Congress will end the OCS moratorium—now what?
ShareThisSeptember 24, 2008· 5 Comments
Congress has decided to end the moratorium on energy exploration and production on the Outer Continental Shelf (OCS). This is a victory for the American people, but the question is, what does ending the moratorium really mean and when should we expect to see production on the OCS?
The moratorium banned any energy leasing off the West Coast and East Coast. Ending the moratorium will allow the first exploration off the West and East Coast in over 20 years. As spelled out below, however, there is a lot of red tape that needs to be cut through before that exploration can actually occur. Also, ending the moratorium does not ease the ban on exploration and production 125 miles off Florida’s coast in the Gulf of Mexico. This ban was created by the Gulf of Mexico Energy Security Act of 2006 and it will not expire until 2022.
Besides banning offshore production, the moratorium also banned the development of oil shale in Utah, Wyoming, and Colorado. Lifting the moratorium will allow oil shale exploration and development activities to move forward. This is critically important because there is more oil locked up in oil shale than Saudi Arabia’s oil reserves.
Ending the moratorium will allow energy exploration and production to move forward, but there are many activities that need to occur for actual production to take place.
Step 1: The Minerals Management Service (MMS) Prepares a 5-Year Leasing Program
MMS, a part of the Department of the Interior, regulates the OCS under the Outer Continental Shelf Lands Act (OCSLA). Section 18 of OCSLA requires MMS to adopt a 5-year leasing program which describes the scheduled lease sales for a 5-year period, along with policies pertaining to the size and location of sales and the receipt of fair-market value. To develop the five-year program, MMS takes the following steps:
- Publishes a Request for Comment and Information in the Federal Register
- 45-day Comment Period (the comment period closed last week on MMS’s new 5-year plan starting in 2010)
- Publishes a Draft Proposed Program in the Federal Register
- 60-day Comment Period
- Publishes a Proposed Leasing Program and Draft Environmental Impact Statement Published in the Federal Register
- 90-day Comment Period
- Publishes a Proposed Final Leasing Program and Final Environmental Impact Statement in the Federal Register
- 60-day Period in which Congress can object
- 5-year Program Announced
This process usually takes 18-36 months to complete.[1] In the case of offshore exploration on the West and East coasts, it is likely the process will take longer than 36 months. First, environmental special interest groups would likely sue MMS on the Environmental Impact Statements. Environmental Impact Statements are especially lawsuit prone because the National Environmental Policy Act (NEPA) calls for “a detailed statement” on the environmental impacts of an action and alternatives to that action. These “detailed statements” now run thousands of papers because over time, judges have added to the list of things that need to be studied in the Environmental Impact Statement.
Second, while Congress may allow the moratorium to expire at the end of September, there will likely be a fight during the 60-day period in which Congress can object to a final leasing plan.
Step 2: MMS Conducts Actual Lease Sales
The 5-year leasing plan selects broad areas in which MMS will offer leases. After MMS completes the 5-year plan, the next step is to go through the process of selecting the actual lease areas and offering the leases for sale. To conduct actual lease sales, MMS takes the following steps:
- Publishes Request for Information in the Federal Register
- 45-day comment period
- Defines proposed sale area
- Publishes Environmental Impact Statement for the specific sale
- 60-day comment period
[Steps 6-11 occur concurrently]
- Publishes Final Environmental Impact Statement
- 30-day period
- Publishes Proposed Notice of Sale
- 60-day period
- Sends a Consistency Determination (as required by the Coastal Zone Management Act) to Governors of affected states
- 90-day period
- Publishes notice of actual sale
- 30-day period
- Sale
- Leases issued
If everything goes well, this entire process from the request for information to the actual sale may take two or more years.[2] But as with the development of the 5-year plan, there are many ways to slow down the process, especially through litigation. For example, earlier this year environmental special interest groups sued to stop a lease sale on the Chukchi Sea. Environmental activists would likely sue on all new lease sales on the West and East Coast, slowing down any new energy production.
Step 3: Energy Companies Work to Produce Oil and Natural Gas
After MMS has produced a 5-year plan and carried out the lease sales, it will still take time for energy companies to explore and start producing oil (unless the lease sales are offered offshore of California where we already know where some resources are).
Here is some of the typical activities that need to occur for an energy company to produce energy:
• Gather seismic data and evaluate
• Conduct shallow hazards survey
• Partner with new companies; spread risk
• File for approval of exploration plan—NEPA review
• Drill well (60–180 days)
• Assess prospect
• Gather seismic data and evaluate
• Drill additional wells
• Decide to proceed with development; obtain partner commitment
• File development plan/pipeline approval—NEPA review
• Structural engineering review by MMS
(with a major project–2 year period to construct/fabricate production facility/ transport from overseas)
• Structural engineering review by MMS
• Pre-production inspection by MMS (and Coast Guard)
• Transport to site and hook-up (2–6 months)
• Production approval by MMS
• First production
It is great news that Congress has decided to lift the OCS moratorium. Now we can start moving forward with all of the steps necessary to start producing more domestic energy. There are a lot of steps, but we haven’t been able to take any of them until now.
One last caveat, this is an important victory, but Congress and future Administrations can reverse course and lock up America’s energy resources. We need to be vigilant to safeguard our domestic energy production.
[1] Mineral Management Service, Leasing Oil and Natural Gas Resources: Outer Continental Shelf, p. 10. http://www.mms.gov/ld/PDFs/GreenBook-LeasingDocument.pdf.
[2] Mineral Management Service, Leasing Oil and Natural Gas Resources: Outer Continental Shelf, p. 16. http://www.mms.gov/ld/PDFs/GreenBook-LeasingDocument.pdf.
June 19th, 2009 at 2:44 pm
I am biased, of course, but since this decision was reversed by the Obama administration, our effort to provide energy from domestic resources, thereby reducing dependence on foreign oil and providing years’ supply of clean-burning natural gas, has taken the fastest nosedive in history, from a thriving hotbed of employment and production to a pile of unproductive idle drilling rigs and thousands of unemployed workers. Wind, solar, tidal, and other alternative energies are still developmental. And why can’t we continue to produce oil and gas domestically while they catch up? why must they be mutually exclusive? HUGE Obama administration mistake, and they don’t seem to know they have done it!!
June 30th, 2009 at 5:47 pm
I am tired of the mind dribble coming from our legislators and the feds, and the president. I think that our government, and our legislators are out of their minds. Starting from Obama down, do not represent us anymore. They represent themselves. This is a intolerable situation, and these people need to be held accountable, or we will fire them, both parties. The middle class will eventually be funding the poor who refuse to work, and the uber rich. This situation clearly has to change, before these idiots make this country into a third world country. Wake up and write to the idiots, change their minds. And yes, threaten to vote them out.
September 17th, 2009 at 3:52 pm
Bill, We need to FLIP the Senate and Congress in 2010 and end the Liberal
agenda being forced upon American Citizens by the Pelosi Hollywood dreamers.
Real people drive cars, turn on their heat and airconditions after a hard
day at work. We water our grass and plants and of course we take showers.
Not every are like Robert Redford and get to hop on a horse and go into the
Utah outback or the Rockies in Montana becsuse we have millions. I love
Utah and Montana becsuse I’m from Washingto State and have lived in Californ-
ia for the last 10 years. Califorinia is also a great state and except for those who have wealth like: Senator Finestine, Boxer, Redford and the Liberals that want you to think your like them, We need to take America Back
in 2010. FLIP Congress both in Washington DC and California. We don’t need
a bankrupt America like how they have done to California. Vote out the en-
cumbants and install real people for what our Constitution stands for. thanks
January 23rd, 2010 at 8:36 am
How can we compete with the rest of the world when everything our leaders do is to stop the industries that help drive our economy.
February 9th, 2010 at 6:59 pm
We are a great nation an it is not by accident.We have to start pulling in our wings and start to take care of ourselves. We have to start to produce not only energy,but how about things that we use everyday that has been outsourced such as clothing, appliances small and large. Yes things that we use and buy everyday. I once read for ever billion dollars of imports we could create 20,000 jobs at $20.00 an hour. Think about it,let’s
put the money in peoples hands that will create jobs in the U.S.A.. Lets create an American pie that evryone can if they are willing to work can have a piece of it.