Offshore Energy Development Progressing Despite Challenges From Anti-Development Groups

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 prepared by Brent Greenfield, HBW Resources’ Director of Ocean Policy and Regulatory Affairs.

Budget Bill with Energy Provisions Signed Into Law

Following a successful vote in the U.S. House of Representatives, the U.S. Senate last month passed a budget bill that contains several energy-related provisions.  President Obama signed the bill into law on Dec. 26.

Among other things, the legislation does the following:

  • Approves Agreement between the United States of America and the United Mexican States Concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico (Amendment);
  • Amends Outer Continental Shelf Lands Act to provide Interior Secretary with permanent authority to implement transdoundary hydrocarbon agreements entered into by President and approved by Congress, requiring all such agreements to be submitted to Congress within 180 days
  • Repeals Energy Department’s Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research Program, which was created by the Energy Policy Act of 2005 (also rescinds program’s remaining funds)

Commenting on congressional passage of the U.S.-Mexico Transboundary Hydrocarbons Agreement,  Interior Secretary Sally Jewell said that the Agreement “supports the responsible expansion of domestic energy production” and “makes available promising areas in the resource-rich Gulf of Mexico and establishes a clear process by which both governments can provide the necessary oversight to ensure exploration and development activities are conducted safely.”

Congressman Introduces “Ocean Energy Safety and Technology Improvement Act”

U.S. Rep. Rush Holt (D-NJ) has introduced the “Ocean Energy Safety and Technology Improvement Act of 2013” (H.R. 3780), which he said would make offshore drilling “safer for workers and the environment.”

Holt said his bill would adopt the National Academy of Sciences’ October 2013 recommendations for implementing Best Available and Safest Technologies (BAST) for offshore oil and gas operations by giving the Bureau of Safety and Environmental (BSEE) the authority to establish a “robust” and permanent Ocean Energy Safety Institute (Institute) “with a steady source of funding.”
He further stated that the bill would provide authority to prioritize the review of drilling plans and permits if they would use particularly innovative safety technologies, as well as promote safety research by small businesses

Reiterating his opposition to drilling offshore New Jersey and conveyed his concerns about “continued dependence” on offshore oil and gas, Holt said that offshore drilling will continue in places like the Gulf of Mexico, at least for the time being” and that “we should ensure that it is being done with the absolute best safest and environmentally responsible technology available.”

The legislation, which is co-sponsored by Rep.’s Peter DeFazio (D-OR) and Alan Lowenthal (D-CA), has been referred to the House Committees on Natural Resources and Science, Space, and Technology.

AP: “Advocates Push for New Atlantic Offshore Drilling”

The Associated Press (AP) recently wrote about an “increasing push” by advocates to allow Atlantic drilling for oil and gas resources, which AP says could be “puny or mean big cash.”

AP referenced the Obama Administration’s upcoming decision on whether to allow seismic activity in the Atlantic and work that is expected to soon begin on the next 5-year offshore leasing program, as well as the recent Quest Offshore Resources study that examined the economic benefits associated with Atlantic oil and gas development.

As to benefits from Atlantic development, AP stated that “drilling, refineries, and the jobs that could accompany them are at least a decade away” and that “a big burst of jobs created by exploration and drilling could take a long time.”  AP cited BOEM’s most recent assessment which finds that the Atlantic OCS contains an estimated mean 3.3 billion barrels of oil, reporting that is “roughly equal to what Saudi Arabia’s state-owned oil company pumped last year alone.”

However, North Carolina Petroleum Council Executive Director David McGowan noted that “[w]e are not saying that the Atlantic is going to be the largest part of U.S. production,” but that “it will be one piece of the larger U.S. oil and gas pie.”

AP also said it is unlikely that offshore activity will bring down U.S. consumer prices given worldwide demand, citing a statement by University of Michigan professor Tom Lyon that “[i]t will still mostly be substituting domestic oil production for foreign oil imports,” and the Southern Environmental Law Center’s North Carolina Director Derb Carter complained that the Quest Offshore study is “all on the positive side as if there’s no adverse impacts,” adding that “[t]here will be costs associated with this that should also be considered.”

NGOs Release Whale Study Results, Request More Scoping/Updated Draft Seismic PEIS 

Oceana recently announced the results of an Oceana/International Fund for Animal Welfare (IFAW)-funded study conducted by Cornell University’s Bioacoustics Research Program on the presence of North Atlantic right whales offshore Virginia, stating that the study “rais[es] questions about the risks of proceeding with planned seismic airgun use.”

Specifically, they stated that while the federal government has suggested a November-April seasonal closure extending 20 nautical miles offshore Virginia, most of the calls recorded under the study took place ~65 miles offshore.  Oceana said that whales traversing in waters beyond the closure area “would not be protected and could be injured or even killed by the testing.”

In addition,  Cornell’s Bioacoustics Research Program Director Dr. Aaron Rice said that right whales were heard calling “throughout the year,” which he called “a surprise” that “raises many new questions about the home range of this species.”  He added that further study “will allow for a better understanding of the Virginia ocean ecosystems.”

In a letter sent to Interior Secretary Sally Jewell, Oceana and IFAW said that the study results represent “significant new information” and show that the assumptions and mitigation measures that were analyzed and adopted in the Bureau of Ocean Energy Management’s (BOEM) draft Programmatic Environmental Impact Statement “are not justified.”

As a result, they said it is “necessary” for BOEM to re-scope the issues and alternatives and develop a new draft PEIS for public comment before moving forward.  At minimum, the groups said that BOEM must supplement the PEIS and update the impact and alternatives analysis.

The letter noted that the Cornell study findings were presented to BOEM staff on November 14, 2013, and E&E News PM reported on a statement by BOEM that the agency’s scientists “are aware of the research…and have considered this type of information in our analysis.”

Comments Sought on Proposed Updated Acoustic Threshold Levels for Marine Mammals

NOAA’s National Marine Fisheries Service (NMFS) has announced the release for public comment of Draft Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammals, which contains updated received levels (thresholds) above which individual marine mammals are predicted to experience changes in hearing sensitivity (temporary or permanent) for all underwater anthropogenic sound sources.  Comments are due by Monday, January 27, 2014.

The guidance “is intended to be used by NOAA analysts and managers and other relevant user groups and stakeholders, including other federal agencies, when seeking to determine whether and how their activities are expected to result in particular types of impacts to marine mammals via acoustic exposure.”

The draft guidance includes a protocol for estimating permanent and temporary hearing threshold shift onset levels for impulsive and non-impulsive sound sources, the establishment of 5 marine mammal functional hearing groups, the incorporation of marine mammal auditory weighting functions into threshold calculations, and a discussion on how to combine multiple datasets and determine appropriate surrogates when data are not available.

The draft notes that NOAA will consider whether to adjust acoustic threshold levels “as more data become available,” stating that “[i]t may be necessary to refine the acoustic threshold levels based on particular sound sources (e.g., separate acoustic threshold levels for impulsive pile driving strikes versus seismic airgun shots), duration of exposure (e.g., continuous vs. intermittent), or frequency ranges of exposure (e.g., low-, mid-, or high-frequency) rather than by broad sound source categories.”

NMFS specifically encourages public comments to identify any additional datasets to include in the assessment and comment on the appropriateness of the proposed accumulation period for the cumulative sound exposure metric and the proposed low-frequency auditory weighting function for which direct hearing sensitivity measurements are unavailable.

In conjunction with the public comment period, NMFS will conduct a public meeting (with online webinar access) at the NOAA Silver Spring, MD Metro Center Complex from 2:00 p.m. – 5:00 p.m. on Tuesday, January 14, 2014.  Webinar registration is accessible here.

NMFS says that it expects final guidance to be issued in Spring 2014 and that the agency will work in 2014 to develop guidance on the effects of anthropogenic sound on marine mammal behavior.

Senior Interior Department Nominee Questioned About Offshore Oil and Gas

During a Senate Energy and Natural Resources nomination hearing held in December, Assistant Interior Secretary for Land and Minerals Management-nominee Janice Schneider was asked several questions related to offshore oil and gas activity.

Sen. Lisa Murkowski (R-AK) referenced a letter of questions for Schneider from Alaska Gov. Parnell on behalf of the Outer Continental Shelf Governors Coalition (OCSGC), noting that many of the letter’s questions signal that there is currently an inadequate level of dialogue between federal and state policymakers on OCS issues.

Sen. Murkowski specifically asked Schneider for her opinion on what the appropriate role for states in federal policymaking should be.  Schneider responded that while she can’t speak to the current level of dialogue, she is committed to improving the dialogue with the states and she looks forward to traveling to these states to ensure she hears their various perspectives.

Sen. Murkowski stated that she would submit all five OCSGC questions for the record, and concluded by suggesting to Schneider that the OCSGC might be a great place for her to start dialogue with the states (to which she responded “I agree”).  Committee Chairman Wyden also endorsed Sen. Murkowski’s desire for more consultation with the states.

Sen. Tim Scott (R-SC) asked Schneider for her opinion on the Programmatic EIS for Atlantic geological and geophysical activity and Atlantic leasing.  Schneider responded that she supports expeditious finalization of the PEIS and environmentally responsible surveying.  Once that seismic information is available, she said that she would support working with the states to identify those offshore areas that may make the most sense for leasing.

Schneider was also asked her opinion on whether the National Ocean Policy will “hinder the development of offshore energy” and what role she sees the policy playing in the development of the Interior Department’s next 5-year offshore oil and gas leasing program.

Schneider said in response that she needs to “get more up to speed on the new ocean policy,” adding that “I think that we’re going to need to bring the ocean policy and the positions that it’s proposing, along with and kind of merge the need for looking at new areas that can support both offshore renewable and conventional development.”

Congressional Task Force Issues Recommendations for DOI Climate Plan Implementation

Congress’s Bicameral Task Force on Climate Change (Task Force) recently announced the release of recommendations for the Interior Department on implementing President Obama’s Climate Action Plan.

The report includes recommendations pertaining to offshore oil and gas methane emissions, offshore oil and gas royalties, finalization of draft NEPA guidance, and timelines for making climate-related changes to policies, programs, and regulations.

The report includes the following recommendations and statements, among others:

  • Bureau of Ocean Energy Management and Bureau of Land Management “should reduce the wasteful practice of venting and flaring gas on federal lands onshore and offshore”
  • “Research suggests that methane emissions from offshore oil and gas production can be reduced by up to 85 percent using cost effective emissions controls and practices…BOEM may…take action to limit methane emissions from oil and gas systems on the Outer Continental Shelf.  We urge BLM and BOEM to utilize their authorities to limit methane pollution from oil and gas production on federal land and the Outer Continental Shelf.”
  • Interior Department should work with Congress “to close loopholes that currently allow oil companies to produce significant quantities of oil and natural gas from public lands offshore in the Gulf of Mexico without paying royalties to the American people”
  • Interior Department “should take all steps within its authority and work with the Congress to end the royalty-free drilling that is happening in the Gulf of Mexico…Roughly one-quarter of all offshore oil produced in the United States is now produced royalty-free and DOI estimates that this loophole will cost taxpayers more than $15 billion over the next decade.  This loophole is a massive subsidy to the offshore oil industry and should be ended.”
  • Obama Administration should finalize the draft NEPA guidance on Consideration of the Effects of Climate Change and Greenhouse Gas Emissions (stating that “[m]any energy projects on federal lands overseen by BOEM and BLM are subject to NEPA review,” and that “[e]stimating the greenhouse gas effects of projects undergoing NEPA review will help the federal government and public understand the full range of impacts associated with energy development on federal lands”)

Established in January 2013, the Task Force is currently co-chaired by U.S. Rep.’s Henry Waxman (D-CA)Bobby Rush (D-IL), and Earl Blumenauer (D-OR), and U.S. Sen.’s Sheldon Whitehouse (D-RI)Benjamin Cardin (D-MD), and Edward Markey (D-MA).

White Papers Sought for Oil Spill Response Research Projects

The Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) recently announced that it is seeking white papers in response to the agency’s decision to invest up to $7 million in support of oil spill response research projects.  Selected white papers will be requested to submit proposals.  White papers are due by Monday, January 20, 2014.

Respondents are asked to focus their white papers on one of the following 10 topics:

  • Cataloging BSEE’s oil spill response research programs funded research recommendations and key findings that may have an impact on BSEE regulations;
  • Scientifically based planning standards for dispersant effectiveness and usage rates;
  • Scientifically based planning standards for burn boom effectiveness and usage rates;
  • Oil spill detection and analysis using remote sensing technologies;
  • Subsea oil spill detection sensors;
  • Mechanical recovery capability of chemically treated oil;
  • Solidifying the scientific capabilities of Ohmsett – quantifying mixing energy;
  • Solidifying the scientific capabilities of Ohmsett – effect of ambient chemical levels;
  • Development of “smart” skimming technologies; and
  • Establishment of technology readiness level definitions for oil spill response equipment

MARAD Seeks Comments on Vessel Availability for Transport of Platform Jacket 

The U.S. Transportation Department’s Maritime Administration (MARAD) has announced that it is seeking comments on the availability of suitable coastwise qualified vessels to transport a 27,679 long ton Platform Jacket from a Gulf Coast facility to the Ewing Bank Area on the Gulf of Mexico Outer Continental Shelf.

The announcement was made in response to a request by Walter Oil & Gas Corporation for permission to use a foreign launch barge to load, transport, and launch the Platform Jacket.  The projected move is expected to take place during the September-December 2015 period.

If a suitable coastwise qualified vessel is determined to be unavailable, MARAD will issue a non-availability determination granting Walter Oil & Gas approval to use a foreign barge.  MARAD intends to issue a final determination within 90 days of the announcement unless a suitable coastwise qualified vessel is identified and more time is needed for negotiations.

Comments are due by Monday, January 27, 2014.

NOAA Issues MMPA Regulations for Pacific Navy Activities, NGOs Commence Litigation

NOAA’s National Marine Fisheries Service (NMFS) has announced the issuance of final Marine Mammal Protection Act regulations that provide for the issuance of Letters of Authorization for the U.S. Navy’s unintentional take of marine mammals incidental to training and testing activities conducted in the Hawaii-Southern California Training and Testing Study Area off the California and Hawaii coasts and on the high seas of the Pacific Ocean from December 2013 through December 2018.

The regulations also establish the permissible methods of taking, other means of effecting the least practicable adverse impact on marine mammal species or stocks and their habitat, and incidental take monitoring and reporting requirements.

Training and testing-related activities that are authorized in the final rule relate to the use of active sonar, underwater detonations, airguns, pile driving and removal, and ship strikes.  The Navy specifically requested authorization to take 39 marine mammal species by Level B harassments and 24 marine mammal species by Level A harassment or mortality.

Later that day, a group of environmental organizations announced the filing of a lawsuit in federal district court challenging the NMFS approval, alleging that the agency unlawfully failed to evaluate any alternatives that would prohibit training and testing activity in biologically important areas.

The lawsuit was filed by Earthjustice, which is representing Conservation Council for Hawai’iAnimal Welfare InstituteCenter for Biological Diversity, and Ocean Mammal Institute.

Climate Change Task Force Convenes Inaugural Meeting at White House

The White House Council on Environmental Quality recently reported that the State, Local and Tribal Leaders Task Force on Climate Preparedness and Resilience (Task Force) held its inaugural meeting at the White House.

The Task Force was established under the November 2013 Executive Order on Climate Preparedness and Resilience to provide recommendations on how the federal government can address climate preparedness and resilience.  It is to sunset within 6 months of issuing recommendations, which are due by Nov. 1, 2014.

According to the announcement, the Task Force discussed how to improve coordination to protect critical infrastructure, public resources, and emphasize preparedness, and “shared ideas” about the kind of information and tools that would be most beneficial in dealing with climate change impacts.

The announcement notes that the Task Force will hold its next meeting “in the coming months,” when it will discuss issues including energy, water, transportation and building infrastructure, natural resources, agriculture, human health, and community development.  In the interim, Task Force members will conduct community and other outreach to solicit ideas and suggestions for Task Force consideration.

McAuliffe Announces Pick for Virginia Secretary of Natural Resources

Virginia Gov.-elect Terry McAuliffe, who will be sworn in on January 11, 2014, recently announced his selection of former Hampton, VA Mayor Molly Ward to be Virginia’s Secretary of Natural Resources.

In making the announcement, which also included his selection for Secretary of Agriculture, McAuliffe said in part that both individuals “will help lay a foundation for growing and diversifying our economy by utilizing resources that are uniquely Virginian.”

Ward said that “[p]rotecting and promoting our natural and historic resources are a key part of growing and diversifying Virginia’s economy and have been a central focus of my career in public service.”

Additional Information

For additional information, contact Brent Greenfield with HBW Resources. His contact information is below.

Brent Greenfield
HBW Resources
2211 Norfolk Street, #410
Houston, TX 77098
Tel: 713-337-8810
E-mail: bgreenfield@hbwresources.com
Web: http://www.hbwresources.com

If you have any general questions, please give me a call anytime. Previous reports and other updates can be found at the HBW Resources Intelligence Tab at: https://hbwresources.com/intelligence/.   Hope you have a great day.

Thanks,

Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
E-mail: mzehr@hbwresources.com
Twitter: @mzehrhbw