The People of America's Oil and Natural Gas Indusry

Go For ‘Robust’ in New Offshore Leasing Program

Mark Green

Mark Green
Posted August 18, 2017

Here’s the case for expanded opportunity within a new offshore oil and natural gas leasing program that federal officials are assembling:

  • Safely developing American oil and natural gas on the outer continental shelf (OCS) is vital to the United States’ long-term energy and national security.
  • We need new access to offshore areas, such as the Eastern Gulf of Mexico. Including them in the federal five-year plan will allow surveying to determine the location and size of oil and gas reserves.  
  • Safe oil and natural gas production on the OCS could significantly boost local, regional and state economies.
  • Advanced technologies, strong industry standards and a robust regulatory system work effectively together to protect workers, communities and the environment.

API and eight other groups urged the Interior Department’s Bureau of Ocean Energy Management (BOEM), which is developing an offshore leasing program for 2019-2024, to increase OCS access now so that offshore energy can be harnessed in the future:

At this point in the Five-year Program development process it is important for BOEM’s evaluation of the OCS areas to include all 26 Planning Areas and not prematurely eliminate areas that have resource development potential. … Since the existing process does not allow an area removed from consideration at an early stage to be added back in at a later stage, it is important that areas are not prematurely eliminated from consideration. The decisions made now will have long-lasting impacts on U.S. energy policy. To continue our march towards greater energy independence, bold, forward-looking decisions need to be made.

Erik Milito, API Upstream Group Director:

“We have an opportunity in the next offshore leasing plan to truly embrace our nation’s energy potential and ensure American consumers and businesses continue to benefit from the U.S. energy renaissance. In addition to contributing to the economy, creating thousands of jobs, and providing billions in government revenue, developing our abundant offshore resources will also strengthen our national security. The ability to explore our resources in the Arctic, Atlantic, and the Eastern Gulf of Mexico in the next five-year program is a critical part of advancing the long-term energy security of our nation, and we urge the administration to consider these benefits as they prepare a new offshore leasing program.”

This week BOEM conducted its first offshore lease auction under the new administration, generating more than $121 million in high bids for 90 tracts in the Gulf of Mexico. While every offshore auction is welcome, this week’s sale was modest compared to some in the past.

Production in the Gulf continues to increase – up 25 percent between 2005 and 2016 – and the U.S. Energy Information Administration projects it will continue to rise in the future. Yet, offshore development has long lead times, making it critically important for the leasing program the government is working on now to be more expansive than the existing one. From the industry group’s comments to BOEM:

To ensure a robust energy program out to 2040 and beyond, decisions on areas to include in the 2019-2024 OCS Leasing Program need to be more expansive than today’s Leasing Program. Therefore, BOEM should fully consider all areas for inclusion in the program and keep as many areas as feasible in the Draft Proposed Program.

In addition to the Eastern Gulf, the groups specifically note that the Alaskan Arctic and the Mid- and Southern Atlantic OCS should be included 2019-2024 leasing program. Including an area in the program doesn’t mean a lease sale will occur during the time period; it only creates the option to hold one in the area. Excluding an area from the program all but rules out a lease sale in that area during the program’s time period.

The groups point to economic benefits that could result from increased offshore development. One study found that development in the Atlantic could create nearly 280,000 new jobs along the East Coast and across the country, growing the economy by up to $23 billion per year. It could add 1.3 million barrels of oil equivalent per day to U.S. production, which is about 70 percent of current Gulf production. Another study estimated that new access to the Pacific OCS and Eastern Gulf could unlock more than 200,000 jobs, $218 billion in government revenue and 2.6 million barrels of oil per day. Below, Wood Mackenzie’s map of estimated offshore resources off limits to development:

offshore_resources

In comments to BOEM, the groups say industry is working to enhance the safety of offshore development, noting new and revised industry standards and technologies:

Many industry standards have been revised, enhanced or developed to cover areas including well design, cementing, and operator/contractor interaction; blowout prevention equipment design, operation, repair and maintenance, and associated control systems; and, subsea equipment interfaces with remotely operated vehicles and well capping equipment. The Center for Offshore Safety also works to improve the safety performance of America’s offshore oil and natural gas industry and it continues to work with companies and the regulators to engrain safety culture into day-to-day operations.

Milito:

“Safety is a core value of the U.S. natural gas and oil industry, and we are constantly improving technologies, standards, best practices, and programs that protect our workers and our environment. Decades of experience demonstrate that offshore operations safely coexist with the military, tourism and commercial and recreational fishing industries. Safe offshore energy development is a necessary part of a robust energy policy to harness our nation’s energy potential for the benefit of American energy consumers.”

Federal officials said collecting comments from stakeholders is one of the early stages of developing a new offshore leasing program. As has been mentioned above, “robust” is a word that should fit as a description of the program they unveil down the road.

Americans appreciate the importance of our country’s offshore energy potential. They have strongly supported offshore oil and natural gas production – 64 percent favorability in this survey – and they overwhelmingly support increasing domestic energy production overall. This is essential to our country’s future security and prosperity, which should be reflected in BOEM’s new leasing program.

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.