DOI announces proposed final 2012-17 OCS leasing program

July 9, 2012
The US Department of the Interior released its proposed final 2012-17 US Outer Continental Shelf leasing program that it said makes areas with the most likely recoverable oil and gas resources—including tracts off Alaska's Arctic coast—available over the next 5 years.

The US Department of the Interior released its proposed final 2012-17 US Outer Continental Shelf leasing program that it said makes areas with the most likely recoverable oil and gas resources—including tracts off Alaska's Arctic coast—available over the next 5 years. Oil and gas industry associations immediately said the program fell short by not including any new regions.

"This is a good plan. It's a smart plan. It's aggressive," Interior Sec. Ken Salazar told reporters. "This program will make all the high-potential areas available. It includes 15 potential lease sales in 6 offshore areas in the Gulf of Mexico and off the coast of Alaska. The guiding principle was to develop a program that is regionally tailored and accounts for each region's distinct needs." The proposed final plan will be submitted to Congress for 60 days for review and recommendations, after which the secretary can make it final.

Salazar and Tommy P. Beaudreau, director of the US Bureau of Ocean Energy Management, emphasized that a targeted approach would be used in Alaska's Arctic offshore areas that would differ from the area-wide leasing planned for the central, western, and portions of the eastern Gulf of Mexico that have not been congressionally deferred.

"The western and central gulf are still the crown jewels of the US OCS," Beaudreau said. "In light of the mature infrastructure to bring resources to market and respond to emergencies, we scheduled alternating area-wide sales in alternate years. We also scheduled two sales in the eastern gulf area that has not been congressionally deferred."

Offshore Alaska, particularly in the Chukchi and Beaufort seas, requires more study not just of potential resources and their extent, but also of potentially conflicting environmental conditions and existing native subsistence activities, he continued. "We have set forth targeted leasing for areas of the Alaskan Arctic, specifically developing information about resource potential and lining it up against environmental and cultural requirements," Beaudreau said.

Cautious approach

"We are taking a cautious approach to leasing in the Arctic that accounts for [its] unique environmental resources and the social, cultural, and subsistence needs of Native Alaskan communities, and draws from the best available science as well as any new information that we may learn from activity on current leases," Salazar said.

"We want to make sure that when those lease sales are held—and I expect they will be held—we have deconflicted uses before we put [tracts] on the auction block," he continued. "This is similar to the approach we have taken onshore and with wind energy projects." A sale has been scheduled in the Cook Inlet area farther south as well as the two announced for the Chukchi and Beaufort seas, he noted.

Oil and gas groups immediately criticized the plan. "[It] will not allow us to realize the full benefits from safe and responsible development of America's oil and gas resources, continuing a pattern of delay and unnecessary restraint," said Erik Milito, the American Petroleum Institute's upstream and industry operations group director. "For example, this plan pushes back the 2015 Beaufort lease sale, where leasing has already occurred, and makes more areas off-limits than it makes available."

National Ocean Industries Association Pres. Randall B. Luthi said, "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 gas."

He maintained, "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."

'Same tired path'

Daniel T. Naatz, the Independent Petroleum Association of America's vice-president of federal resources and political affairs, said the proposed final plan was deeply disappointing. "Despite bipartisan entreaties from Virginia's top elected officials, for example, [DOI] refuses to lease the promising offshore waters of that state," he told OGJ by e-mail. "Rather than taking the opportunity to take bold action, the Obama administration chose to follow the same tired path for American offshore exploration."

Virginia Gov. Robert F. McDonnell (R) also expressed disappointment in the state's exclusion from the final proposed 5-year plan until 1917 at the earliest. "This administration shows no confidence in the creative and ingenious American private-sector to innovate and overcome obstacles in pursuit of energy development and job creation, nor any confidence that [President Barack Obama's] own administration can safely regulate offshore drilling, which has been done for 40 years in the Gulf of Mexico," he said. "This is giving up on a job-creating industry, which is not the American way."

Asked why a lease sale off Virginia was not included, Salazar said there is no current information about resources off the Atlantic coast to make credible leasing decisions. Potential conflicts with military, commercial fishing, and other existing activities off Old Dominion's coast also need to be addressed, he indicated. "Our approach is we need additional information, and we're not afraid to begin seismic efforts in the Atlantic," he told reporters. "We are leaning into the development of additional information so we can make those decisions in the future."

Beaudreau said BOEM has closed the comment period for a programmatic environmental impact statement covering proposed seismic activity. "We can move ahead once it is completed late this year or in early January and we have designed appropriate mitigation measures," he said. "As the secretary noted, this is important information to collect. We need to understand what the resource potential is as well as where it might be so we can deconflict any potential oil and gas activity with commercial fishing, military, and other existing activities."

The proposed final program also drew fire from environmental and other groups over its planned Arctic Alaska activities. "We are disappointed that the Obama administration's final 2012-17 offshore program will include the two new Arctic Ocean lease sales despite the opposition of nearly half a million people, including many who live on America's Arctic coast," said Kristen Miller, the Alaska Wilderness League's government affairs director. "The conservation community has long called on the Obama administration to implement a comprehensive management and conservation plan for America's Arctic before allowing any further steps toward drilling in this fragile ecosystem."

Andrew Hartsig, the Ocean Conservancy's Arctic program director, said the group appreciated DOI's pledge to use a targeted leasing approach in Alaska's offshore Arctic waters. "As Interior decides whether and under what conditions to hold future Arctic lease sales, it should consider only those areas where scientific and other evidence show that oil and gas activities can be conducted without harming the ecosystem or opportunities for subsistence, and it should proceed with lease sales only when the risks are outweighed by the benefits," he said.

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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.