Feds finalizing 5-year drilling plan with heavy Gulf focus

The Obama administration this week will finalize a plan for selling offshore drilling leases over the next five years that focuses on the Gulf of Mexico but still would allow three auctions of Arctic areas.

The final 2012-2017 outer continental shelf plan is nearly identical to a proposed leasing blueprint the Interior Department unveiled in November, though it would briefly postpone sales of drilling rights in the Beaufort and Chukchi seas. Under the proposed 5-year plan, those sales would have taken place in 2015 and 2016 respectively; the final document schedules them for 2016 and 2017.

Deputy Interior Secretary David Hayes said the additional year would allow for more scientific studies in the region to guide what areas should be included in future sales and is part of a broader strategy to concentrate oil and gas leasing in coastal areas “that have the least conflicts.”

“We will have a real focus on the scientific effort to get input from all the relevant parties,” Hayes told reporters on a conference call. “We want to make sure we get it right, so we don’t want to rush the process.”

Speaking at an offshore drilling forum in Norway, Interior Secretary Ken Salazar stressed that the Obama administration is committed to safe development of oil and gas resources locked underneath U.S. Arctic waters.

“These resources, if developed safely, can be important components in the all-of-the-above energy strategy that President Obama is implementing,” Salazar said. “But if we are to access these resources, we have to take a careful, step-by-step approach that is grounded in science and that protects subsistence uses, wildlife, local communities and the broader ecosystem.”

Salazar said the Obama administration is adopting a “targeted leasing” approach to Arctic development that is designed “to maximize the availability of oil and gas resources in those areas that we are making available for leasing, while minimizing potential conflicts with environmentally sensitive areas and the native Alaskan communities that rely on the ocean for subsistence use.”

For instance, the final five-year leasing plan — like the initial proposal — will keep areas north of Barrow, Alaska, off limits for development, because of the subsistence whaling that occurs in the region. That area “has not historically attracted industry interest” but “has very high subsistence value to Native Alaskan communities.” The Interior Department will maintain a long-standing 25-mile buffer zone along Alaska’s Chukchi Sea coastline.

Some Arctic drilling advocates cheered the administration’s five-year plan. Sen. Mark Begich, D-Alaska, said the administration’s announcements “reflect another vote of confidence in Alaska’s OCS prospects.”

Begich, who has been a fierce advocate for Arctic drilling that could eventually mean more crude flowing through the Trans-Alaska Pipeline System, said the contours of the final five-year leasing plan shows the administration is heeding the value of oil and gas resources in the region.

The final five-year plan was unlikely to satisfy environmentalists, who say the administration is allowing too much drilling in frontier areas, and industry representatives who complained that the proposed blueprint didn’t make enough new territories available.

Kristen Miller, government affairs director for the Alaska Wilderness League, suggested Obama was turning his back on a promised “new way of making decisions about drilling in this country” by scheduling Arctic lease sales “despite the opposition of nearly half a million people including many who live on America’s Arctic coast.”

Mike LeVine, the Pacific senior counsel for the conservation group Oceana, said the Obama administration was making the right move by “allowing additional time to gather science and develop targeted lease sales.”

But, LeVine added, the administration was still on the wrong track by committing to lease sales in Arctic waters, even after those scientific studies. “There is an inherent and substantial conflict in identifying the need for better science while commiting to decisions made without that necessary science and without demonstrated response capacity.”

Andrew Hartsig, the director of the Ocean Conservancy’s Arctic program, said that while he was disappointed that the Obama administration is including Arctic lease sales in its new five-year program, those auctions “are several years off.”

“Interior must now use that time to develop and implement a comprehensive science and monitoring program and to identify and protect important ecological and subsistence areas in the Arctic,” Harsig said. “If the administration is going to push to expand Arctic drilling, there also must be concrete actions that demonstrate a commitment to conservation.”

The release of the final five-year leasing plan, expected later this week, comes as the federal regulators enter the final stages of reviewing Shell Oil’s plan to launch exploratory drilling in the Chukchi and Beaufort seas this summer.

Federal regulators from the Interior Department’s Bureau of Safety and Environmental Enforcement witnessed a deployment test of Shell’s Arctic well capping stack in Puget Sound on Monday. Additional tests of the company’s containment system for Arctic waters also are expected soon, as the safety bureau scrutinizes Shell’s applications for permits to drill individual wells in the region.

“We are still in the process of doing the inspections and making sure the (applications for permits to drill) meet the requirements. Until all those requirements are met, no permit will be issued, but I do anticipate — having seen the conditions that Shell has already met — that it is probable that they are going to get these permits,” Salazar said. “It is highly likely the permits will be issued.”

Salazar also insisted that “there’s not going to be an oil spill” in the Arctic waters where Shell intends to drill, because the company’s plans have been so heavily scrutinized.