Friday, July 15, 2011

Looking more positive? Obama administration makes moves to speed up Arctic oil and gas development

Alan Bailey, Petroleum News

In May President Obama said that his administration would encourage domestic oil production by offering annual lease sales in the National Petroleum Reserve-Alaska. At that time, as reported in Petroleum News, he also announced an intention to extend the terms of some existing leases in the Alaska offshore.

Now, in the latest twist in the administration’s new moves over Arctic oil and gas, the president has issued an executive order establishing an interagency working group for the coordination of energy development and permitting onshore and offshore Arctic Alaska. Led by the U.S. Department of the Interior and involving multiple federal agencies, the group will facilitate efficient decision making over permits and environmental reviews, the order says. The group will ensure the sharing and integrity of scientific information, environmental information and traditional knowledge among agencies. The group will also ensure the coordination of issues such as oil spill prevention and contingency planning, while also coordinating the development of any necessary support infrastructure in Alaska, the order says.

Cautiously optimistic
Alaska Gov. Sean Parnell said he was cautiously optimistic about the latest presidential action.

“I appreciate the federal government recognizing and taking steps to address the increased costs and lengthy delays the federal permitting process has had on resource development and jobs in Alaska,” Parnell said. “The structure of the federal permitting process must be reformed.”

However, Parnell also expressed concern that the president has not included representation from the State of Alaska in the new working group.

On June 13 President Obama sent a letter to Gov. Parnell saying that the Obama administration “appreciates the importance of Alaska’s vast natural resources, including both the significant potential for energy production and the unique challenges posed by the development of the Arctic environment.”

The letter confirmed the administration’s intention of holding annual NPR-A lease sales and also re-iterated the intent “to extend the leases for certain areas off the coast of Alaska to give companies time to meet heightened safety and environmental standards for exploration and development.”

Taking action?
The U.S. Bureau of Land Management has acted on the president’s instructions for NPR-A lease sales by planning an NPR-A sale for later in 2011. However, so far the Bureau of Ocean Energy, Management, Regulation and Enforcement has not made any public statement regarding the possible extension of Arctic OCS leases.

“Our conversations with BOEMRE regarding lease extensions have not revealed what their intention is for Arctic leases,” Shell spokesman Curtis Smith told Petroleum News in a July 12 e-mail. “We continue to wait for their explanation on how lease extensions will be resolved in the future.”

Shell purchased leases in the Chukchi Sea in 2008 but has so far been unable to drill in any of those leases, in part because of appeals against the 2008 lease sale. The company has reacted positively to Obama’s announcement about the new interagency working group.

“The formal creation of a working group dedicated to pursuing domestic energy solutions in Alaska is welcome news and builds on recent, positive conversations we have had with this administration related to responsible offshore exploration in the Arctic,” Smith said. “We have long advocated for a regulatory process that is fair and accountable. … We’re hopeful this effort to coordinate various regulatory work streams will lead to more data sharing and a more efficient, while still robust, permitting process.”

AK delegation support
“The administration’s decision to designate specific people at each agency to focus on the development of our Arctic resources represents a positive step forward in improving the federal permitting process for companies interested in investing in Alaska,” said Sen. Lisa Murkowski in response to the president’s order. “I will be watching this effort closely to ensure that it’s successful at closing what has been an endless loop of approvals, appeals and delays — delays caused by special interest groups opposed to improving our energy security and the jobs it would create.”

“For the past two years, I’ve called on the administration to have federal agencies work together in Alaska,” said Sen. Mark Begich. “The president recognized the problem in his weekly address at the end of March. I give him full marks for honoring his commitment and look forward to the group untying the procedural knots that have stalled development at CD-5 in the National Petroleum Reserve-Alaska and improving permit processing in the OCS.”

“I am pleased that the administration is seemingly taking Alaska resource development more seriously,” said Rep. Don Young. “Time will tell if this working group helps streamline and expedite the process, as I hope it will, or if it adds another level of bureaucracy and red tape. In the meantime, I commend the president for taking a positive step in the right direction.”

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Republished with the permission of the Petroleum News.