In a press release on January 27, 2015, the Interior Department and Bureau of Ocean Energy Management (“BOEM”) announced their draft strategy for an offshore oil and gas leasing program that will be finalized from 2017 to 2022. The draft plan is a work in progress, however; it is still subject to public comment and to date has been informed by more than 500,000 comments.
According to the Interior Department, the plan will be regionally tailored in order to balance leasing and development. It will allow drilling on the outer continental shelf, which would open up areas of the Atlantic Ocean that were previously prohibited, while at the same time protect other areas in the Artic that have been deemed too sensitive and unique to open up to drilling. The plan would also increase drilling rights in the Gulf of Mexico, where there are already more than 32 million acres leased for drilling.
“The safe and responsible development of our nation’s domestic energy resources is a key part of the President’s efforts to support American jobs and reduce our dependence on foreign oil,” said Secretary of the Interior Sally Jewell. “This is a balanced proposal that would make available nearly 80 percent of the undiscovered technically recoverable resources, while protecting areas that are simply too special to develop.”
By 2013, outer continental shelf oil and gas leases accounted for about 18% of domestic oil production and 5% of domestic natural gas production, which has generated billions of dollars and supported hundreds of thousands of jobs. The Interior Department estimates that, in the Atlantic’s outer continental shelf alone, there are 3.3 billion barrels of recoverable oil and 31.3 trillion cubic feet of natural gas.
The specific areas covered by the plan include:
Several Alaskan areas have been mostly carved out of the drilling proposal, including the Barrow and Kaktovik whaling areas in the Beaufort Sea, and areas in the Chukchi Sea, Hanna Shoal, and Bristol Bay. The main reason for this exemption is that studies have found these areas to be of critical importance to many marine species, including Pacific walruses and bearded seals. These exemptions also protect fishing areas of Alaska Natives, who use these areas as a main source of food. The draft proposal proposes just one lease sale each in the Chukchi Sea, Beaufort Sea, and Cook Inlet areas.
Gulf of Mexico The draft proposal includes ten lease sales for the Gulf of Mexico and contains a new approach to lease sales in the region overall. The draft proposal would allow for two annual lease sales in the Western, Central, and Eastern Gulf, rather than one annual sale each in the Western and Central regions.
“This new approach will allow for BOEM to more effectively balance the sales while providing greater flexibility to industry to invest in the Gulf, particularly given the significant energy reforms recently adopted by the Mexican government,” said BOEM Director Abigail Hopper.
Atlantic The draft proposal includes a potential lease sale in the Mid- and South Atlantic, which would include areas offshore to Virginia, North Carolina, South Carolina, and Georgia. There would be a 50-mile coastal buffer zone to address concerns over recreational fishing, wildlife habitat, and other environmental issues.
Pacific The Pacific Coast is not considered for drilling because of the coastal states’ opposition of drilling.
The expansion of the proposed drilling area is seen as a win for the oil and gas industry, but is being decried by environmental groups. Environmentalists fear that this plan will endanger the coasts of the Atlantic states, should there be another oil spill like the Deepwater Horizon spill that impacted the Gulf Coast in 2010. Environmental groups point to the heavy dependence on tourism and fishing in states like Virginia and North Carolina, and claim a spill could devastate those industries.
Not everyone shares those feelings, however. In fact, one of the strongest proponents of the proposal to open the Atlantic coast to drilling is Gov. Pat McCrory of North Carolina. Gov. McCrory—who has fiercely opposed many of the President’s other environmental initiatives—stated that President Obama is “taking a step in the right direction to help North Carolina become a significant energy-producing state.” Gov. Mr. McCrory added that “[r]esponsible exploration and development of oil and gas reserves off our coast would create thousands of good paying jobs, spur activity in a host of associated industries, generate billions of dollars in tax revenue and move America closer to energy independence.”
Gov. Terry McAuliffe of Virginia joins Gov. McCrory in welcoming what he calls responsible oil and gas exploration off the Atlantic coast. He commented that “[i]f we proceed in a smart and safe way, we can unlock gas, oil, and wind assets offshore while protecting our environment and Virginia’s close relationship with the Department of Defense and other key stakeholders. I will continue to work with the Obama administration on this important issue to move our energy economy forward.”
Despite the support of the states, environmental groups vow to fight the proposed expansion. The Interior Department plans to hold over 20 public hearings on the plan, which does not require approval from Congress.
This article was authored by Jennelle D. Arthur, Jackson Kelly PLLC. For more information on the author, see here.