The US Department of the Interior announced its proposed 2017-21 US Outer Continental Shelf oil and gas program, which deleted a planned 2021 lease sale offshore Virginia. Officials said this was largely in response to US military and public concerns that were much stronger this time than 5 years earlier.
"There was tremendous interest in the Atlantic," Interior Sec. Sally Jewell told reporters during a Mar. 15 teleconference. "Generally, it was expressions of concern. We weren't just waiting for [the US Department of Defense] to weigh in. We held multiple public meetings over a year."
US Bureau of Ocean Energy Management Director Abigail Ross Hopper, who also participated, said, "DOD took a look at how their mission could be affected by oil and gas activity in the Atlantic. The map they provided showed the entire proposed lease sale area would be affected. The way it changed from 2010 is that more of the area is affected because of growth in the Navy's mission."
News of DOD's stronger concerns apparently surprised at least one of Virginia's two Democratic US senators, however. "I am particularly struck by the material objections of [DOD] to the incompatibility of drilling with naval operations off Virginia's coast, cited by the BOEM as one of the three principal reasons for [its] decision," Timothy J. Kaine said following DOI's announcement.
"I have participated in this debate for over a decade as a governor and member of the Senate Armed Services Committee," Kaine said. "DOD has been relatively quiet during this public debate and has never shared their objections with me before. I look forward to additional discussions with DOD to understand its position."
Virginia's other US senator, Mark R. Warner, and Gov. Terry McAuliffe (D) separately said that DOI's announcement created an opportunity to address DOD's concerns and work to ensure that any energy activity off the commonwealth's coast includes revenue sharing. "This announcement should also serve as motivation to expand and diversify Virginia's energy economy in every sector, with a particular focus on renewables," McAuliffe added.
'Now is not the time'
But Jewell and Hopper emphasized that DOD's concerns were only part of broader objections to holding the sale, which came from coastal residents and communities as well as from individuals and groups across the country. Oil and gas market trends and growing domestic onshore production also affected the decision, they said.
"We heard from many corners that now is not the time to offer oil and gas leasing off the Atlantic coast," Jewell said. "When you factor in conflicts with national defense, economic activities such as fishing and tourism, and opposition from many local communities, it simply doesn't make sense to move forward with any lease sales in the coming 5 years."
Hopper noted, "The market reality now is that onshore production has increased in the last few years. When we look at the production we'd receive from a single lease sale in the South Atlantic, we determined that national security would not be hurt if it didn't take place."
Jewell said, "Oil is a commodity. Its price jumps all over the place. We really rely on the industry's interest. Current oil prices were not a material factor. But market conditions writ large and risks of pursuing an Atlantic lease sale over a 5-year period were."
The proposed program also included 10 sales in the Gulf of Mexico and one sale each in the Chukchi Sea, Beaufort Sea, and Cook Inlet planning areas off Alaska. Jewell said that at public meetings following release of the draft proposed program's environmental impact statement (OGJ Online, Jan. 27, 2015), several Alaska North Slope communities said that additional leasing areas there would not be appropriate. "Over the course of this last comment period, we heard from several that they were concerned about possible impacts on their subsistence living from oil and gas activity," she said.
Based on those comments as well as others and the best available science, the secretary said that BOEM has identified several areas where oil and gas activity might conflict with important environmental resources and subsistence activities, and labeled then "environmentally important areas" in the proposed program's environmental impact statement.
Stronger Arctic stewardship
Jewell also noted that in his joint declaration with Canadian Prime Minister Justin Trudeau the previous week (OGJ Online, Mar. 10, 2016), US President Barack Obama announced Arctic leadership principles, with a commitment to ensure that any commercial activities in the Arctic will occur only when the highest safety and environmental standards are met, including national and global climate and environmental goals, and indigenous rights and agreements. BOEM will work with its Canadian counterpart to meet these Arctic stewardship standards, she said.
"We know the Arctic is a unique place of critical importance to many-including Alaska Natives who rely on the ocean for subsistence," Jewell added. "As we put together the final proposal, we want to hear from the public to help determine whether these areas are appropriate for future leasing and how we can protect environmental, cultural, and subsistence resources."
Comments on the entire proposed 2017-22 OCS oil and gas program and its programmatic EIS will be accepted for 90 days following their publication in the Federal Register in the next few days, DOI officials said.
Oil and gas groups immediately criticized the move. "This is not how you harness America's economic and diplomatic potential," American Petroleum Institute Pres. Jack N. Gerard said. "While benefiting from energy policy choices made more than a decade ago, this inconsistent policy leads to unraveling the nation's ability to be a global energy leader and has left the future of American energy and national security vulnerable for the geopolitical challenges that lie ahead."
Meanwhile, National Ocean Industries Association Pres. Randall B. Luthi said, "It is difficult to put into words how wrong and anti-energy this decision is. By not taking the long-term view, the administration sells US consumers short. Instead, they have determined they are content to let the rest of world lead in Atlantic offshore oil and gas development. This is the wrong direction in efforts to continue the US march towards energy independence."
Independent Petroleum Association of America Pres. Barry Russell, meanwhile, said, "Closing the door to new areas of development, including the already-planned Atlantic waters, the eastern Gulf of Mexico, and even Alaska's waters, in turn closes the door to more American jobs and opportunities for our economy. This plan will make our nation less competitive, limit our geopolitical advantages abroad, and force us to be more reliant on foreign sources of oil from volatile regions of the world."
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.