Energy from Federal Lands: Opening Up For Business (11/02)

The following column by AGI/AIPG Geoscience & Public Policy Intern David Viator is reprinted from the November 2002 issue of The Professional Geologist, a publication of the American Institute of Professional Geologists . It is reprinted with permission.

The availability of cheap and abundant energy is a key economic health issue for the US and has been prominently featured in the legislative agenda on Capitol Hill this year. Both President Bush and congressional leaders have offered their views on energy matters, the president through his National Energy Policy report and Congress through yet-to-be-finalized energy legislation. Concerns over domestic energy supply have resurfaced in part due to changing international relations precipitated by the terrorist acts of last September 11th.

Federal lands are a major factor in the nation's domestic energy production of petroleum and natural gas, especially the outer continental shelf (OCS), lands managed by the Bureau of Land Management, and the national forest system. Like so many geoscience issues, the production of energy from federal lands is linked to a range of contentious issues such as global warming, land access, and the globalization of energy markets. Stakeholders in these energy issues vary from industrial producers and financial backers to local consumers and environmentalists. The geoscience stake includes energy exploration, resource development, remediation, and waste disposal.

Access: To Open or not to Open

Ever since taking office, President Bush has pushed to open resource-rich federal lands in order to boost domestic energy supplies and reduce dependence on foreign oil. The administration's National Energy Policy urged the Department of the Interior to "examine land status and lease stipulation impediments to federal oil and gas leasing, and review and modify those where opportunities exist." Similar language can be found in the House version of comprehensive energy legislation (H.R. 4). Areas targeted for development include portions of the OCS, lands in the Rocky Mountains, and the northern reaches of Alaska. The opening of federal lands does not sit well with all stakeholders, however, as opponents in the environmental community view such development as tantamount to environmental destruction. A major theme in the Republican-controlled House is that the federal government should not act unilaterally in making decisions regarding public lands but instead should take into account the wishes of the states, local residents, and other stakeholders.

One of the most contentious pieces of federal real estate targeted for development is Alaska's Arctic National Wildlife Refuge (ANWR). Alaskans and most Republicans are in favor of opening, but most Democrats as well as some Republicans are not. Debate over drilling in ANWR is the most prominent example of how intractable federal lands debates can become. In the short term, the fate of ANWR and related provisions on energy from public lands will be decided in the ongoing House-Senate conference to determine the final version of H.R. 4.

OCS Policy: From Traditional to Alternative Energy Resources

The outer continental shelf is host to some of the most oil- and gas-rich federal lands. The Minerals Management Service within the Department of the Interior handles management of the OCS. Moratoria have prohibited the issuing and development of oil and gas leases in most of the OCS, leaving only portions of the Gulf of Mexico, California, and Alaska available for current usage. Florida and California are pushing to extend the moratoria in their offshore lands -- turning their attention from economic development to environmental conservation.

In May, Florida and the Bush administration agreed to a $235 million deal in which the federal government would buy back portions of Florida's Gulf of Mexico OCS oil leases (as well as some mineral rights in the Florida Everglades). This buyback of the land located in the natural-gas-rich Destin Dome Unit near Pensacola, is a reflection of a larger trend to halt oil and gas development by repurchasing leases sold prior to the moratorium. To end gridlock in domestic production stemming from litigation, the administration has been forced to buy back many leases. On the heels of the Florida buyback agreement, California appealed to the administration to similarly purchase leases off of its southern coast. Discussion over the California leases is ongoing despite the administration's initial refusal to offer a deal.

OCS energy activities have primarily consisted of traditional oil and gas operations, although the potential exists for alternative energy sources. In July, House Energy and Mineral Resources Subcommittee Chair Barbara Cubin (R-WY) introduced H.R. 5156, a bill to amend the Outer Continental Shelf Lands Act to provide an administrative framework for the management of future activities. The legislation encourages alternative energies such as wind, wave, and solar power by streamlining the permitting process for new projects. Permitting authority for these projects would, for the first time, be placed solely within the Department of the Interior. This streamlining of the permitting process is an end goal for both the administration and H.R. 4. All parties generally agree that alternative energy sources, while currently contributing only marginally to total energy production, will play a larger role in the future.

The Emergence of Natural Gas

Electricity in the US is generated from three main sources: coal, natural gas, and nuclear. Coal is currently the premier energy source for electricity generation, accounting for over 50% of the total in 2000, but natural gas is coming on strong. Over 90% of new and proposed power plants will use natural gas. This jump in natural gas-powered plants is expected to push demand for natural gas upwards of 50% in the next 20 years. But looming on the horizon is a growing gas supply and demand imbalance due to the fast-growing demand and static production. In order to begin correcting this imbalance and meet this demand, the Bush administration has proposed increased development in gas-rich federal lands in the Rocky Mountains, Alaska, and the OCS. The Department of the Interior has adopted both long- and short-term plans to increase domestic production. According to Cubin, at one of the many hearings on energy and public lands that she chaired this summer: "this country has sufficient gas resources to fuel our economy for decades, but public policies are preventing them from being produced."

The emergence of natural gas is not necessarily a death knell for coal, however. Coal has the advantage of being well established in the nation's existing power plants. But the ability of coal to effectively hold its own could hinge on the development of "clean coal" technology that dramatically cuts CO2 emissions, coal's main liability. Provisions for developing such technology are expected to be part of the final energy bill. Many in Congress see coal playing an important role for years to come, in part as the transition fuel for future technologies and as a part of a stable multi-source approach to energy policy.

No matter what shape the final version of H.R. 4 ultimately takes, Congress will no doubt struggle with public land access, and all its trappings, for years to come. The need to develop energy resources on federal lands will depend on the complex interaction of market forces, science and politics that will determine the energy sources of the future. The US energy picture will both shape, and be shaped, by the role of public lands.

David has returned to Louisiana State University to complete his Master's degree in geology.

This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted July 22, 2003

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