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Regan Nelson’s Blog

Offshore Drilling Provisions are Insufficient to Protect Oceans and Coastal Communities

Regan Nelson

Posted May 13, 2010 in Moving Beyond Oil, Reviving the World's Oceans, Solving Global Warming

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The long-awaited release of the American Power Act is an important step forward to transition our economy to a clean energy future, a need brought into stark focus by the oil disaster unfolding in the Gulf.  But despite the many strong provisions in the bill, its offshore drilling provisions are profoundly disheartening.  We need legislation that will protect our oceans and coastal communities and reduce dependence on dirty, dangerous fuels, not one that encourages more drilling off our coasts. 

We had hoped for visionary, strong mandates for reform.  What we got instead is a bill that encourages new drilling without any new safeguards in environmentally vulnerable areas.  It is hard to imagine a proposal that misses the point more than this one at a time when dead dolphins are washing up on Gulf beaches and shrimpers are watching their livelihoods disappear.

A few points stand out in particular.

Nothing in the bill addresses the disaster unfolding in the Gulf, nor will it help prevent another one from occurring elsewhere.

The OCS section of the bill starts with a long list of reforms needed to address the Gulf disaster (Section 1201), but then calls only for consideration of such actions in yet-to-be-written legislation.  The bill does not require an investigation into the regulatory and operational lapses leading to the disaster, advances no corrective measures of any kind, and fails to mandate a moratorium on new OCS activity while the accident is being investigated.  No new protections are required in the Gulf, or in highly vulnerable areas like Arctic Alaska, where drilling is scheduled to begin this summer, and where a spill a fraction of the size of the Gulf spill could devastate the entire region and its wildlife. At a minimum, there should be a moratorium on all new offshore drilling activities, including the drilling now scheduled to begin in Alaska this summer, until an independent investigation determines the causes and ramifications of the Gulf spill. 

The bill actually ENCOURAGES drilling without any new safeguards in previously protected areas like the East Coast.

 It does this by diverting a whopping 37.5% of federal offshore oil and gas revenues to East Coast states, Florida and Alaska, with no strings attached, if they allow drilling off their coasts.  In addition, 20% of each State’s share goes directly to local governments, with the allocation directly proportional to the locality’s proximity to the offshore leasing.  This revenue sharing creates major new financial incentives for states to accept offshore oil and gas drilling in areas already under stress from pollution, overfishing, ocean acidification and warming.  The bill also provides no oversight or accountability, and no restrictions on how the money may be used. 

The so-called “state veto” provisions make it very difficult for states to reject leasing off their coasts.

Supporters of the bill argue that the incentives for new drilling in new areas will be countered by granting states authority to “veto” leasing off their coasts.  But the process outlined in the bill is so tilted towards oil development that many states will likely find it difficult to effectively exercise their veto options.

First, the bill imposes a high hurdle for state action.  Sec. 1204 would allow states to veto offshore leasing within 75 miles of their coasts, but only if the state legislature passes a law and the governor then chooses to petition the federal government to prohibit leasing within 75 miles.  In many states, enacting legislation is an extremely time-consuming process, and one that will be made doubly difficult in the face of a system of financial incentives designed to promote drilling. 

Second, much damage can be done while the state is deciding whether to act.  Under Sec. 1204, if a Governor does file a petition (separate petitions are required for oil and gas leases and natural gas leases), the Interior Department then has to review and accept the petitions. After that, the federal five-year offshore leasing program must be revised.  During this entire time, leasing, seismic exploration, drilling, production, pipeline laying and other offshore operations can go forward unhindered by any restriction in the bill. Leasing and drilling could easily be a done deal by the time a State’s “veto authority” takes effect. 

It also appears that a state would have to renew its veto through the same time-consuming process each time the Interior Department draws up a new five-year leasing plan.  And after all that, even if it is successful, the State only gets a 75 mile buffer – an area easily traversed by an oil spill.

Third, the state veto provisions for more distant states are entirely at the mercy of the Department of Interior.  Some point to a second “veto provision” (Sec. 1205) as a failsafe to counter the bill’s enormous incentives.   Under that provision, states that would be significantly affected by an oil spill supposedly could veto drilling off the coasts of other states no matter how distant.  But which states get veto authority is up to the Interior Department.  Section 1205 requires the Interior Department to conduct an assessment of the probability of an oil spill, and the potential environmental and economic impacts on the coastline of certain coastal states of an oil spill resulting from drilling.  The state only has a veto if the economic assessment – the environmental study is irrelevant to the veto process –indicates that a state would be “significantly impacted” by an oil spill - a term that is not defined.  So the Interior Department, with its poor record of handling concerns about oil drilling and its mission to exploit resources and maximize revenues, would be the one to make qualitative, case-by-case decisions about which states could veto drilling off other’s coasts.  This is literally a recipe for disaster. 

Even if the Interior Department grants the state veto authority, the state can only exercise this by having their state legislature pass a law.

Beyond that, the Interior assessment only must consider the impacts of “an oil spill resulting from drilling.”  Spills from tankers or pipelines required to transport the oil to shore, which are much more common than spills from drilling, need not be assessed for reasons that are not apparent.  Nor does the Department need to assess the impacts of seismic exploration, production discharges, boat and helicopter traffic, construction of onshore processing facilities and storage tanks,  or any other type of impact producing activity under this provision. Seismic exploration and other activities can have major impacts on coastal states adjacent to States that have accepted offshore development. This is particularly true off the East Coast, where activity off one State can easily affect the resources of another.   

Finally, the language of the bill only allows states to pass a law “prohibiting oil and gas leasing” (emphasis added).  So a veto only means the Secretary is obligated to not issue further leases - he or she is not obligated to prevent drilling from starting on existing leases.  For a state like Florida, which is near an area where many leases already exist, this “veto authority” only addresses part of the problem.

The bill sets up an inherently cumbersome system – it would be much easier not to have a dangerous oil drilling incentive policy in the first place – but the specific provisions make it totally unworkable. 

Working smart with existing oil supplies and using Enhanced Oil Recovery with Carbon Storage provides enough domestic oil.

Proponents of offshore drilling claim that we have to choose between endangering our precious coasts and relying on oil imports from dangerous regimes. This is a false choice.  We need to be smarter about how we use our existing oil supplies.  As my colleague Dan Lashof describes in a recent post, a government analysis shows that we could reduce U.S. oil consumption by almost 7 million barrels per day compared to business-as-usual by 2030.  By comparison we currently produce only 1.6 million barrels per day off the Gulf coast. The American Power Act takes steps to help wean our transportation system from oil. The bill directs federal agencies, in consultation with the State of California, to continue to strengthen greenhouse gas standards and fuel economy standards for cars and light trucks and create a plan to spur electric vehicle deployment. The bill directs EPA to set greenhouse gas emissions standards for heavy trucks, which will cut diesel use. The American Power Act also puts more than $6 billion per year toward critical transportation infrastructure, such as expanded public transportation and bike and pedestrian networks that can cut oil use and global warming pollution.

Furthermore, expanding offshore drilling is unnecessary because of other provisions contained in this bill.  By capturing carbon dioxide from power plants and other industrial sources, the American Power Act enables and encourages the use of CO2 enhanced oil recovery which can be used to increase domestic production from existing onshore wells.  The CO2 is injected to force additional oil out of fields that can no longer be tapped using conventional methods. After the enhanced oil recovery operation is complete the CO2 can be permanently secured in these depleted reservoirs. 

Producing more oil with CO2 from onshore oil fields could yield ten times more oil than the American Petroleum Institute (API) projects is likely to come from new offshore exploration.  Gulf Coast states alone have more onshore potential with CO2-enhanced oil production than exploring in new areas of the Gulf.  API estimates that only 286,000 barrels of oil per day would be produced by 2030 from new offshore areas, 64,000 barrels of which would come from the Gulf of Mexico.  Assessments of the potential for CO2-enhanced oil recovery indicate that 3 million barrels per day could be produced by 2030, more than 10 times the potential of new offshore development and almost a third of what we import today.  Of that potential, 175,000 barrels per day could come from onshore fields in the Gulf Coast states of Louisiana, Mississippi and Alabama, almost three times what API estimates from drilling new areas in the Gulf of Mexico.

In sum, by being smarter in how we use existing oil supplies, and by using technologies being promoted by the American Power Act, there is no compelling reason for this bill to include offshore drilling provisions that perversely incentive States to accept new offshore drilling.  The American Power Act presents a foundation for the strong climate and clean energy legislation this country urgently needs.  The Senate should build on this foundation without delay, but ensure provisions that endanger our oceans and coasts are left on the cutting room floor.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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