Groups seek details as they welcome Obama's OCS plan

Oil, natural gas, and other business associations continued to respond warmly to US President Barack Obama’s administration’s US Outer Continental Shelf strategy, announced Mar. 31 (OGJ Online, Mar. 31, 2010).

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Apr. 2 -- Oil, natural gas, and other business associations continued to respond warmly to US President Barack Obama’s administration’s US Outer Continental Shelf strategy, announced Mar. 31 (OGJ Online, Mar. 31, 2010). Several groups also sought more details as they studied the long-awaited announcement.

“It’s a very positive development,” said Brian T. Petty, executive vice-president for government affairs at the International Association of Drilling Contractors. But he cautioned that oil and gas activity in OCS areas outside the central and western Gulf of Mexico is not necessarily imminent since it will depend on the results of further studies.

“But it’s a welcome signal, particularly the president’s statement of hydrocarbons’ continued importance in the US energy mix,” Petty told OGJ on Apr. 1. “That’s quite a contrast from a year ago, when the emphasis was on developing renewable and alternative technologies. The cancellation of the Alaskan sales was unfortunate, but on balance, it was very positive.”

Natural Gas Supply Association Pres. R. Skip Horvath had a similar reaction, saying on Mar. 31: “Producing natural gas in areas of the Atlantic OCS, eastern Gulf of Mexico and Arctic Ocean north of Alaska is a good beginning for the nation and for coastal states, which would share in the revenues. Most immediately, the administration’s proposed plan would make areas 50 miles off the coast of Virginia available for leasing consideration in 2011 or 2012 under Lease Sale 220. We urge the administration to ensure the permitting process moves forward in a timely manner.”

The American Gas Association issued a statement urging the Obama administration to allow exploration of federal land currently open for oil and gas production but not yet tapped, including the OCS. “These energy-rich areas can and should be explored in order to steer us away from foreign resources and to help keep costs down for American consumers,” AGA said, adding that the administration’s Mar. 31 announcement was a positive first step.

‘Sensible, yet effective’
“We commend the president’s announcement and believe that a sensible yet effective energy policy that safely utilizes US resources will help US industries, strengthen national security and supply, and spur economic growth,” said Bert Kalisch, president of the American Public Gas Association, which represents municipal distributors. “If we are to keep an abundant domestic supply of natural gas available at a long-term affordable level, our energy policy must not take those available in the OCS off the table.”

In Houston, the International Association of Geophysical Contractors applauded the decision to expand OCS exploration and development, notably US Interior Secretary Ken Salazar’s call for seismic exploration of frontier areas in the South and Mid-Atlantic OCS.

“Seismic data have not been acquired in these areas of the Atlantic seaboard since the 1980s,” IAGC Pres. Chip Gill said. “There have been tremendous advances in seismic imaging technology over the last several decades. When applied to these frontier areas, this modern technology will facilitate their efficient and responsible exploration.”

The seismic industry association noted that these Atlantic frontier areas are very large, and significant lead time will be required to acquire and process new data before it can be made available to the US Minerals Management Service and the oil and gas industry. More time will be needed to assimilate and evaluate the information, making it important for the process to start as soon as possible, IAGC added.

To facilitate the process, IAGC recommended that MMS consider processing small-scale, limited permit requests while it prepares its programmatic environmental impact statement for the South and Mid-Atlantic OCS. IAGC also urged the administration to make certain that the necessary employees and funding are available to both MMS and the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service to ensure that the required National Environmental Protection Act, Endangered Species Act, and Marine Mammal Protection Act assessments and consultations are completed promptly.

‘Several years’
National Ocean Industries Association Pres. Randall B. Luthi said NOIA members are anxious to see the US Department of the Interior begin the multiple steps leading to implementation of the next 5-year OCS plan in July 2012. “True access requires deeds, in addition to written words,” Luthi said. “True access to the areas included in the plan will require a number of interim actions, scientific analyses, and permitting processes that are the foundation of these larger plans and often take several years of work to accomplish.”

Collection of vital environmental data should not be delayed since the Obama administration has expressed a commitment both to science-based decision-making and to providing predictability and consistency for offshore energy industries, Luthi said. He noted that neither the administration’s Mar. 31 OCS announcement nor its fiscal 2010 budget request included a request that Congress provide funding for the environmental analysis, which will need to be completed before new seismic studies in the South and Mid-Atlantic OCS can move forward. “We hope that the release of this plan, which is largely a scoping document, truly represents an actual commitment to actual sales in new areas,” he said, adding, “This should be more than a virtual reality process.”

Organizations outside the oil and gas industry also welcomed the announcement, but with qualifications. “It is encouraging that the Obama administration has recognized that tapping America’s vast oil and gas reserves must play a critical role in enhancing our energy security and creating jobs. Yet the new 2012-17 5-year plan appears to be a smaller step forward than what is needed,” said Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy.

Harbert pointed out that Salazar and others in the Obama administration shelved a 5-year plan for 2010-15 that entered its final comment period in January 2009 and would have opened more areas with more lease sales. “The plan released today still leaves billions of barrels of American oil and significant reserves of natural gas under lock and key, including some of the most productive areas of exploration,” she said.

“The new plan does create the potential for new areas of exploration on the Outer Continental Shelf. But at this stage, that’s all it is: potential,” Harbert added. “Much of what is promised is many years away, subject to more study and congressional action. What is needed today is urgent action, not analysis.”

Complete seismic
Industrial Energy Consumers of America Pres. Paul A. Ciccio also said that the announcement was an important first step and urged the administration to move forward quickly to complete seismic evaluation of the proposal’s frontier regions. “It is essential that the United States take the necessary steps to increase domestic production of oil and natural gas. Doing so will increase supply of needed hydrocarbons necessary for a globally competitive manufacturing sector which will in turn create jobs and exports,” Ciccio said.

American Chemistry Council Pres. Cal Dooley said ACC members also welcomed the announcement of additional OCS activity. “More must be done, and we look forward to working with the administration and Congress to develop policies to expand and expedite domestic oil and gas development as part of a diverse energy mix,” Dooley said.

Jay Timmons, executive vice-president of the National Association of Manufacturers, said an independent report it commissioned from the Milken Institute found that an investment of $46.5 billion in offshore exploration and production could create up to 195,000 jobs directly and 3.5 million jobs in other industries.

“While manufacturers support the president’s announcement, we also believe the administration missed an opportunity to take advantage of proven and known reserves in Alaska and other portions of the OCS and to expedite the leasing process,” Timmons said.

“To shut down know resources only hinders our ability to reduce our foreign energy dependence and create jobs,” said Timmons. “The OCS contains 420 tcf of gas, which can go a long way toward meeting domestic energy needs, but only a portion of these potential resources will be open for exploration and development.”

Contact Nick Snow at nicks@pennwell.com.

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