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Zinke Orders Revamp of 2017-2022 OCS Oil, NatGas Leasing, Appoints Energy Counselor

Interior Secretary Ryan Zinke, in Houston on Monday to help kick off the 48th annual Offshore Technology Conference, signed orders implementing an "America-first" strategy, that directs a rewrite of the 2017-2022 Outer Continental Shelf (OCS) leasing plan. He also named an attorney as the first counselor for energy policy, who is to coordinate the department's immense oil and gas portfolio.

Borrowing staging frequently used by President Trump, Zinke signed two secretarial orders on a stage at the OTC, flanked by a couple dozen men and women wearing white hard hats and overalls who were said to work on offshore platforms. He also addressed attendees at an event hosted by the Consumer Energy Alliance.

"If you're in the oil and gas and energy segment in this society, the stars are lined up,” Zinke said. “We're going to make jobs; we're going to bring the economy ahead."

Secretarial Order (SO) 3550 implements the executive order (EO) signed by President Trump last Friday, which directed BOEM to rewrite the OCS leasing plan for 2017-2022 and reconsider several regulations governing offshore activities.

SO 3351 establishes the Counselor to the Secretary for Energy Policy, who would coordinate Interior's energy portfolio, which spans nine of the department's 10 bureaus. Vincent DeVito, an attorney who previously worked for the Department of Energy, was appointed to serve as the first counselor.

"Reorganizing the federal government also means identifying the best of the best in the private sector and using their talents to help achieve the goals and missions of the Department of the Interior; and that’s what we gain in Mr. DeVito," Zinke said. “Like President Trump and myself, Mr. DeVito recognizes that American energy resources create jobs and revenue and that we can both promote responsible energy development and protect traditional multiple use through responsible stewardship of our treasured public lands for future generations to come."

DeVito most recently was a partner at the Boston law firm of Bowditch & Dewey LLP. He is to advise on "all aspects of energy policy" and develop and coordinate "strategies, policies and practices that promote responsible development of all types of energy on public lands managed and administered by the department,” Zinke said.

The two orders, Zinke said, “will help cement our nation's position as a global energy leader and foster energy independence and security for the benefit of the American people, while ensuring that this development is safe and environmentally responsible.

"We will conduct a thorough review of the OCS for oil and gas exploration and listen to state and local stakeholders. We also will conduct a thorough review of regulations that were created with good intentions but have had harmful impacts on America's energy security."

Some areas long off limits to offshore exploration could remain that way, he said.

"We're going to look at it in a very pragmatic and scientific effort, and take the local voice into consideration, as we should," Zinke told reporters.

The revised OCS Leasing Program for 2017-2022 would give "full consideration" to leasing offshore Alaska, Mid- and South-Atlantic, and the Gulf of Mexico (GOM).

The original OCS leasing program for 2017-2022, finalized last November by the Obama administration, had, among other things, removed Alaska's Beaufort and Chukchi seas from the program. The Mid- and South Atlantic region was removed earlier last year from the final program following criticism by coastal communities, legislators and the military.

As in Trump's EO, Zinke directed BOEM to work with the Commerce Department's National Marine Fisheries Service to expedite authorization requests for seismic surveys, particularly for new or resubmitted permitting applications in the Atlantic.

"Why is seismic important? You can't know what's there unless you do seismic," he said.

In January the Obama administration had denied six pending applications to conduct airgun seismic surveys in the Mid- and South Atlantic Planning Areas of the Atlantic, citing the fact that no oil and gas lease sales were planned through at least 2022. The decision to deny the geophysical and geological permit applications was based on several factors, with the key to the denials based on the "diminished need" for additional seismic information.

Zinke on Monday also ordered "prompt completion" of the notice to lessees No. 2016-N01 issued last September, ending all activities to promulgate the proposed offshore Air Quality Control, Reporting, and Compliance Rule. Following industry criticism, BOEM in early January had extended a deadline by six months to implement the rules, designed to ensure OCS lease and grant holders are able to pay for decommissioning activities and remove offshore production facilities.

The order also directed BOEM and its twin agency, the Bureau of Safety, Environment and Enforcement, to review other rules and report their progress to Interior within 21 days.

"We're going to look at everything and make sure the policies are appropriate for each local community, rather than force a Washington-driven one-size-fits-all plan," Zinke said. "There's no predetermined map of development, but if there are areas that are acceptable, that have resources, and states and local communities support offshore development, we could include those area in the next five-Year program."

Also under consideration is a reorganization of the Interior Department, which may have functions divided by ecosystems that would report to a joint command. A possible restructuring plan could be ready by the end of summer.

In his speech, Zinke said OCS production currently accounts for about 18% of domestic crude oil and 4% of U.S. natural gas supply. In fiscal year 2016, federal leasing revenues for the OCS were about $2.8 billion in fiscal 2016, versus $18 billion in fiscal 2008, he said.

"That's a drop of more than $15 billion that would otherwise go to the Treasury or toward funding important conservation programs like the Land and Water Conservation Fund and the Historic Preservation Fund," Zinke said.

BSEE and BOEM "will play vital roles in this expansive energy policy" by strengthening staff to coordinate with industry and communities. "We are committed to fuller cooperation with the offshore industry and coastal communities to expand responsible energy development while holding industry accountable to strict safety and environmental protections."

According to Interior, only about 17 million of the 1.7 billion acres on the OCS are leased for energy development, with 4.4 million acres, or 885 blocks, producing oil and gas. Nearly all (97%) of all OCS leases now are in the GOM.

BOEM has estimated that the U.S. OCS has about 90 billion bbl of undiscovered technically recoverable oil and 327 Tcf of undiscovered, technically recoverable natural gas. The GOM, covering 160 million acres of the OCS, has an estimated 48.46 billion bbl of technically recoverable oil and 141.76 Tcf of technically recoverable gas.

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