US to open Atlantic to oil, gas drilling

OREANDA-NEWS. The US administration today unveiled a draft, five-year offshore leasing plan that —potentially — could enable oil and gas producers to drill off the US east coast from Virginia south to Georgia for the first time since 1984.

The Interior Department's Bureau of Ocean Energy Management (BOEM) released a draft 2017-2022 offshore leasing plan that contemplates holding one lease sale for acreage in the Atlantic in 2021. But the plan would open no new areas in the eastern Gulf of Mexico, while walling off portions of the Chukchi and Beaufort seas off the northern Alaska coast.

Interior secretary Sally Jewell called the plan "a balanced proposal that would make available nearly 80pc of the undiscovered, technically recoverable resources, while protecting areas that are simply too special to develop."

In all, the plan proposes holding 14 lease sales over the period, including 10 in the Gulf of Mexico. Rather than hold alternating lease sales in the central and western Gulf of Mexico, and periodic sales in the eastern section, the plan calls for region-wide Gulf sales.

BOEM is proposing three lease sales for acreage off Alaska, one in the Beaufort sea in 2020, one in Cook Inlet in 2021 and one in the Chukchi in 2022. The plan envisions no lease sales off of California.

Perhaps the most controversial element of the plan calls for holding a lease sale that would cover yet-unspecified territory in BOEM's Mid- and South-Atlantic planning areas. No acreage closer than 50 miles to shore would be offered for lease to avoid interfering with Defense Department and NASA activities along the coast.

Industry officials are hoping to begin shooting seismic in the Atlantic later this year or in 2016, to update data that is more than three decades old. BOEM last June issued a programmatic environmental impact statement for geological and geophysical work but has yet to issue any permits.

But Jewell made clear plans for opening parts of the Atlantic for drilling are still tentative and subject to change. "When it comes to considering leasing on the Atlantic, we need more information," Jewell said.

President Barack Obama had announced plans in March 2010 to open the waters off the coast of Virginia to oil and gas drilling. But 20 days later BP lost control of its Macondo well in the US Gulf of Mexico in the deadly Deepwater Horizon accident, in what became the worst oil spill in US offshore history. And the administration quickly revoked plans to allow drilling in the Atlantic.

The federal government held 10 offshore oil and gas lease sales for acreage in the Atlantic from 1976-1983. Five wells were drilled there between 1975-79 under the auspices of BOEM predecessor the US Minerals Management Service's continental offshore stratigraphic test program.

Producers then drilled another 46 wells in the Atlantic from 1977-1984. Five wells off the coast of New Jersey found natural gas or condensate deposits but were deemed uneconomic.

While BOEM will offer some acreage for lease in the Chukchi and Beaufort, Obama is withdrawing portions of those seas from leasing consideration. Much of those areas already had been excluding under the existing 2012-17 leasing plan, as well as by former president George Bush's administration.

Whaling areas in the Beaufort sea near Barrow, Alaska, and Kaktovik, Alaska, will be off limits, along with a 25-mile coastal buffer and the Hanna Shoal area in the Chukchi.

Those restrictions follow Obama's decision in December to extend indefinitely a ban on leasing in Bristol Bay off Alaska's southwest coast.

Shell waded out to the US arctic offshore in 2012, only to experience a series of mishaps. The company began preliminary work on one well each in the Chukchi and Beaufort seas but was unable to drill to oil-bearing zones.

"As recent exploration attempts by Shell have demonstrated to the world, the arctic is a tough place that requires specialized planning and detailed consideration," Jewell said. But she said "there is nothing that we are announcing today that impact's Shell plans."

Industry trade group the Independent Petroleum Association of America president Barry Russell welcomed the administration's move to expand offshore access by opening areas in the Atlantic. American Petroleum Institute director of upstream Erik Milito said that while considering development in the Atlantic is a good step "the administration's proposal represents the bare minimum for potentially opening that area by including only a single lease sale six years from now."

Shell voiced concerns that "key acreage in the eastern Gulf of Mexico was excluded, especially given the existing data that indicates the region may hold significant oil and gas resources."

Environmental group the Natural Resources Defense Council executive director Peter Lehner warned the plan would expose the US eastern seaboard and offshore waters to the risk of a well blowout, while the Sierra Club's Athan Manuel said "keeping dirty fuels in the ground" must be part of Obama's pledge to address climate change.