HBW Resources: Greenfield Offshore Energy Report
Below is a summary of publicly available activities currently underway that could affect the development of offshore oil and gas resources.
Following Court Ruling, ENGOs Say Arctic Is “No Place To Drill”
Environment News Service wrote about the recent ruling by U.S. District Judge Ralph Beistline (D. Alaska) that found the federal government complied with the law and did not violate the National Environmental Policy Act or the Endangered Species Act when it approved Shell’s oil spill prevention and response plan for its activities in the Beaufort and Chukchi Seas.
The decision responds to a lawsuit filed by the Alaska Wilderness League, Center for Biological Diversity, Greenpeace, National Audubon Society, Natural Resources Defense Council, Ocean Conservancy, Oceana, Pacific Environment, Resisting Environmental Destruction on Indigenous Lands, and Sierra Club.
In a joint statement following the ruling, the organizations said in part that the Arctic Ocean “is no place for rosy-eyed optimism,” adding that “until and unless clean-up technology has been proven effective, reliable, and benign in the Arctic, it’s no place to drill at all” and that “[i]t is time for the Administration to reassess whether to allow offshore drilling in this pristine environment in the first place.”
Coast Guard Proposes Changes To MODU and Floating OCS Facility Inspection Oversight
The U.S. Coast Guard has announced that it is seeking comments on its consideration of whether to establish a single Officer in Charge, Marine Inspection (OCMI) to oversee marine inspections for all Mobile Offshore Drilling Units (MODUs) and Floating Outer Continental Shelf (OCS) Facilities engaged directly in, capable of engaging directly in, or being constructed to engage directly in oil and gas exploration or production in the offshore waters of the Eighth Coast Guard District. This District covers all or part of 26 states including Texas, Louisiana, Mississippi, Alabama, and Florida (partial).
The units and facilities at issue are currently inspected by six separate OCMI offices located in Mobile, AL, New Orleans, LA, Morgan City, LA, Port Arthur, TX, Houston, TX, and Corpus Christi, TX. Under the proposal currently under consideration, offshore supply vessels would continue to be inspected by the six existing OCMIs.
Comments are due by Friday, September 6, 2013.
NTL Issued On Pollution Inspection Intervals For GOM Unmanned Production Facilities
The Interior Department’s Bureau of Safety and Environmental Enforcement has issued NTL No. 2013-G03, a Notice to Lessees and Operators of federal oil, gas, and sulphur leases in the Gulf of Mexico Outer Continental Shelf.
The NTL supersedes the April 14, 2008 NTL No. 2008-G03, clarifying current policy by describing how Gulf of Mexico OCS District Managers are to determine the appropriate intervals for pollution inspections conducted for unmanned production facilities and explaining that some pollution inspections may be conducted visually (vs. physically boarding the facility).
Specifically, the NTL includes a point system matrix and evaluation code that Gulf of Mexico OCS District Managers are to use in determining pollution inspection intervals for unmanned facilities. The matrix accounts for factors including distance of facility to nearby manned platforms and to shorelines or sensitive areas, capacity of facility’s hydrocarbon storage tanks, general direction of currents, Supervisory Control and Data Acquisition or other continuous monitoring, product, and the number of pollution incidents cumulatively > 1 barrel in the 2 years before the request date.
Depending on the number of points tallied from the matrix, inspections are to take place bi-weekly, weekly, every other three days, every other day, or daily, and physical on-board inspections are to take place bi-weekly or weekly.
Among other things, the NTL also provides that Gulf of Mexico OCS District Managers may approve a pollution inspection interval of up to 1 month for certain unmanned facilities and outlines conditions under which Gulf of Mexico OCS District Managers may rescind increases in prescribed daily pollution inspection intervals that were previously approved.
NMFS Issues IHA For Chukchi Sea Marine Survey and Other Activities
NOAA’s National Marine Fisheries Service (NMFS) has announced its decision to issue an Incidental Harassment Authorization (IHA) to Shell Gulf of Mexico Inc. authorizing the take of the following 13 species of marine mammals by Level B harassment incidental to its plans to conduct a marine survey program and equipment recovery and maintenance activity in the Chukchi Sea during the 2013 open-water season: beluga whale, harbor porpoise, killer whale, narwhal, bowhead whale, gray whale, minke whale, fin whale, humpback whale, ringed seal, spotted seal, bearded seal, and ribbon seal. NMFS received Shell’s original application in January 2013.
The IHA is effective from July 1, 2013 through October 31, 2013.
Regulators Considering Extra Scrutiny For Offshore Hydraulic Fracturing
San Francisco Bay Area, CA Fox affiliate KTVU-TV recently reported that regulators are investigating whether to require a separate permit and stricter environmental reviews for the use of hydraulic fracturing during offshore drilling operations.
According to the report and documents released by the federal government in response to a Freedom of Information Act request, companies drilling in the Santa Barbara Channel in federal waters offshore California have used the process on at least 12 occasions since the late 1990’s, and regulators approved a new project in March for DCOR LLC. Although new federal oil and gas leases offshore California are currently prohibited, the report notes that companies may still drill from 23 existing platforms.
California regulators say they only recently became aware that offshore hydraulic fracturing was taking place and that they are now asking oil companies proposing new offshore drilling projects whether their activities will involve hydraulic fracturing. California Coastal Commission Deputy Director Alison Dettmer said that “[i]t wasn’t on our radar before, and now it is.”
According to one January 2013 email that was released, Bureau of Safety and Environmental Enforcement Pacific Regional Director Jaron Ming told employees that the agency and the public had a heightened interest in offshore hydraulic fracturing, stating that “[f]or that reason, I am asking you to pay close attention to any (drilling applications) that we receive and let me know if you believe any of them would be considered a ‘frac job.’”
BOEM Proposes Revisions For Oil Spill Financial Responsibility For Offshore Facility Forms
The Interior Department’s Bureau of Ocean Energy Management (BOEM) has announced that it is seeking comments on its proposed revisions of oil spill financial responsibility forms for offshore facilities that are associated with an information collection request (ICR) the agency intends to submit to OMB for review and approval.
According to BOEM, the revisions will “better protect the Federal Government from potential disputes and litigation by clarifying that the primary relationship is between the responsible party and guarantor and that the designated applicant/operator is intended to function primarily in an administrative capacity.”
In addition, the agency says that the changes would “better align BOEM’s process with that of the U.S. Coast Guard’s National Pollution Fund Center, thereby reducing the burden on industry in complying with potentially conflicting guidance on oil spill responsibility, particularly with respect to offshore facilities that also function as vessels.”
Comments are due by Monday, October 7, 2013.
DOI Proposes New O&G Royalty Reporting and Payment Regulations
The Interior Department’s Office of Natural Resources Revenue (ONRR) has proposed new regulations prescribing when, among others, federal offshore oil and gas lessees must report and pay royalties on the volume of oil and gas they take from a lease or on the volume to which they are entitled based on their ownership interest in a lease. ONRR says that the proposed regulations would implement Section 111(k)(1)-(4) of the Federal Oil and Gas Royalty Management Act, under which the agency states that “Congress intended to clarify and resolve the long-standing issues regarding so-called ‘takes versus entitlements.’”
The proposed regulations address the following:
· Volume of production on which lessees must pay royalties;
· Reporting of gas volumes produced from federal leases; and
· Alternatives to proposed reporting/payment requirements
ONRR estimates the net costs of the proposed regulations for industry to be $643,378 in the rule’s first year, and $7,544 annually thereafter.
Comments on the proposed regulations are due by Monday, October 7, 2013.
EPA Seeks Additional Comments Sought Proposed Extension Of National Contingency Plan ICR
The Environmental Protection Agency has announced that it is seeking comments on its request for the Office of Management and Budget to approve its request to extend the National Oil and Hazardous Substances Pollution Contingency Plans (NCP) information collection request (ICR). The ICR is currently set to expire on October 31, 2013. The new comment period follows a 60-day comment period that were previously requested in April.
The ICR pertains to the use of dispersants and other chemicals in response to oil spills in U.S. waters and adjoining shorelines. For an oil spill mitigating agent to be applied as part of an emergency response to an oil spill, the product must be listed on the NCP Product Schedule. The Product Schedule is available to federal On-scene Coordinators, Regional Response Teams, and Area Committees for determining the most appropriate products to use in various spill scenarios.
Comments are due by Monday, September 9, 2013.
BOEM Releases Q2 2013 Gulf of Mexico OCS Environmental Documents
The Interior Department’s Bureau of Ocean Energy Management has published a list of 84 Site-Specific Environmental Assessments and Findings of No Significant Impact that were prepared between April 1, 2013 and June 30, 2013 for oil, gas, and mineral-related activities that were proposed in the Gulf of Mexico.
Publication of the list constitutes public notice of the availability of environmental documents required under the National Environmental Policy Act’s implementing regulations.
NMFS Denies Petition To Delist Southern Resident Killer Whale DPS
NOAA’s National Marine Fisheries Service has announced its 12-month finding that a delisting of the Southern Resident killer whale Distinct Population Segment (DPS) is not warranted. The finding responds to an August 2012 petition to delist the DPS that was filed by the Pacific Legal Foundation on behalf of the Center for Environmental Science Accuracy and Reliability, Empresas Del Bosque, and Coburn Ranch.
The Southern Resident killer whale DPS population consists of three pods that (1) reside for part of the year in the inland waterways of Washington State and British Columbia mainly during the late spring, summer and fall; and (2) visit coastal sites off Washington and Vancouver Island and travel as far south as central California and as far north as southeast Alaska.
The Southern Resident killer whale DPS has been listed as endangered since 2005. In 2006, critical habitat for the DPS was designated in (1) the Summer Core Area in Haro Strait and waters around the San Juan Islands; (2) Puget Sound; and (3) the Strait of Juan de Fuca (comprises ~2,560 square miles of Puget Sound). A Final Recovery Plan was issued in 2008, and a 5-year review concluded in 2011 found that no change was needed in the listing status and that the DPS would remain listed as endangered.
For additional information, contact Brent Greenfield with HBW Resources. His contact information is below.
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