The People of America's Oil and Natural Gas Indusry

Offshore Access Sooner Than Later

Mark Green

Mark Green
Posted June 10, 2013

House legislation requiring a new federal offshore leasing plan that includes areas off South Carolina and Virginia is the best way to create new access to federal oil and natural gas resources sooner rather than later. Later – much later – is likely under the current federal plan, which would keep lease sales from happening until 2017 at the earliest. Because of the time it takes to develop offshore resources, that means actual production wouldn’t occur until 2024 or even 2027.

Creating access to areas that currently are off-limits is critical to U. S. energy security, job creation and economic growth. Access leads to exploration, which results in the oil and natural gas development that’s vital to President Obama’s pledge to increase domestic production under his all-of-the-above energy strategy. API Chief Economist John Felmy, in testimony before a House subcommittee last week:

“Offshore oil and natural gas production is a long-term effort that requires long-term planning. Before the first well can be drilled and any of these benefits realized, the federal government must schedule lease sales and permit modern seismic surveys, which are essential for locating undersea energy resources.”

The proposed legislation is needed to change the offshore status quo that has about 87 percent of federal offshore acreage closed to oil and natural gas development:

offshore access

This status quo is held in place by the federal government’s five-year leasing plan that excludes the areas in red from lease sales at least through 2017. Felmy said the government estimates that 88.6 billion barrels of oil and 398.4 trillion cubic feet of natural gas have yet to be discovered on the outer continental shelf:

“While these estimates are large, they are also incredibly out-of-date because a large share of the estimates are based on seismic surveys that were conducted 30 years ago. Today, seismic surveys using modern technology produce sub-surface images which are much clearer than those from decades ago and allow for a better understanding of the potential resources available. … It is only through exploratory drilling that we can find potential domestic resources, but the use of seismic surveys is critical for determining the best prospects for drilling. Seismic surveys have been used safely for decades – with little impact on marine life – to assess the location and size of potential oil and natural gas deposits, which often lay several miles beneath the ocean floor."

Without access, there’ll be no lease sales. Without the possibility of a lease, research that leads to development will be stunted if not blocked altogether. And so it is for the vast majority of the acreage off our coasts. Felmy:

“No other developed nation in the world keeps so much of its offshore energy resources out of reach. … Under current administration policy, collecting much needed seismic data in the Atlantic OCS may not happen. Why? Because without a lease sale scheduled in the Atlantic for the foreseeable future, there is very little prospect for the companies that collect these data to sell it. It is important to send positive signals on leasing in order to spur companies to invest in collecting new data, so that they can be assured that there will be a market for these data. Moving forward with leasing in the Atlantic as proposed in this legislation would be a step in the right direction.”

The wrong direction is maintaining a status quo that has seen a downward trend in production from federal areas, reflected in data on the sales of oil and natural gas on federal lands reported last week by the U.S. Energy Information Administration:

  • Offshore and onshore sales down 5 percent in fiscal year 2012 from FY 2011 – 596 million barrels (mb) in 2012 compared to 629 mb in 2011. That includes an 8 percent decrease in offshore volumes (from 516 mb in 2011 to 474 mb in 2012).
  • A 12.2 percent decrease in all federal production since FY 2003 – again, led by an 18.1 percent decline offshore (579 mb  in 2003 to 474 mb in 2012).

EIA’s table:

EIA oil sales

Certainly, new Interior Secretary Sally Jewell offered encouragement last week, noting that when a new federal lease plan is developed in 2017 there will be opportunity for exploration and production. Better would be a plan that opens new access and gets us on the road to actual production quicker.

With sensible regulation and policies that allow for more leasing, timely permitting and increased drilling, we can produce more of our oil and natural gas here at home – creating jobs, growing our economy and strengthening our national security.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.