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Interior files revised OCS program Submits new 2007-12 lease sale plan with DC court in response to appeal against program that includes 2008 Chukchi Sea lease sale Alan Bailey Petroleum News
On Dec. 23 the U.S. Department of the Interior filed with the U.S. Court of Appeals for the District of Columbia a revised version of its 2007-12 outer continental shelf oil and gas lease sale program. The filing came in response to an April 2009 court decision in an appeal against the program — the program includes the 2008 Chukchi Sea lease sale in which several companies including Shell, ConocoPhillips and Statoil purchased leases.
The court required Interior to rework the environmental analysis for the program and meantime withdrew the Chukchi Sea lease sale, thus creating uncertainty over whether companies holding Chukchi Sea leases will be able to proceed with exploration drilling.
Following the Dec. 23 filing, the court will now need to determine whether the revised program has adequately addressed the environmental analysis deficiencies that the court identified in 2009. And according to a letter from the U.S. Department of Justice, filed along with the new program, all parties in the appeal case will now submit motions to the court by Jan. 24.
Chukchi sale upheld The revised program upholds the 2008 Chukchi Sea lease sale while deferring any further lease sales in the Chukchi and Beaufort seas for possible inclusion in the next lease sale program, running from 2012-17. The program also combines the two remaining central Gulf of Mexico sales into a single sale, scheduled for 2012, and continues to schedule a single remaining western Gulf of Mexico sale for 2011 or 2012; Gulf of Mexico sales are subject to the outcome of a new environmental analysis under the National Environmental Policy Act.
The program no longer includes a lease sale in the mid-Atlantic region.
The sale schedule appears consistent with a new OCS leasing strategy that Interior Secretary Ken Salazar announced on Dec. 1.
The main focus of the D.C. court’s critique of the original version of the lease sale program was the fact that, to assess the environmental sensitivities of OCS regions to oil and gas development, Interior had simply used a NOAA analysis of shoreline sensitivities to oil spills. Interior has not explained how this analysis can serve as a substitute for OCS environmental sensitivity when potential leasing areas are distant from the coastline, the court said in its 2009 ruling.
In the revised lease sale program that Interior has now published, the Bureau of Ocean Energy Management, Regulation and Enforcement has used a numerical ranking system to score the potential impacts of oil and gas activities in each OCS region. To do this it separately scored the possible impacts of oil spills, industrial sound and physical disturbance in each region while also separately assessing these impacts on three marine environment components: the marine habitat; the natural productivity of marine plants and animals; and the marine fauna, including birds, fish and mammals.
The BOEMRE analysis also considered the relative increase in environmental sensitivities as a consequence of global climate change. All Arctic OCS areas figured high in terms of the impact of climate change, as did the central and eastern Gulf of Mexico.
Classified by scoring The agency combined the individual scores for the various combinations of industrial impacts and marine environment components, adjusting the results to accommodate climate change sensitivities, to obtain an overall environmental sensitivity score for each OCS region. And then, recognizing the imprecision of this numerical analysis, the agency used the numerical ratings to broadly classify each region into one of four categories: “most sensitive”, “more sensitive”, “less sensitive” and “least sensitive.”
Under this system, the Beaufort Sea fitted into the “more sensitive” category and the Chukchi Sea was classified as “less sensitive.” The federal waters of the lower Cook Inlet were considered “less sensitive,” as was the North Aleutian basin.
The four OCS regions classified as “most sensitive” were the central Gulf of Mexico, the eastern Gulf of Mexico, the mid-Atlantic and the south Atlantic. The western Gulf of Mexico came within the classification of “more sensitive.”
Deepwater Horizon In an introductory statement for the revised lease sale program, Interior Secretary Ken Salazar said that the Department of the Interior is still assessing the implications of the Gulf of Mexico Deepwater Horizon disaster for future OCS oil and gas leasing. The revised program does not attempt to re-assess the entire leasing program in the light of that disaster, Salazar said.
However, fallout from the Deepwater Horizon incident has clearly driven a heightened sense of caution for the regulators, impacting decisions on the timing of lease sales but not precluding lease-related industrial activities.
For example, in its evaluation of options for future leasing in the Chukchi and Beaufort seas, BOEMRE now flags an approach in which it wants to see the results of exploration in leases that have already been issued before making decisions on whether to conduct future lease sales. Deferral of future lease sales would also allow time for further research into oil spill risks and response capabilities, incorporating information from Deepwater Horizon investigations, the agency said in the revised lease sale program.
In the Chukchi Sea, exploration in existing leases would secure important environmental monitoring information; allow industry to assess the economic viability of developing oil and gas resources in the region; support orderly leasing; and maximize revenues from future lease sales, BOEMRE said. Similarly, in the Beaufort Sea “the timing and number of sales in this area is intended to allow sufficient time between sales for any post-lease exploration that may have been conducted and monitoring activities and analysis of the results of such activities, as well as for consideration of new scientific research,” the agency said.
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