Not All Offshore Drilling is Practical: Zinke

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By Nushin Huq

In the Interior Department’s five-year review of its offshore leasing plan, Secretary Ryan Zinke said all options are on the table when it comes to opening new leases. But not if the market says so.

Zinke told reporters in Houston May 1 that when it comes to opening up new leases such as the Eastern Gulf or new land leases, the department would consider all options. But he hedged by saying everything would be reviewed.

“My task is to look at where we’re going to make changes and make recommendations across the board,” Zinke said. “That’s going to be a two year effort.”

The two-year review will also have “market-driven” recommendations, Zinke said, adding that in some areas the economics to drill are just not there. In the Atlantic, Zinke would like to consult the military and perform seismic studies to find out what resources are there. Some parts of the coast also may be opened up to offshore wind. But the most opportunities are clearly on the West coast of the Gulf of Mexico, he said.

“We have to work with Congress on this,” Zinke told Bloomberg BNA. “We have to base it on science, you have to base it on seismic and look at where the market is in five years. There are some places where it is not going to be appropriate to drill. The margins are very thin at $50 per barrel. We are going to look at the economic data we have on our holdings.”

However, he said, the review will also take into account the local sentiment on drilling and other energy development projects.

“I don’t live in a vacuum,” Zinke said.

Zinke stressed that the Obama administration’s five-year leasing plan is still in effect and the department is currently just reviewing the plan. He spoke to reporters after giving prepared remarks and signing two orders at the Offshore Technology conference.

Orders Signed

Zinke signed a order directing the Bureau of Ocean Energy Management to develop a new five-year plan for oil and gas exploration in offshore waters and reconsider a number of regulations governing those activities. The second order created a new position, counselor to the Secretary for Energy Policy, who will coordinate the Interior Department’s energy portfolio. Vincent DeVito, a former assistant secretary of energy and Massachusetts campaign chairman for Trump’s campaign, has been nominated to the position.

He plans to reorganize the department, moving resources to the “front lines,” and creating similar boundaries for each regional department. Some of the largest offices are in Washington and Denver, but he said an office could be added to Alaska. A review of combining Bureau of Safety and Environmental Enforcement and Bureau of Ocean Energy Management won’t take place until the end of this summer.

Speaking to BSEE employees during a tour of the conference, Zinke said he plans to give the outpost offices more resources, including moving the U.S. Geological Survey personnel to those offices. The new head of BSEE will probably be announced by end of May, he told reporters after the tour.

Regarding personnel at the department, Zinke said 16 percent of Interior employees are currently at retirement age, and in five years, that will increase to 40 percent. The department needs to look at hiring more people and focus on career development, he said.

Orienting Interior

Zinke wants to work with the states and is looking at sharing rents and royalties, but didn’t give any specifics other than to say how rent is shared with states needs to be transparent.

“It can’t be arbitrary, the public has to have a value proposition,” Zinke said.

Not only is energy development on public land good for economics, it is better for the environment, Zinke said.

To contact the reporter on this story: Nushin Huq in Houston at nHuq@bna.com

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

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