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Obama leaves Arctic off the table

Written by  Melissa Sustaita & Audrey Leon Friday, 18 November 2016 13:53

The US Department of the Interior (DOI) and Bureau of Ocean Energy Management (BOEM) released the final plan for the Outer Continental Shelf (OCS) lease sales for 2017-2022, excluding areas in the Beaufort and Chukchi Seas in the US Arctic, much to the dismay of industry watchers.

Photo: Pete Souza/White House Flickr.

The proposed final program offers 11 potential lease sales in four planning areas – 10 sales in the portions of three Gulf of Mexico program areas that are not under moratorium, and one sale off the coast of Alaska in the Cook Inlet program area.

“The plan focuses lease sales in the best places – those with the highest resource potential, lowest conflict, and established infrastructure – and removes regions that are simply not right to lease,” said Secretary of the Interior Sally Jewell.  “Given the unique and challenging Arctic environment and industry’s declining interest in the area, forgoing lease sales in the Arctic is the right path forward.”  

BOEM Director Abigail Hopper added: “The plan was informed by robust stakeholder engagement and the best available science. The proposal makes available more than 70% of the economically recoverable resources, which is ample opportunity for oil and gas development to meet the nation’s energy needs.”

The Secretary may approve the final 2017-2022 program after a minimum of 60 days, which would set the plan to become effective on 1 July 2017. 

Industry reaction

The National Ocean Industries Association (NOIA) blasted the Obama administration for excluding the Arctic, calling the decision arrogant and "unfathomable."

"Offshore energy development is a vital part of the US economy, providing jobs, energy security and much needed government revenue. Yet, on the way out of office, the Obama administration remains determined to leave a legacy that keeps much of America’s vital offshore oil and natural gas resources off limits to exploration and development,"said NOIA President Randall Luthi. "The eye-rolling decision to eliminate lease sales in the Beaufort and Chukchi seas from the Final 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Program is a short-sighted political decision that threatens US energy security, pulls the rug out from under Alaskans, and is a slap in the face and for consumers in the US and throughout the world."

The American Petroleum Institute echoed the same anger over the decision to exclude Arctic areas from the lease sales expressed by NOIA.

“Keeping the Arctic off limits to development also puts the US at a serious competitive disadvantage," said API President and CEO Jack Gerard. "Russia has been actively exploring in the region, and military experts warned earlier this year that removing the Arctic from the leasing plan would ‘signal retreat, needlessly reducing US flexibility for promoting our national interests and our ability to ensure international cooperation.’ And it would forego research and exploration of the world’s largest remaining conventional, undiscovered oil and natural gas resources at a time when it remains important to implement a long-term vision for America’s strategic energy future."

It is true that Russia has been actively exploring and producing from the Arctic. And, in October, Russia and Norway agreed to share seismic data in the Barents Sea. However, the US could catch a small break as Russia announced a temporary ban on new Arctic offshore exploration licenses back in September. The move is meant to steer focus on existing Arctic developments.

Leasing: Gulf of Mexico

Known as one of the most productive basins in the world, the Gulf of Mexico’s resource potential and industry interest are high, and oil and gas infrastructure is well established.

The proposed final program includes 10 sales in the Gulf of Mexico, and to provide greater flexibility for investment in the GoM, the program adopts a new approach to lease sales by offering two annual lease sales for the entire Western, Central, and Eastern Gulf of Mexico acreage not under moratorium.  This is a shift from the traditional approach of one sale per year in each of the Western Gulf and the Central Gulf and periodic sales in the Eastern Gulf, the two agencies said.

Leasing: Alaska

Considering the fragile and unique Arctic ecosystem and the recent demonstrated decline in industry interest, the Obama Administration has decided to exclude the Chukchi and Beaufort Seas from the proposed final program.

“Based on consideration of the best available science and significant public input, the DOI’s analysis identified significant risks to sensitive marine resources and communities from potential new leasing in the Arctic. Moreover, due to the high costs associated with exploration and development in the Arctic and the foreseeable low projected oil prices environment, demonstrated industry interest in new leasing currently is low,” the two agencies said.

However, the proposed final program does include one sale in the northern portion of the Cook Inlet Planning Area. 

Cook Inlet is a mature basin with a long history of oil and gas development in state waters, where existing infrastructure could support new activity. The design of this program area balances the protection of endangered species by taking into account the beluga whale and the northern sea otter critical habitat, with the availability for leasing of areas with the greatest industry interest and existence of oil and gas resources, the two agencies said.

Read more

Cold Comfort - Bruce McMicheal reports for OE on Arctic exploration activity. [OE: October 2016]

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