The US Department of the Interior disputed a Wall Street Journal report quoting Sec. David L. Bernhardt as saying development of a new US Outer Continental Shelf oil and gas leasing program has been delayed indefinitely because of a recent court decision in Alaska which blocks Arctic offshore drilling there.
“Given the recent court decision, [DOI] is simply evaluating all of its options to determine the best pathway to accomplish the mission entrusted to it by [President Donald Trump],” a DOI spokeswoman told OGJ in an Apr. 26 e-mail.
The US Bureau of Ocean Energy Management is working under an approved 2017-22 OCS oil and gas leasing program. In response to an Apr. 28, 2017, executive order from Trump and a May 1, 2017, order from then-US Interior Sec. Ryan Zinke, it began to develop one for 2019-24 which, if approved, would supersede the program in place. BOEM released a proposed draft on Jan. 4, 2018, and received 27,042 public comments on it through Mar. 9, 2018.
US District Judge Sharon L. Gleason ruled on Mar. 29 in Anchorage that Trump exceeded his authority when he issued an executive order revoking orders by his predecessor, Barack Obama, toward the end of his second term that withdrew three federal offshore areas from oil and gas leasing consideration.
A review of the court decision’s possible impacts on the proposed 5-year OCS leasing program was not surprising, National Ocean Industries Association Pres. Randall Luthi said in response to the report. “While litigation can take unexpected twists and turns, it is important to note that the offshore energy industry is finally starting to recover,” he said.
“US offshore investments are even outpacing shale, but there is a very real chance that companies will decide to invest billions of dollars into other foreign offshore energy markets free from litigious activism,” Luthi warned.
“We hope that an appeal of this case will move quickly and that we can proceed with the important work of exploring for America’s offshore resources without unnecessary delay,” Erik Milito, vice-president for industry and upstream operations at the American Petroleum Institute, said on Apr. 26.
This is not the first time that a US Interior secretary has begun developing a new 5-year OCS oil and gas leasing program earlier than usual. Dirk A. Kempthorne began to develop one 2 years ahead of schedule on July 30, 2008, in response to dramatically higher prices. “When our current 5-year plan was launched in July 2007, oil was selling for $64/bbl. Today, a barrel of oil costs more than $120[/bbl], almost double the price a year ago. Clearly, today’s escalating energy prices and the widening gap between US energy consumption and supply have changed the fundamental assumptions on which many of our decisions were based,” he said at the time.
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
