Offshore in depth

On July 18, the U.S. Bureau of Ocean Energy Management (BOEM) announced that it had approved opening of the southern and mid-Atlantic Outer Continental Shelf (OCS) planning areas for geologic and geophysical exploration, including waters from Cape Canaveral to Delaware Bay. Permits have already been issued to nine geophysical survey companies that could conduct multi-client surveys as early as 2015. Exploratory drilling could begin by 2018, with earliest production in 2026.

For many in the oil and gas industry, the government’s decision to open these waters for G&G exploration was decades overdue. But one could argue that the process worked the way it is supposed to in protecting the public interest. BOEM made the decision after lengthy deliberation and public comment on the draft environmental impact statement, which reviewed possible impacts on marine mammals, commercial fisheries, sea turtles, seabed corals, and coastal communities.

Coverage of BOEM’s decision in the popular media sounded the alarm, giving seismic air guns the sinister name of “sonic cannons.” The Associated Press wrote that the sonic cannons emit “sound waves many times louder than a jet engine reverberating through the deep every 10 sec. for weeks at a time.” Coastal communities, dependent on tourism and fishing, are concerned about eventual drilling and fear another Deepwater Horizon accident.

Environmentalists were outraged that the Obama administration would authorize the use of a technology that could potentially injure 138,000 sea creatures. (BOEM estimated marine casualties by calculating the largest possible affected number of marine mammals, fish and turtles, but also stated that the actual number would probably be much lower.)

To mitigate the impact on marine life, BOEM calls for survey exclusion zones that would be in force during months when whales migrate and sea turtles nest. BOEM also called for protocols that require marine mammal observers on board seismic vessels and mandate interruption of seismic survey activity, if whales or dolphins are sighted nearby. Passive acoustic monitoring technology will be required to control operating frequencies, and seismic activity would be ramped up slowly to enable unobserved animals to move away from the sound produced by the air guns. The industry already follows these operational protocols.

The BOEM restrictions are not sufficient for the most vocal environmentalists, who believe that any new fossil fuel development should be stopped, not only to save the whales, but also to combat global warming.

The energy industry’s argument in favor of opening the Atlantic to oil and gas exploration cites the commendable record of minimal environmental impact, while conducting seismic surveys in offshore basins around the world and large potential economic benefits.

The API and NOIA sponsored a study, prepared by Quest Offshore and released in December 2013, which projected significant economic benefits of developing oil and gas in all three planning areas off the East Coast, including $195 billion in investment and the creation of 280,000 jobs by 2035.

These economic projections optimistically assume that exploration efforts will find commercial quantities of petroleum; that regular lease sales will take place; and that development will not face future regulatory roadblocks. In the Quest forecast, drilling would commence in 2019 with a projected 69 development projects achieving combined production of 1.34 MMboe/year in 2035.

In addition to job creation and a $23.5 billion/year contribution to the U.S. economy, federal and state governments would generate a cumulative total of $51 billion in revenues through 2035, according to the API-NOIA sponsored study.

Of course, it remains to be seen whether commercial quantities of hydrocarbons are present off the Atlantic coast. In the 1970s and 1980s, 2D seismic surveys covered much of the area just opened. Based on these surveys and a 2011 review by BOEM, the amount of technically recoverable reserves was estimated at 3.3 Bbbl of oil and 31.3 Tcf of natural gas. Modern seismic techniques might find additional potential reserves, but the new data are needed to confirm this assumption. A total of 51 exploratory wells were drilled off the East Coast through 1984, mainly in shallow water in the North Atlantic planning area, without making a commercial discovery.

Like the controversies over hydraulic fracturing and the Keystone XL pipeline, oil exploration off the East Coast evokes a strong “not in my backyard” reaction. Environmentalists use scare tactics to overstate the impacts and tie them to the ultimate fate of our planet. At the same time, industry advocates tend to minimize the negative impact of oil and gas development and exaggerate its economic benefit. Industrial activities do impact the environment. These impacts can be limited by technology, responsible practices, and regulation, but they are part of the price we pay to live a modern lifestyle that depends on energy consumption.

In the final analysis, public policy for energy development requires compromise. While we need to protect the environment and address global warming, our industry is playing an important role in providing the energy that powers civilization. Officials from both parties recognize the need to develop all forms of energy while respecting the environment. Opening these waters to exploration is a reasonable step, taken after considering all aspects of the issue. This action shows that even a Democratic administration can make a rational decision related to energy exploration and production.