81 FR 84612 - Notice of Availability of the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Proposed Final Program

DEPARTMENT OF THE INTERIOR
Bureau of Ocean Energy Management

Federal Register Volume 81, Issue 226 (November 23, 2016)

The Bureau of Ocean Energy Management (BOEM) is announcing the availability of the 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Proposed Final Program (``Proposed Final Program'' or ``PFP''). This proposal is the last of three proposals for the 2017-2022 OCS Oil and Gas Leasing Program that will succeed the current, 2012-2017 Program. The PFP provides information and analyses to inform the Secretary of the Interior's (Secretary) decision on the size, timing, and location of leasing in the 2017-2022 Program. Section 18 of the OCS Lands Act (43 U.S.C. 1344) specifies a multi-step process of consultation and analysis that must be completed before the Secretary may approve a new OCS Oil and Gas Leasing Program, commonly known as the Five-Year Program. The required steps following this notice include a minimum 60-day period after the submission of the PFP to the President and Congress before the Secretary may approve the 2017-2022 Program. Concurrently with this notice, and pursuant to the National Environmental Policy Act (NEPA), BOEM is publishing a Notice of Availability (NOA) of the Final Programmatic Environmental Impact Statement (PEIS) for the 2017-2022 Program.

[Federal Register Volume 81, Number 226 (Wednesday, November 23, 2016)]
[Notices]
[Pages 84612-84615]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-28296]


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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2016-0003]; [MAA104000]


Notice of Availability of the 2017-2022 Outer Continental Shelf 
Oil and Gas Leasing Proposed Final Program

AGENCY: Bureau of Ocean Energy Management, Interior.

ACTION: Notice of availability.

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SUMMARY: The Bureau of Ocean Energy Management (BOEM) is announcing the 
availability of the 2017-2022 Outer Continental Shelf (OCS) Oil and Gas 
Leasing Proposed Final Program (``Proposed Final Program'' or ``PFP''). 
This proposal is the last of three proposals for the 2017-2022 OCS Oil 
and Gas Leasing Program that will succeed the current, 2012-2017 
Program. The PFP provides information and analyses to inform the 
Secretary of the Interior's (Secretary) decision on the size, timing, 
and location of leasing in the 2017-2022 Program. Section 18 of the OCS 
Lands Act (43 U.S.C. 1344) specifies a multi-step process of 
consultation and analysis that must be completed before the Secretary 
may approve a new OCS Oil and Gas Leasing Program, commonly known as 
the Five-Year Program. The required steps following this notice include 
a minimum 60-day period after the submission of the PFP to the 
President and Congress before the Secretary may approve the 2017-2022 
Program. Concurrently with this notice, and pursuant to the National 
Environmental Policy Act (NEPA), BOEM is publishing a Notice of 
Availability (NOA) of the Final Programmatic Environmental Impact 
Statement (PEIS) for the 2017-2022 Program.

FOR FURTHER INFORMATION CONTACT: Ms. Kelly Hammerle, Five-Year Program 
Manager, at (703) 787-1613 or [email protected].

[[Page 84613]]


SUPPLEMENTARY INFORMATION: 

Background

    Section 18 of the OCS Lands Act requires the Secretary to prepare 
and maintain a schedule of proposed OCS oil and gas lease sales 
determined to ``best meet national energy needs for the five-year 
period following its approval or reapproval.'' This PFP is the last of 
three proposed leasing schedules for OCS lease sales under the 2017-
2022 Program. The first proposal, the Draft Proposed Program (DPP), was 
published on January 29, 2015, and was followed by a 60-day comment 
period that ended on March 30, 2015. The second proposal, the Proposed 
Program, was published on March 18, 2016, with a 90-day comment period 
that closed on June 16, 2016.
    The areas identified in the PFP were chosen after careful 
consideration of the factors specified in Section 18 of the OCS Lands 
Act and the comments received during the Program development process. 
Included in this PFP is an analysis of the lease sale options 
identified by the Secretary in the Proposed Program. The development of 
the Five-Year Program is a winnowing process; thus, only those areas 
that the Secretary decided were appropriate to include in the Proposed 
Program are analyzed in the PFP and the associated Final PEIS. The PFP 
and Final PEIS will be submitted to the President and Congress at least 
60 days prior to Secretarial approval of the 2017-2022 Program.

Summary of the Proposed Final Program

    As part of the Administration's energy strategy, the PFP is 
designed to best meet the nation's energy needs. It takes into account 
the Section 18 requirement to balance the potential for discovery of 
offshore oil and gas resources with the potential for environmental 
damage and the potential for adverse impact on the coastal zone. In 
weighing the Section 18 factors to develop a nationwide program, 
region-specific considerations were taken into account, including 
information about resource potential, the status of resource 
development and infrastructure to support oil and gas activities and 
emergency response capabilities, industry interest, and the regional 
interests and policies of affected states. Through the Five-Year 
Program winnowing process, the Secretary gathers information to 
determine the timing of lease sales and the combination of offshore 
areas that will, if leased, best meet the energy needs of the nation 
while protecting against environmental damage and adverse impact to the 
coastal zone.
    Grounded in the above principles, and after careful consideration 
of public input and the OCS Lands Act Section 18(a)(2) factors, the PFP 
contains a proposed lease sale schedule of 11 lease sales, 10 in those 
portions of three OCS planning areas in the Gulf of Mexico that are not 
subject to moratorium, and one in the Cook Inlet offshore Alaska. These 
areas have high resource potential, existing Federal or state leases 
and infrastructure, and more manageable potential environmental and 
coastal conflicts from development as compared to other OCS areas that 
are not included in the 2017-2022 Program. In total, the PFP makes 
available approximately 70 percent of the resources that are 
economically recoverable at an oil price of $40 per barrel, and nearly 
one half of the estimated undiscovered technically recoverable OCS oil 
and gas resources.

      Table 1--2017-2022 Proposed Final Program Lease Sale Schedule
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                Year                       Planning area        Sale No.
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1. 2017.............................  Gulf of Mexico.........        249
2. 2018.............................  Gulf of Mexico.........        250
3. 2018.............................  Gulf of Mexico.........        251
4. 2019.............................  Gulf of Mexico.........        252
5. 2019.............................  Gulf of Mexico.........        253
6. 2020.............................  Gulf of Mexico.........        254
7. 2020.............................  Gulf of Mexico.........        256
8. 2021.............................  Gulf of Mexico.........        257
9. 2021.............................  Cook Inlet.............        258
10. 2021............................  Gulf of Mexico.........        259
11. 2022............................  Gulf of Mexico.........        261
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Gulf of Mexico Region

    The Gulf of Mexico combines abundant proven and estimated oil and 
gas resources, broad industry interest, and well-developed 
infrastructure. The oil and gas resource potential of the Western and 
Central Gulf of Mexico, as well as the portion of the Eastern Gulf of 
Mexico that is not subject to Congressional moratorium, is the best 
understood of all of the OCS planning areas. Not only are the oil and 
gas resource volume estimates for the Gulf of Mexico OCS unparalleled, 
the existing infrastructure to support development is mature for and 
able to support oil and gas activity and response capabilities in the 
event of an emergency.
    Of the 11 lease sales included in the PFP, 10 are in the Gulf of 
Mexico (see Figure 1), where infrastructure is well established, and 
there is strong adjacent state support and significant oil and gas 
resource potential. The Gulf of Mexico proposal includes region-wide 
sales: One sale in 2017 and 2022, and two sales in 2018, 2019, 2020, 
and 2021.

Alaska Region

    In Alaska, the PFP includes a Cook Inlet lease sale in 2021 that 
comprises the northern portion of the Cook Inlet Planning Area (see 
Figure 2). Cook Inlet is a mature basin with a long history of oil and 
gas development in State waters, where existing infrastructure is 
capable of supporting new activity. The design of this lease sale area 
allows for the protection of the endangered beluga whale, and for the 
protection of northern sea otter critical habitat, and makes available 
those areas with the greatest industry interest and significant oil and 
gas resource potential. BOEM will continue to use developing scientific 
information and stakeholder feedback to determine, in advance of any 
sale, which specific areas offer the greatest resource potential, while 
minimizing conflicts with environmental, subsistence, and multiple use 
considerations in Cook Inlet.
    The DPP and Proposed Program included one sale each in the Chukchi 
Sea and Beaufort Sea Planning Areas. After considering all available 
information and analyses, the Secretary removed the Chukchi Sea and 
Beaufort Sea Program Areas from the PFP. The Secretary's decision to 
remove the Beaufort Sea and Chukchi Sea Program Areas was based on a 
consideration of the Section 18(a)(2) factors, which include regional 
geographical, geological and ecological characteristics of the region; 
equitable sharing of developmental benefits and environmental risks 
among regions; environmental and predictive information; industry 
interest; regional and national energy markets; state goals and policy; 
environmental sensitivity; and other uses of the various planning 
areas.
    While there are significant hydrocarbon resources in the Arctic, 
the region is a unique, sensitive, and costly environment in which to 
operate. Unlike the Cook Inlet, the Arctic OCS is remote, and would 
require substantially more new investment for large-scale OCS 
development. Industry voiced its interest in the Arctic OCS in the 
comment period on the Proposed Program. However, foreshadowed by 
Shell's disappointing 2015 drilling season and subsequent announcement 
that it would leave the U.S. Arctic for the foreseeable future, 
industry has demonstrated its declining interest in the Arctic OCS with 
the relinquishment of the majority of leases in these two

[[Page 84614]]

Planning Areas. In fact, the number of active leases in the Arctic OCS 
has declined by more than 90 percent in a matter of months, from 527 in 
February 2016 to only 43 as of October 2016, with most of these 
expected to expire in 2017.
    While the Arctic OCS has the potential to provide domestic energy 
production when economic conditions are considerably more favorable, 
the increase in domestic onshore production from shale formations and 
other market factors have shifted expectations regarding oil and gas 
price trajectories and have substantially reduced the economic 
incentives for Arctic exploration and production. As described in 
Chapter 6 of the PFP, recent developments in domestic oil and natural 
gas markets have reduced the United States' reliance on imported 
petroleum. With the existing U.S. onshore crude production increasing 
in every year since 2008, and substantial Gulf of Mexico offshore 
production continuing, U.S. domestic energy supply remains strong. 
While new production can be beneficial, the Arctic lease sales are not 
necessary to have a 2017-2022 Program that best meets the energy needs 
of the nation. BOEM estimates that without the Arctic OCS lease sales, 
cumulative U.S. oil and gas production will be less than one percent 
lower over the 70-year life of projected activity, and only four 
percent lower during the years of peak production. The Nation's energy 
security remains strong without leasing in the Arctic, and the oil and 
gas resources in the Arctic will likely become more valuable to 
potential bidders at some point in the future.

Atlantic Region

    As in the Proposed Program, no lease sales are included in the 
Atlantic Region in the lease sale schedule for 2017-2022.

Pacific Region

    As in the DPP and Proposed Program, no lease sales are included in 
the Pacific Region in the lease sale schedule for 2017-2022.

Assurance of Fair Market Value

    Section 18 of the OCS Lands Act requires receipt of fair market 
value from OCS oil and gas leases. BOEM plans to continue to use the 
two-phase post-sale bid evaluation process that it has used since 1983 
to meet the fair market value requirement. BOEM recently revised its 
post-sale bid evaluation process (see Summary of Procedures for 
Determining Bid Adequacy at Offshore Oil and Gas Lease Sales: Effective 
March 2016 at http://www.boem.gov/Summary-of-Procedures-For-Determining-Bid-Adequacy/). Further, the PFP provides that BOEM may set 
minimum bid levels, rental rates, and royalty rates for each individual 
lease sale, based on BOEM's assessment of market and resource 
conditions closer to the date of the lease sale.

Next Steps in the Process

    BOEM will submit the PFP and Final PEIS to the President and 
Congress at least 60 days prior to Secretarial approval of the 2017-
2022 Program.

    Dated: November 16, 2016.
Abigail R. Hopper,
Director, Bureau of Ocean Energy Management.
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[FR Doc. 2016-28296 Filed 11-21-16; 8:45 am]
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