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Support builds for U.S. offshore drilling Two-thirds of comments on MMS’ 5-year plan favor opening more of U.S. OCS to drilling; eastern Gulf of most interest to industry Ray Tyson For Petroleum News
Opening more of the U.S. offshore to exploration and development is clearly gaining momentum across America, according to recent opinion surveys and thousands of public comments submitted in response to the U.S. Minerals Management Service’s first draft of the proposed 2007-2012 offshore leasing program.
In fact, heads turned when MMS Director Johnnie Burton told a luncheon crowd May 1 at the Offshore Technology Conference in Houston, Texas, that more than two-thirds of some 36,000 public comments received by the end of April favored giving industry more access to the U.S. Outer Continental Shelf, 85 percent of which is under moratoria and off limits to drilling.
Moreover, a public opinion survey conducted in Virginia State Sen. Frank Wagner’s district, which includes parts of Virginia Beach, showed 75 percent of those polled supported opening offshore Virginia to exploration. During an OTC press briefing, Wagner said he is hoping efforts to open offshore Virginia to drilling will rub off on other Atlantic Coast states.
“Since we stepped out in Virginia, there’s been a lot more discussion in other states, particularly in the south,” Wagner said. “South Carolina and Georgia, even Florida is starting to broach the subject a little bit, and North Carolina is starting to revisit it.”
Wagner said high gasoline prices, led by fuel shortages following Gulf of Mexico hurricanes Katrina and Rita last year, have led to more public support for drilling offshore Virginia.
Nationwide survey shows same results Both MMS’ comments and Virginia’s poll are supported by a recent nationwide opinion survey conducted by the Consumer Alliance for Energy Security, a mix of consumer, industrial and institutional energy users. The survey found nearly 60 percent of those questioned wanted more of the U.S offshore opened to E&P activities.
So, why the major shift in public sentiment? For one, an overwhelming 90 percent of those responding to the alliance’s national survey believe increasing energy costs are having a significant impact on the family budget.
“America is suffering an energy crisis which is hurting our economy and threatening our jobs,” said John Engler, president and chief executive officer of the National Association of Manufacturers, a member of the alliance.
Still, MMS’ Burton cautioned OTC participants that in spite of the public’s overwhelming support, regional politics likely will limit the opening of exploration acreage in the government’s proposed five-year leasing program. This particularly true in the far Eastern Gulf of Mexico, where Florida continues to oppose drilling well over 100 miles from its shores, fearing this would ruin the state’s tourism industry.
It now appears that Industry’s only hope is that a few million acres might be added to the existing Eastern Gulf Sale 181 area, a sliver bordering the Central Gulf measuring roughly 100 miles long by 25 miles wide.
“The point is that unless there is a major change of heart in Florida — the delegation as well as the governor — I don’t think you will see any drilling in the Eastern Gulf of Mexico,” Burton said, adding that aside from the possible tack-on to the Sale 181 area the Bush administration “does not plan on going there. The administration is supportive of state desires.”
Eastern Gulf industry priority Meanwhile, Noble Energy chief executive Chuck Davidson, chairman of the Independent Petroleum Association of America’s offshore committee, made it clear in an interview at OTC that the Eastern Gulf, more so than other areas closed to drilling offshore the Lower 48, is an industry priority and probably represents industry’s best chance of opening more of the U.S. offshore “near term” to exploration and production.
“I would say that the Eastern Gulf of Mexico and its proximity to known resources in the Gulf of Mexico make it geologically much more attractive,” Davidson said. “It’s just a natural expansion of our pipeline infrastructure.”
The Western and Central Gulf of Mexico, as well as most offshore areas of Alaska, have been open to federal leasing for years.
“I think it (Eastern Gulf) stands the best chance of getting a little more area opened near term,” Davidson said. “I think the Gulf beyond that will take more action in Washington.”
Davidson said he also believes industry has “a much higher confidence level of there being resources that are commercial” in the Eastern Gulf, compared to federal waters offshore the U.S. East and West coasts which for years have been closed to leasing.
“So, from an industry standpoint, from a company standpoint, it’s very appealing,” Davidson said, adding that although he believes additional areas of the Eastern Gulf will be opened to leasing, it would not be enough to satisfy industry.
Nevertheless, Davidson was hopeful that eventually more of the U.S. outer continental shelf, including offshore Virginia, would be opened to exploration activities.
“We’re seeing much greater support and, as a result, I think there is some hope that we will see one or more of these areas opened up,” he said. “But certainly it starts around the Sale 181 area and then tries to expand from there.”
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