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US seeks to open nearly all offshore areas to drilling

04 Jan 2018 19:21 GMT
US seeks to open nearly all offshore areas to drilling

Washington, 4 January (Argus) — President Donald Trump's administration is seeking a dramatic expansion of offshore drilling by proposing oil and gas lease sales in the Atlantic, the Pacific and all other federal acreage except a small area off Alaska.

The leasing plan, proposed today, would give the oil and gas industry access to offshore territory that is projected to hold 90bn bl of oil and 319 trillion cubic feet of natural gas. That is about 80pc more oil and gas resources than is now available under existing leases and an offshore leasing plan completed in 2016 under former president Barack Obama.

But the move immediately drew widespread opposition, as it would bring oil and gas development near tourism-reliant coastal communities worried about a repeat of BP's 2010 oil spill. And it comes as the administration tries to roll back offshore safety regulations and seek closer ties with industry.

US interior secretary Ryan Zinke said the draft proposed plan, which would include 47 potential oil and gas lease sales covering 90pc of total federal offshore acreage, offered a contrast from a leasing plan issued under Obama that confine offshore development to the US Gulf of Mexico and the Cook Inlet in Alaska.

"This is a clear difference between energy weakness and energy dominance," Zinke said.

The US Bureau of Ocean Energy Management (BOEM) plan is the first step in a complex leasing process that will not take effect until 2019. Draft plans typically cover the widest range of possible areas because regulators cannot add new leasing areas without starting the entire process over.

BOEM has proposed to hold the first of the 47 lease sales in the Beaufort and Chukchi seas in arctic waters off Alaska, which are projected to hold 24bl bl of oil. Obama considered keeping those waters open to leasing but ultimately reversed course. The proposal would make all other areas in Alaska available for leasing except for the Bristol Bay.

The plan would also allow leasing along the entire US east coast, bringing the industry to an area where drilling last occurred in 1984. Florida governor Rick Scott (R), North Carolina governor Roy Cooper (D) and Virginia governor Terry McAuliffe (D) all oppose offshore drilling. Maine governor Paul LePage (R) is the only east coast governor to back offshore oil and gas development. LePage is still reviewing the plan.

Offshore producers would also be able to lease acreage in the eastern Gulf after June 2022, when an existing drilling moratorium is set to expire. The oil and gas sector has particularly pushed for access to this area because of its proximity to existing oil and gas infrastructure and its estimated 4bn bl of recoverable oil.

But US military officials have said that oil and gas production in the eastern Gulf could interfere with military training exercises in the area. Zinke said he had a "long dialogue" with US defense secretary Jim Mattis about leasing int he eastern Gulf and was working to mitigate concerns.

BOEM also proposed to allow offshore leasing in all federal waters off California, Oregon and Washington. California already has some offshore oil and gas development but federal leasing has not occurred for more than 30 years, in the wake an oil spill off Santa Barbara in 1969. The states have opposed offshore drilling.

Industry officials cheered the plan but environmentalists were alarmed. Oceana campaign director Diane Hoskins said the plan "opens the floodgates" to drilling and threaten coastal communities. Natural Resources Defense Council president Rhea Suh said the plan sought to cater to the oil and gas industry while putting coastal communities at risk for the "next BP-style disaster."

Zinke said "nothing is final" about the draft proposed plan. The administration will consider feedback from governors, coastal communities and other affected groups, he said. BOEM plans to take comment on the proposal for 60 days.

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