Planned offshore leasing review draws party-line questions

July 24, 2017
The Trump administration's intentions to consider opening more of the US Outer Continental Shelf to oil and gas leasing in a new management program it plans to develop drew equally strong support from Republicans and opposition from Democrats at a July 12 US House of Representatives Natural Resources subcommittee hearing.

The Trump administration's intentions to consider opening more of the US Outer Continental Shelf to oil and gas leasing in a new management program it plans to develop drew equally strong support from Republicans and opposition from Democrats at a July 12 US House of Representatives Natural Resources subcommittee hearing.

"The new program will allow for full consideration of the OCS in Alaska, the South and Mid-Atlantic, and the Gulf of Mexico. Communities along the Atlantic Coast in particular have long expressed interest in evaluating potential energy resources, and will have a voice in the leasing process," Energy and Minerals Subcommittee Chairman Paul Gosar (R-Ariz.) said.

"It is imperative we facilitate the seismic survey permitting in these areas, including off the Mid-Atlantic coast. Our leasing decisions should be determined by geology, not shifting partisan politics, Gosar said.

More US production also would increase security by reducing crude oil imports, Gosar said. "For instance, in 2016, decreased production in Alaska forced California to meet its energy demand by importing more than half its crude supply from foreign sources such as Saudi Arabia," he said.

But Democrats protested signs that the Trump administration might lease more blocks in more regions under a 2019-24 OCS management program it plans to develop. Members from East Coast districts expressed particular concern over moves since January to reverse a decision late in the Obama administration and allow the first oil and gas seismic testing in nearly 4 decades off Mid-Atlantic states.

The National Oceanic and Atmospheric Administration has estimated that more than 1 million tourism and recreation jobs now exist on the East Coast, said Alan Lowenthal (D-Calif.), the subcommittee's ranking minority member. "Think about that when you hear the industry-generated fantasies of 250,000 jobs if the entire Atlantic Seaboard was opened to drilling rigs," he said.

More jobs at risk

Lowenthal said, "Four times as many jobs would be at risk from the industrial facilities that would be built along the coast. Four times as many jobs would be at risk from the climate risk, the climate pollution, and pipeline spills that are at risk with offshore oil and gas. And four times as many jobs would be at risk if there was a catastrophic blowout like the one we saw in the Gulf of Mexico 7 years ago."

Several East Coast Democrats urged the administration to support development of energy from offshore wind turbines instead. "It is not surprising that [it] announced that it would fast-track permits for fossil fuel development offshore and on public lands but plans nothing similar for new energy technologies," said Nikki Tsongas (Mass.).

"Right now, it looks as if we're trying to prop up 20th century jobs as we move farther into the 21st century," added Darren Soto (Fla.).

But a US Department of the Interior official said during her testimony that it will be essential for the US to capitalize on its improved oil and gas outlook by producing more of its supplies. "By opening development of a new OCS management program, we will enhance opportunities to develop resources in the US. We will ensure public input throughout the process and maintain our ultimate commitment to safety," Acting Assistant Interior Sec. for Land and Minerals Management Katharine McGregor said.

"Dominance is defined as asserting authority or commanding from a superior position. Dominance does not stem from eliminating areas from future production," she said.

McGregor said US Interior Sec. Ryan Zinke's May 1 secretarial order directed the US Bureau of Ocean Energy Management to work closely with the National Marine Fisheries Service on a plan to expedite consideration of Incidental Take Authorization requests necessary for seismic surveys and other OCS activities. It also directed the agencies to develop and implement a streamlined permitting approach for privately funded seismic data research and collection to expeditiously determine the US offshore energy potential, she added.

Current information needed

"As we begin the important job of deciding which areas will be offered for exploration and development in a new program, information on what resources are potentially available is critical," said McGregor. "For this reason, we are moving forward with evaluation of the seismic permit applications for the South and Mid-Atlantic. The current data was collected 30-40 years ago. There have been many advances in technology since then, and we need to have a better understanding of the resources we manage for the nation."

Another witness argued that shooting fresh seismic along the Mid-Atlantic OCS poses too many risks to the marine life there and would not necessarily produce better information. Five applications to run 2D seismic surveys there are being reviewed, said Margaret S. Howell, who founded Stop Oil Drilling in the Atlantic (SODA) in Pauley's Island, SC, following an offshore oil and gas career that included work for Chevron Corp., Mobil Corp., and Marathon Oil Corp. in the US and the North Sea.

"Historically, 2D seismic alone is only successful in finding oil and gas 20-25% of the time. After the requested 2D surveys, seismic companies will be back asking for permits to run 3D seismic, a second blast of nonstop air-gun noise in our ocean. And 3D seismic only increases the odds of finding oil and gas to 40-50% of the time, in true wildcat exploration," she explained. "If seismic surveys were able to definitively find oil and gas, Royal Dutch Shell [PLC] would not have spent $7 billion on a dry hole in the Arctic 2 years ago."

A third witness agreed that new technology doesn't necessarily guarantee that oil and gas will be found, but suggested that it still should be deployed. "The body of evidence shows that there's no lasting damage to marine communities from seismic surveys," said James H. Knapp, an earth, ocean, and environment professor at the University of South Carolina at Columbia. "Informed decisions about offshore development potential can only be made with new state-of-the-art data."

The Gulf of Mexico experience shows that a successful OCS industry requires a blend of major oil companies and smaller independent producers working both competitively and cooperatively where the market forces determine what works best, according to Lori LeBlanc, offshore committee director at the Louisiana Midcontinent Oil & Gas Association. "A successful OCS industry also requires a federal regulatory regime in which operators are provided a high degree of clarity, predictability and certainty as they invest hundreds of millions of dollars in developing and producing our nation's energy," she said.

Michael Whatley, executive vice-president for Consumer Energy Alliance in Charlotte, NC, said development of a new offshore program for 2019-24 presents an opportunity to expand OCS leasing in the Arctic, the Gulf of Mexico, and the Atlantic. "To be sure, this is a long process. Assuming that these areas are ultimately included in the new program, additional environmental and public reviews, federal approvals, and business determinations will have to occur before any actual on-the-water activity takes place," he said, adding, "Given the long lead-times associated with development in new OCS regions, actual production would be unlikely to take place before the mid-2030s."

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.