Questions and Answers: The Next Five-Year OCS Oil and Gas Leasing Program (2012-2017)
The 8th program prepared since Congress passed the OCS Lands Act Amendments in 1978
Q1. What effect does the Secretary’s decision on the eight OCS areas that will receive public scoping (information gathering) have on the eventual 2012-2017 OCS leasing program?
The Secretary’s decision merely identifies those areas that he would like to have studied in the draft environmental impact statement (EIS) for the 2012-2017 program. While this decision is not a final determination of the areas to be considered for leasing in the final 5-year schedule of proposed lease sales, any areas not analyzed in the new EIS cannot be later considered for leasing in the 2012-2017 program.
Q2. How would the Secretary’s decisions on the current 5-year program (contained in the Preliminary Revised Program for 2007-2012) affect development of the new program?
The Secretary’s Preliminary Revised Program decision for the current program does not limit his decisions for the new program. Because the MMS scoping effort is for preparation of an entirely new EIS for a new program, the areas to be evaluated in the EIS (and considered in future 2012-2017 program decisions) are not limited by the Preliminary Revised Program decision. In fact, the Secretary has asked MMS to include in its scoping effort three planning areas not included in the Preliminary Revised Program – the Beaufort Sea, offshore Alaska; the South Atlantic; and the Eastern Gulf of Mexico – and a larger area of the Mid-Atlantic than that included in the Preliminary Revised Program. (Eastern Gulf Sale 224 is listed on the Preliminary Revised Program sale schedule as an historic record of leasing activity during the time period. The sale was mandated by the Gulf of Mexico Energy Security Act of 2006 and not subject to section 18 (OCSLA) analysis in the 2007-2012 program.)
The Secretary’s decision to remove from the 2007-2012 schedule all the Beaufort Sea sales and the remaining Chukchi Sea lease sales (retaining Sale 193, held in 2008) does not limit his decisions regarding leasing consideration in those areas for the new program. He specifically stated that such program decisions will be based in part on information gained from exploration of the extensive acreage already under lease in those areas, particularly as that information helps MMS analyze the likely effects of developing the infrastructure that would be needed to produce and transport Chukchi resources to market as well as ongoing research on oil spill clean-up in icy waters and more awareness of the effects of climate change. However, the conditions underlying the Secretary’s rationale for removing the North Aleutian Basin sale from the Preliminary Revised Program are unlikely to change in the foreseeable future; thus, he has not asked for that area to be studied in the EIS.
Q3. How might the Secretary’s scoping decision on next 5-year program affect future lease sales in the Gulf of Mexico Region and how might the new program differ from the current program?
The Central and Western Gulf of Mexico planning areas remain the two areas of highest resource potential and interest. The initial decision on scoping implies that the proposed program decision that is expected in the spring of 2011 is likely to continue to include annual area-wide lease sales in the two areas. However, the decision to include an area for study is not a decision to schedule lease sales in that area.
In addition, the initial scoping decision would include a portion of the Eastern Gulf among the areas to be studied in the EIS. The Eastern Gulf area being scoped for the draft EIS focuses on the southwestern third of the planning area rather than the entire area contemplated in the January 2009 Draft Proposed Program, but does encompass a larger area than the area offered in Sale 224 pursuant to Gulf of Mexico Energy Security Act. While much of the Eastern Gulf is subject to a moratorium until 2022, Congress could choose to modify or eliminate the restriction. If that were to happen, the area must be on an approved 5-year schedule for leasing to be considered.
In recognition of the importance to national security as a testing area, the area to be scoped is at least 125 miles off the Florida Coast. However, this area is estimated to contain approximately 2/3 of the available oil and gas resources in the Eastern Gulf.
The MMS estimates of undiscovered, economically recoverable resources for the Gulf of Mexico areas proposed for EIS scoping are: Western GOM: 8-10 billion barrels of oil and 50-60 trillion cubic feet of natural gas; Central GOM: 25-28 billion barrels of oil and 100-130 trillion cubic feet of natural gas; and approximately 2/3 of the 3-3.5 billion barrels of oil and 11-17 trillion cubic feet of natural gas in the Eastern Gulf of Mexico.
Q4. How might the Secretary’s scoping decision for the next 5-year program affect future Atlantic OCS lease sales and how might the new program differ from the current program?
The current program includes a special interest sale in the Mid-Atlantic off the coast of Virginia. In contrast, the initial scoping decision would include the entire Mid-Atlantic and South Atlantic planning areas in the EIS analysis. Decisions as to whether to schedule lease sales in these areas, and if so, whether to remove from leasing consideration those parts of the planning areas with conflicting uses (e.g., shipping lanes) or particular sensitivity, will come later in the process of developing the new 5-year program and the pre-sale process.
The MMS estimates of undiscovered, economically recoverable resources for the Atlantic OCS areas proposed for EIS scoping are: Mid-Atlantic: 0.5-1 billion barrels of oil and 2.5-11 trillion cubic feet of natural gas; South Atlantic: 0.03-0.15 billion barrels of oil and 0.3-0.7 trillion cubic feet of natural gas.
Q5. How might the scoping decision affect future Pacific OCS lease sales?
The initial scoping decision does not call for any Pacific planning areas to be evaluated for the EIS. As only areas analyzed in the EIS may be considered for leasing, the new program would match the current program and not offer any Pacific region planning areas for leasing consideration.
Q6. How might the scoping decision affect future Alaska OCS lease sales and how might the new program differ from the current program?
There are 15 planning areas in the OCS offshore Alaska. Most have never been offered for leasing consideration because of the low resource potential and/or extremely high costs. The Preliminary Revised Proposal for 2007-2012 retains the very successful Chukchi Sea Sale 193, held in 2008, and two special interest sales in Cook Inlet. Special interest sales are held only if there is sufficient industry interest shown in response to annual calls for information. The first Cook Inlet sale (Sale 211, scheduled for 2009) was cancelled due to lack of industry interest.
The initial scoping decision for the 2012-2017 program calls for the Chukchi Sea and Cook Inlet, as well as the Beaufort Sea, to be studied for the EIS. Therefore, the proposed program for 2012-2017 could include all or portions of the three areas. Those portions included for leasing consideration are called “program areas.” The program areas included in the proposed program and the final EIS would be available for consideration in the final program. However, the decision to include an area for study is not a decision to schedule lease sales in that area.
The MMS estimates of undiscovered, economically recoverable resources for the Alaska OCS areas proposed for EIS scoping are: Beaufort Sea: 2-7 billion barrels of oil and 3-20 trillion cubic feet of natural gas; Chukchi Sea: 0.15-12 billion barrels of oil and 0.5-54 trillion cubic feet of natural gas; Cook Inlet: 0.7-1 billion barrels of oil and 0.9-1.2 trillion cubic feet of natural gas.
Anticipated exploration in these areas would help refine resource estimates for both leased and unleased areas, especially for the Beaufort Sea and Chukchi Sea.
Q7: Does the scoping decision for the next 5-year program include any areas currently under Presidential withdrawal and/or Congressional moratoria?
The Secretary will honor any Presidential and Congressional restrictions on leasing. Currently, the Presidential withdrawal from leasing consideration extends to all marine sanctuaries for an indefinite period and may be lifted only at the direction of the President. The only existing Congressional moratorium is pursuant to the Gulf of Mexico Energy Security Act until 2022 and may be changed only by Congressional action. The only area being considered for scoping that is subject to these restrictions is a portion of the Eastern Gulf of Mexico.” We will work with Congress to determine how we might open these areas in a manner that protects Florida’s coastline and military training in the area. Our goal is to schedule lease sales in the Eastern Gulf for the 2012-2017 program.
Q8. How many responses did MMS receive in response to its January 2009 request for comments on the Draft proposed programs?
MMS received a total of about 534,000 comments in response to the Draft Proposed Program.
A breakdown of responses by commenter category is as follows.
Governors, State Elected Officials, and State Agencies 79
Local Governments, Tribes, and Alaska Native Corporations 59
Members of Congress 28 letters (396 signatories)
Federal Agencies 4
Environmental and Other Related Interest Organizations 102
Oil and Gas Companies and Associations 25
Non-Energy Industry Associations and Business Groups 109
Chambers of Commerce 11
General Public 534,000*
*More than 98 percent of comments were from individuals using form letters or postcards created for mail-in and email campaigns.
All comments are available for review on-line at Regulations.gov.
Q9: How much energy is potentially available in the OCS areas proposed for evaluation in the EIS?
MMS estimates that 39-63 billion barrels of oil and 168-294 trillion cubic feet of natural gas are economically recoverable from the eight areas under consideration.
Q10. Under what authority does MMS develop the 5-year leasing programs?
Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) requires the Secretary of the Interior to prepare and maintain a schedule of proposed lease sales. His decisions are to be based on consideration of eight factors listed in the Act including information solicited from interested and affected parties during the preparation of a 5-year program.
Q11: What sort of revenue comes back to the states if energy is developed off their shores? What other benefits might states receive from OCS energy developed off their shores?
The State retains all revenue from activities within state waters, generally the first 3 miles off the coast (9 miles in the case of Texas and the Gulf Coast of Florida). States also receive 27 percent of revenues from the “section 8(g) zone,” which extends out the next 3 miles from the state/federal boundary. States also benefit from OCS monies that come through the Historic Preservation, Land and Water and Reclamation Funds, and the new Coastal Impact Assistance Program (CIAP). As a result of the Energy Policy Act of 2005, CIAP will distribute $250 million annually for 4 years to the 6 states with offshore activity and their coastal political subdivisions. GOMESA established revenue sharing with four Gulf Coast States and their coastal political subdivisions in newly available Gulf areas through 2016 and all Gulf areas starting in 2017. Any further provisions for revenue sharing with states would need to be enacted by Congress.
Q12: When and where will the public “scoping” (information gathering) meetings for the next 5-year program be held?
Interior’s Minerals Management Service has announced the OCS program areas to be considered for the draft environmental impact statement (EIS) for the OCS Oil and Gas Program for 2012-2017. The MMS will evaluate the potential benefits, costs, and other effects of offering all or portions of eight OCS planning areas for oil and gas leasing: Beaufort Sea, Chukchi Sea, and Cook Inlet, offshore Alaska; Western, Central, and Eastern Gulf of Mexico; and the South and Mid-Atlantic. Public meetings will be held in coastal areas near these program areas in June and early July of this year to help determine the appropriate scope of the EIS in terms of geographical areas and issues. The areas studied in the draft EIS also will be the focus of the proposed program analyses.
Q12: How will the Secretary make a final decision on which OCS program areas – or parts of program areas to offer for leases under the 2012 -2017 period?
The Draft EIS and various analyses required under section 18 of the Outer Continental Shelf Lands Act to be prepared over the next year will provide information for the Secretary to consider in making his proposed program decision for the program covering the mid-2012 to mid-2017 period. The draft EIS analyzes the potential environmental and social effects of the proposed activities,
Q13: When does the current (2007-2012) OCS oil & gas program end and the new one (2012-2017) begin?
The current leasing program runs through June 30, 2012. The Secretary’s proposed program decision and draft EIS will be followed by a 90-day comment period, further analyses of the potential effects of the decision, and completion of the final EIS. The Secretary’s last preliminary decision on the new program, known as the proposed final program, is expected in early 2012, with a final decision no sooner than 60 days thereafter, as required by section 18 of the Outer Continental Shelf Lands Act. The new program would take effect on July 1, 2012.