Atlantic Drilling Dropped From Offshore Plan

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By Alan Kovski

March 15 — The Interior Department has dropped the prospect of Atlantic offshore oil and gas drilling from the proposed version of the next five-year plan for offshore leasing.

Interior Secretary Sally Jewell, announcing the decision March 15, said it was a reaction in large part to opposition from communities in the southeastern U.S. fearful that oil development would conflict with fishing, tourism and shipping activities.

A draft version of the plan, covering the period from mid-2017 to mid-2022, was released in January 2015 with a provision for a lease sale in 2021 somewhere off the coasts of Virginia, North Carolina, South Carolina and Georgia, as well as 10 more lease sales in the Gulf of Mexico and three in Alaskan waters.

The draft version drew more than 1 million comments. Along with public reactions, U.S. military use of the southeastern offshore was a factor but not stressed by Jewell or Director Abigail Ross Hopper of the Bureau of Ocean Energy Management, which wrote the plan.

When the proposed plan is published in the Federal Register by BOEM, it will kick off a 90-day public comment period. Along with the plan, a draft programmatic environmental impact statement will be published and subject to a 45-day public comment period.

Arctic Exploration Possible

There is no chance the Atlantic drilling plan will be added back into the five-year plan's final version, Jewell said, noting that the planning system allows only for narrowing the lease list further, not expanding it.

The leasing plans for the Gulf of Mexico are relatively uncontroversial. Alaska is a different matter, because of environmental activist opposition to Arctic drilling and the high costs and tougher regulations for Arctic waters. The five-year plan includes provisions for one sale in Alaska's Cook Inlet in 2021, one in the Beaufort Sea in 2020 and one in the Chukchi Sea in 2022.

Some parts of the Beaufort and Chukchi seas are off-limits to exploration, and more could be put off limits or be given seasonal limits if Interior is convinced of the environmental sensitivity of those areas, Jewell said. The department is soliciting public comment partly for that purpose—to elicit information about the need to protect more areas.

Royal Dutch Shell Plc and Statoil ASA both gave up last year on the U.S. Arctic offshore. Only one offshore development prospect in the U.S. Arctic is continuing to advance through the permitting process as Hilcorp Alaska LLC edges toward trying to build a gravel island for drilling the Liberty field in a near-shore part of the Beaufort Sea.

No leasing will occur off the Pacific Coast, especially because of opposition by California, Oregon and Washington, Jewell said.

‘Standing Up to Big Oil.'

Environmental activist groups hailed the decision on Atlantic drilling as the right thing to do. Oil and gas industry groups called it short-sighted.

“By dropping the Atlantic from oil and gas leasing, the administration is standing up to Big Oil and protecting our coastal communities that rightly fear a BP-style disaster,” said Rhea Suh, president of the Natural Resources Defense Council, in a statement released shortly before the Interior announcement.

“Next, the president should finish the job, honor his historic climate agenda, and protect future generations by using his authority to permanently end the threat of drilling in the Atlantic and the Arctic,” said Suh, a former Interior official in the Obama administration. She didn't explain how any president might have the authority to permanently end drilling anywhere.

The administration's relationship with oil companies, big or small, has been increasingly uncomfortable, possibly making it easy for Interior to shrug off any influence the industry might hope to have on exploration leasing .

Wishing for ‘Long-Term View.'

While environmental groups look back to the Deepwater Horizon disaster of 2010 at a BP Plc drilling site in the Gulf of Mexico, industry groups point to other nations, such as Canada, developing their Atlantic offshore petroleum prospects. Industry groups also note the coexistence of thriving oil and gas development with tourism and fishing in the Gulf of Mexico.

“By not taking the long-term view, the administration sells U.S. consumers short. Instead, they have determined they are content to let the rest of world lead in Atlantic offshore oil and natural gas development,” said Randall Luthi, president of the National Ocean Industries Association, in a statement decrying the removal of the Atlantic leasing option from the five-year plan.

When BOEM issued its draft proposal in 2015, the public comments filed by industry groups made it clear that they feared the Atlantic portion of the plan would be dropped out .

Future Leasing Plans

A future administration could revise offshore leasing plans, but the process is a slow one, taking at least a year-and-a-half and potentially subject to litigation from opponents. For the next administration, regardless of political party, the simplest strategy would be to start planning for a 2022-2027 five-year plan.

Congress also could step in to mandate changes, although it hasn't succeeded in doing so in recent years amid the political stalemate between President Barack Obama and congressional Republicans.

To contact the reporter on this story: Alan Kovski in Washington at akovski@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com