Platts: FEATURE: Fight over US offshore plan to focus on Gulf of Mexico, Atlantic, Alaska

Washington (Platts)–28Jul2014/403 pm EDT/2003 GMT

The Obama administration later this week is expected to fully delve into the three-year process to develop the next five-year plan for offshore oil and gas leasing, an effort expected to center on whether to allow drilling in US Atlantic waters and offshore Alaska.

The US Interior Department’s Bureau of Energy Management has already received hundreds of comments on which offshore areas should be auctioned off for oil and gas drilling from 2017 to 2022 and is expected to receive thousands more by Thursday, the deadline for its formal “request for information.”

The plan, which administration officials want to have finalized before Obama is scheduled to leave office in January 2017, is expected to spark broad disagreements between industry, which wants unfettered access to the outer continental shelf, and environmentalists, who want offshore drilling limited, if not shut down completely.

The plan has already drawn considerable concern from California’s Democratic congressional delegation, which has urged Interior officials to keep California’s offshore waters out of the five-year plan.
But the three OCS planning areas offshore California are largely seen as politically untenable and will likely draw little focus from industry lobbyists, according to Erik Milito, upstream director for the American Petroleum Institute.   Milito said that industry is expected to push for expanded drilling throughout the US Gulf of Mexico, as well as in the Atlantic and offshore Alaska.
The majority of the eastern Gulf and a portion of the central Gulf are subject to a congressional moratorium and are not expected to be open for leasing until 2022, but Milito said this should not prevent the administration from including it in its leasing plan. The moratorium, he said, could always be reversed and, like any other offshore areas where oil and gas could be produced, the administration should not stand in the way.

“If you keep areas out of the program, then you’re taking those opportunities off the table and you’re pushing things way further out,” Milito said. “From our long-term energy planning standpoint, both from the government and the industry, it’s important to keep options on the table and not take them off the table.”

The administration is expected early next year to approve applications for companies to conduct seismic testing in the mid- and south Atlantic, but BOEM and industry officials said the administration could include the Atlantic in its next five-year plan even if these tests to update decades-old data are not complete.

Just because a lease sale is scheduled for a particular planning area, there’s no guarantee a lease sale will take place, Milito said.

“It just means you’re including opportunities for a potential lease sales,” he said. “If you don’t include the Atlantic then you have no possibility of doing it.”

BOEM’s current 2012-2017 schedule includes 15 lease sales — 12 in the Gulf of Mexico and three offshore Alaska, with the latter including sales planned for the Chukchi Sea and Cook Inlet in 2016 and the Beaufort Sea in 2017. Only six of the 26 OCS planning areas are included in the current leasing program.

Alaska Senator Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, wants to see additional drilling offshore Alaska, but is not pushing for a specific plan outside of simply expanding leasing offshore the state, according to Robert Dillon, a spokesman.  In other words, Murkowksi is not specifying which of the 15 federal planning areas offshore Alaska she wants to see included in the next leasing plan. Dillon said the specifics would be up to industry.

–Brian Scheid, brian.scheid@platts.com –Edited by Lisa Miller, lisa.miller@platts.com
Special thanks to Richard Charter
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