Atlantic Seismic Surveys May Get Permits But Await Action

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By Alan Kovski

Six companies are hoping to get permits to conduct seismic surveys in the U.S. Atlantic offshore as a step toward identifying the most promising places to drill for oil or natural gas.

The Trump administration is supportive of the seismic work, but uncertainty remains over whether the surveys actually will be conducted. No lease sales for exploration drilling have been scheduled for the Outer Continental Shelf in the Atlantic, and without the prospect of lease sales, the service companies that do the seismic work may be unable to find clients among oil companies to finance the surveys.

“We only see seismic surveying going ahead in the Atlantic if we see enough companies coming in with funding,” said Will Ashby, vice president of human resources and communications for TGS NOPEC Geophysical Co. ASA, one of the six companies seeking permits.

Ashby told Bloomberg BNA he was skeptical oil companies will fund a seismic survey without lease plans scheduled. As a result, permits may expire at the end of their one-year terms if no Atlantic leasing appears likely, although there is nothing to prevent the companies from seeking new permits in the future if the prospect of Atlantic leasing grows.

Along with TGS, the other five geophysical companies that have pending applications for Atlantic seismic surveys are Petroleum Geo-Services ASA, Spectrum ASA, ION Geophysical Corp., CGG S.A. and WesternGeco Ltd., a subsidiary of Schlumberger Ltd.

There is no time frame for how long the permit reviews will take, said a spokesman for the permitting agency, the Interior Department’s Bureau of Ocean Energy Management.

‘There’s a Lot of Interest’

President Donald Trump ordered reconsideration of possible oil and gas leasing in the Atlantic, with a clearly expressed interest in mid-Atlantic and southern Atlantic leasing though without any commitment. The leasing program review will take about two years to complete, Interior Secretary Ryan Zinke said.

Zinke issued an order May 10 to resume evaluation of the permit applications from the six service companies. The Obama administration denied those applications Jan. 5 on the assumption there was no point in allowing them without lease sales scheduled.

The Obama administration in 2015 tentatively proposed a lease sale in 2021 for oil and gas exploration somewhere in the mid-Atlantic and southern Atlantic from Virginia to Georgia, then dropped the idea in March 2016 after running into opposition from environmental activists and residents of coastal communities.

“Over 80 percent of the last administration’s proposed lease plan [for the Atlantic] has never been surveyed,” said Nikki Martin, president of the International Association of Geophysical Contractors. “So there’s a lot of interest in finding what the potential is.”

Asked what the most promising offshore areas might be, Martin said, “I think that’s exactly the kind of information they’re hoping to attain,” adding that the government as well as industry needs the seismic data to inform future decisions.

Wells Drilled in Atlantic

The last seismic work in the Atlantic was conducted in the 1980s. New seismic work will use better technologies to give the government a better sense of what resources might be available, Zinke said in his May 10 statement along with his order to resume permit review.

Companies drilled 51 exploratory wells in the Atlantic offshore during 1976-1984, a period when nine lease sales were held.

The wells were drilled by Exxon Corp. and Mobil Corp. before their merger, Chevron Corp. and Texaco Inc. before their merger, Royal Dutch Shell Plc, ConocoPhillips Co.’s predecessor Conoco Inc., Murphy Oil Corp. and a few other companies such as Gulf Oil Corp. before its acquisition by Chevron.

Several wells found some hydrocarbons, but none led to followup development.

The Baltimore Canyon Trough, a sedimentary basin off New Jersey, Delaware and Maryland, saw 32 wells drilled. Farther south is the Carolina Trough, a sedimentary basin off North and South Carolina, within the area temporarily considered for exploration by the Obama administration. It has never been drilled.

Ten wells were drilled farther north on the Georges Bank offshore of New England, and a handful were drilled elsewhere, notably off North Carolina north of the Carolina Trough.

Much Opposition Remains

Many people hope the surveys never happen, either because they worry about the commercial and environmental impacts of eventual oil drilling or because they are concerned about possible harm to marine mammals from the seismic surveys themselves.

Rep. Don Beyer (D-Va.) in April introduced a bill (H.R. 2158) to prohibit seismic activities in the Atlantic for oil and gas work. Rep. Frank Pallone (D-N.J.) in early May introduced a bill (H.R. 2272) to prohibit offshore drilling in the Atlantic.

There is no reason to expect a Republican-dominated Congress to go along with such legislation, although a few Republicans from coastal states signed on as cosponsors of the bills.

When the Obama administration suggested Atlantic exploration drilling, many Atlantic coastal communities in the Southeast expressed very strong opposition. Recreation and fishing are important parts of the Southeastern coastal economies and were seen by the critics as threatened by offshore drilling.

Concerns for Marine Mammals

The companies applying for seismic survey permits also need “incidental take permits” under the Marine Mammal Protection Act to minimize harm to whales, dolphins and other marine mammals. The take permits are issued by the National Marine Fisheries Service, which also consults with the Bureau of Ocean Energy Management on endangered species, including several whale species.

Some academic biologists worry about the impacts on sea life. Douglas Nowacek, a marine mammal specialist at Duke University, led a group in 2015 that advocated international regulation of seismic surveys to protect marine life.

Part of the worry is that the sound waves generated in seismic work can severely harm whales, possibly deafening them.

For seismic surveys, airguns are dragged behind a boat and fire acoustic signals down through water and subsea geologic layers. Reflections of the acoustic waves provide information about the geology of the subsurface.

The Bureau of Ocean Energy Management requires mitigation measures such as avoidance of firing airguns when whales are spotted near a survey boat.

There is no documented scientific evidence that noise from airguns used in seismic surveys adversely affects marine animal populations, BOEM has said.

Canada Keeps Offshore Active

Ashby at geophysical company TGS said the Canadian province of Newfoundland and Labrador demonstrates how to keep the investments in offshore work flowing.

The province has a system of annual lease sales for the Atlantic offshore, and that has encouraged much seismic survey work in an area of great potential that is “hugely underexplored,” as Ashby put it.

TGS and Petroleum Geo-Services have been teaming up for multi-client surveys in the Canadian offshore. In the typical multi-client arrangement, oil companies provide upfront funding for seismic work, and those companies get first access to the data and a discount on the price. At a later date, other companies also can buy the data.

Some geophysical companies have a different approach, doing a survey for one client and letting that client take ownership of the data.

This summer will see the seventh consecutive season of data acquisition by the TGS and Petroleum Geo-Services joint activity.

Mexico, too, has seen much seismic work recently as it has opened up its offshore to exploration by foreign companies. Much seismic activity also has occurred in the North Sea and off the coasts of Australia, New Zealand and West Africa.

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

To contact the editor responsible for this story: Paul Connolly at PConnolly@bna.com

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