DOI cuts most Alaska tracts in latest 2017-22 OCS leasing-plan move

The US Department of the Interior released a proposed final program (PFP) for the 2017-22 US Outer Continental Shelf oil and gas leasing that removed all tracts offshore Alaska. National oil and gas associations, other business organizations, and members of Alaska’s government immediately criticized the Nov. 18 action.

The PFP offers 11 potential lease sales in four planning areas—10 sales in portions of three Gulf of Mexico program areas that are not under moratorium and one sale offshore Alaska in the Cook Inlet program area. Sales in the Beaufort and Chukchi seas were removed after receiving extensive public input and analyzing the best available scientific data, DOI officials said.

“Given the unique and challenging Arctic environment and industry’s declining interest in the area, foregoing lease sales in the Arctic is the right path forward,” Interior Sec. Sally Jewell said.

Oil and gas industry association leaders disagreed. “Today’s announcement is a short-sighted decision that ignores America’s long-term energy security needs,” American Petroleum Institute Pres. Jack N. Gerard said.

“Our national energy security depends on our ability to produce oil and gas here in the US, and this decision could very well increase the cost of energy for American consumers and close the door on creating new jobs and new investments for years,” Gerard said. “We hope that the incoming administration will reverse this decision—consistent with the will of American voters.”

‘Politically expedient program’

National Ocean Industries Association Pres. Randall B. Luthi said, “The arrogance of the decision is unfathomable, but unfortunately not surprising.”

By following the same political calculus that resulted in the removal of Atlantic OCS Lease Sale 260 from the proposed program in March, “the administration has chosen a politically expedient agenda that bows to the wishes of antifossil fuel activists and has completely discounted the opinion of the people with the most at stake,” Luthi said (OGJ Online, Mar. 15, 2016).

In its announcement, DOI said the PFP makes available areas containing about 70% of the US OCS’s economically recoverable reserves. Independent Petroleum Association of America Pres. Barry Russell said it actually places more than 80% of offshore federal acreage—including Atlantic waters, the eastern Gulf of Mexico, and Alaska’s energy-rich waters—off-limits for future development.

Russell noted that the US Energy Information Administration has said that the US needs more energy, specifically oil and gas, to meet its future demands. “Instead, this administration is abandoning America’s energy potential and is threatening our role as a global energy superpower,” Russell said. “This final offshore program raises serious questions as to why this administration, at the 11th hour, chose to ignore recommendations by its own energy data agency.”

Other business organizations called elimination of the Beaufort and Chukchi sea tracts from the next 5-year OCS plan a serious mistake. “Today’s announcement limiting offshore energy production is one of the final nails in the coffin of the Obama administration’s antigrowth energy agenda,” said Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy.

“In doing so, [it] is ignoring the will of the American people who understand that offshore energy production is good for American jobs, economic growth, and energy security,” Harbert said. “In particular, this plan is an affront to the people of Alaska and the Gulf States, whose concerns have been ignored by this administration.”

National Association of Manufacturers Vice-Pres. of Energy and Resources Policy Ross Eisenberg said, “This was the wrong decision. The future of a strong manufacturing sector is inextricably linked to energy access. The final 5-year plan ignores that reality and slams the door on promising opportunities.”

‘Short-sighted policy’

“The administration’s final plan reflects its short-sighted policy of limiting access to oil and gas on federal lands,” the American Chemistry Council said in a Nov. 18 statement. “American manufacturers rely on secure and affordable energy supplies to compete globally, yet DOI has repeatedly withdrawn or withheld from development major portions of the OCS. Public lands are important suppliers of domestic energy, and any sensible long-term policy must include offshore resources.”

Alaska’s congressional delegation, who are all Republicans, condemned Interior’s decision to eliminate Beaufort and Chukchi sea lease sales from the 2017-22 federal OCS program. “President Obama is well aware that the vast majority of Alaskans want OCS development, and I am infuriated that he has once again ignored our voices to side with the factions who oppose it,” said Sen. Lisa Murkowski, who chairs the Energy and Natural Resources Committee.

“Why the president is willing to send all of those benefits overseas is beyond explanation,” Murkowski said. “And it is even more stunning that just one day after urging the new administration to stand up to Russia, he continues to cede leadership on Arctic energy production to them.”

Sen. Dan Sullivan said, “With this action, the Obama administration is once again capitulating to the demands of extreme environmental groups over Alaskans and their fellow Americans who want good-paying jobs, energy independence, and a strong economy. For nearly 8 years, this administration has given lip service to an ‘all-of-the above’ energy strategy, when their actions say the opposite.”

“Today’s announcement—politically driven and meant to appease the nation’s most extreme environmental groups—represents some of the worst decision making we’ve seen over the last 8 years,” said Rep. Don Young, who is a House Natural Resources Committee member.

Alaska’s government formally nominated the Beaufort and Chukchi seas and Cook Inlet for inclusion last month in the 2017-22 OCS management program that DOI’s Bureau of Ocean Energy Management was preparing (OGJ Online, Oct. 12, 2016). The action was necessary to assure that one lease sale in each area remain in the program, Gov. Bill Walker (I) said in a letter to Jewell.

‘Should have been easy’

Expressing disappointment with DOI’s latest decision, Walker said on Nov. 18 that the state government supports a plan that balance subsistence concerns with the need for economic development. “There is enough opportunity and protection in the plan that it should have been an easy decision to move forward with our proposal,” he said.

The state nominated the Beaufort and Chukchi seas to ensure Alaskans’ interests were protected in this process, Walker said. The nominations provided subsistence protection, as well as benefits under the Outer Continental Shelf Lands Act, he noted. “With the Trans-Alaska Pipeline System three-quarters empty, we must spur more oil production,” Walker said. “When Alaska became a state, the federal government mandated that we live off of our resources—but we must be able to access them.”

In Barrow, Arctic Slope Regional Corp. (ASRC), the state’s largest private employer, also said it was disappointed with DOI’s decision. “This plan ignores the needs and voices of the Inupiat who support responsible OCS development,” it said.

“Critical habitat designations, coupled with a ban on OCS development in the Arctic, will continue to endanger our communities with no regard for the future health of our people and region,” ASRC said. “This plan cripples our ability to answer the mandate from Congress under the Alaska Native Claims Settlement Act of 1971 which requires us to return benefits to our people.”

A spokesman for the Arctic Energy Center said, “Today’s announcement is a body blow for the Native communities, businesses, elected officials, military experts, and other Alaskans who repeatedly have pleaded with the White House to allow offshore energy development in the Arctic. Having been told that local views would take priority, they have now seen that the exact opposite is true and their wishes have been ignored in the name of legacy-building.”

The spokesman predicted, “As a result of this decision, people across Alaska will be looking to the Trump administration to quickly tear up the lease plan and implement an entirely new schedule, which includes the Arctic and helps secure the state’s future.”

Other groups also expressed hope that the incoming administration will be able to reverse DOI’s Nov. 18 2017-22 OCS program decision.

Contact Nick Snow at nicks@pennwell.com.

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Storm Impact Analytics for Utilities

In recent years, increasingly volatile and extreme weather events have significantly impacted the...

Reach New Heights: Six Best Practices in Planning and Scheduling

These 6 best practices have created millions of dollars in value for many global companies. Learn...

Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...