Senate Committee Considers Outer Continental Shelf Leases
Before a prospector can explore natural resources, (s)he must first acquire the mineral rights. On the productive outer continental shelf (OCS) of the U.S., those rights belong to the federal government. Every five years, the U.S. Bureau of Ocean Energy Management (BOEM) must generate a complete plan for upcoming leases on the OCS. In the current proposed plan, 13 leases would be offered, all in the Gulf of Mexico, down from 15 in the previous five-year plan.
The Senate Energy and Natural Resources Committee held a hearing to examine this proposed 2017-2022 OCS Oil and Gas Leasing Program. Decisions by BOEM are complex, as the “Secretary of the Interior must consider a number of factors and balance the potential for environmental damage, discovery of oil and gas, and adverse impact on the coastal zone to determine the size, timing, and location of lease sales,” explained BOEM Director Abigail Ross Hopper. BOEM also takes stakeholder comments into account; since releasing the draft leasing proposal in January of this year, they have received over one million comments and held 23 public meetings. They will continue to accept comments on the 2017-2022 leasing plan until June 6, 2016.
Economist Dr. Joseph R. Mason (Professor, Louisiana State University) suggested that the “federal government is [financially] better off selling leases today rather than waiting for inflation expectations to rise.” By Dr. Mason’s estimation, the current BOEM plan would contribute $457- 747 million in annual gross domestic product to the Gulf states, including annual wages of $91-146 million to the region and $21-34 million in state and local tax revenues during development. He sees no reason to limit leases to the Gulf of Mexico and stated that domestic oil burns cleaner than many foreign oils, so U.S. OCS drilling may be an environmentally prudent option.
Chairwoman Lisa Murkowski (AK) showed disappointment in the low number of proposed BOEM leases and their proposed locations, with none in her state’s waters. According to the Chairwoman, 70 percent of Alaskans support local petroleum leases, and the Mayor of Wainwright, Alaska, John Hopson, Jr., agrees. He hopes oil exploration and production in Alaskan waters would bring much-needed economic growth to his region of the Arctic, where it is “very clear that we need development.” It remains unclear whether oil companies would even be interested in leases off Alaska, considering that Shell recently cancelled its plans for drilling in its previously selected well location.
The Atlantic margin has also not been listed with the proposed leases. Dr. James Knapp (Professor, School of the Earth, Ocean and Environment, University of South Carolina) has been a vocal advocate for acquiring new seismic data on the Atlantic OCS so that BOEM can “execute its statutory obligation to adequately evaluate the resource potential of this essentially frontier petroleum province” and for the benefit of science. While not expressly supporting Atlantic drilling, Dr. Knapp pointed out the lack of scientific knowledge about the Atlantic, “There are still vast areas on the outer continental shelf, which have never been imaged with any seismic data.” He also noted that acquisition of new, high-tech seismic data would aid industry and science without detriment to marine life since, “There is no demonstrable correlation between seismic activities either here in the U.S. or worldwide that shows that there is a significant or long lasting threat to either marine mammals or the marine environment.” Director Hopper noted that direct environmental effects were not the only issue; if a spill were to occur on the Atlantic or Alaskan margins, the infrastructure to contain it would have to be transported from the distal Gulf.
These potential large-scale projects require considerable upfront investment and take a long time to see to fruition. All panelists agreed on the importance of making prudent decisions as soon as possible, though the relative weight of economic, social, and environmental costs to the decision-making process remain contentious.