Offshore NEPA review

Nov. 22, 2010
The problem with environmental documentation prepared for the ill-fated Macondo well in the Gulf of Mexico was not the amount of study conducted.

The problem with environmental documentation prepared for the ill-fated Macondo well in the Gulf of Mexico was not the amount of study conducted. The problem was that the multilayered assessment contained an important assertion about operational readiness that proved, tragically, to be unfounded. Additional assessment would not have corrected the mistake.

The difference between study and readiness is large and important. Attention to it can help the offshore producing industry and federal government move past a regulatory impasse that threatens to delay oil and gas drilling unnecessarily.

Supplemental EIA

With good reason, the industry has voiced concern about a Nov. 10 announcement that the Bureau of Ocean Energy Management, Regulation, and Enforcement intends to prepare a supplemental environmental impact statement (SEIS) for sales scheduled next year of oil and gas leases in the Gulf of Mexico. EISs are comprehensive. They take time to prepare. They require public comment. Allegations of their inadequacy can become grounds for lawsuits filed by groups wanting to block drilling. The American Petroleum Institute and National Ocean Industries Association legitimately warn that the process might lead to cancellation of next year's sales or be impossible to complete before the first scheduled sale in March.

Yet Interior has good reasons to want the SEIS analysis. If it focuses on those reasons and doesn't let preparation turn into an antiindustry circus, it might be able to secure the documentation it seeks in time to let the 2011 sales proceed. Forebearance by the industry, meanwhile, might serve an interest more critical in the long run than a year's worth of gulf leasing, important as that is. The interest is a tool of National Environmental Policy Act (NEPA) evaluation known as the categorical exclusion (CE).

The 40-year-old NEPA requires federal agencies to assess probable environmental consequences of their actions. For oil and gas leasing, the most comprehensive level of assessment occurs with the EIS. Less comprehensive is the environmental assessment (EA). And below that is the CE, which exempts specific activities from NEPA review. The grant of a CE doesn't mean that an oil and gas activity receives no environmental review. It usually occurs when the leasing agency, under a scheme called tiering, deems the activity already to have been covered by other levels of assessment.

Drilling of the Macondo well, for example, occurred under an exploration plan approved under a CE that relied on an EA conducted for the relevant lease sale, which in turn relied on EISs prepared for a group of lease sales and for the encompassing 5-year leasing program. Macondo had received plenty of study. But the CE was written when deepwater drilling was rare. And the exploration program, like BP's oil spill response plan, contained standard assurance of the ability to handle hypothetical blowout rates far higher than Macondo's, now estimated at an astonishing 60,000 b/d. Obviously, the assurance was wrong.

So the CE needs to be updated, at least to account for the special problems of deep water. NEPA documents tiered above it must be checked for similar anachronisms and unfounded boilerplate. The review, though, should account for new response capability developed under duress by BP and improving rapidly in response to new regulation and industry effort. It's on physical prevention and response that regulation of deepwater work should focus.

CE review

Against that standard a new BOEMRE review of CEs, announced last month, creates reason for worry. If the review results in a constructive update of CEs, it will have been constructive. If it eliminates the CE as a way to avoid duplicative NEPA assessment of deepwater activity, however, it will divert BOEMRE resources and attention away from the operational issues on which they should concentrate. It also will slow offshore work and crimp oil and gas production forever.

The BOEMRE and the industry it regulates have much to accomplish in the wake of the Macondo tragedy. It's crucial that they address real problems.

More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on