What is the federal government’s five-year offshore leasing plan and why is it important?
America’s vast proven reserves and undiscovered offshore resources are estimated at nearly 101 billion barrels of oil and 480 trillion cubic feet of natural gas in federal areas spanning the Atlantic and Pacific Oceans as well as the Gulf of Mexico, and the Chukchi and Beaufort Seas. To put this in perspective: 101 billion barrels of oil is enough oil to power 10 million cars for 348 years; and 480 trillion cubic feet of natural gas is enough to heat 10 million homes for nearly 656 years.
Unfortunately, as it currently stands, 87 percent of America’s offshore acreage is off limits to development. The federal government controls which acreage is developed via an offshore leasing plan issued by the Interior Department.
The administration's most recent five-year offshore leasing plan was a first step toward increased domestic energy production, but it is hardly a good step. The plan scheduled 15 potential lease sales between 2012 and 2017—12 in the Gulf of Mexico and three off the coast of Alaska. However, the plan mostly provided for offshore leasing in areas where the oil and natural gas industry already operates. The plan omitted the Atlantic, the Pacific and almost all of the Eastern Gulf of Mexico, and it would open significantly less acreage to leasing than the administration’s 2010 plan.
These omitted areas could hold substantial amounts of oil and natural gas, the development of which could greatly benefit the U.S. economy and energy security. A recent Wood Mackenzie study concluded that full development of these areas could provide hundreds of thousands of additional new jobs, more than $100 billion in cumulative additional government revenue, and nearly 4 million barrels of additional oil and natural gas by 2030.
In addition to these missed economic opportunities, leaving resource areas―such as a sector off Virginia's coast―out of the five-year plan means the government effectively killed incentive for preliminary work. Seismic studies and other industry activities need to occur before oil and natural gas companies make long-term decisions to acquire a lease for development.
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