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At the end of January, the Obama administration announced the next step in a long process that could result in the exploration and ultimate extraction of oil-and-gas resources of the U.S. mid-Atlantic—something the Outer Continental Shelf (OCS) Governors Coalition supports. On March 30, the 60-day comment period ends. If everything goes well, we could see new American resources on the market in twenty years.
With the current oil abundance, it may seem like an odd time to be going after more. However, the legal wheels that could allow limited access to the vast, untapped oil resources move very slowly. Today’s market conditions will fluctuate between now and 2035 when the global demand for energy is expected to spike. Not to mention the increasingly volatile situation in the Middle East, where new coalitions are already being formed: Iran and Iraq, Saudi Arabia and South Korea—just to name two. If one more beheading takes place or a bomb hits the right (or wrong) target, the region could erupt, and the entire energy dynamic would change. Considering the variables, American energy security is always something worth pursuing.
The planning for the 2017-2022 OCS leasing program (5Y OCS) began June 2014, when the Bureau of Ocean Energy Management (BOEM) issued a request for information and comments. Then, in January, it published the Draft Proposed Plan; the Final Proposed Plan is anticipated in early 2017. 5Y OCS proposes just one mid-Atlantic lease sale six years from now—and even its future is precarious. The mid-Atlantic currently has no leases in federal waters.
Explaining the process, Offshore magazine writes: “The OCS Lands Act requires the Secretary of the Interior to prepare a five-year program that includes a schedule of potential oil and gas lease sales and indicates the size, timing and location of proposed leasing activity as determined to best meet national energy needs, while addressing a range of economic, environmental and social considerations.”
The BOEM estimates that the entire U.S. OCS holds approximately 90 billion barrels of oil and more than 400 trillion cubic feet of natural gas which are technically recoverable. Based on 30- to 40-year-old data, it estimates that the mid-Atlantic OCS may contain approximately 8-9 billion barrels of oil equivalent—which at current consumption rates would be enough to meet South Carolina’s needs for 67 years. New seismic and other geological and geophysical surveys are needed. Modern practices and technologies will provide a more comprehensive view that will help make informed decisions on using the resources.
While the proposal for possible mid-Atlantic development faces opposition from environmental lobbyists, who call it a gift to oil-and-gas interests and an anchor to the “dirty fossil fuels of the past,” it enjoys a favorable political climate in the affected coastal states, where polls show citizens support offshore drilling.
When the January announcement came out, North Carolina’s Republican Governor Pat McCory, chairman of the OCS Governors Coalition, applauded the proposal: “Responsible exploration and development of oil and gas reserves off our coast would create thousands of good paying jobs, spur activity in a host of associated industries, generate billions of dollars in tax revenue and move America closer to energy independence.” Even Virginia’s Democrat senators say the proposal is a “significant step … that should result in safe, responsible development of energy resources off the Virginia and mid-Atlantic coasts.”
Both the senators and governors want to see legislation passed that would provide for the same type of revenue-sharing system currently applied to the Gulf States to compensate local communities for additional infrastructure, environmental protection, and other coastal management needs generated by the new economic activity. If Congress allows revenue sharing, Brydon Ross, Southeast director of the Consumer Energy Alliance (CEA), predicts that it “could generate more than $10 billion in revenue combined for critical public budget infusions without taxpayer dollars.”
Unfortunately, even though the draft proposal includes it and lawmakers and citizens in the impacted states support it, future mid-Atlantic resource development is not a sure thing. The Washington Post (WP) calls the plan: “politically fraught.”
“This is a political plan,” Randall Luthi, president of the National Ocean Industries Association, stated, “not a plan based on science and resource data”—though he acknowledged it “is a small step in the right direction.” Luthi added: “Our members are encouraged by the decision to further analyze the mid- and south-Atlantic areas, which have not been included in a leasing program for over two generations.”
5Y OCS is still in the early stages. Addressing the ongoing process, Jeremy Kennedy, an attorney who focuses on domestic- and international-energy transactions, explains: “Each of the steps … will winnow the scope of the 2017-2022 leasing program.” The WP reports: BOEM “could decide to narrow—but not expand—the proposed leasing area before it is finalized.”
Kennedy sees that “little is certain at this time.” After all, the Obama administration has killed previous potential lease sales. “Once published,” he states, “planned lease sales can always be cancelled or delayed by the Interior Department, president or Congress.”
Will the U.S. pursue development of our own offshore oil-and-natural gas resources in the Atlantic, as Canada, Cuba, the Bahamas, and South American Atlantic-coast countries do? No one really knows—but it is something we should do.
Supporters of American energy security need to get involved in the “political process” by making our voices heard. Add your public comment before the March 30 deadline.