U.S. Policies: Raising Red Flags Offshore

By Randall Luthi, President of the National Ocean Industries Association (NOIA)
Wednesday, October 16, 2013

National Ocean Policy, Coastal & Marine Spatial Planning: two of the biggest issues you never heard of. It’s also far more complicated than you might think.

This summer, the Obama Administration released the innocuously named “Guide to Regional Marine Planning,” and across town, the House of Representatives passed the latest in a string of resolutions restricting the Administration from spending money on the implementation of the National Ocean Policy. The battle continues over an issue which could well redefine the future of offshore energy development, fisheries management, renewable energy siting, coastal development, deep sea mining, and conservation policy. Because of that, National Ocean Policy (NOP) and Coastal and Marine Spatial Planning (CMSP) are the biggest issues of which you have never heard.  
Here is how the National Ocean Council – part of the White House Council on Environmental Quality – describes the effort: “The National Ocean Council released a Marine Planning Handbook to support the efforts of regions that choose to engage marine industries, stakeholders, the public, and government to advance their economic development and conservation priorities. Each coastal region of the country has its own interests and ways of doing business, but all regions want to support their marine economies and coastal communities. Voluntary marine planning is a science-based tool that provides regionally tailored information that all ocean interests can use to reduce conflicts, grow ocean industries, and support the healthy natural resources that our economy and communities depend on.”
A key policy tool in the Marine Planning Handbook is Coastal Marine Spatial Planning. Strong supporters of the NOP, including many environmental groups, seem completely flummoxed that the use of CMSP has much of the offshore energy industry and many current ocean users concerned. After all, as explained by the NOP, the overall goal of CMSP is to reduce conflicts and the time necessary to permit ocean uses. The stated aim is for ocean users and federal regulators to eventually spend less time contemplating the ‘where’ and focus instead, on just the ‘when.’ 
In principle, it sounds good. However, the reality is more complex. Technically almost all of the outer continental shelf (OCS) has been available for energy exploration and development since 2008 when moratoria were allowed to lapse. However, while the OCS is technically open, exploration and development cannot occur without Federal approval. This Federal approval is generally granted through five year plans mandated by the Outer Continental Shelf Lands Act (OCSLA).
The last five year plan covered 2007 – 2012 and was developed before the entire OCS was technically open. In 2012, the Obama Administration had the opportunity to include much more of the OCS in the 2012-2017 five year leasing plan, yet decided to leave approximately 87 percent of the OCS closed to exploration and development for oil and natural gas. Thus, even though technically open, the entire Atlantic, Pacific and Eastern Gulf of Mexico are locked down tight when it comes to oil and natural gas activities.
This raises red flag number 1. The same Administration that closed down 87% of the OCS is now promoting the NOP and the use of CMSP. There is legitimate concern that CMSP is starting with a bias towards leaving oil and natural gas out of any future use of much of the oceans. This concern is compounded since the NOP calls for the use of CMSP without having a good idea of the potential location or extent of oil and natural gas reserves throughout much of the OCS.
Government estimates show the OCS may hold over 116 billion barrels of oil, which is enough to power 65 million cars for 60 years, and over 650 trillion cubic feet of natural gas, which could heat 60 million homes for 160 years. But these existing estimates of potential oil and gas reserves are exactly that: estimates. For most of the OCS, these estimates are based on decades-old data and are certain to be wrong. The reserves could be larger or they could be smaller. But we won’t know unless exploration is allowed to take place in these areas. Proponents of CMSP often state their interest in a science-based, data-driven management of ocean resources, but they have effectively barred the oil and gas industry from collecting the data that would allow it to make its case for where to drill.
The surest way to start the exploration process and secure the necessary data to make informed decisions is to have a lease sale. Under OCSLA, lease sales are conducted by the Federal government using a sealed bidding process. In the Gulf of Mexico, where lease sales have been conducted for decades, bids range from hundreds of thousands of dollars to millions of dollars for each tract. Once a sale is announced, companies usually arrange to have the lease areas surveyed for potential oil and natural gas reserves through the use of seismic surveys, otherwise known as geological and geophysical (G&G) work. Based on these initial findings, companies then submit bids on the tracts they judge to have the most potential. If they submit the highest bid, and are awarded the lease. 
But purchasing a lease, does not guarantee that oil and gas reserves are present. The only sure way to see if the resources exist is to drill an exploratory well. If an exploratory well taps into sufficient reserves, then the company makes plans to actually produce the oil and/or natural gas.  Each of these steps requires government oversight and permitting, as well as adherence to environmental and safety laws and regulations. In addition to the bonus bids, companies pay rent for the lease, and if production occurs, also pay royalties based upon the amount of oil and gas produced.  Leases that companies do not develop are relinquished to the Federal government for possible resale. 
Unfortunately, the entire process outlined above is virtually impossible to undertake in an informed or scientific manner, since there has not been any G&G work done in about 87 percent of the OCS for over 20 years. So, right now, we really have no idea if there are substantial oil and gas reserves in most of the OCS or not. Despite that lack of knowledge, regional councils under the NOP are capable of zoning off entire areas. They are not using data to make these decisions. Instead, they are guided by incomplete information and politics. This raises red flag number 2.
CMSP may also lead to designations for single use of areas that are more suitable for multiple uses.  For example, under the current OCSLA and Coastal Zone Management Act, any area is deemed at the outset to be open for potential oil and natural gas development, wind development and recreational and commercial fishing and diving. In many places, the end result of the process is the successful co-location of all these activities. For example, structures used in energy development and production often form vital habitat for coral and fish species. So the structures not only support energy development, but also support fisheries and fishing spots that did not even exist before. On the other hand, having CMSP pre-determine uses based on data limited solely to existing users’ interests locks the oil and gas industry out of vast swaths of the OCS, and leads to multiple use areas that will not realize their full potential.
Industry and other user groups also have legitimate concerns over how and whether they will be invited to participate in the CMSP process. As currently designed, it is a management regime that focuses entirely on the agencies of the Federal and state governments as the decision makers. This is red flag number 3. Where industries’ concerns are solicited, there is often only one opportunity for all of industry to weigh in. Industries using the OCS are not monolithic in their interests, however. There must be real time moments in the planning process for these important voices to be heard and considered.
Finally, CMSP seems like another federal solution looking for a problem. Current law provides a robust coordination process between the Federal government, states and communities. While it may be true that competing uses in state waters make planning like this important, the OCS is vastly larger and less utilized. Trying to create a system of governance for an area that is not burdened with conflicts is unnecessary.  In addition, the current public process allows ample input from the general public and industry officials.
With all these concerns, it should come as no surprise that many industry and user groups are not jumping on the CMSP bandwagon. It makes sense that the House of Representatives have repeatedly voted to halt funding for this apparently well-meaning but ill-conceived process. All of these potential pitfalls are what transform a positive-sounding process into an area of deep concern for economic users of the ocean. Until these concerns can be allayed, CMSP will remain an issue that threatens to have a negative impact on our Nation’s energy and other ocean resources. 



(As published in the October 2013 edition of Marine News - www.marinelink.com)

 

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