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March 9, 2018

Comment on Proposed Outer Continental Shelf Oil and Gas Leasing Program

March 9, 2018
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The following comment was submitted by Kenneth Stein, Director of Policy, on behalf of the Institute for Energy Research regarding Docket No. BOEM-2017-0074.

The Institute for Energy Research strongly supports the creation of a new offshore 5-year leasing plan to replace the unnecessarily restrictive plan currently in effect. This Draft Proposed Program (DPP) is an excellent start to the process because it begins from the premise of considering almost all areas of the outer continental shelf (OCS) for inclusion in the plan. Previous leasing plans have started by ruling out much of the OCS, focusing instead only on areas deemed most likely to draw bids. This approach unnecessarily narrowed the scope of prior leasing plans and limited the potential for development, contravening the federal mandate to evaluate all of the OCS for resource potential.

Moving forward, the Bureau of Ocean Energy Management (BOEM) should continue to keep all areas of the OCS in the leasing plan. BOEM cannot anticipate technological and engineering advancements which in short periods of time can change what resources are attractive for development. A planning area that looks unattractive today can still have major future potential if studied and considered without constraints. Including all areas of the OCS allows for updating of seismic and geophysical data, which can change assumptions that are based on decades-old data. In the new five-year plan, BOEM should not preemptively place any areas off limits based on this old data.

The new offshore plan should focus on being a funnel, making available the maximum possible amount of acreage at the outset and allowing the private sector to winnow which prospects to investigate. Limited present day interest should not be grounds for exclusion from the leasing plan. Given that offshore project development times often exceed a decade, there is ample time for changes to the political, price, or technological environments affecting interest in a given leasing block. The five-year plan should encourage this evolution and flexibility, seeking to facilitate development of new sources rather than only focusing on leasing around known deposits.

While state and local preferences should be heard, they cannot be controlling on federal waters. In particular, the state interest in determining beyond-horizon development rapidly dwindles. Development, for example, in excess of 50 miles is well beyond line of sight and potential shoreline impacts are minimal to nonexistent. States are free to bar development in their own waters, but federal waters must be available for the benefit of the whole country. Any compromise or concession to state objections must have a limit. Even if near-shore development is forgone in deference to the states, further and deeper waters should remain available for leasing and exploration.

There are substantial economic benefits which await the United States from expanding offshore oil and gas development. In 2015, the Institute for Energy Research published a study estimating the economic benefits from fully opening federal offshore development. The study found short-term GDP increases of $39 billion per year over seven years, rising to $113 billion per year over the following 30 years. The study also estimated over 170,000 additional jobs over the short term, with over 280,000 additional jobs over the long term.These estimates should be seen as a floor given that they are based on Congressional Budget Office figures from resource estimates that are many decades out of date. Additionally, government estimates of oil and gas resources have historically been very conservative, with actual discoveries and recovery far exceeding those estimates. The large potential economic benefits from offshore development strongly favors opening the maximum possible area of the OCS to exploration and development.

In conclusion, IER strongly urges BOEM to retain a maximal amount of the OCS proposed in this DPP in the five-year plan. The United States offshore resource potential is enormous. The economic benefits from its development are limited only by BOEM’s willingness to permit said development.


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