Obama puts US Arctic, Atlantic OCS off-limits to oil, gas activity

US President Barack Obama closed 3.8 million acres off the US North and Mid-Atlantic coasts and 115 million acres in the US Arctic Ocean to future oil and gas activity. The president made his Arctic move in coordination with Canada in a joint announcement with Canadian Prime Minister Justin Trudeau, who took similar steps with his country’s Arctic offshore area.

Obama withdrew the US Outer Continental Shelf areas on Dec. 20 under Section 12-A of the 1953 Outer Continental Shelf Lands Act (OCSLA), which a few of his predecessors used for significantly smaller areas and with time limits. He acted to preserve what he considered vulnerable, sensitive environmental areas from potential hazards he believes oil, gas, and other mineral operations would pose, administration officials said.

“The president’s bold action recognizes the vulnerable marine environments in the Arctic and Atlantic oceans, their critical and irreplaceable ecological value, as well as the unique role that commercial fishing and subsistence use plays in the regions’ economies and cultures,” US Sec. of the Interior Sally Jewell said.

“The withdrawal will help build the resilience of these vital ecosystems, provide refuges for at-risk species, sustain commercial fisheries and subsistence traditions, and create natural laboratories for scientists to monitor and explore the impacts of climate change,” she maintained.

Oil and gas trade association officials quickly criticized Obama’s action. “President Obama’s short sighted, unilateral withdrawal of Atlantic and Arctic Ocean areas from future oil and gas leasing not only risks the long-term energy security and energy leadership position of the United States, it violates the letter and spirit of the law,” National Ocean Industries Association Pres. Randall B. Luthi said.

He said that a withdrawal this expansive—particularly since it’s being portrayed as permanent—violates OCSLA’s declaration that the OCS is “a vital national resources reserve held by the federal government which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other national needs…”

‘The wrong direction’

American Petroleum Institute Upstream Director Erik Milito said, “Our national security depends on our ability to produce oil and natural gas here in the United States. This proposal would take us in the wrong direction just as we have become world leader in production and refining of oil and natural gas and in reduction of carbon emissions.

“Blocking offshore exploration weakens our national security, destroys good-paying jobs, and could make energy less affordable for consumers,” he continued. “Fortunately, there is no such thing as a permanent ban, and we look forward to working with the new administration on fulfilling the will of American voters on energy production.”

Daniel T. Naatz, senior vice-president of government relations and political affairs at the Independent Petroleum Association of America, found Obama’s actions puzzling since the US Energy Information Administration and international data analysis have said that oil and gas demand will continue to grow until 2040 and beyond.

“We disagree with this last-minute political rhetoric coming from the Obama administration and contest this decision by the outgoing administration as disingenuous,” he said. “With exactly one month left in office, President Obama chose to succumb to environmental extremists demands to keep our nation’s affordable and abundant energy supplies away from those who need it the most by keeping them in the ground.”

Lucas Frances, a spokesman for the Arctic Energy Center, called Obama’s attempt to close the Arctic offshore to future oil and gas activity “deeply frustrating, and one that will mean a bleak economic future for Alaska.”

Noting that the White House cited a lack of industry interest in the Arctic for removing nearly all of the region from the 2017-22 OCS leasing program that’s being developed (OGJ Online, Nov. 21, 2016), he said that an Alaska state lease sale on Dec. 14 received 410 bids from companies and investors for tracts in the Beaufort and Chukchi Seas.

Risks not worth taking

Administration officials said that Obama’s Arctic withdrawals encompassing all of the Chukchi Sea and significant portions of the Beaufort Sea would protect marine mammals and other resources on which many Alaska Native communities rely for subsistence and cultural traditions.

“Risks associated with oil and gas activity in the remote, harsh and undeveloped Arctic are not worth taking when the nation has ample energy sources near existing infrastructure,” said Abigail Ross Hopper, the director of Interior Department's Bureau of Ocean Energy Management. “Oil spill response and cleanup raises unique challenges in the Arctic and a spill could have substantial impacts on the region, particularly given the ecosystem fragility and limited available resources to respond to a spill.”

She said the withdrawal does not affect existing leases in these federal offshore waters and would not affect a near-shore area of the Beaufort Sea, totaling about 2.8 million acres, that has high oil and gas potential and is adjacent to existing state oil and gas activity and infrastructure.

While there are significant concerns about oil and gas activity occurring in this area, it will be subject to additional evaluation and study to determine if new leasing could be appropriate at some point in the future, Hopper said.

In their Dec. 20 US-Canada Joint Arctic Leaders Statement, Obama and Trudeau said they were launching joint actions “ensuring a strong, sustainable, and viable Arctic economy and ecosystem, with low-impact shipping, science-based management of marine resources, and free from the future risks of offshore oil and gas activity. Together, these actions set the stage for deeper partnerships with other Arctic nations, including through the Arctic Council,” the statement said.

“In the coming weeks, a new Congress will be sworn in and a new president will assume office,” Consumer Energy Alliance Pres. David Holt said in Houston. “That transition will hopefully provide an opportunity to undo today’s irresponsible and irrational action and replace a misguided ‘just say no’ approach to energy with common-sense policies that recognize that offshore energy development and environmental stewardship can be done successfully and do in fact coexist. The nation’s energy, economic, and environmental security depends on it.”

Contact Nick Snow at nicks@pennwell.com.

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