Louisiana's congressional delegation celebrates proposed oil, gas leasing program

Halen Doughty
An oil rig in the Gulf of Mexico.

U.S. Secretary of the Interior Ryan Zinke recently announced the next step for developing the National Outer Continental Shelf Oil and Gas Leasing Program for 2019-2024. The plan proposes making over 90 percent of the total OCS acreage available to consider for future exploration and development.

The program includes 98 percent of undiscovered, technically recoverable oil and gas resources, making it the largest number of lease sales in U.S. history if approved.

President of the Louisiana Mid-Continent Oil and Gas Association, Chris John, said they are extremely pleased to see the Bureau of Ocean Energy Management take offshore oil and gas development seriously. He said expanding access to other OCS areas is critical to our nation's energy security and economy.

"Louisiana is a perfect example of how a robust offshore oil and gas industry can provide significant benefits to our local, state and national economies while at the same time balancing other stakeholder interests. The offshore industry has a $44 billion economic impact on the State of Louisiana," said John. "Combining the offshore sector with related pipeline and refining activities, the oil and gas industry has a $70 billion total annual impact to Louisiana. According to the Department of Interior, it is believed that over $1 trillion in net economic value is associated with development of the Gulf of Mexico over the past 20 years and the federal government has collected over $150 billion in offshore revenues."

The Draft Proposed Program (DPP) includes 47 potential lease sales in 25 of the 26 planning areas, including 12 in the Gulf of Mexico. The draft proposal includes 10 biannual lease sales in areas of the Western, Central, and Eastern Gulf that are not subject to Congressional moratorium, as well as two sales in the Eastern and Central Gulf with moratoriums that expire in 2022. The Gulf of Mexico is one of the most productive basins in the world and already has well-established oil and gas infrastructure.

"The Gulf of Mexico is an example of how our country can explore and produce American energy while also balancing the needs of other stakeholders such as some of the best hunting, fishing, wildlife watching and tourism," said John. "Louisiana’s success in effectively achieving that balance is a shining example of what the United States can achieve in other federal offshore areas. LMOGA looks forward to being part of the federal process to see increasing access become a reality on our path towards American energy dominance."

Congressman Garret Graves was also pleased with the announcement. He said preventing energy production in the U.S. makes us reliant upon foreign energy sources and sends American dollars and jobs to other countries.

"This energy plan is different. It starts to reverse our reliance upon foreign energy and aims to maximize our domestic resources, including in the Gulf of Mexico. Our energy workforce and families have suffered through a historic offshore energy slump that was compounded by previous federal policies – this plan will create jobs, not kill them," said Graves. "The United States has one of the safest, most environmentally-sensitive conventional energy production programs in the world – and nobody does it better than Louisiana."

Graves added that eliminating barriers to domestic energy production, as envisioned in this plan, is a step in the right direction.

Louisiana's U.S. Senators echoed that sentiment. Senator Bill Cassidy said the proposal demonstrates that officials are serious about creating jobs and making American energy dominant.

"Opening the Eastern Gulf of Mexico to American energy producers will create thousands of jobs in Louisiana and other Gulf Coast states, and bring billions of dollars of investment to our country," said Cassidy. "This proposal would mean better paychecks and opportunities for American workers and more affordable energy for their families."

Cassidy recently spoke on the Senate floor about the plan, saying it would mean more affordable energy made in the U.S., which he said is good news for American workers. He noted that when people make more money, local, state, and federal tax receipts increase.

"According to one study, opening the Eastern Gulf of Mexico would create nearly 230,000 new American jobs by 2035—It would bring roughly $115 billion of investment to the United States. Federal, state and local governments would collect an additional $70 billion in tax revenue by 2035," said Cassidy.

Cassidy went on to say American energy production would be boosted by about a million barrels of oil and that the plan is expected to create more than 30,000 new jobs in Louisiana. U.S. Senator John Kennedy agrees this is good news for the Bayou State.

"This is an extraordinary moment for American energy. Continuing to remove these restrictions will move our country one giant step closer towards energy independence," said Kennedy. "It also means more jobs and opportunities for our oilfield families in Louisiana and around the country that have been hit hard over the past several years."

While many representatives from Louisiana appear thrilled at the announcement, there are those who have their concerns about opening up more land for oil and gas exploration.

"The administration has chosen a ‘drill everywhere’ approach, but even the analysis included in this proposal makes clear that the choice isn’t rational," said Michael Livermore, senior advisor at the Institute for Policy Integrity at University of Virginia School of Law. "Based purely on price uncertainty, many areas up for leasing in this proposal are on the border of being uneconomic. Drilling in sensitive areas also entails enormous environmental uncertainties, which the agency did not attempt to quantify. Once the risks are accounted for, it is clear that ‘drill everywhere’ can't be the result of a reasoned balancing of costs and benefits."

"Opening up nearly all offshore areas for oil and gas leasing is a public land giveaway in which citizens and coastal communities bear the significant risks of a major oil spill, while receiving minimal benefits," said Jayni Hein, policy director at the Institute for Policy Integrity at New York University School of Law. "In addition, tying up large portions of the Outer Continental Shelf for fossil fuel extraction prevents these areas from being used for offshore wind production and other, more strategic uses.

"This proposal is a terrible deal for taxpayers. It would flood the market with more offshore tracts for lease, all but ensuring that they sell for bargain prices with little to no competition. In Interior's last offshore lease sale, held this past summer, the vast majority of tracts had only one bidder."

The release of the DPP is an early step in a long process of developing the final program. The 2017-2022 Five Year Program will continue to be implemented until the new program is approved. Public comment periods will be open to gather further input from stakeholders including state governments, federal agencies, industry, and the public.

BOEM manages about 2,900 active OCS leases covering more than 15 million acres, most of which are in the Gulf of Mexico. In the 2016 fiscal year, oil and gas leases on the OCS accounted for about 18 percent of domestic oil production, as well as four percent of domestic natural gas production.

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