Extended OCS comment period produces 350,000 comments, Salazar says

Nick Snow
OGJ Washington Editor
Oil and Gas Journal
Sep 22, 2009

WASHINGTON, DC, Sept. 22 -- The US government received more than 350,000 public comments on possible Outer Continental Shelf resource development strategies during the 6-month comment period that expired Sept. 21, US Interior Secretary Ken Salazar said on Sept. 22.

Many of the comments came from public meetings he hosted in New Jersey, Louisiana, Alaska, and California, he said. “I heard broad agreement that we must confront our dangerous dependence on foreign oil, build a clean energy future, and make use of the limited resources we have while protecting our land, water, and wildlife,” he said.

Salazar said the US Minerals Management Service is reviewing all of the comments, which will take several weeks. Once that is complete, it will initiate environmental analysis and what he termed “public scoping opportunities” associated with the 5-Year Plan for oil and gas development on the OCS.

“The offshore energy program we are developing must address our nation’s energy security challenges, deliver a fair return to the taxpayers who own the resources, and account for the views of local communities, states, and tribal nations,” the secretary said.

It also must take several key considerations into account, including ocean areas critical to military training and the national defense; other economic benefits of the oceans including fishing, tourism, and subsistence uses; environmental considerations; existing oil and gas infrastructure; interest from the oil and gas industry; and the availability of seismic and scientific data, he said.

“I am confident that we will be able to expand our nation’s offshore energy portfolio by focusing on development in the right way in the right places,” Salazar said.

Move aggressively
Meanwhile, oil and gas industry groups urged MMS to move ahead aggressively on developing more OCS energy resources the 6-month public comment period on a draft proposed 5-year OCS plan expired.

“In about a week’s time, we will mark the 1-year anniversary of the end of the moratoria for new oil and natural gas leasing in federal waters off our Atlantic and Pacific coasts,” noted American Petroleum Institute Pres. Jack N. Gerard. “Despite the public’s clear desire for more domestic energy development and the industry’s years of experience operating offshore in an environmentally sensitive way, this administration repeatedly has slow-pedaled this plan which would benefit all Americans, especially in these tough economic times.”

Gerard said new oil and gas development could create thousands of jobs, add more than $1 trillion to government coffers, strengthen US energy security, and encourage a domestic economic recovery. “It’s time to end the delays. The administration now has comments in hand. It knows that oil and natural gas will be integral to the nation’s economy for decades to come. It must act now to ensure that America has the energy it needs today, and in the future,” he said on Sept. 21.

In comments submitted to MMS on Sept. 15, Independent Petroleum Association of American Pres. Barry Russell warned: “As our nation’s energy demand continues to increase, a failure to provide needed access to the OCS will increase domestic energy prices, slow US economic growth, and create hardships for consumers.”

“The next 5-Year Plan will define the shape and scope of domestic offshore energy development. It is essential that MMS develop a leasing program that provides maximum flexibility for our nation to address its energy needs,” Russell said.

Prompt review
National Ocean Industries Association Pres. Tom Fry urged US Interior Secretary Ken Salazar to review the comments promptly and analyze all OCS planning areas now that the 6-month comment period extension the secretary imposed on Feb. 10 has expired.

“Today’s volatile energy prices and supplies have created many problems for ordinary Americans. In part, this is because the government has denied access to energy resources owned by the American people,” Fry said on Sept. 21. “The energy resources on the OCS are vital to the nation’s economic prosperity, and safety records show that they can be produced in an environmentally responsible manner.”

Jenny Fordham, energy markets and government affairs director at the Natural Gas Supply Association, said the draft proposed plan (DPP) was a step in the right direction “and industry supports a robust plan as a foundation to our future domestic energy supply.” She said, “MMS should not delay the 5-Year Plan process, but should move forward quickly after the close of the comment period to develop the proposed plan and complete the necessary environmental work.”

In comments submitted to Renee Orr, MMS’s 5-Year Plan program director on Sept. 21, Fordham said NGSA was pleased that MMS added areas not included in previous 5-year OCS plans to this one’s DPP, including lease sales in the eastern Gulf of Mexico “which is known to contain vast resources of natural gas.” The industry association supports the proposal of 31 lease sales with no restrictions, such as buffer zones, and encourages MMS to prioritize the schedule of lease sales to be held in those areas known to have the highest resource potential, she said.

The federal government locked up OCS areas believed to contain 18 billion bbl of oil and 77 tcf of gas for more than 20 years, Doug Morris, API’s upstream and industry operations group director, noted in comments that API submitted to MMS on Sept. 21.

‘May be conservative’
“These resource estimates may be conservative since the areas in question are largely unexplored,” Morris said. “But if given access to them, the industry could use today’s highly sophisticated technology to locate and tap new domestic resources in an environmentally responsible manner as it has in other areas for decades.”

Past decisions to restrict OCS acreage available for exploration compelled the oil and gas industry to “pick over the bones” in search of commercial hydrocarbon quantities, Morris said. He cited expenditures of $2.2 billion for leases in 1996-97, with only 6% of the tracts eventually producing oil and gas and the remainder returned to the government. “Over 50% of the leases were eventually resold in subsequent sales for an additional $6.2 billion as the industry continued to search for the ‘needle in the haystack’ in a limited geographic area using new exploration technologies,” he said.

Morris conceded that successive exploration over some of the same areas led to new discoveries because new geologic concepts were tested, aided by the evolution of exploration and production technologies. “Nevertheless, over the period that moratoria restricted access to as much as 80% of the OCS, other opportunities for discovery went unexplored and untested,” he said.

Access to areas where technologies and concepts can be tested, and where lessons learned from exploration elsewhere in the world can be applied, will increase the likelihood that new domestic offshore oil and gas resources will be discovered and domestic energy security improved, Morris said. “We will continue to rely on oil and gas in the long term, so we need to make decisions now that provide us with the resource in the long term,” he said.

Include all areas
In IPAA’s comments, Russell urged MMS to keep all areas, including the eastern Gulf of Mexico, Alaska, and the entire Atlantic and Pacific OCS under consideration during the planning process’s next phase. Doing so would mean that “essential preparatory work will have been completed enabling that area to be offered for leasing more quickly should Congress mandate a sale,” he said.

Russell also suggested that MMS use area-wide lease sales wherever possible, and focused leasing for places where it is not. “Area-wide leasing allows IPAA members, the smaller independent companies, to actively acquire, explore, and produce low-risk fields. It also encourages innovative exploration strategies and is consistent with maintaining financially sound geophysical contracting and processing industries,” he said.

Fordham said in NGSA’s comment that the association also was encouraged by MMS’s including areas previously off-limits in the DPP. NGSA and API separately expressed in their submissions to MMS their opposition to the idea of coastal buffer zones and support for sharing new federal OCS oil and gas revenues with states directly feeling the impacts of development.

Morris and Fordham each noted that in August 2008, when MMS requested comments as then-Interior Secretary Dirk A. Kempthorne accelerated the OCS planning process to produce a 5-Year Plan for the 2010-15 period, some 60% of the responses said that the agency should “new program to provide some level of expanded access to domestic sources of oil and natural gas.” It was a significant indication that the general public understood the importance of developing more domestic oil and gas supplies, the API and NGSA officials separately said.

Contact Nick Snow at nicks@pennwell.com.

Source