Salazar defends proposed 5-year OCS plan before House panel

The US Department of the Interior proposed a 5-year Outer Continental Shelf program that concentrates on the central and western Gulf of Mexico after the 2010 Macondo well incident showed the oil and gas industry could not effectively handle a major incident and spill, Interior Secretary Ken Salazar told a US House committee on Nov. 16.

“It’s important for this committee, Congress, and the United States not to have amnesia about the Deepwater Horizon incident,” he told the Natural Resources Committee, adding that the central and western gulf are the best-known OCS areas with the most systems.

DOI kept working on a 2012-17 proposal amid calls to completely shut down OCS oil and gas activity following the 2010 accident that took 11 lives and set off a massive oil spill, Salazar said later in the hearing.

“At the end of the day, we know that developing oil and gas in the world’s oceans is not a risk-free activity. That’s why we’ve led the nation’s largest overhaul of its offshore oil and gas development regulations,” the secretary said. “Some members on my staff have worked 18 hr/day, 6 days/week, to make sure we have the right kind of leasing program where we can move forward.”

Committee Republicans were skeptical. Chairman Doc Hastings (R-Wash.) noted in his opening statement that both Congress and then-US President George W. Bush lifted decades-long US offshore drilling bans in 2008, creating new oil and gas leasing and development opportunities off the Atlantic and Pacific coasts.

Missed opportunities

“Unfortunately, these opportunities have been missed by this administration, he continued. “[It has] ignored the bipartisan will of both Congress and the American people to allow for new drilling off our coasts. The Obama administration’s draft plan only allows lease sales in areas that were previously open, and it indefinitely delays the Virginia lease sale scheduled to take place last year. With this, the president has effectively put the moratoriums back in place.”

Salazar said a lease sale off Virginia was not part of the proposed 2012-17 OCS program despite bipartisan support from its governor and most of its congressional delegation because the US Department of Defense raised significant questions about possible conflicts with military operations in the area. More time also is needed to evaluate potential resources along the Mid-Atlantic OCS with modern technology, he added. “We believe running seismic will help us develop information in an area when there’s been a dearth,” he said.

Committee member Robert Wittman (R-Va.) urged Salazar to move more quickly to resolve coordination issues DOD raised. “It seems to me these issues can be taken up in a fairly timely manner and not spread out over the next 5 years,” he told the secretary. “I have spoken to US Navy officials who say they would like to get moving on it.”

Salazar said in his prepared testimony that while most of the proposed 5-year OCS program’s lease sales are in the gulf, two have been proposed in the Arctic, “where we must proceed cautiously, safely, and based on the best science available.” The sales would not take place until late in the program so DOI can properly evaluate their potential impacts and assure that the necessary accident and spill response infrastructure is in place, he said.

Tommy P. Beaudreau, director of the new US Bureau of Ocean Energy Management, told the committee that the agency plans to spend millions of dollars for research on climate change, marine mammal migration, ocean currents, and other issues. “All of this information is necessary as development in the Arctic proceeds,” he said. “The scale of this development will depend on our evaluations. We will make those decisions at an appropriate time in the leasing schedule.”

Conditional permits

Another committee member, Niki Tsongas (D-Mass.), who mentioned that she has introduced a bill that would require companies drilling offshore to have a worst-case spill scenario as part of their plans, said that Shell Exploration Co.’s plan for its Arctic leases envisioned responses in August, when conditions would be most favorable. Beaudreau responded that Shell’s permits included a condition requiring it to satisfy BOEM that its spill response capabilities would be adequate in any season.

Deputy US Interior Sec. David J. Hayes also is overseeing a multiagency effort coordinating governmental agencies’ reviews of Shell’s drilling plans, BOEM’s director said. “There are challenging circumstances there,” he observed. “The regulations set a very high bar to spill response. Close attention must be paid to challenges in the Arctic.”

Other Republicans on the committee questioned whether companies would be willing to fund seismic research of areas presently not part of the proposed 5-year OCS program if lease sales aren’t scheduled. They also said that Salazar’s references to strong activity in the gulf ignored the fact decisions in previous administrations made it possible. “The average time period from a lease sale to first production is 9.5 years,” said Bill Flores (R-Tex.). “For this administration to take credit for current activity is remarkable.”

Salazar responded that oil and gas industry response to previous OCS lease sales also should not be overlooked. “It’s a shared accomplishment. The oil and gas production we’re seeing in the gulf is largely dependent on the discoveries the industry has made,” he said. “We see robust production going on in the gulf today. Our expectation is with 12 additional lease sales there in the next 5 years, more production will come on line.”

Contact Nick Snow at nicks@pennwell.com.

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