Obama administration opens door to Atlantic drilling

WASHINGTON — The Obama administration is poised to unveil a draft plan for selling offshore oil and gas leases that is expected to rule out auctioning drilling rights in parts of the Atlantic Ocean as well as in some Arctic waters and along the West Coast between 2017 and 2022.

The proposed five-year plan for oil and gas leases on the outer continental shelf is set to be released as early as Tuesday.

Required by federal law, the five-year plan dictates the schedule and territory covered by those lease sales, which are a critical first step to oil and gas exploration on the United States’ outer continental shelf. The auctions can’t be scheduled unless they are in the five-year OCS plan, and the draft to be released this week defines the broad contours of the final sale schedule.

And while federal regulators generally start with a more expansive draft, they usually winnow away at it over time, resulting in a final offshore oil and gas lease sale schedule that is more narrow, with fewer areas up for grabs.

Off limits

Sources who have been tracking the issue said they expect the administration’s draft to keep some of the mid- and south-Atlantic on the table, paving the way for possible offshore lease sales beginning as early as 2017. But Atlantic waters near Florida, Delaware and Maryland are not expected to make it into the plan. And part of the Chukchi Sea north of Alaska also is expected to be off limits.

The draft plan is expected to keep the door open for selling oil and gas leases off the coasts of Virginia, North Carolina and South Carolina, though with a larger buffer zone than previously outlined. Possible oil and gas leases in the Chukchi Sea also would be set back further from the coast than during a previous 2008 auction of drilling rights in those Arctic waters.

A map providing an overview of the plan viewed by The Houston Chronicle confirms those expectations.

An Interior Department spokesman declined to comment on the draft plan.

Oil industry leaders have implored the Obama administration to sell oil and gas leases along the East Coast, building on the Interior Department’s decision last year to broadly allow seismic research of potential energy resources along the mid- and south Atlantic.

A draft plan that keeps Atlantic waters on the table is “good news,” said Erik Milito, upstream director for the American Petroleum Institute. But “we don’t think they should be shaving any areas off.”

A study commissioned last year by advocates of drilling along the East Coast said oil and gas development from Delaware to Georgia would generate $10.8 billion to $60 billion in added economic value for the states neighboring that activity.

Report: East Coast states could cash in on offshore drilling

Although the most recent geological surveys of U.S. Atlantic waters dates back decades, oil industry leaders believe the area has potential. They say oil development in other parts of the Atlantic Ocean offers a clue about potential resources hugging the U.S. East Coast.

In joint comments filed with the administration last year, oil industry groups urged the Bureau of Ocean Energy Administration to assemble a plan that adopts “bold, forward-looking decisions” and keeps all areas on the table. Resources from newly available offshore areas will be required to replace oil and gas reserves that have been produced, they said.

Environmentalists opposed to offshore drilling insisted that any Atlantic drilling is a bad idea.

“We don’t think it makes any sense to expand offshore drilling to the Atlantic or the Arctic,” said Jacqueline Savitz, vice president of U.S. oceans at Oceana, a conservation group. “To industrialize the Atlantic for a small amount of oil when we could be building offshore wind out there and getting twice as much jobs and twice as much energy doesn’t make much sense.”

In weighing geological research in Atlantic waters along the East Coast, Obama administration officials generally have drawn the northernmost line between Delaware and New Jersey — at least partly based on opposition from the political leaders of Northeast states to drilling off their coasts. By contrast, some lawmakers from Virginia, South Carolina and North Carolina have lobbied for offshore drilling near their shores.

Building opposition

But Savitz suggested Monday that opposition could build from residents of southern Atlantic states amid strengthening prospects for nearby offshore drilling.

“If what comes out tomorrow is they are planning to drill in the southeast Atlantic, I think the people in the southeast Atlantic are going to have something to say about it,” she said. “You’re going to see a lot of opposition coming from the coast. It’s going to be real to people who were wondering if it was a real threat or not.”

Although there are no active oil and gas leases in federal Atlantic waters today, energy companies drilled 51 wells there between 1975 and 1984. Five wells off the coast of New Jersey found natural gas or other hydrocarbons but were abandoned as too expensive to produce at the time.

After the Bureau of Ocean Energy Management releases its draft five-year program, it will hold public meetings and solicit public comments before creating a final sale schedule.

“I hope what you will see is a lot of pushback and hopefully at the end of the day no drilling in the Atlantic,” Savitz said.

Sen. Lisa Murkowski, R-Alaska, told reporters Monday that Interior Department officials had warned her that some areas of the Chukchi and Beaufort seas — where drilling had been deferred in the past — would be withdrawn “completely.”

Well beyond the Arctic, a statutory ban blocks the government from selling oil and gas leases in some parts of the eastern Gulf of Mexico, near Florida, until 2022. It is not clear whether the government’s coming draft plan will consider possible sales of that territory in 2022 or earlier, if Congress lifted the restrictions.

The current Bureau of Ocean Energy Management program for selling oil and gas leases on the outer continental shelf from 2012 through August 2017 includes 15 sales of territory in the Gulf of Mexico and auctions of waters around Alaska but no acreage along the East and West coasts. It expires on Aug. 26, 2017.

There is existing oil production from federal waters of the U.S. Pacific, under projects developed years ago.

Lease sales are one step in the long path toward offshore oil and gas production. Companies that buy drilling leases typically conduct additional seismic research to better understand the oil and gas that may be lurking deep below the sea bed. Additional permits are required for exploratory drilling, and if a commercial oil discovery is found, companies can take years to bring it to production.

Federal regulators also can tailor the scope of planned lease sales, or cancel them entirely — as happened with a scheduled auction of territory near Virginia after the Deepwater Horizon disaster.

For instance, under the Obama administration, the Interior Department’s Bureau of Ocean Energy Management has adopted a targeted leasing approach to the Chukchi and Beaufort seas — with potential territory nominated by would-be bidders — rather than the area-wide approach customary with Gulf of Mexico auctions.