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Finding middle road on OCS development BOEM Alaska director says lease sale process will drive decisions recognizing both economic development and environmental priorities Alan Bailey Petroleum News
The recent publication by the Bureau of Ocean Energy Management of a proposed new five-year oil and gas lease sale program for the U.S. outer continental shelf raised a perhaps predictable flurry of polarized objections, with those who support offshore development complaining about the plan’s limitations while the environmental lobby argued for heightened restrictions, especially in the Arctic offshore.
BOEM has scheduled a series of scoping meetings as part of the process for developing an environmental impact statement for its proposed program. And during a break in one of these meetings, in Anchorage on March 2, James Kendall, BOEM’s Alaska region director, talked to Petroleum News about the outer continental shelf leasing process and the ways in which his agency is trying to balance economic development with environmental protection, and with the need to protect subsistence hunting by Native communities.
“Our job is to bring the information together, so that the decision makers can make a balanced, informed decision,” Kendall said. “Yes, we understand the perspectives of both sides. Both sides have legitimate concerns and interests.”
The lease sale plan envisages sales in the Beaufort Sea in 2020, in the Chukchi Sea in 2022 and in federal waters of the Cook Inlet in 2021. Concurrent with the release of the lease sale plan, the Obama administration announced the withdrawal of some environmentally sensitive areas of the Arctic offshore from future leasing, including an area known as the Hanna Shoal in the Chukchi Sea. The withdrawals drew a storm of protests from Alaska’s congressional delegation, which accused the administration of trying to shut down oil and gas development in Alaska’s federal regions.
Statutory requirement Kendall characterized the outer continental shelf lease sale program as a process mandated by the U.S. Outer Continental Shelf Lands Act, an act that requires the Department of the Interior to manage the OCS as a valuable resource, available for expeditious development while also being subject to environmental safeguards. He said that in Alaska BOEM is moving towards what he termed “targeted leasing,” in which the agency will try to minimize conflicts between industry, subsistence activities and environmental protection. The idea is to collect objective information about the location of oil and gas resources, environmental priorities and subsistence needs, to figure out where oil and gas development makes sense, and where it does not, he said.
Kendall cited the withdrawal from leasing of the Hanna Shoal area and of a 25-mile corridor along the Chukchi Sea coast as examples of the targeted leasing approach. A number of people have identified the Hanna Shoal as very important biologically for whales and walrus; and whales migrate, feed and calve in the coastal corridor, he said. While it does not make sense to conduct oil and gas activities in these sensitive areas, there are many other areas of the Chukchi available for leasing, he said.
“We’re trying to narrow it down early in the process, so that you don’t end up having leases in areas that don’t make sense,” Kendall said.
And, while a general lack of past drilling on the Arctic outer continental shelf leads to a dependency on the results of geophysical surveying for estimates of potential oil and gas resources, available information indicates that there is plenty of oil and gas to be found in areas that could be leased, he said.
Allowing time Asked about the proposal to schedule lease sales in the Beaufort and Chukchi seas quite late in the five-year sale program, Kendall responded that the timing would enable the collection of information for a comprehensive environmental analysis.
“We did that intentionally, so that we can continue to acquire good scientific information, work with all constituents and stakeholders, acquire traditional knowledge, so that when we get to the point of having a lease sale and we have to do an EIS for that lease sale, we have even more information,” Kendall said, adding that experience from any drilling that Shell conducts could factor into future lease sale environmental analyses.
Kendall also emphasized that the current round of EIS scoping meetings represents the early stages of a lengthy process of developing a five-year plan, with a final decision on the plan not happening until the end of the process. At this stage the idea is to gather information and people’s views, and bring all of that information together for consideration.
“It’s a very hard process and we have to take into account what everyone is saying,” Kendall said.
And, after BOEM has assembled the required information into an EIS document, the secretary of the Interior will make a decision on what form the final outer continental shelf lease sale plan will take, based on a view of what is in the best interests of the United States, Alaska and everybody concerned, he said.
Four-stage process BOEM has a four-stage OCS leasing process that starts with a five-year lease sale plan, moves through the conducting of individual lease sales, permits exploration in leases and then oversees the development of oil or gas fields discovered during exploration. The agency conducts an environmental evaluation under the terms of the National Environmental Policy Act for each of these four stages. One criticism of this approach is that it may allow the deferral of difficult decisions over issues such as oil spill risks until the later stages of the process, thus placing oil companies at risk of not being able to operate in leases that they have invested in. A series of lawsuits challenging federal actions have, for example, delayed Shell’s efforts to drill in the Chukchi and Beaufort seas.
Kendall defended his agency’s approach, saying that on the one hand the agency does consider specific oil spill scenarios in its environmental impact statements, but that, on the other hand, it is impossible to second guess the specifics of a worst-case oil spill scenario without knowledge of where a company proposes to drill.
“As you move through the process you get more information and you can have a more robust analysis,” he said, adding that technology evolves and information becomes richer during the many years that industry spends exploring, evaluating and developing leases.
“You can’t do it all at the front end,” he said.
Cautious approach Kendall also commented that, with the best way of dealing with oil spills being not to have one, BOEM is taking a cautious approach to oil activities in the Arctic offshore. Shell, in its exploration drilling efforts, cannot drill into an oil bearing zone without having available well capping and oil containment systems to prevent an oil spill. And new Arctic drilling regulations being proposed by BOEM and the Bureau of Safety and Environmental Enforcement codify requirements such as an ability to drill a relief well in the event of a well blowout and the need for adequate ice-management capabilities.
“You want to prevent a spill. You want to take a cautious approach. You want all your equipment in place,” Kendall said.
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