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OCS Five-Year Plan Opens More Arctic, GOM to Leasing

U.S. Department of Interior (DOI) Secretary Ken Salazar Thursday offered the final version of the department's OCS [Outer Continental Shelf] Oil and Gas Leasing Program for 2012-2017, sticking to tried and true areas in the Gulf of Mexico (GOM) and holding out delayed possibilities in Alaska.

The proposed program was first unveiled last fall (see NGI, Nov. 14, 2011). As completed by DOI's Bureau of Ocean Energy Management (BOEM) it calls for scheduling 15 potential lease sales in six offshore areas, three of which comprise the GOM. Twelve potential lease sales would be held for the Western and Central GOM, and the portion of the Eastern GOM not currently under a Congressional moratorium (see NGI, Dec. 6, 2010).

The program also calls for three potential lease sales in offshore Alaska. Sales would be held for planning areas in the Cook Inlet and Chukchi Sea in 2016, while one initially proposed for 2015 in the Beaufort Sea is being put off until 2017. As announced earlier there are no sales scheduled for the Atlantic or Pacific Coasts.

"This is a good plan; it's a smart plan and it's an aggressive one," Salazar said. "Through this proposed five-year program we will make all of the highest resource areas that are currently acceptable and available in the U.S. [OCS] available for oil and gas leasing."

A 25-mile buffer zone along the coast of the Chukchi would be excluded from leasing, as would the Hanna Shoal and an area north of Barrow, AK, that has a very high subsistence value to Native Alaskan communities.

Salazar said the program has been submitted to President Obama and Congress for their approval.

BOEM Director Tommy Beaudreau identified three companies -- BP plc, ConocoPhillips and Royal Dutch Shell plc -- as having a significant interest in the potential lease sales in the Beaufort and Chukchi seas, but he declined to identify anyone interested in the Cook Inlet.

"We received significant interest at this time in that area," Beaudreau said. "In light of that interest, we will proceed with conducting the necessary environmental impact statement analysis of that area. Historically, interest in that area has been limited, but we're confident enough at this point in the industry's interest to move forward with the environmental analysis."

According to federal estimates, the offshore areas that would be available to oil and gas leasing under the program total 67.7 billion bbls of oil, 306.6 Tcf of natural gas and 122.3 billion boe, all of which are considered technically recoverable.

The oil and gas industry and its supporters continued their withering criticism of the plan, especially since it leaves the Atlantic and Pacific areas of the OCS off the table.

"This deeply disappointing 'no new access' plan does not reflect the comprehensive 'all of the above' energy policy touted by the administration, nor does it keep pace with the energy policies of foreign nations that are expanding their offshore access to develop badly needed oil and natural gas," said National Ocean Industries Association President Randall Luthi. "Taking the entire East and West coasts off the table and further delaying Alaska sales clearly shows this administration is not following its own advice to lessen our dependence on foreign sources of energy by bolstering production here at home."

Rep. Doc Hastings (R-WA), chairman of the House Natural Resources Committee, concurred.

"Today the Obama administration has announced a bleak future for American energy production by keeping 85% of America's offshore areas under lock and key and refusing to open any new areas to drilling," Hastings said. "This plan reimposes the drilling moratoria lifted in 2008, hurts job creation and keeps new areas of American energy production sidelined."

Meanwhile Salazar said federal regulators were in the final stages of reviewing Shell's proposal to drill up to six wells in the Chukchi Sea this summer, and added that it was "highly likely" Shell will be granted the necessary permits. Shell has been waiting for years to explore the Chukchi, having purchased leases in 2008 and investing $2.1 billion in the project.

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