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MMS draws yeas and nays on 5-year plan Five-year leasing program for offshore U.S. draws thousands of comments, warnings about America’s future energy needs Ray Tyson Petroleum News Contributing Writer
With the United States facing an energy supply crisis, industry and many coastal communities have lined up in support of keeping or expanding offshore oil and gas leasing in federal waters off Alaska and the Lower 48, currently 90 percent closed to drilling.
One notable exception in Alaska is the North Slope Borough, which continues to wage an already 30-year war against offshore drilling in the Arctic, in particular the Beaufort and Chukchi seas, traditional hunting grounds of the Inupiat people.
In lengthy comments submitted to the U.S. Interior Department regarding the department’s proposed 2007-2012 Outer Continental Shelf leasing program, the North Slope Borough went beyond just opposing offshore lease sales in the Arctic. It asked that federal leasing be halted altogether in the Beaufort and Chukchi, until the borough is satisfied offshore projects can be brought on-line safely.
“Continuing tests of offshore oil spill response capabilities in broken ice have done nothing to increase our confidence in industry’s ability to safely operate in the arctic marine environment,” the borough charged.
Moreover, the North Slope Borough said it wants to make deferred areas of the Beaufort Sea permanently untouchable to federal leasing, including offshore of the Arctic National Wildlife Refuge coastal plain.
The borough also complained bitterly that it is being mistreated when it comes to national leasing moratoria and presidential withdrawals, arguing that much of the U.S. offshore remains closed to leasing, “while our arctic waters remain open.”
“The biological and cultural resources of the Beaufort and Chukchi seas, including the endangered bowhead whale and unique Inupiat traditional subsistence culture, are as valuable and as sensitive to disruption as the resources contained within any of the withdrawn planning areas.” Only a few areas open to leasing There are 26 so-called planning areas offshore United States. In addition to Alaska’s North Aleutian Basin, areas subject to presidential withdrawal or moratoria through 2012 include the entire East and West coasts of the continental U.S. and most of the eastern Gulf of Mexico offshore Florida. Only a few areas in Alaska and the western and central Gulf of Mexico are currently open to OCS leasing.
Aside from various environmental groups and Alaska’s Northwest Arctic Borough, which said it supported the North Slope Borough’s no-leasing position in the Arctic, most of Alaska’s coastal communities and local governments expressed strong support for future offshore leasing in their comments, including the Aleutians East, Kenai Peninsula and Lake and Peninsula boroughs, as well as the City of Nome and several Alaska village corporations.
However, the Bristol Bay Borough told Interior it supports a continued presidential ban on drilling in Bristol Bay, home of the world’s largest salmon fishery. Still, the borough said it now “strongly supports” onshore oil and gas exploration in the Bristol Bay region, “provided maximum protection be given to the fishery resources, and exploration and development be done in an environmentally safe manner.”
The Alaska Oil and Gas Association, which represents the majority of energy companies operating in the state, wants all offshore areas of Alaska that are in the current plan (Beaufort and Chukchi) to be in the next five-year plan, plus areas that are under administrative withdrawal or leasing moratoria, in particular the North Aleutian Basin, the location of salmon-rich Bristol Bay.
“Bristol Bay holds great promise for oil and gas discoveries and should be included,” AOGA said, urging Interior to make the 2007-2012 leasing plan “as flexible as possible, so that the federal government will be nimble in responding to changing circumstances and needs of the country.” 12,000 comments received MMS said it received about 12,000 comments from the public, environmental groups, the oil and gas industry, congress, and state, local and federal governments.
Meanwhile, in soliciting comments from the public on the next five-year plan, the U.S. Minerals Management Service, Interior’s agency in charge of offshore leasing, warned that the United States is falling further behind in domestic oil and gas production. The agency noted that daily U.S. petroleum demand is expected to grow to 27.9 million barrels in 2025 from 20 million barrels in 2003, and that net imports already have increased to about 58 percent of U.S. supply.
“An even larger share of petroleum is projected to come from overseas in future years,” MMS said, adding that imports are expected to account for 68 percent of U.S. petroleum demand in 2025. Administration supports bans Interestingly, while MMS is supposed to take into account America’s future energy requirements when preparing five-year lease schedules, the Bush administration appears to support existing bans on offshore leasing.
“Given that the presidential withdrawals bar the conduct of lease sales in those areas for the entire five-year planning period until 2012, and that most of the areas have been subject to congressional moratoria, a full analysis of these areas … may not be necessary,” MMS said.
Public comments on future MMS leasing areas included particularly strong and continued opposition from the coastal states of California, North Carolina, Georgia, Delaware, Massachusetts and Florida. Alaska and the Gulf states of Texas, Louisiana and Alabama strongly support continued oil and gas leasing off their shores.
“The federal waters offshore Alaska could play a significant role in meeting future U.S. energy supply needs,” Alaska Gov. Frank Murkowski said, noting that Alaska’s OCS is estimated to contain 122 trillion cubic feet of natural gas reserves alone, plus millions of additional barrels of oil reserves.
He added: “It is important, in light of lessons learned from the recent hurricanes on the Gulf Coast, for MMS to consider ways to diversify the sources of our nation’s oil and gas supply.” Comments on withdrawals requested MMS also asked for comments as to whether existing withdrawals or moratoria should be modified or expanded to include other areas in the OCS. Additionally, under the Energy Policy Act of 2005, Congress required the Secretary of the Interior to conduct “a comprehensive inventory” of oil and gas resources beneath all waters of the OCS.
“Based upon the analysis of these factors, the secretary will decide which areas to exclude from the draft proposed program,” MMS said.
Industry was clearly irked by an MMS statement that Interior Secretary Gale Norton had already decided not to offer for lease areas in the Eastern Gulf of Mexico planning area within 100 miles of Florida’s coast.
“This position is not consistent with the five-year OCS oil and gas leasing program process (and) the MMS is required to thoroughly analyze all areas of the Eastern Gulf of Mexico for consideration,” David Trice, chief executive officer for exploration and production independent Newfield Exploration, said in comments to MMS.
Predictably, U.S. oil and gas trade organizations support expanding the OCS in the next five-year program. The American Petroleum Institute, one of industry’s strongest voices, urged MMS “to provide for as expansive an OCS leasing program as possible” in the 2007-2012 plan. API noted that the western and central Gulf of Mexico alone account for 30 percent of the U.S. domestic oil supply and 20 percent of its domestic natural gas production.
“This concentration reflects government policies that have responded to anti-development and ‘not in my backyard’ voices by largely limiting offshore exploration and production to this portion of the Gulf,” API said.
“The impacts of hurricanes Katrina and Rita, including supply disruptions that impacted Americans nationwide, underscore the need to expand domestic oil and gas supplies for all consumers.”
MMS plans to release a draft of the proposed 2007-2012 leasing plan this winter, followed by a 60-day public comment period. Next summer the agency plans to issue the proposed program and a draft of the environmental impact statement, followed by a 90-day comment period. The final program and EIS is scheduled for release in the winter of 2007, followed by a 60-day waiting period. Interior is expected to approve the final package in the spring of 2007.
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