Mr. Gary D. Goeke Chief, Environmental Assessment Section Leasing and Environment (MS 5410)

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1 Mr. J. F. Bennett Chief, Branch of Environmental Assessment Bureau of Ocean Energy Management, Regulation and Enforcement 381 Elden Street Mail Stop 4042 Herndon, Virginia Mr. Gary D. Goeke Chief, Environmental Assessment Section Leasing and Environment (MS 5410) Bureau of Ocean Energy Management, Regulation and Enforcement Gulf of Mexico OCS Region 1201 Elmwood Park Boulevard New Orleans, Louisiana Subjects: Scope of the Programmatic EIS for the OCS Leasing Plan Scope of the Multisale EIS on the Oil and Gas leasing proposals in the Western and Central Planning Areas of the GOM The American Petroleum Institute (API), National Ocean Industries Association (NOIA), International Association of Drilling Contractors (IADC), Independent Petroleum Association of America (IPAA), International Association of Geophysical Contractors (IAGC) and the U.S. Oil and Gas Association (USOGA) offer the following comments on the scoping of the Programmatic Environmental Impact Statement (PEIS) for the Outer Continental Shelf (OCS) Leasing Plan that the Bureau of Ocean Energy Management, Regulation and Enforcement [(BOEMRE formerly the Minerals Management Service (MMS)] originally published in the Federal Register on April 2 and republished on January 4, 2011, and scoping of the Multi sale Environmental Impact Statement (EIS) addressing Central and Western Gulf of Mexico lease sales for the OCS Leasing Program published on February 9, These comments are offered in addition to comments filed in June 2010 by API, IPAA, and NOIA. The API is a national trade association that represents over 475 members involved in all aspects of the oil and natural gas industry. Our members are greatly interested in exploring for and developing oil and natural gas resources found on the OCS and are interested in the development of the OCS Leasing Program. The scoping of the PEIS and EIS and the subsequent environmental analyses will provide critical information to the federal government

2 to further inform and support decisions on areas to include in the OCS Leasing Program and will be used extensively in support of holding lease sales in these areas. The NOIA, founded in 1972 with 35 members, represents all facets of the domestic offshore energy and related industries. Today, more than 250 member companies are dedicated to the development of offshore energy for the continued growth and security of the United States. The membership also includes companies involved in or branching out to pursue offshore renewable and alternative energy opportunities. NOIA members are engaged in many business activities, including environmental safeguards, equipment supply, gas transmission, navigation, research and technology, shipping and shipyards. The IPAA represents over six thousand independent petroleum and natural gas producers across the country. Independent producers drill 90 percent of domestic oil and natural gas wells, produce 68 percent of domestic oil and produce 85 percent of domestic natural gas. The IADC is the sole trade association representing virtually the entire global oil and natural gas drilling industry, both onshore and offshore. Headquartered in Houston, it also has permanent offices in Washington DC, The Netherlands, Dubai and Thailand, and chapters on every continent except Antarctica. The IAGC is the international trade association representing the industry that provides geophysical services (geophysical data acquisition, processing and interpretation, geophysical information ownership and licensing, associated services and product providers) to the oil and gas industry. IAGC member companies play an integral role in the successful exploration and development of offshore hydrocarbon resources through the acquisition and processing of geophysical data. IAGC members provide their services and products to exploration and production companies who are or have interest in exploring and developing natural gas and oil resources found on the OCS. The USOGA is a national trade association for the oil and gas industry established in 1917 in Tulsa, OK. USOGA currently has about 4,500 members and in addition to its Washington, DC headquarters has divisions in Alabama/Mississippi, Louisiana, Oklahoma and Texas. We would like to note that to date the Secretary of the Interior has not published a proposed program that contains a proposed lease sale schedule for the time period. Nevertheless, on December 1, 2010, the Secretary announced an updated oil and gas leasing strategy for the OCS that rescinded his earlier decision to consider areas in the Eastern Gulf of Mexico Planning Area and the Mid and South Atlantic Planning Areas for potential lease sales and development and to focus only on areas where we have current leasing activity. While we strongly support continued area wide leasing in the Gulf of Mexico and Alaska OCS areas, we are disappointed with the Secretary s decision. The Secretary cited the need to focus and expend critical resources on areas with leases that are currently active as justification for removing these areas from consideration. We support environmentally responsible exploration and production not just in the Gulf of Mexico and the Alaska OCS, but in all offshore areas to

3 provide for equitable sharing among all OCS Regions where analysis indicates economic benefits exceed environmental costs. Industry and government regulators continue to examine and strengthen safety regulations for offshore production to reduce the risk of any future events, and industry has allotted substantial resources for response preparedness in the event of a well control incident. For example, in the Arctic, industry has invested significant resources to develop comprehensive response plans in the event of an oil spill. In Alaska, Shell Oil currently maintains a fleet of 14 ships, tankers, barges, tow vessels and specialized ice and water containment equipment, as well as a large workforce of highly trained people on location, ready to respond in the event of a spill. Given the reality that demand for energy is growing and that we will need more oil and natural gas to help meet growing demand for energy in the coming decades, we believe the Secretary s proposed decision is short sighted. This decision will keep the Eastern Gulf and the Mid and South Atlantic areas off limits to potential development until at least 2017, at the earliest. We recommend the Secretary reconsider this decision and include these areas within the scope of the PEIS. Including these areas in the PEIS does not guarantee that there would be leasing in these areas. As stated in the April 2, 2010 Federal Register notice, the fact that an area is analyzed in a 5 year EIS does not mean that it will be included in a final leasing program. However, an area must be analyzed pursuant to NEPA to be included in a 5 year program. By including these areas in the PEIS, the federal government would have the benefit of having already performed the needed environmental analyses should circumstances dictate that these areas be offered for leasing during the time period. The U.S. Energy Information Administration (EIA) forecasts U.S. energy demand will grow by 14 percent between 2008 and 2035, and more than half that demand is expected to be met by oil and natural gas, as it is today. The EIA expects that oil will continue to meet the largest share of our energy needs, supplying 33 percent of total energy consumed, including 85 percent of the energy for transportation. The EIA s analysis of the nation s energy demand and energy fuels mix makes plain that our nation will continue to rely significantly on natural gas and oil for at least the next generation. Given global economic and population growth estimates, improvements in efficiency alone or growth in alternative energy sources will not be enough to meet our needs. We will need more energy both in the United States and around the world. We must safely and responsibly pursue domestic energy production, including those resources located in the OCS as part of our national energy portfolio. The United States has vast oil and natural gas resources in the OCS that should play a critical role in meeting America s future energy demand, providing jobs and fueling the economy. The BOEMRE estimates that the undiscovered, technically recoverable oil and natural gas resources located in the OCS range from 66.6 billion to billion barrels of oil and trillion to trillion cubic feet of natural gas. These current estimates may very well be conservative as they have not benefited from the use of new seismic and computer modeling technology and some areas remain largely unexplored. Even at the current tally, developing these resources would translate into thousands of jobs for hardworking Americans and millions of dollars in government revenue. Royalties from oil and gas production represent one of the most

4 significant non tax revenues for the federal government. In 2008, the offshore industry paid $8.3 billion in royalties, $237 million in rent and $9.4 billion in lease bids. In 2010, the industry paid $4.0 billion in royalties, $245 million in rent and $979 million in lease bids. 1 The offshore Gulf of Mexico oil and gas industry generated almost $70 billion of economic value and supported nearly 400,000 jobs in just In Alaska alone, if new development of offshore resources proceeded, an annual average of 35,000 jobs a year could be created for the next 50 years. Overall, the oil and natural gas industry already supports 9.2 million American jobs and contributes more than $1 trillion to the national economy, or 7.5 percent GDP, according to a PricewaterhouseCoopers study. This number could climb even higher with access to additional OCS areas available for exploration and development. We strongly urge the Secretary to reconsider his decision to exclude areas in the Eastern Gulf of Mexico and the Mid and South Atlantic Planning Areas as part of the OCS Leasing Program. Additionally, given the ongoing restructuring within the Department of the Interior of functions regarding offshore oil and gas leasing and development, the BOEMRE and other federal agencies that will be collaborating on the EIS should ensure that they have a clear understanding of their role in the process and possess the financial and personnel resources needed to complete the EIS in a timely manner. BOEMRE should also ensure that the EIS development is complementary to other environmental analyses being conducted by agencies in Alaska, the Gulf of Mexico, and the Atlantic, including the supplemental environmental impact statement (SEIS) for the remaining Western Planning Area (WPA) and Central Planning Area (CPA) lease sales in the Year OCS Program. Data from the best available peer reviewed scientific literature, and not speculation, should be used when assessing potential impacts of oil and natural gas activities on the environment. The analyses should use the most current scientific data available, and should clearly identify any limitations in data sets, models, and methodologies for impact assessment. If there are conflicting sets of data, models results or methodologies, BOEMRE should provide analysis of the strengths and weaknesses of each and the basis for selecting one over another or for including multiple methods in the analysis. Notwithstanding the incident in the Gulf of Mexico, the entire environmental and safety record of the offshore industry should be analyzed as part of the EIS. As relevant, credible information emerges from the ongoing Gulf of Mexico incident and the ensuing investigations and studies it should be incorporated into the analyses as appropriate. In closing, we are reminded of the comments the President made at Georgetown University on March 30, The President expressed his support for domestic oil and natural gas production, stating, This begins by continuing to increase America s oil supply. In order to continue to increase America s oil supply we need to allow America s oil and natural gas industry to explore in all offshore areas. Only through exploration, will we ever know the true 1

5 potential of our domestic resources. And only through exploration of new areas, will we be able to truly to continue to increase America s oil supply. The assembled trade associations appreciatee the opportunity to comment on the effort to scope the PEIS for the OCS Leasing Program and the Multi sale EIS for the Gulf of Mexico. The resources of the Outer Continental Shelf remain a vital source of jobs, revenue, energy and economic growth. We believe that these resources can be safely developed, and we encourage the Department of the Interior to develop a 5 Year Plan that is robust and allows for development of the broadest possible economic area offshore. The oil and natural gas industry stands ready to invest in safe exploration and development of the OCS. Michael Kearns, NOIA Erik Milito, API Barry Russell, IPAA Alby Modiano, USOGA Chip Gill, IAGC Brian Petty, IADC