US Senate offshore leasing foes reaffirm opposition

Nick Snow
Washington Correspondent

WASHINGTON, DC, Apr. 20 -- US Senate Energy and Natural Resources Committee members from California, Florida, and North Carolina reiterated their strong opposition Apr. 19 to authorization of additional oil and gas leasing of the Outer Continental Shelf or related offshore activity.

But senators from other coastal states, including one who is not on the committee, expressed support for legislation authorizing a state to request a federal inventory of potential resources off its coast.

The exchanges came during a committee hearing on potential offshore resources that included discussions of wind, wave, and tidal technology. But oil and gas dominated the proceedings.

"We recognize there's a need to address energy production. But we're adamantly opposed to oil and gas drilling off our coast," said Sen. Mel Martinez (R-Fla.). "It is a fairly strong consensus among leaders from both parties. I realize that as technologies change, there's a temptation to view things differently. The people of Florida don't."

Sens. Diane Feinstein (D-Calif.) and Richard Burr (R-NC) said opposition to offshore oil and gas activity in their states is as strong as ever.

"But I do not want my opposition to preclude other states from reviewing their participation in moratoriums or withdrawals," Burr said. "They should have that opportunity."

Senators' comments
Sen. Lamar Alexander (R-Tenn.) said a bill he has cosponsored with Sen. Tim Johnson (D-SD) includes a provision under which a coastal state could request a federal offshore inventory (OGJ Online, Apr. 11, 2005). The measure also would instruct the Interior secretary to extend a state's boundary farther into the ocean and permit the US Minerals Management Service to issue leases for natural gas only.

"Federal law treats states differently in terms of onshore and offshore production. In Wyoming, if there is drilling on federal lands, the state gets 50% of the revenues. Offshore, if drilling is beyond 9 miles, the states get nothing. Our proposal would give states 9% of the revenues and another 12.5% as a conservation royalty," Alexander said. An adjacent state also could veto leasing if it could demonstrate that a rig or drillship could be seen from the state's coastline.

Sen. George Allen (R-Va.) said, "There's a lot of emotion on this issue." He is not on the committee but attended the hearing to support one of the witnesses, Virginia state Sen. Frank W. Wagner. A Republican from Virginia Beach, Wagner sponsored a bill that would have given state support to federal efforts to ease OCS leasing moratoriums. The bill was vetoed.

Other senators emphasized the importance of sending more offshore oil and gas revenues directly to coastal states, counties, and communities.

"We need to come up with a way that each state can produce what it can and what it wants and get a share equal to its contribution and not see it go into general federal revenues for every state," said Sen. Mary L. Landrieu (D-La.).

Sen. Lisa Murkowski (R-Alas.) echoed Landrieu's revenue-sharing concerns. "If we were to have offshore drilling off Alaska's coast, we would not enjoy the same share we have from our onshore production," she said.

Another witness, Louisiana Natural Resources Sec. Scott A. Angele, suggested that sharing more than 1% of federal offshore revenues with coastal states would encourage those states to pursue oil and gas development more aggressively.

"The federal government has proven that it has the ability to steer investment, as evidenced by deepwater drilling in the gulf and coalbed methane gas onshore," he said.

Sen. Pete V. Domenici (R-NM), the committee's chairman, said: "One of the principal objectives heretofore has been revenues to the federal treasury. I think the time is changing, and the concern should be how we better distribute the money to mitigate impacts, encourage conservation, and provide better assurances of safety and welfare. Simply put, I think we should decide where the money goes."

Referring to the Union Oil Co. spill in the Santa Barbara Channel off California, Feinstein said, "We are all too familiar with the consequences of what happened in 1969. . . Sen. Landrieu and I are poles apart on this, and Louisiana may have different needs than my state. But the [Gulf of Mexico Outer Continental Shelf] is a unique area, and we need to be careful."

Technological advances
Other senators and witnesses said it is time to recognize recent technological advances.

"When we began placing coastal areas off limits to energy development in 1981, many of the technologies we use today were not available, and perhaps not even imagined," noted Noble Energy Inc. Chairman and CEO Charles D. Davidson said in written testimony on behalf of the Domestic Petroleum Council and the Independent Petroleum Association of America.

James V. Watkins, a former energy secretary who currently chairs the US Commission on Ocean Policy, agreed.

"I believe that since the technology advances that have been made since the Santa Barbara blowout, we need to review our attitudes," he said. "Offshore production employees care about the environment, too."

Watkins said: "It's not just the risk. To stay on the same old issues, whether it's the spill off Santa Barbara or the Exxon Valdez or a tanker off the coast of France, is a mistake. We haven't had an energy policy since 1992. I think the actual [situation] changes over time, and the perception doesn't."

MMS Director Johnnie Burton called the OCS environmental record "exemplary and improving," noting that there hasn't been a significant OCS platform spill in 35 years.

"The MMS has worked diligently the past 20 years to create a framework for science-based decisions," she said. "It also has increased its inspection activities over 60% since 1999."

Burton said the OCS holds an estimated 60% of the country's oil reserves and 40% of its gas reserves. "However, there is concern that the last assessments occurred more than 25 years ago," she said.

Burton also said oil and gas producers are most qualified to determine if it's feasible to issue leases limited to gas.

"There are areas that are considered gas-prone," she said. "We are not currently authorized to issue gas-only leases. Gas and oil are statutorily tied under MMS authorization. The industry needs to let you know if it can produce only gas, and what would happen if oil was discovered. Would you ask them, for example, to reinject the oil?"

Feinstein and Martinez separately asked the MMS director if the federal government could buy back leases issued but not developed because of subsequent moratoriums. Burton responded that White House action would be needed to address leases off Florida but added that the administration has agreed to buy back 36 leases off California.

"We have been in negotiations the past 3 years to do so," she said. "The Justice Department is the lead negotiator. The problem is that its assessment and the companies' appraisals of what the leases are worth is so far apart that an agreement has not been reached."

Contact Nick Snow at nsnow@cox.net.

Related Articles

BHI: US rig count down in 14th straight week, loses 67 units

03/13/2015 The US drilling rig count plunged 67 units—64 on land and 56 targeting oil—to settle at 1,125 rigs working during the week ended Mar. 13, according...

USW, Shell reach tentative deal to end strike at US refineries

03/13/2015 Royal Dutch Shell PLC and the United Steelworkers union (USW) have reached a tentative bargaining agreement over pay, benefits, and health and safe...

Tillerson: Sound policies needed to buoy N. American energy revolution

03/13/2015 The US government needs to adjust its energy policies to ensure the country realizes all the benefits of the new era of energy abundance, said Rex ...

TAEP: Year of ‘dramatic contraction’ under way in Texas oil, gas employment

03/13/2015 The Texas Petro Index (TPI) dropped seven points to 299.6 during January compared with December, reflecting low crude oil prices, a falling rig cou...

Hazard seen behind North American rig upturn

03/13/2015 Wells not completed while oil prices are low might foreshorten recovery of North American drilling, even if the upturn arrives sooner than expected...

USGS: More data needed to grasp fracing’s water-quality risks

03/13/2015 More data and research will be necessary to better understand potential water-quality risks associated with US unconventional oil and gas resource ...

Afren reaches recapitalization agreement

03/13/2015 Afren PLC, London, has reached a recapitalization agreement with creditors that its interim managers say would, if approved by shareholders, preclu...

MARKET WATCH: NYMEX crude oil drops again on storage concerns

03/13/2015 Crude oil futures prices for April delivery on the New York market fell by more than $1/bbl to settle Mar. 12 at their lowest level since late Janu...

Perpetual Energy to sell West Edson for Tourmaline stock

03/13/2015 Perpetual Energy Inc., Calgary, has signed a definitive agreement to sell its joint interest share of West Edson in west-central Alberta to Tourmal...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected