servicing the oil and gas industry, particularly deepwater,” he said. “When I look at what it has brought, I think it’s beautiful.”

Chiasson said Hampton Roads, Va., officials came to his community following similar visits over the years from government and industry representatives from Florida, South Carolina, and Alaska.

Would welcome opportunity

“Just as there are communities across the country that have benefited from the recent boon of onshore energy production, coastal communities [would welcome] the opportunity for economic benefits of increased employment, educational development, revenues and the like,” he said.

Offshore oil and gas activity also places public service burdens on local counties and communities, he said. “It’s critical for states with such activity off their shores to be able to share in federal oil and gas revenue,” Chiasson said.

Shuster said more parts of the OCS need to be opened as prospects in the central and western gulf dwindle. At the very least, he said the next OCS 5-year program should include an eastern gulf lease sale to be held if Congress removes a moratorium that’s in place. Leasing actually could occur sooner and with more certainty there than in the Mid-Atlantic because the infrastructure already exists, Shuster suggested.

Contact Nick Snow at nicks@pennwell.com.

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