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January 2018

Vol. 23, No. 2 Week of January 14, 2018

Lease sales proposed

Interior wants expanded OCS program including 19 sales off the coast of Alaska

Alan Bailey

Petroleum News

On Dec. 4 the Department of the Interior announced a draft new five year outer continental shelf oil and gas lease sale program that would greatly expand the availability of federal offshore lands for oil and gas activities. The proposed plan, which covers the years 2019 to 2024, includes 47 lease sales covering all OCS planning areas except the North Aleutian basin, which remains subject to a presidential withdrawal. The draft plan includes 19 lease sales off the coast of Alaska, with the first of the sales in the program being in the Beaufort and Chukchi seas.

Energy dominance

“This is a start in looking at American energy dominance and looking at our offshore assets, and the beginning of a dialogue of when, how, where and how fast offshore assets should be or could be developed,” said Interior Secretary Ryan Zinke during a press conference announcing the proposed plan.

“This is the largest number of lease sales ever proposed for a national outer continental shelf program,” Zinke said.

“By proposing to open up nearly the entire OCS for potential oil and gas exploration, the United States can advance the goal of moving from aspiring for energy independence to attaining energy dominance,” said Vincent DeVito, counselor for energy policy in the Department of the Interior. “This decision could bring unprecedented access to America’s extensive offshore oil and gas resources and allows us to better compete with other oil-rich nations.”

Public review

Zinke emphasized the draft nature of the plan, saying that the administration will consult with states, local communities and congressional delegations over the proposal.

“Nothing is final and our department is continuing to engage the American people for our final product,” Zinke said.

An Interior press release commented that the inclusion of broad areas of the OCS in the proposed plan will encourage public input, to inform future decisions on the OCS program. There will be a 60-day public comment period following publication of the draft plan in the Federal Register. And individual lease sales will be subject to environmental review.

“Inclusion of an area in the draft proposed plan is not a final indication that it will be included in the approved program or offered in a lease sale, because many decision points still remain,” the press release said.

“American energy production can be competitive while remaining safe and environmentally sound,” said Walter Cruickshank, acting director of the Bureau of Ocean Energy Management. “Public input is a crucial part of this process, and we hope to hear from industry groups, elected officials, other government agencies, concerned citizens and others as we move forward with developing the 2019-2024 national OCS program.”

Response to one immediate concern came quickly: On Jan. 9 Zinke announced that he was withdrawing waters around Florida from the lease plans, following objections from Florida Gov. Rick Scott, given concerns in particular about the importance of tourism along the Florida coast.

Reversing withdrawals

In April President Trump opened the door for the proposed lease sale program by canceling an order by President Obama, withdrawing large areas of the OCS from future oil and gas leasing. Those withdrawals included virtually all of the Chukchi Sea and much of the Beaufort Sea. Environmental groups have challenged the legality of Trump’s action. A resulting lawsuit is moving through federal District Court in Alaska - oral arguments were held in the case in early November.

Zinke said that the Obama administration had taken 94 percent of the OCS offline for energy exploration and development, and that Interior’s offshore revenues had dropped from $18 billion in 2008 to $2.6 billion 2016. He said that there are three key benefits to developing energy in the United States rather than elsewhere: reasonable regulation that ensures clean and responsible development; the production of affordable energy that drives the economy and supports quality lifestyles for American families; and the avoidance of risks to the U.S. associated with dependence on energy from foreign entities.

Planned Alaska sales

The first Alaska lease sale is planned for the Beaufort Sea in 2019. The draft plan then schedules a Chukchi Sea sale as the first sale in 2020. The first sale in 2021 would then be another Beaufort Sea sale, to be immediately followed by a Cook Inlet sale. The first sale in 2022 would be another Chukchi Sea sale - another Beaufort Sea sale would be the first sale in 2023, again followed by a Cook Inlet sale. These sales would be followed in 2023 by a series of sales for the less prominent Alaska OCS basins: the Hope basin, the Norton basin, the St. Matthew-Hall basin, the Navarin basin, Bowers basin, the Aleutian Arc, the Shumagin basin, Kodiak and the Gulf of Alaska. The final Alaska sale would be another Chukchi Sea sale, the first sale in 2024.

The less well known basins targeted for sales in 2023 have geology that is prospective for hydrocarbons. However, these basins have seen little previous exploration and they are mostly thought to be gas prone.

The only Alaska basin not included in the plan is the North Aleutian basin, in the Bristol Bay region. This basin is prospective for both oil and gas but is in an area of important fisheries, in particular a wild salmon fishery. In response in particular to concerns about potential impacts to those fisheries, in 2010 President Obama temporarily withdrew the basin from oil and gas leasing, and in 2014 he made that withdrawal permanent.

Welcomed by lawmakers

Alaska lawmakers, who see OCS development as important to the state’s economy, welcomed the Interior announcement.

“The Department of Interior’s draft five-year offshore leasing plan is an important step toward allowing Alaskans to responsibly develop our natural resources as we see fit,” said Gov. Bill Walker. “My administration is committed to responsible resource development, and has established a pattern of working successfully with our congressional delegation and federal agencies to unleash Alaska’s energy potential.”

“This draft program is another positive step as we seek to reinforce our nation’s status as a global energy leader,” said Sen. Lisa Murkowski. “Secretary Zinke’s ‘blank slate’ approach launches a new discussion with local stakeholders to determine where responsible energy development should take place. While nothing in this proposal is final, it is good to see the administration seeking to expand access in places like Alaska, rather than limiting our opportunities. This is more good news as we seek to create jobs, keep energy affordable, and strengthen our long-term security.”

“This administration continues to take important and necessary steps to reverse a series of misguided attempts to shut down responsible resource development across Alaska and the Arctic,” said Sen. Dan Sullivan. “Today’s action, combined with efforts to create a more stable regulatory environment, sends a powerful message that the United States is serious about unleashing its energy potential in an expeditious and broad based manner. With the input and support of local communities, this is an important step to begin collectively working towards new, safe and responsible development from Alaska and America’s offshore energy resources.”

Environmentalist objections

Environmental organizations, however, have expressed horror at the specter of increased offshore oil and gas development, especially in the Arctic. They see the likelihood of disturbance to the delicate offshore ecosystem and, especially, the possibility of a major offshore oil spill as a significant environmental threat.

“Re-doing the five-year program reflects this administration’s eagerness to sellout our public lands and waters and pursue fossil fuel energy development everywhere,” said Lois Epstein, Arctic program director for the Wilderness Society. “This is part of a wholesale assault on Alaska’s Arctic, with Congress opening the Arctic National Wildlife Refuge’s coastal plain to oil drilling and the Trump administration seeking to revise the scientifically sound National Petroleum Reserve-Alaska management plan, so it allows drilling even in currently protected, sensitive habitat … drilling in the Arctic Ocean is extremely difficult and dangerous, and a major oil spill would pose a grave threat to marine life, sensitive coastal habitat and subsistence resources that are vital to Alaska’s Native communities.”






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