As prepared for delivery
Public Statement
Draft PEIS for the 2012-2017 OCS 5 Year Leasing Program
December 6, 2011
Good afternoon. My name is Erik Milito and I'm a group director for upstream and industry operations with the American Petroleum Institute. I'm grateful for the opportunity to speak today on the Draft Programmatic Environmental Impact Statement (PEIS) for the 2012-2017 OCS Leasing Program.
The API is a national trade association that represents more than 490 members involved in all aspects of the oil and natural gas industry. Our members are greatly interested in advancing the 2012-2017 OCS Leasing Program because of its enormous importance to developing at home more of the energy we will need to power our nation, create more jobs for Americans, and generate more revenue for our government. The PEIS and the subsequent environmental analyses will provide critical information to the federal government to further inform and support decisions on areas to include in the 2012-2017 OCS Leasing Program and will be used extensively in support of holding lease sales in these areas.
Unfortunately, the Secretary's decision to limit the scope of the 2012-2017 five-year program to portions of the Gulf of Mexico and Alaska constitutes a missed opportunity to help reach a more secure energy future for our nation, an obstacle that could increase our reliance on foreign energy and deny major benefits to our economy. We need a robust strategy for developing offshore areas and BLM-administered lands because they are and will continue to be important to the nation's oil and natural gas production. We need to be doing the right things today to be able to meet our energy needs tomorrow. This five-year program is flatfooted energy policy that fails to move us in the right direction and it maintains a status quo that will not adequately help prepare us for a strong energy future.
The reasons offered for effectively foreclosing expansion of future offshore development are inconsistent and make little sense.
One criterion the department used for selecting areas was the likely availability of resources. If that is important, why were areas in the Gulf of Mexico included while areas in the Pacific with significant known reserves that featured promising geological conditions not included? Like in the Gulf, there also is existing infrastructure in place in the Pacific to support exploration and development, including spill preparedness and response.
Another criterion given for deciding to include an area was the existence of local and state support for development. Again, the criterion was inconsistently applied. The Secretary removed Pacific areas from consideration citing recommendations of local elected officials, while excluding areas in the mid-Atlantic – in Virginia, North Carolina and South Carolina – where support for leasing and development by elected officials is strong. The public in the mid-Atlantic supports development. It sees the potential for job creation. Why was the existence of local and state support discounted in one area?
In other cases, the rationales the department presented for including or excluding areas don't make sense on their face.
Take the argument that we shouldn't be looking for more oil and natural gas if there's not development infrastructure already in place. This standard effectively rules out all new development in frontier areas, and it would simply continue the leasing moratoria that have locked up most of our coasts for many decades.
And why does the department consider the pre-existence of spill preparedness and response capability in reaching a decision on which areas to include in its plan? No company can drill a well anywhere without showing compliance with the department's strict regulations on spill preparedness and response.
The department also cites potential conflicts with the military to rule out some areas despite thorough consideration of this issue – including extensive discussions between DOI and DOD in mid-September of 2009 that led to a decision by the Secretary in March 2010 to include the Atlantic in its next five-year program. There was no mention of military concerns then when it looked like the mid-Atlantic might be opened up. Now, the department is citing conflicts with military operations as a reason for not AS including Atlantic areas in its five-year plan proposal. It fails to document or substantiate these conflicts and concerns.
The department also says that some areas were not included because data on resource potential was lacking, but that data is very unlikely to be generated unless the areas are first included in a five-year plan and leasing is envisioned. The government does not generate this data; seismic companies do. And they do this on a speculative basis, hoping to sell the data to operators that are looking to purchase leases in an area. As part of the permit conditions, the government also gets a copy of this data. With no lease sale scheduled in the Atlantic, and thus no potential customers, seismic companies have no incentive to gather new data.
These examples highlight the unrealistic and illogical approach taken by the Secretary in making his decision on the scope of the 2012-2017 five-year program. To reiterate, requiring all of the data and infrastructure to be in place before offering an area for potential leasing doesn't make sense, is inconsistent with a forward-looking program of domestic energy development, and is not one of the considerations outlined in the OCSLA that the Secretary must use in preparing a five-year program.
There is a well-defined and time-tested process in place for gathering data and then making science-based decisions on how to proceed. The pathway from lease sale to drilling and potential development contains numerous decision points along the way. By removing areas from consideration at this point in the process, the Secretary has short-circuited the ability of our nation to strengthen its own energy production and damaged its security interests.
We can create more jobs and generate more revenue if allowed to responsibly develop and produce here in the United States more of the oil and natural gas we need. But more development – especially on public lands and federally controlled waters – requires that industry and government share a vision of the potential benefits and act as partners to fully realize them.
We call on the department to finalize the 2012-2017 five-year program as quickly as possible so that leasing can continue in the restricted areas defined by that program. That will allow us to explore and develop in some areas and continue to generate some jobs and additional revenue and enhance the nation's energy security. We also strongly urge the Department to create a new, more robust five-year program that will include additional OCS areas in the Atlantic, Pacific, and Eastern Gulf of Mexico that were illogically removed from consideration as part of this five-year program.