Salazar OCS Delay Garners Mixed Response
The attempts over the years to expand the nation's energy resource base by developing more domestic and unconventional sources has been enthusiastically backed by the supplier and manufacturing sectors. High costs for fuels such as oil and natural gas has often put a crushing burden on manufacturers since these resources are used in 97% of all manufactured goods in the U.S. Because manufacturers consume one-third of all energy in the country, the sector also suffers disportionate impacts when prices are high. The elevated costs over the last several years have pushed plants to reduce labor hours, trim output and even close doors or move overseas. During a six-year span, the forest products industry was forced to close 276 mills, and since 2006, 190,000 jobs have been lost—15% of the industry's total workforce. And though natural gas and oil prices have fallen dramatically from peaks seen just months ago to multi-year lows as the global slowdown sinks demand, there will eventually be a return to higher prices.
After the Congressional offshore drilling moratorium was allowed to expire in October, one of the final actions by the outgoing Bush Administration was to publish a new draft of the five-year plan for energy development on the nation's Outer Continental Shelf (OCS). The Department of the Interior (DOI), the U.S. Geological Survey (USGS) and the Minerals Management Service (MMS) have worked slowly on hammering out a direction for oil and gas drilling on the OCS, and the deadline for public comment on the latest proposal is set to expire March 23rd. Originally, the Energy Policy Act of 2005 outlined that the DOI craft rules and regulations on energy development on the OCS within nine months of the bill's passage, but the agency has languished for three years to simply submit a proposed plan for comment.
Interior Secretary Ken Salazar feels that the March 23rd deadline for public review on the current draft plan is inadequate, and has extended the public comment period by an additional 180 days; turning the 60-day comment period to a 240-day period. He is also asking for a detailed report, within 45 days, on conventional and renewable resources offshore, and 30 days after receipt of this report he plans to hold four regional conferences—Pacific Coast, Atlantic Coast, Alaska and the Gulf of Mexico—to review the findings.
"The additional time we are providing will give states, stakeholders and affected communities the opportunity to provide input on the future of our offshore areas," said Salazar. "The additional time will allow us to restore an orderly process to our offshore energy planning."
Though the recent MMS draft is the seventh five-year OCS plan developed by the agency, the move to delay the public comment period was met with mixed emotions.
"Clearly, consensus has developed around the need for OCS energy to be part of America's energy equation," said Cal Dooley, president and CEO, American Chemistry Council (ACC). "We cannot begin soon enough to reshape U.S. energy policy in a way that drives demand for American goods and services, including chemistry." The chemistry sector has been hit hard by high energy prices, and of the 120 chemical plants being built worldwide, 119 of them will be outside the U.S.
"Congress made the American people wait nearly 30 years to address our immediate energy challenges," said American Petroleum Institute (API) President Jack Gerard. "Secretary Salazar today told the American people they must continue to wait—even though more than two-thirds of them want to tap our vast domestic resources for the benefit of all Americans."
Gerard added the announcement could mean that development of "offshore resources could be stalled indefinitely." From Gerard's and many other industry leader standpoints, there have already been a record 120,000 comments collected on the OCS draft plan from state leaders, environmental groups, citizens and businesses, meaning the additional time for the comment period seems unnecessary.
The OCS represents an area roughly three fourths the size of the United States, totaling more than 1.7 billion acres. The area has been eyed for development because it is estimated to hold a massive cache of oil and gas, containing roughly 86 billion barrels of oil and some 420 trillion cubic feet of natural gas. Despite the restrictions in development over the last two decades, the OCS constitutes 27% of the U.S. oil supply and 14% of the country's natural gas supply. One of the largest areas affected in any future OCS drilling plan is the opening up of the Atlantic seaboard to development.
Salazar said that he intends to issue a final rule for offshore renewables in the coming months, "so that potential developers know the rules of the road."
Matthew Carr, NACM staff writer