Posts Tagged ‘OCSLA’

As is evident from the first table below, the EIA’s new short-term production forecast for the Gulf of Mexico differs significantly from the optimistic BOEM forecast.

The EIA 2022 figure is spot-on, as it should be given that 10 months of 2022 production data are now in hand. However, BOEM’s 2022 forecast (published in July) missed the mark considerably. (In fairness to BOEM staff, their work was probably completed months before publication pending internal reviews.)

Of greater concern, given the policy implications, is the rosy BOEM forecast for the out-years. Despite historically low levels of leasing and exploratory drilling, BOEM forecasts oil production to exceed 2 million BOPD through 2027 and to remain well above the current (2022) level through 2031 (second table below).

As previously noted, the authors of the proposed 5 year OCS leasing plan have used the BOEM forecasts to justify a skeleton leasing plan that is unprecedented in program history. Contrary to the OCS Lands Act’s mandate and EIA projections regarding future oil and gas consumption, the proposed leasing plan not so subtly announces the intention to phase out the offshore oil and gas program.

Notes: (1) forecasts are for average daily production – millions of barrels
(2) actual 2022 production averaged 1.74 million BOPD through Oct.

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The need for alternate energy/use legislation was obvious to Minerals Management Service (predecessor of BSEE and BOEM) personnel decades ago given the growing interest in renewable energy projects and the reuse of offshore platforms. Twenty years ago, MMS staff took the initiative to draft alternate use amendments to the OCS Lands Act that MMS Director Johnnie Burton and the congressional liaison office worked closely with Congresswoman Barbara Cubin of Wyoming to gain support for the amendments and they were adopted as part of the Energy Policy Act of 2005

Attached below are the talking points used by MMS in briefing congressional staff and other agencies. These talking points were spot-on and have endured the test of time.

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Planned obsolescence, as justification for the minimalist leasing program (see below), is neither prudent nor consistent with the OCS Lands Act.

The long-term nature of OCS oil and gas development, such that production on a lease can continue for decades makes consideration of future climate pathways relevant to the Secretary’s determinations with respect to how the OCS leasing program best meets the Nation’s energy needs.

5 Year Leasing Program, p.3

Basing offshore leasing decisions on “future climate pathways” is a high risk strategy that may be inconsistent with the recent SCOTUS decision in West Virginia vs. EPA. A planned or phased shutdown of the offshore oil and gas program would dramatically increase economic and security risks, and has not been authorized by legislation.

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Contrary to the opinion of some, opponents of offshore oil and gas leasing are not rigid zealots who are unwilling to compromise. More than 80 such organizations have graciously voiced support for a novel five year leasing plan:

In accordance with OCSLA, we urge you to create a new five-year lease plan that includes no new offshore lease sales for the next five years.

Letter to President Biden and Secretary Haaland

That’s right – a leasing plan with no leasing, a program that is about nothing.

Seinfeld on Twitter: ""The show is about nothing!" #Seinfeld  #GeorgeCostanza http://t.co/6eQoZeJLxG" / Twitter

Unfortunately for the proponents, this creative proposal would seem to have some significant legal obstacles, most notably its inconsistency with the statute and the legislative history. The idea was to have an organized approach to leasing, not to eliminate it. Per OCSLA:

The leasing program shall consist of a schedule of proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity which he determines will best meet national energy needs for the five-year period following its approval or reapproval. 

OCS Lands Act

How does zero leasing help meet national energy needs? Security? Price stability? Supply chain? Are these groups funded by OPEC+ members and nations that hate us the most? If not, they should be, because they are certainly doing their bidding.

As Daniel Yergin’s excellent Atlantic piece explained, the energy transition will take time and be enormously complex. He quoted French economist Jean Pisani-Ferry who warned that “going into overdrive on transitioning away from fossil fuels would lead to major economic shocks similar to the oil crises that rocked the global economy in the 1970s.”

Empty five year leasing programs are not an option for a diverse nation of 330+ million people that will continue to need oil and gas well into the future. We should and are adding new energy alternatives to the mix, and many of us were involved in developing the framework for these alternatives, but eliminating important sources of oil and gas at this time would be sheer folly.

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