The Outer Continental Shelf Lands Act (OCSLA) requires the Secretary of the Interior to develop a program every five years that grants mineral leases and regulates oil and natural gas activities. The OCSLA allows the Secretary to grant leases to the highest bidder, and allows the Secretary to formulate regulations for the areas.
The five year programs have been sanctioned by the federal government since 1982. The latest Outer Continental Shelf (OCS) Oil and Gas Leasing Program will run from 2012 to 2017 and includes a schedule of lease sales including size, timing, and location of oil and gas activity.
One goal for the next five years is to advance safe and responsible domestic energy exploration and production by including more acreage for lease in regions that have known oil and gas resources. Before that acreage can be developed, however, it must first be tested for environmental impact. The new five-year program will test new acreage for environmental impact and schedule leasing sales according to specific regional needs.
New Acreage being Tested for Environmental Impact
The latest OCS Oil and Gas Leasing Program will begin by conducting environmental testing in areas that have potential for development. After testing, it is likely that the new program will continue leasing areas of the Central and Western Gulf of Mexico on a yearly basis, as these areas remain of high interest to Operators. Parts of the Eastern Gulf of Mexico will also be tested, but this area is currently under a congressional moratorium until 2022.
The previous five-year program sold leases in the Mid-Atlantic off the coast of Virginia. The new program will include environmental testing of the entire Mid-Atlantic and South Atlantic region, however it is not expected that these areas will be developed for production, as no leases have been scheduled in this region.
Substantial amounts of new acreage will be opened up for environmental testing in Alaska. This acreage is located in the Chukchi Sea, Cook Inlet, and Beaufort Sea.
More Resources Available in a Staggered Schedule
The new program makes more than 75% of undiscovered oil and gas resources in the OCS available for possible production. Fifteen lease sales have been scheduled in six offshore areas with known resources. For example, the new program includes five annual area-wide lease sales in the Western Gulf of Mexico, starting in fall 2012. Next in the schedule are five annual area-wide lease sales in the Central Gulf of Mexico, starting in spring 2013. The Eastern Gulf of Mexico includes only two sales, scheduled for 2014 and 2016, in areas that are not part of the congressional moratorium.
There is one lease sale in Alaska in 2013 – tentatively scheduled in the Cook Inlet, provided that this area passes environmental testing. Acreage in the Beaufort Sea and Chukchi Sea will not be scheduled until 2015 and 2016, which will allow more time to learn from exploration and analysis of environmental issues.
New Region-Specific Approach
The staggered schedule described above reflects the new, region-specific approach for the 2012-2017 five-year program. Regional concerns such as resource potential, infrastructure, oil spill capabilities, and state interests were taken into consideration to form the program.
As the Gulf of Mexico currently supplies more than 25% of U.S. oil production and has a developed and mature infrastructure, the new program schedule includes area-wide leasing sales in the Western and Central Gulf throughout the five-year plan.
In Alaska, the new program attempts to balance the area’s energy needs with the environmental needs of the region. The program also takes into account the cultural and subsistence needs of Native Alaskans. To accomplish this, sales are placed late in the five-year program to allow more time to test for environmental impact and sufficiently build up necessary infrastructure.
The new program does not include leasing sales in the Atlantic. This region will continue to undergo environmental testing, but no leasing sales are planned due to a lack of infrastructure and ability to be sufficiently prepared for oil spills and other safety disasters.
Due to opposition from the governors of California, Washington, and Oregon to offshore drilling in the Pacific, there are no plans for leasing sales in that region.
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