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Trade Associations Urge Feds to Expand Offshore Leasing Areas

The heads of three oil and natural gas trade associations said they would use the first of several public scoping meetings as a platform to urge federal officials to expand the areas under consideration for offshore oil and gas leasing.

Last month, the Department of Interior's Bureau of Ocean Energy Management (BOEM) released a draft proposed program (DPP), the first stage of its Five-Year Outer Continental Shelf (OCS) Oil and Gas Leasing program to cover 2017-2022 (see Daily GPI, Jan. 27). The first public meetings to discuss the plan were held Monday in Washington, DC, and Fairbanks, AK, with additional meetings scheduled through March 11.

The DPP calls for scheduling 14 potential lease sales in eight OCS planning areas:

  • 10 in the three Gulf of Mexico (GOM) planning areas;
  • One sale each in the Beaufort Sea, Chukchi Sea and Cook Inlet Planning Areas in offshore Alaska; and
  • One sale in a portion of the combined Mid-Atlantic and South Atlantic Planning Areas.

At a press conference held before Monday's scoping meeting, Jack Gerard, CEO of the American Petroleum Institute (API), said the United States has a chance to become a world energy leader, but not if the federal government keeps 87% of the offshore closed to oil and gas leasing.

"These meetings will only focus on the narrow confines of what the Obama administration proposed in late January," Gerard said. "We're only able to comment on what the first draft proposal is, and therefore are concerned that it's being limited as we even start the dialogue."

Gerard cited studies that show 840,000 jobs could be created and more than $200 billion raised for the federal government if oil and gas development were allowed in the Atlantic Ocean, the Pacific Ocean and the eastern GOM.

"By ignoring the latter two areas, the administration has already turned its back on most of the potential jobs that could be created," Gerard said. "In the Atlantic, [BOEM] has proposed just a single lease sale in the next five-year program. I might add that [Interior] Secretary [Sally] Jewell was quick to say that that may even be canceled. But that's not a certainty. Exploration and production in Alaska is also being restricted both on and offshore."

According to Gerard, recent public opinion polls show support for offshore oil and gas development, and that respondents do not believe the federal government is doing enough to make that happen.

"Voters have experienced first-hand, at the gas pump, the benefits of plentiful supply," Gerard said. "We must maintain this momentum, even as we pursue new markets abroad through the opportunities of exports. Access to the resources is key to both. This is America's energy moment, but the moment will pass unless our elected leaders allow more exploration and production of our abundant oil and natural gas resources both on and offshore.

National Ocean Industries Association (NOIA) President Randall Luthi said the scoping meetings "begin a new opportunity and a challenge" for the offshore energy industry.

"With one hand, the DPP appears to support increased job, economic and energy opportunities by opening up the Mid-Atlantic and South Atlantic for further analysis and possible lease sale," Luthi said. "But on the other hand, the DPP slams the door on industry...It adds questionable limits, such as the 50-mile buffer zone off the Atlantic, reduces the areas available for further analysis in the Beaufort and Chukchi seas, and omits other offshore from consideration altogether.

"The DPP effectively keeps about 87% of the offshore areas locked away. And this has been the case for decades. The administration has missed the chance to include additional OCS areas in the plan. We do look forward to increased opportunity in the Atlantic, but we are disappointed that so much of the OCS will remain closed, without the possibility of finding out if there are valuable resources in these areas. We strongly urge BOEM to keep all areas currently in the DPP in the next draft version of the program, including the proposed Atlantic Lease Sale No. 260."

Barry Russell, CEO of the Independent Petroleum Association of America (IPAA), said the Obama administration was "taking small steps in the right direction" with the areas being offered for leasing so far.

"We strongly urge the Interior Department to open up all the offshore areas to make them available to exploration," Russell said. "Opening these new areas to exploration will provide us with much needed knowledge. Today we don't know the extent of what resources lie beneath those waters. As Americans, all of us own those resources and deserve the right to know and to use sound science to make sure that we have the full potential of our offshore oil and natural gas reserves.

"This proposed five-year plan represents an opportunity for the Obama administration to put a much more robust plan in place, one that opens up new vital offshore areas and best utilizes the energy resources we have right here at home."

Luthi said the "main thrust" for the NOIA at the scoping meeting would be for the BOEM to not remove any areas up for consideration for leasing.

"We're happy for the little bit [BOEM] put in, and we're going to keep supporting them on this effort," Luthi said, adding that members of Congress are expected to attend the meeting, too. "We'll take the opportunity to educate those members of Congress who might be paying attention. Maybe there's an opportunity, if the plan goes forward, for Congress to get involved in actually opening up some of these areas that really make a lot of sense, particularly work with the eastern GOM."

Gerard pointed to the efforts of the Outer Continental Shelf Governors Coalition, which includes the governors of Alabama, Louisiana, Mississippi, North Carolina, South Carolina and Virginia.

"If you look up and down the Atlantic, you see strong bipartisan support in both our federal elected officials and their governors," Gerard said. "We're seeing the opportunity for the United States to become energy secure while also having the potential to expand into the market places we have not been for many years. And that raises issues like crude exports that we really haven't had the need to consider in this country for 40 years. But this is a unique window and it gives us a chance to really increase our security, our job creation, our revenue. It's a multiple winner across all fronts, and I think more and more people are seeing that."

During a Q&A session, Gerard disagreed with the suggestion that discord between Democrats and Republicans in Washington would stymie offshore development.

"I don't think we have as stark of a partisan divide as we've had in the past," Gerard said. "You might see a little bit more reflected in the [Senate Committee on Energy and Natural Resources]. And candidly, as you know the leadership of the parties has a big say in who sits on which committees. But I would use the Keystone XL pipeline vote as an example as to why I believe there is actually growing bipartisan support for oil and natural gas development...you had nine Democrats join all of the Republicans” in backing the pipeline.

"Even though within subsets of the Senate or the House you might have one committee or another that might be a little more partisan, when you look at it overall, I think we're seeing growing support."

Luthi added that the coastal states are advocating for a revenue sharing agreement, much like one that has been proposed by Sen. Lisa Murkowski (R-AK), chairman of the Senate Energy Committee.

"It certainly is important for the coastal states to have some type of revenue sharing," Luthi said. "They've told us that time and time again. That's an important source of revenue for them. It's a way they can better use and take advantage of the resources that are made available.

"It's up to Congress [to decide] how that's divided up, but we've always been supportive of a reasonable, sensible plan to share that revenue with the states."

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