Grahm Jesmer

November 18, 2011

On November 8, U.S. Secretary of the Interior Ken Salazar announced that the Department of the Interior (DOI) had completed its Proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2012-2017, which will make more federal offshore areas available for energy exploration and development.

Sec. Salazar said that the program could lead to the development of more than 75 percent of undiscovered technically recoverable oil and gas resources in federal waters.This will include six offshore areas where there is either current active leasing or where there are known resources.

The program includes plans for as many as 15 potential lease sales starting in 2012, 12 of which would be for development in the Gulf of Mexico and three in the waters of the Atlantic Ocean. Notably however, the plan excludes sites off the east coast, including waters off the coast of Virgina

The program was promulgated pursuant to the OCS Lands Act, which requires that the Secretary of the Interior prepare a 5-year program that includes a schedule of oil and gas lease sales. In addition, the program is required to indicate the size, timing and location of proposed leasing activity.

While not a victory for environmental groups that oppose any offshore drilling on the grounds that the risks are high while the returns will be small or at least uncertain, the plan has also drawn criticism from Congressional Republicans for not going far enough fast enough. In a Wall Street Journal editorial, Senator Lisa Murkowski (R-AK) first said that the plan kicks the proverbial can down the road because it would "keep Atlantic and Pacific sites off-limits in order to avoid a controversial decision before the 2012 election."

In addition to not allowing development fast enough, Murkowski also wrote that the plan will result in more potential environmental harm that will occur as other nations like Mexico, Canada and Cuba and Russia develop deepwater resources, often without the safeguards that would be in place on U.S. permitted oil rigs. "In this case, we will lose the economic opportunities but still face essentially the same environmental threats," Murkowski wrote.

As indicated by Republican opposition, the plan does not create an open season environment for drilling. While more than 21 million acres of leases will be sold, they will come at a price, $100-per-acre, which is close to three times the cost under previous plans. DOI said that this was done to ensure that leases were actually used as the old pricing scheme resulted in wasted leases. This increase in price may also lead to more conscientious development as developers will look to avoid waste and operational loss.

The debate on the DOI's plans however is not over. Before the program takes effect, it will be open for public comment and consideration. Following public comment and review periods for the proposed program, as well as the accompanying Draft Environmental Impact Statement, a Proposed Final Program (PFP) and a Final EIS will be submitted to the President and Congress.

To read more details about the plan, click the links below.

DOI Program Fact Sheet: http://www.boem.gov/uploadedFiles/5-Year_Program_Factsheet.pdf.

Full OCS Oil and Gas Leasing Proposed Program:http://www.boem.gov/uploadedFiles/Proposed_OCS_Oil_Gas_Lease_Program_2012-2017.pdf

Draft Programmatic Environment Impact Statement:http://www.boem.gov/uploadedFiles/BOEM_2012-2017_OCS_Oil_and_Gas_Leasing_Draft_Programmatic_EIS.pdf

Schedule of 2011 Public Hearings:http://www.boem.gov/uploadedFiles/Fact_sheet_public_hearings.pdf

Sources

Links above as well as…

DOI Press Release: http://www.doi.gov/news/pressreleases/Secretary-Salazar-Announces-2012-2017-Offshore-Oil-and-Gas-Development-Program.cfm

Murkowski Editorial: http://online.wsj.com/article/SB10001424052970204190704577026392654471870.html?mod=WSJ_Opinion_LEFTTopOpinion

Houston Chronicle Blog: http://blog.chron.com/txpotomac/2011/11/texmessage-oil-and-gas-lease-sale-in-the-gulf-prompts-both-praise-and-criticism-from-kevin-brady/

New York Times Story: http://www.nytimes.com/2011/11/09/science/earth/us-to-open-new-areas-to-offshore-drilling.html?_r=1