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Interior's Atlantic Plan Called 'Empty Gesture'

The Interior Department last Wednesday released a draft programmatic environmental impact statement (PEIS) for seismic exploration in the Mid- and South Atlantic Planning Areas, the first step toward a survey of the oil and natural gas potential off the East Coast. However, the offshore industry was far from hopeful that the seismic survey would lead to a lease sale in the Atlantic in the near term.

Speaking at the headquarters of seismic firm Fugro Atlantic in Norfolk, VA, Interior Secretary Ken Salazar and Tommy Beaudreau, director of the Bureau of Ocean Energy Management (BOEM), said the PEIS would be finalized by the end of the year. Depending on the determination in the final EIS, they said seismic activity could begin in the Mid- and South Atlantic Planning Area as early as next year.

"There is significant interest in [carrying out] seismic exploration in the Atlantic. We have received already over 10 applications," Salazar said. He noted that the department plans to hold 15 hearings to receive comments on the PEIS in eight different states bordering the Mid- and South Atlantic Planning Area over the next two months.

This is a "welcome step," but "when it comes to oil and gas exploration, it appears the department has given the offshore industry a canoe with no oars, since there are no lease sales planned anywhere off the East Coast in the upcoming 2012-2017 OCS [Outer Continental Shelf] leasing plan," said Randall Luthi, president of the National Ocean Industries Association, which represents the entire offshore industry. The five-yer leasing program, which was released in November, was most noticeable for what it lacked -- a proposed lease sale off the coast of Virginia (see NGI, Feb. 13).

The American Petroleum Institute (API) echoed the sentiment. "This is a conversation starter that has been more than three years in the making, but the path forward remains unclear. Without an Atlantic coast lease sale in their five-year plan, the administration's wishful thinking on seismic research has no ultimate purpose," said API Upstream Director Erik Milito.

"This is political rhetoric to make it appear the administration is doing something on gas prices, but in reality it is little more than an empty gesture," he said.

Under Interior's seismic plan, individual oil and gas companies would contract with companies like Fugro Atlantic to obtain seismic data. The information could cost tens of million of dollars, said Beaudreau.

Luthi doubted that industry would shell out the money for seismic, given that there is unlikely to be exploratory drilling in the Atlantic OCS before 2018, at the earliest.

Virginia's offshore areas are not included in the current 2012-2015 OCS program. "If the [seismic] information that is developed allows us to move forward in a quicker time frame, we could always come in with an amendment...that would include it," Salazar said.

"Virginians want offshore development," said Virginia Secretary of Natural Resources Douglas W. Domenech. He noted that a recent statewide poll showed that 80% of Virginians supported offshore leasing. According to the BOEM, an estimated 37 Tcf and 3.8 billion bbl of oil are located offshore Virginia.

The House already has passed legislation that calls for Virginia to hold an offshore lease sale. If directed by Congress, a lease sale could be authorized earlier than 2018, despite its exclusion in the administration's 2012-2017 leasing plan.

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