Offshore Development Opportunities
The states of the Southeast have struggled to fully participate in the American energy resurgence, as the federal government has forced them to the sidelines. As part of the 87 percent of federally controlled offshore acreage that is off limits to energy exploration, potentially significant geologic formations in the Atlantic Outer Continental Shelf (OCS) and Eastern Gulf of Mexico that could hold billions of barrels of untapped resources have been left out of the U.S. energy revolution that is transforming state economies in other regions.
During the 30-plus years federal policy has forfeited energy opportunities in most offshore areas, exploration, drilling and production technologies have advanced so much that previous resource estimates for southeastern coastal areas are obsolete. Revised estimates from the Bureau of Ocean Energy Management (BOEM) released in 2014 reveal that 4.72 billion barrels of technically recoverable oil and 37.51 trillion cubic feet of technically recoverable natural gas could be awaiting discovery off the Atlantic Coast. Estimates have jumped just since 2011 assessments, when oil and natural gas estimates were 43 percent and 20 percent lower, respectively. Notably, these revised estimates have been done without the benefit of modern seismic surveying technology, which could reveal even more potential resources.
Voters in Virginia, North Carolina, South Carolina, Georgia and Florida support offshore energy exploration and believe increased access could help create jobs, lower energy costs for consumers and strengthen American energy security.
Multiple studies confirm significant economic benefits are waiting to be unlocked along with energy resources in the coastal Southeast. Offshore oil and natural gas development is a long-term investment, and decisions made this decade will impact U.S. energy potential for decades to come. To realize the full advantages of our energy resources and maintain global energy leadership, expanding offshore access to new areas is essential.
Offshore Energy Drives Job Growth
After decades of missed opportunity, federal policy is inching closer to opening additional offshore areas to energy development – and major economic growth. Yet a commitment to fully embrace a forward-thinking offshore energy strategy is still lacking. Allowing oil and natural gas exploration in areas in the Atlantic, Pacific and Eastern Gulf of Mexico could create nearly 840,000 jobs and boost domestic energy production by 3.5 million barrels of oil equivalent per day by 2035, according to studies by Quest Offshore Resources. Energy development in these areas could also generate more than $200 billion in cumulative revenue for the government, lead to nearly $450 billion in new private sector spending and contribute more than $70 billion per year to the U.S. economy. Atlantic development alone could create nearly 280,000 jobs by 2035, grow the economy by up to $23.5 billion per year and result in production equal to about 70 percent of current Gulf output, according to Quest.
Development in the Eastern Gulf of Mexico could support nearly 230,000 jobs, produce nearly 1 million barrels of oil equivalent per day, contribute over $18 billion per year to the U.S. economy and generate $70 billion in cumulative government revenue.
Currently, the Department of Interior’s Draft Proposed Leasing Program for 2017-2022 barely opens the door to greater OCS access. Promising areas in the Pacific OCS and the Eastern Gulf of Mexico are left out entirely, and the next Five Year Program includes just one potential lease sale for the Atlantic OCS and not until 2021. Two additional steps remain in a leasing program development process that is designed to winnow down the areas offered for lease, so access to the Atlantic is far from assured.
Bipartisan coalitions in the House and Senate have written to Interior Secretary Sally Jewell, calling for greater access. A letter from the Outer Continental Shelf Governors Coalition, which includes Democrat and Republican governors from Atlantic coastal states plus Louisiana and Alaska, points out that “once an area is narrowed, it cannot be expanded without an act of Congress or restarting the entire Five Year Program development process” and urges BOEM to “preserve the full extent of all eight OCS planning areas.”
Given the long lead time – as much as 10 to 15 years – required to develop offshore projects, failure to make additional areas available for leasing in the Five Year OCS Leasing Program can set progress back decades. Long-term energy security and economic growth for southeastern states and the entire nation depend on expanded offshore exploration opportunities.
Unlocking Energy Potential Through Seismic Technology
Source: Quest Offshore Resources
Much of what we know about offshore resource potential is based on surveys conducted over 30 years ago. That’s set to change with BOEM’s July 2014 decision to allow seismic testing to map offshore energy reserves in portions of the Atlantic. Citing “the need to update the nearly four-decade-old data in the region while protecting marine life and cultural sites,” BOEM took a step toward preliminary exploration in waters from southern New Jersey to roughly the midpoint of Florida. After an arduous, lengthy permitting process, no seismic surveys were conducted in 2015, but they could commence in 2016.
Seismic surveying is an advanced, carefully regulated technology that works like an ultrasound. Releasing compressed air into the water creates sound waves that penetrate deep into the subsurface rock at the bottom of the ocean and reflect back to the surface, where sensors make recordings that allow scientists to produce detailed 3-dimensional maps that give engineers the information they need to identify the safest and most efficient drilling locations.
Seismic surveying is technology that works like an ultrasound. Releasing compressed air into the water creates sound waves.
Noise levels created by seismic surveys are comparable in volume to the sounds of sperm whales echo-locating for prey, wind and wave action, rain and shipping operations. Surveyors follow strict guidelines to protect marine ecosystems, increasing sound levels gradually to allow sensitive animals to leave the area and halting operations immediately if visual observers or acoustic monitoring devices detect sensitive marine life in the vicinity.
BOEM Chief Environmental Officer William Brown describes the technique’s safe track record: “To date, there has been no documented scientific evidence of noise from air guns used in geological and geophysical (G&G) seismic activities adversely affecting marine animal populations or coastal communities. This technology has been used for more than 30 years around the world. It is still used in U.S. waters off of the Gulf of Mexico with no known detrimental impact to marine animal populations or to commercial fishing.” Continual improvements in seismic technology throughout its 30-year history make it even more effective today. Seismic surveying is a critical step in understanding offshore resource potential and ultimately realizing that potential through safe exploration.
Center for Offshore Safety: Continuous Progress and Accountability
Comprehensive, continuous efforts implemented by the oil and natural gas industry in coordination with federal regulators are proving effective in further improving safety for offshore energy development.
The Center for Offshore Safety (COS) was launched in 2011 to promote the highest level of safety for offshore drilling, completions and operations. Through effective leadership, communication, teamwork, utilization of disciplined safety management systems, monitoring and independent third-party auditing and certification, COS works to achieve continual safety improvements. The center released a first-of-its-kind annual report in 2015 to measure safety performance. Compiled from industry data and independent third-party audits, the report found that 96 percent of planned critical offshore maintenance, inspections and testing were performed on schedule in 2013, and that rate improved to 99 percent in 2014.
COS has created tools to assist companies in building or enhancing Safety and Environmental Management Systems (SEMS), and three COS guidelines have been adopted by the Bureau of Safety and Environmental Enforcement (BSEE) into its own regulations. In 2015, BSEE also formally recognized COS as the first and only organization with the authorization to accredit Audit Service Providers who conduct the BSEErequired SEMS audits, which are required for all offshore oil and gas operators.
In addition to the COS activities, more than 100 standards have been developed or enhanced since 2010 for well design, blowout prevention equipment, worker safety and other elements of exploration and production.
Among the actions taken to ensure effective response in the rare event of an incident is a requirement that advanced systems for capping wells at the ocean floor are now pre-positioned in ports on the Gulf of Mexico, ready to be deployed immediately.
After systematic efforts to examine and improve every aspect of operations, offshore oil and natural gas development is safer than ever. The industry has the commitment and processes in place to build on that progress and move closer to the goal of zero accidents while expanding America’s energy security and global energy leadership.