Process Begins to Open OCS to Exploration

American Association of Petroleum Geologists (AAPG)

The media had been buzzing all morning with news that the administration was planning to open additional areas of the outer continental shelf (OCS) to exploration and production as part of a new energy plan.

Flash bulbs popped as President Obama strode to the podium to announce his new energy initiative at Andrews Air Force base in Maryland on March 31. In his remarks, he acknowledged the decision to open additional offshore acreage to leasing was difficult.

“But the bottom line is this,” the president said: “Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.”

The president’s plan combined a bit of old and new business. First, it responded to legal concerns raised about the current 2007-12 five-year program and outlines the administration’s plans for a new 2012-17 five-year program. The five-year programs are the formal process the Minerals Management Service uses to plan and conduct oil and gas lease sales on the nation’s OCS.

It also announced aggressive new fuel standards for cars and light trucks; that the federal government was expanding its fleet of hybrid vehicles and plug-in electric hybrid vehicles; and that the Department of Defense was looking at opportunities to diversify away from fossil fuels.

In announcing the Administration’s strategy for the OCS, Interior Secretary Ken Salazar framed it in the context of “finally cutting America’s dependence on foreign oil, building a clean energy economy that is more secure and prosperous, and protecting our children from the dangers of pollution.

“But no single energy source is enough,” the secretary continued. “Oil. Gas. Coal. Nuclear. Sun. Wind. Geothermal. Biofuels. Hydropower. They all need to be on the table.”

The Department of Interior announced a preliminary revised program for the current 2007-12 five-year program that responded to the concerns raised by the District of Columbia Circuit of the U.S. Court of Appeals about the environmental analysis that had gone into inclusion of Alaska and Arctic regions in the original program (Washington Watch September 2009).

Interior conducted additional environmental sensitivity analysis to develop the revised proposal, looking specifically at the “the sensitivity to oil spills and other factors, such as sound and physical disturbance, and increased sensitivity due to climate change and ocean acidification.”

As a result of this analysis, the secretary made the following determinations:

  • Existing leases in the Chukchi and Beaufort will be honored, as will awards made in the 2008 Chukchi Sea lease sale. However, the secretary removed future lease sales in this region during the current five-year program.
  • The Cook Inlet sale in 2009 was cancelled for lack of interest, but a future lease sale will remain on the schedule.
  • The Bristol Bay area will not have a lease sale, and President Obama signed an executive order withdrawing Bristol Bay from future consideration during the term of his presidency.
  • Lease sales in Virginia and the central and eastern Gulf of Mexico will proceed according to plan, subject to standard reviews of environmental and military activity impact. The secretary plans to make a final decision on the Virginia lease sale by late 2011 or early 2012.

Interior opened a 30-day public comment period on the revised 2007-12 five-year program. After review of those comments, the secretary would issue the final program and the department would then work expeditiously with the D.C. district court to conclude the matter.

The newly proposed 2012-17 five-year program is the administration’s response to an extensive review of the OCS leasing program Secretary Salazar launched shortly after being confirmed. This review was prompted by an accelerated five-year program launched by the Bush administration in its final months in office, and which Salazar elected not to continue.

Instead, in its 2012-17 program the administration will:

  • Open the mid- and south-Atlantic areas. The North Atlantic remains closed.
  • Open a portion of the eastern Gulf of Mexico, subject to Congress lifting a moratorium on oil and gas activity in that part of the Gulf. The portion under consideration is 125 miles off Florida’s western coast, and according to the Interior department contains two-thirds of the area’s undiscovered, economically recoverable resource.
  • The Chukchi and Beaufort seas are open, with the administration expecting results and insights developed during the exploration and development of current leases to help inform the decision to proceed with future lease sales in these areas.
  • The Pacific Coast of the contiguous 48 states remains closed.

The inclusion of these areas in the announcement of the 2012-17 five-year program does not guarantee there will be lease sales, exploration or production in all of these areas. They still must clear the scoping hearings, environmental and other reviews.

But that process can now begin.

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