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Interior Takes First Step to Formulate 2017-2022 OCS Lease Sales

The Department of Interior on Friday took the initial step to develop the next schedule of potential offshore oil and natural gas lease sales from 2017-2022, a multi-year process to evaluate all of the Outer Continental Shelf (OCS) planning areas.

Interior Secretary Sally Jewell and Acting Bureau of Ocean Energy Management (BOEM) Director Walter Cruickshank jointly made the announcement in what they said would be a "robust public engagement process" to develop the next schedule of offshore lease sales. A notice, published in the Federal Register, begins a 45-day period for a request for information (RFI) and comments on preparing the OCS oil and gas leasing program. The notice does not identify any specific course of action. All of the planning areas are to be reviewed in the first stage.

"Substantial public involvement and extensive analysis will accompany all stages of the planning process, which will take up to three years to complete," Jewell said.

"The development of the next five-year program will be a thorough and open process that incorporates stakeholder input and uses the best available science to develop a proposed offshore oil and gas program that creates jobs and safely and responsibly meets the energy needs of the nation." The publication Friday "marks the first step of engaging interested parties across the spectrum to balance the various uses and values inherent in managing the resources of federal offshore waters that belong to all Americans and future generations."

The OCS leasing plan now in place was published in mid-2012 and extended to 2017 (see Daily GPI, June 29, 2012; Dec. 18, 2012). That plan proposed 15 lease sales in six offshore areas, including three in the Western and Central Gulf of Mexico (GOM), and the portion of the Eastern GOM not under a Congressional moratorium (see Daily GPI, Dec. 2, 2010). The program also included three potential lease sales in Alaska's Cook Inlet, Chukchi and Beaufort seas. No sales were scheduled for the Atlantic or Pacific coasts.

The OCS Lands Act requires the Interior secretary, through BOEM, to prepare and maintain a schedule of proposed lease sales in federal waters, indicating the size, timing and location of auctions that would best meet national energy needs for the five-year period following its approval. In developing the program, the secretary is required to achieve" an appropriate balance among the potential for environmental impacts, for discovery of oil and gas, and for adverse effects on the coastal zone."

"In issuing the RFI, BOEM does not propose to schedule sales in particular areas, or make any preliminary decisions on what areas will be included in the schedule," said Cruickshank. "Rather, the RFI provides an opportunity for interested parties to submit comments and suggestions about the potential for leasing and to identify environmental and other concerns and uses that may be affected by offshore leasing."

BOEM wants to consider a "wide array of input" on the "economic, social and environmental values of all OCS resources, as well as the potential impact of oil and gas exploration and development on other resource values of the OCS and the marine, coastal and human environments."

With the information received, a draft proposed program would be prepared by BOEM, followed by a proposed program and a proposed final program. At the same time, BOEM would prepare a programmatic environmental impact statement, as required by the National Environmental Policy Act, to evaluate the potential environmental impacts of various OCS leasing alternatives under the proposed program and to help inform decisions on the proposed final program.

BOEM has held five sales thus far in the 2012-2017 program, including annual auctions in the Central and Western GOM and a single sale in the portion of the Eastern GOM. The five auctions have offered more than 60 million offshore acres, with 4.3 million leased, generating more than $2.3 billion in high bids.

A sixth lease sale scheduled for August is to offer 21 million acres in the Western GOM (see Daily GPI, April 15). Offshore Alaska, the current five-year program, bedeviled by lawsuits filed by conservation groups and stakeholders, still includes one potential sale each for the Chukchi Sea, Beaufort Sea and Cook Inlet.

BOEM manages about 6,200 active OCS leases, mostly in the GOM, that cover more than 33 million acres. Of those, 1,064 are producing leases covering 5.2 million producing acres -- the highest acreage under production since 2008. In 2013, OCS oil and gas leases accounted for about 18% of domestic oil production and 5% of U.S. natural gas production.

Industry groups wasted no time in offering their take on the Interior plan.

"Opening new areas like the Atlantic and eastern Gulf of Mexico would send a signal to the markets and to the world that America's oil and natural gas renaissance is here to stay," said American Petroleum Institute Senior Policy Adviser Andy Radford. "America's long-term energy security can only be ensured with a lasting commitment to expanding oil and natural gas development both on and offshore."

National Ocean Industries Association (NOIA) President Randall Luthi called the announcement "a long anticipated first step toward what could mean more jobs, energy and revenue to the people of the United States." The current program expiring in 2017 "included no new access, and has put the U.S. far behind many other nations that are actively pursuing offshore oil and natural gas energy development, particularly in the Atlantic basin and the Arctic...

"Canada, Mexico, Venezuela, Brazil, Norway, Russia, Cuba and West African nations are examples of countries actually moving ahead with Atlantic and Arctic offshore exploration and development plans. Contrast that with the United States, where almost 87% of the Outer Continental Shelf has been off limits for decades to even geophysical and geological surveys, let alone exploratory drilling."

Friday's action "is a crucial, but still only a first, step in truly adopting an all the above energy policy," said the NOIA chief.

Sen. Mary Landrieu (D-LA), chair of the Committee on Energy and Natural Resources, said offshore exploration had helped to fuel the U.S. energy revolution and positioned the country "to become an energy superpower...We need to open more areas to offshore oil and gas exploration, not fewer. We need to press forward, not scale back."

The new five-year plan also offers a unique opportunity to close the revenue sharing gap between coastal and inland states, Landrieu said. A bill she helped to enact in 2006 allowed coastal states to share in some of the nearly $7 billion in revenues produced every year.

"This new five-year plan offers us the opportunity to build upon that success by accelerating the payment, lifting the arbitrary $500 million cap on Gulf Coast states, and allowing all coastal states to share the revenues they produce off their shores."

Under the RFI published Friday, BOEM will accept comments until July 30 on its website. Online comments may be submitted by clicking on BOEM's "Open Comment Documents" link. Written comments may be sent to Ms. Kelly Hammerle, Five-Year Program Manager; BOEM; 381 Elden St.--HM-3120; Herndon, VA 20170.

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