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July 14, 2008

OCS Scientific Committee Meeting Summary

Associate Director’s Presentation

As advisor to the Director, MMS, the Committee appreciates the opportunity to have a dialogue with Director Quarterman and Associate Director Kallaur for Offshore Minerals Management on ongoing and future issues, policies, and activities of the Bureau. This exchange not only keeps the Committee apprized of MMS direction but also offers an opportunity for the Committee to provide direct advice and guidance on matters as they relate to the Environmental Studies Program.    full text

Associate Director Kallaur introduced Ms. Julie Reynolds who will be providing the staff support to this committee and thanked Ms. Phyllis Clark for the work she has done as the staff assistant over the last 9½ years. Ms. Clark will be assisting Dr. Ken Turgeon full-time in his duties as chief scientist and will continue to interact with the Committee, albeit in a different role than before.

She stated that she is interested in some of the ideas for restructuring the Committee put forward by Dr. Coleman and looks forward to hearing the Committee’s reaction.

Over the short term, MMS is faced with rapidly changing technology that is allowing companies to explore and develop in water depths a few years ago no one thought possible.

Companies have acquired leases in 13,000 feet of water, and there is some talk of gas hydrates not only being a safety problem, but a potential huge natural gas resource. The economic and energy benefits at stake are enormous. Yet these benefits can be realized if industry is able to maintain its excellent environmental and safety record and the American public has confidence in the integrity of the program.

As a regulator, MMS needs to keep up with the science and the evolving technology so that permit decisions are based on solid facts.

Clearly this committee has already contributed significantly through the work of the deepwater subcommittee which has helped chart a course for MMS to follow in pursuing the critical deep water research which is needed. One of the add-ons Congress provided by giving MMS responsibility for oversight of the deepwater research at the Offshore Technology Research Center will also be helpful by providing an opportunity to interact with industry as new technology is developed. How MMS regulates it may not be an issue of direct interest to the Committee, but it does involve the issue of what is the best motivator for top performance recognizing that 80% of accidents are caused by human error, not a failure in technology.

Another challenge MMS faces is the globalization of the offshore industry, both in terms of the mobility of the companies, both independents and majors from one part of the globe to another, and the growing interest in international guidelines and standards. Traditionally, MMS has been an agency with a domestic focus, yet now MMS needs to be everywhere from meeting of the I.M.O. on platform decommissioning requirements to learning about the experiences of other nations who have had FPSO’s operating in their waters. MMS has benefitted by partnering with other nations on environmental issues of common concern, such as the work being done in Norway in partnership with industry on deepwater blowouts.

The last challenge is what to do between now and year 2012 when the Presidential moratoria expires. A good part of the debate surrounding moratoria is how people perceive the risks of offshore oil and gas activity to their coastal environment. MMS needs to some how find a way to identify what are the important issues, attempt to address them, and find a forum or fora where all parties can engage in intelligent discussion. The MMS will need to watch closely and be engaged in the federal ocean policy review that is a follow-up to the Ocean Conference. MMS is closely monitoring the situation in the Canadian portion of the Georges Bank where a moratoria has been in place for approximately 10 years, studies were commissioned, and now there is a public debate relying in part on the studies conducted to decide whether to lift the moratoria.

Gulf of Mexico Region. It was announced that Mr. Chuck Schoennagle has been appointed Regional Deputy Director. Mr. Schoennagle has been a longtime Gulf of Mexico employee and he will have his hands full with the many diverse activities in the Gulf, especially the deepwater activities that continue to play a part of the major ongoing projects in this Region with a continued focus on safety.

In August, there were 30 deepwater rigs simultaneously drilling in Gulf of Mexico water depths greater than 300 meters. While depressed oil prices have had an effect on shallow water drilling, there has been no slackening in deepwater exploration and development at this point. Companies currently hold 3,200 leases in water depths greater than 800 meters and in order to hold those leases they will need to be diligently explored during their primary terms.

MMS’s recent lease sales clearly indicate industry’s confidence in the Gulf’s deepwater potential. In fact, one of the latest GOM lease sales, Sale 171 in the Western Gulf, attracted over $550 million in high bids from 63 companies on over 402 tracts, over 300 of which are in water depths of 200 meters or more. In fact, ninety percent of the $550 million in high bids was offered on tracts in water depths greater than 800 meters.

To address the myriad of environmental issues associated with deepwater, the Gulf of Mexico Region has been preparing an environmental assessment which will likely lead to full blown environmental statements on selected topics. It was hoped that this document would be released in time for the Gulf ITM next month, but it has been realized that more time is needed to have a quality document and the document is not expected to be available until early next year.

As technology advances and costs are reduced, deepwater development projects will become more feasible, allowing companies to venture into ultra-deep waters—exceeding 800-meter water depths. One of MMS’s major challenges is keeping abreast of the technological changes and being able to respond in a timely manner. The latest challenge involves Floating Production, Storage, and Offloading Systems (FPSO’s). To adequately evaluate potential environmental effects from FPSO’s, steps are being taken to procure a contract for preparation of a NEPA document to assess the effects of using FPSO’s, and it is hoped that the contract will be signed by spring 1999.

This document is being paid for by industry through the Deepstar consortium. The first application for an FPSO was filed recently by Texaco for their Fuji prospect and the decision tree for that project will need to be consistent with the timetable for the NEPA analysis.

The Gulf Region has also been preparing an EIS for the proposed Destin Dome development project in the Eastern Gulf of Mexico, and MMS plans to ask the Governors of Alabama, Florida, and Mississippi to review a preliminary draft some time this month. It is expected that a draft EIS will be issued in February, public hearing be held in April, and the Final EIS will be issued in January 2000.

The MMS is beginning the planning process for the first sale in the Eastern Gulf for over 12 years in December. The sale is tentatively proposed for 2001 and involves acreage at least 100 miles from Florida’s coast.

Pacific Region. The Pacific Region continues to interact with various stakeholders. A significant part of this cooperative effort is the California Offshore Oil and Gas Energy Resources Study (COOGER), a joint effort of State and local jurisdictions, offshore operators, and the Federal Government, which began in 1995. COOGER is a study of the onshore constraints to potential future development of leased, but presently undeveloped, oil and gas tracts offshore southern California. The final report, expected to be available for public review by the end of the year, will be an encyclopedia of information describing existing onshore and offshore oil and gas facilities.

Although the contractor, Dames & Moore, continues to work on the study, its completion, unfortunately, has been delayed for a number of reasons including difficulty in obtaining critical data, responding to public comments provided at two sets of public workshops, one in October 1995 and the other in March of this year, and responding to input provided by the Steering Committee. Another matter contributing to the delays was the announcement by Chevron, a major operator in the region, that they have decided to sell their interests to another company.

The Pacific Region and the Santa Barbara Museum of Natural History are sponsoring the Fifth California Islands Symposium March 29-April 1, 1999. This conference will focus on all aspects of research and resource management on the islands off the coast of California and their proximate ocean and mainland areas.

One example of the fruits of MMS labors is the recent release of the proceedings of the 1997 MMS/State Lands Commission Decommissioning Workshop, (Decommissioning and Removal of Oil and Gas Facilities Offshore California: Recent Experiences and Future Deepwater Challenges). As a follow up to the workshop, an interagency working group has been developing an action plan to coordinate and organize a series of small, issue-focused forums to disseminate information and facilitate dialogue and communication among all interested parties. The first forum will be held in conjunction with the Fifth California Islands Symposium. A special session will be devoted to presenting the results of scientific research being conducted to evaluate the ecological role offshore platforms play in supporting rocky reef fishes and other invertebrate communities.

Alaska Region. To quote Regional Director, John Goll, “we have a full plate of activities before us in the Alaska Region.”

In August, Lease Sale 170 was held in the central Beaufort Sea. The sale was small, centering around an existing infrastructure on Alaska’s North Slope, and offered 241 whole and partial blocks encompassing about 1 million acres for lease. High bids totaling over $6 million on 29 tracts, all near shore, were received. Evaluation of the bids has been completed with one bid rejection, and MMS is in the process of issuing leases.

MMS emphasis in 1999 in the Alaska Region will be on the review of the Northstar and Liberty development and production plans in the Beaufort Sea. BP’s Northstar Project involves both State and Federal leases, with the MMS and Corps of Engineers cooperating on the EIS. The Corps hopes to complete the final EIS later this year so that decisions can be made in early 1999.

For the Liberty Project, a draft EIS is being prepared with cooperation from other agencies, the State and the North Slope Borough, and it is hoped to be out on the street late this year or early 1999.

MMS continues its research into using traditional knowledge in various MMS efforts. One such effort was awarding the Ukpiagvik Inupiat Corporation a contract to collect, catalog, and organize traditional knowledge information associated with Alaska’s North Slope. The final report of this research will be available in 2001.

As in previous years, some MMS scientists have recently been up on the Arctic coast to survey the fall bowhead whale migration, and similar to last year, they observed a great number of whales during their overflights. The information collected on the migration was passed on to the National Marine Fisheries Service each day to assist NMFS monitoring efforts. Another coordinating effort was with the Alaska Eskimo Whaling Commission to ensure that MMS overflights did not interfere with the Inupiat communities traditional fall subsistence hunting activities.

There is another concern that will require future regional involvement—the National Petroleum Reserve--Alaska. MMS played a major role in preparing the portion of the EIS dealing with potential oil and gas development. Last month, Interior Secretary Babbitt signed off on a plan for oil and gas leasing on 4.6 million acres of the NPRA. Under this plan, about 87% of the northeast portion of NPRA will be completely open to leasing, while another 900,000 acres will be available only for subsurface activities, with the exception of essential roads and pipeline crossing. About 580,000 acres will be withheld because of “key habitat” concerns. Although eight environmental groups have recently filed a federal lawsuit to block exploration in the reserve, contending that the EIS used to support the decision was “deeply flawed,” the Secretary believes that this is the right thing to do to ensure national energy security for present and future generations.

INTERMAR. Sand and gravel will continue to be the most sought after mineral commodities from the OCS. These reserves on the OCS are immense, with estimates of over 2 trillion cubic meters on the Atlantic shelf alone. MMS continues to support use of these ocean resources.

Through its Marine Minerals Program, MMS continues to focus on integrating geologic and environmental information to identify sand deposits in Federal waters suitable for beach nourishment. Past and ongoing partnerships have been formed with several States along the East Coast and the Gulf of Mexico to collect and analyze necessary data and participate in and fund various beach restoration projects.

Current and future activities for MMS are laying the groundwork for effective Regional Management of OCS sand resources. For fiscal year 2000, a pilot project analyzing the development of an effective long-term cooperative management system for offshore shoals likely to be used as long-term sand sources for beach nourishment and coastal restoration is being planned. Efficient management of these OCS sand areas requires treating them as interconnected components rather than as individual projects.

As authorized under the FY 1998 appropriations bill, the MMS was given management responsibility over the Mississippi Marine Minerals Research Center, which consists of three divisions: Continental Shelf at the University of Mississippi, Ocean Basin at the University of Hawaii, and the Arctic Seas at the University of Alaska. No funding was provided for continuation of these Centers in the FY 99 Appropriations bill, with the exception of $600 thousand for the center at Mississippi where the bulk of the work is expected to focus on gas hydrates. Late this fall, MMS will submit a report to Congress summarizing MMRC’s 1998 research activities.

Besides efforts here in the United States, MMS’s International Activities Program has been busy abroad. MMS has been cooperating with various government organizations and private companies in the United Kingdom to study the environmental impacts associated with dredging operations for offshore sand and gravel.

Just this fall, MMS and the Australian Department of Primary Industries renewed a Memorandum of Understanding to exchange scientific and technical information related to offshore oil, gas, and mineral activities. This cooperation will include exchange of information on many topics, such as resource assessment, administrative procedures and practices, leasing, development, risk perception, safety, and environmental protection.

MMS will also be assisting the Republics of Kazakhstan and Turkmenistan through the Caspian Partnership for Regulatory Cooperation. Through this partnership, MMS will provide geologic, oceanographic, environmental, economic, engineering, and accounting assistance to these countries.

On another front, MMS continues its history of working cooperatively with the Kingdom of Norway by signing a Memorandum of Understanding with the Norwegian Petroleum Directorate concerning scientific and technical cooperation related to offshore mineral resources. This MOU highlights the international leadership roles that the United States and Norway have assumed in developing sound policies and procedures for the environmentally sound and safe development of offshore oil and gas resources.

The MMS also helped organize a Workshop on the Decommissioning of Offshore Oil and Gas Platforms held last month in Jakarta, Indonesia. This workshop was conducted under the auspices of the Asia Pacific Economic Cooperation (APEC) Marine Resources Conservation Working Group, and included representatives from MMS, universities, U.S. oil and gas companies, and other industry organizations.

Environmental Studies Program. Much of MMS’s work requires a strong Environmental Studies Program (ESP) which will provide the solid scientific underpinnings for the critical program decisions that must, by law, accommodate a balance for the Nation’s search for petroleum energy and marine minerals with the protection of the human, marine, and coastal environments. MMS appreciates the efforts of this Committee that it puts into reviewing and making recommendations on regional studies plans and overall research strategies for collecting important environmental information to assist MMS in its resource management responsibilities.

The ESP will continue to receive funding equal to the FY 1998 appropriation of $19.55 million, which includes a $4 million supplemental increase over past budgets. A quick synopsis of where MMS priorities and information needs lie:

For more information, contact Julie Reynolds.