Summary of Hearings on Outer Continental Shelf Policy (8-1-07)

  • June 28, 2007:The House Natural Resources Committee, Subcommittee on Energy and Mineral Resources hearing on "The Minerals Management Service's Proposed 2007-2012 Program for Oil and Gas Leasing on the Outer Continental Shelf"

 

The House Natural Resources Committee, Subcommittee on Energy and Mineral Resources hearing on
"The Minerals Management Service's Proposed 2007-2012 Program for Oil and Gas Leasing on the Outer Continental Shelf"
June 28, 2007

Witnesses:
Panel 1:
Congressman Mike Thompson, (D-CA)
Congressman Jim Moran, (D-VA)
Congresswoman Thelma Drake, (R-VA)

Panel 2:
Mr. Walter Cruickshank, Acting Director, Minerals Management Service, U.S. Department of the Interior

Panel 3:
The Honorable Frank Wagner, Virginia State Senator, Virginia Beach, Virginia
The Honorable Albert Pollard, Former Member, Virginia House of Delegates, Mollusk, Virginia
Mr. Bob Juettner, Administrator, Aleutians East Borough, Anchorage, Alaska
Mr. Whit Sheard, Program Director, Pacific Environment, Anchorage, Alaska

On June 28, 2007 the Subcommittee on Energy and Mineral Resources of the House Natural Resources Committee met to discuss the Minerals Management Service's (MMS) proposed 2007-2012 leasing program for oil and gas (O&G) on the outer continental shelf (OCS). Chairman Jim Costa (D-CA) noted the large amount of energy the OCS provides the U.S. In 2004 the OCS provided 29% of domestically produced oil and 20% of domestically produced gas. Currently the MMS has leasing jurisdiction on 1.76 billion acres of OCS of which 600 million acres is under a moratorium. Under the Outer Continental Shelf Lands Act (OCSLA) the Secretary of the Interior is required to schedule a 5-year leasing schedule on O&G for specific OCS areas. The current proposal calls for an additional 21 leases that would cover an additional 50 million acres spread over the coast of Alaska, Virginia, and in the Gulf of Mexico. However, Costa thought the MMS proposal had "very little vision." He urged that MMS obtain new data on the OCS including the areas under moratorium. Ranking Member Steve Pearce (R-NM) concurred about the significance the OCS has played in obtaining O&G resources. However, he expressed concern about the possible effects of new legislation, specifically the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 would have on limiting OCS development and making the entire MMS proposal a moot point.

The committee had various members of Congress, whose districts would be affected by the current MMS proposal testify and give their input as to the appropriate course of action on the MMS proposal. Congressman Mike Thompson (D-CA) noted that while none of the proposed leases are along the coast of his district he was concerned with future proposals from MMS and other groups trying to lift the moratorium. Thompson stated that his district relies heavily on tourism and fishing and a spill of any kind would be devastating to the local economy. That is why Thompson is introducing H.R. 2758 The Northern California Ocean and Coastal Protection Act which permanently prohibits O&G leasing on the OCS in his district. Congresswoman Thelma Drake (R-VA) supported the MMS proposal on the OCS for Virginia and supported lifting the moratorium in that area. She stated that the OCS has been "locked up for too long" and tapping into this resource would help stabilize oil and gas prices. She concluded that she supports the use of renewable fuels but right now it will not keep the U.S. going and Congress should allow the MMS to explore more in the OCS. Congressman James Moran (D-VA) was strongly opposed to lifting the moratorium because it would hurt fishing and tourism by causing toxic metal contamination in the water from drill mud. Moran continued that the overall gain from this proposal would be minimal and would not have any effect on reducing foreign oil consumption. Moran concluded that there is enough OCS available for drilling and the MMS proposal should be changed.

Mr. Cruickshank, Acting Director of MMS, addressed the committees concerns and explained the current proposal. As part of the Energy Policy Act of 2005, the MMS did an assessment of O&G resources on the OCS (including the 600 million acres under moratorium) and estimated that there remains an additional 86 billion barrels of recoverable oil (bbl) and 420 trillion cubic feet (tcf) of natural gas. The area under moratorium accounts for 18 bbl of oil and 76 tcf of natural gas. Cruickshank noted that this estimate is based on data that is over 25 years old and a more detailed assessment is needed to get a more accurate assessment of OCS resources.

The current proposed leasing program would contribute an additional 10 bbl of oil and 45 tcf of natural gas and contribute over $170 billion in net profits to the U.S. over a 40 year time span. The OCS in the Mid-Atlantic is under a moratorium and therefore no leasing can take place. Even so, Virginia has requested a lease proposal 50 miles offshore of that state. The MMS plan holds off any sale in the Mid-Atlantic until late 2011 so that analysis can be done on specific environmental effects and allows time for the moratorium for the Virginia section to be lifted. The MMS proposal also includes new parts of the Gulf of Mexico because of The Gulf of Mexico Energy Security Act which lifted the moratorium in portions of the Gulf and added over 8.3 million acres. The MMS has proposed 12 leases in the newly open section. The North Aleutian Basin (NAB) in Alaska is also open for leasing after a Presidential modification to the 1998 withdrawal made by former President Clinton. Cruickshank stated that the modification was supported by Alaska and the communities closest to the NAB. MMS promises to work closely with various federal and local agencies to address environmental concerns.

Costa was concerned with the accuracy of the estimates made by MMS of the petroleum resources in place. Cruickshank admitted that the data being used to forecast these estimates was from the 1970's and 1980's. According to Cruickshank the lack of recent data is because the MMS does not have the resources to do 2-D and 3-D seismic analyses. MMS relies on the work done by oil companies because to get information for an entire leasing area costs between $50-80 million and the MMS has jurisdiction on 26 leasing areas. Furthermore, O&G companies will not get seismic data on areas that they do not have a lease on.

Several committee members were also concerned with the environmental repercussions of drilling in OCS. Cruickshank answered the concerns by stating that there has not been a spill due to drilling activity since 1969. In addition drilling in the OCS actually reduces natural seepage caused by leaks in the cap rock which accounts for 63% of oil contamination in the oceans. Cruickshank concluded that MMS will continue to "seek and consider" the advice of federal environmental organizations to insure the proper mitigation measures are taken.

The final panel gave the committee local input from Alaska and Virginia on the MMS proposal. The panel was divided on the issue with support for and against from each state. Virginia State Senator Frank Wagner (R) was in support of the MMS proposal due to the heavy demand for natural gas from local industry. Former Virginia State legislator Albert Pollard called the plan "misguided" because it would not reduce the price of energy and bring harm to local fisheries and tourism. Bob Juettner Administrator of the Aleutians East Borough supported the proposal but only after a stringent environmental impact assessment and statement has been made in order to protect local fisheries. However, Whit Sheard, Program Director of Pacific Environment felt the MMS proposal was too aggressive for Arctic waters. He stated that an oil spill in broken ice conditions is impossible to clean up and therefore is an "unacceptable risk" to endangered species such as polar bears and whales.

Despite environmental concerns, on July 1, 2007 Secretary of the Interior Dirk Kempthorne approved of the 2007 MMS OCS O&G leasing program which will run until June 30, 2012. The Gulf of Mexico is slated to have 12 sales areas, the NAB and coast of Alaska will have eight. The lease sale of one area 50 miles off the coast of Virginia is pending an exception of the moratorium. MMS vows continued cooperation with environmental reviews before deciding on any sale.

A link to witness testimony can be found here.

-DM

Sources: Hearing testimony.

Contributed by David McCormick, 2007 AGI/AIPG Summer Intern

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Last updated on August 18, 2007.