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OCS Scientific Committee Meeting Summary
Tuesday, November 28, 2000

Director’s Presentation

Dr. Tom Kitsos, Deputy Director, represented Mr. Walt Rosenbusch, the Director of the Minerals Management Service (MMS). Dr. Kitsos’ explained that although his background is in the social sciences, he recognizes the importance of natural, physical, and ecological science research in MMS’s successful management of the valuable OCS mineral resources. The MMS’s Environmental Studies Program (ESP) and Technology Assessment and Research Program are integral to the bureau’s resource management responsibilities and commitments. He stated that he is proud of the fact that over the years, MMS’s science research has contributed significantly to this Nation’s scientific knowledge base. The MMS’s environmental research has led to major scientific discoveries such as the chemosynthetic communities and iceworms in the Gulf of Mexico and the first comprehensive effort to understand noise impacts on marine mammals. He extended MMS’s appreciation for the SC’s advice over the years on the array of environmental and scientific issues facing the bureau.

Ongoing issues.

Natural Gas. Natural gas accounts for about 25 percent of our Nation’s fuel needs and is expected to remain a critical component of our energy needs well into this century. Offshore oil and gas production has undergone a steady rise during the 1990’s. Since 1994, oil production in the Gulf of Mexico has increased more than 50 percent with much of this increase coming from huge deepwater fields. Natural gas production in the Gulf of Mexico has increased only a couple of percentage points because of the significant increase in gas production from the deep water being mirrored by an almost similar decline in production from the shallower waters of the shelf. This trend for natural gas production is likely to continue if other sources are not found. The OCS now accounts for over 25 percent of the U. S. oil and gas production, and in the case of oil, is second only to Saudi Arabia as a source of crude for the U. S.

Offshore Activity. The increased activity in the Gulf of Mexico has created scientific challenges for the MMS: in understanding deepwater technology and the deepwater operating environment; in emphasizing the need for vigilant attention to safety management systems and operating practices; and in cooperation and consultation with industry and other regulators around the world. In California, the MMS’s primary focus has been maintaining or increasing production from existing platforms in a safe and environmentally sound manner. However, much attention lately has been focused on the 36 undeveloped leases. In Alaska, the first subsea pipline plan has been approved for BP’s Northstar, Liberty, and McCovey projects in the Beaufort Sea. The Gulf of Mexico remains an area of untapped potential, though somewhat controversial. In all cases, the MMS faces the challenge of building consensus among its offshore group of stakeholders that range from environmental and industry interests groups to Native Alaskan, county, state, and congressional leaders.

Deepwater Royalty Relief. Industry and MMS efforts in deep water Gulf of Mexico have necessitated an assessment of the potential impact of exploration and development in a new frontier on the unique and not so unique parts of the environment. One example is the Floating Production, Storage and Offloading (FPSO) systems which are used in other parts of the world but have never been employed in the Gulf of Mexico. In light of this activity, the continuation of incentives for the deepwater Gulf of Mexico will help support one of our Nation’s energy policy goals. The MMS is proposing two new Deepwater Royalty Relief rules that continue relief for future sales but adds the flexibility to tailor relief to what is appropriate for market and cost conditions at the time of future sales. One rule seeks to sustain the current momentum in deep water exploration by continuing leasing incentives. The second rule seeks to extend and refine the case-by-case royalty relief process MMS uses to encourage development of marginally economic deep water discoveries. Deepwater Royalty Relief could encourage increased oil and natural gas production by continuing the strong interest in leasing and drilling and the consequent building of deepwater infrastructure to support increased production.

The Royalty Management Program has been changed to Minerals Revenue Management which is a part of the MMS’s reengineering initiative. New business processes are projected to provide cost savings to the Government of about $75 million over 10 years and, in addition to being more resource efficient, the new processes will reduce business cycle time, or the time it takes to start and complete tasks, by more than 50 percent.

The Conservation and Reinvestment Act (CARA). CARA would have dedicated OCS revenues to a variety of conservation programs. This Act had passed in the House but never made it to the floor of the Senate. Instead, Congress chose to fund many of the CARA programs through the appropriations processes. On October 11, the President signed a Department of the Interior (DOI) budget bill that provides unprecedented funding for the conservation of some of America’s natural resources. The bill secures $12 billion over 6 years to protect parks, forests, and community green spaces. This bill will more than triple the current funding for these programs by 2006 and represents a major step toward the goal of permanent conservation funding. Funding for coastal programs was left to the Commerce appropriations bill that includes a coastal impact assistance program similar to the one proposed in the Senate version of CARA. It would place the program in the Department of Commerce and fund it for only 1 year ($150 million). However, that appropriations bill has not been sent to the President for signature, so the creation of and funding for a coastal impact assistance program is still an open issue until the Fiscal Year 2001 budget is finalized.

The ALVIN Expedition. While MMS research is mission-focused for OCS mineral decisions, at times it also gets into very basic ocean exploration to gain a better understanding. The ALVIN Expedition is one good example. The ALVIN is a vehicle being used in a multi-agency cruise to the deep waters of the Gulf of Mexico. The 17-day journey which began in mid-October will gather crucial information about marine organisms, such as tubeworms, mussels, and clams that live in chemosynthetic communities. The main objectives of the MMS were to look at bottom furrows and observe the deep slope environment on the lower Sigsbee and Florida Escarpments. These deep-sea ALVIN dives will provide the MMS an opportunity to better understand the deep water environment and the organisms living on the bottom of the ocean floor.

Biotechnology. As a growing field, it is no secret that the oceans harbor life forms with untold potential for commercial and pharmaceutical uses. On September 27, the MMS announced two new biotechnology research projects dealing with exploring America’s oceans for health. These 3-year research initiatives to investigate potential biotechnology opportunities in America’s oceans were entered into with Louisiana State University and the University of California at Santa Barbara. This effort will evaluate the taxonomic and genetic biodiversity of benthic species found growing on the legs of offshore oil and gas platforms. It is MMS’s intent is to screen candidate organisms for bioactive compounds with pharmaceutical and other commercial applications. If the man-made offshore oil and gas structures prove to be viable substrate, then this type of marine bio-harvesting could significantly lessen the need to harvest organisms from the natural ecosystem. This could help protect the marine habitat as well as provide a sustainable source for beneficial natural products.

National Oceanographic Partnership Program (NOPP). The MMS continues to be an active member of the National Ocean Research Leadership Council. The NOPP OCEAN.US office was officially established on October 25th. This is a significant milestone in a mutual and collaborative effort among 14 National Ocean Research Leadership Council agencies that will allow the MMS to deliver an integrated and sustained ocean observing and predicting capability to the Nation. Creation of the OCEAN.US office required a minimum of four signatures from members of the National Ocean Research Leadership Council, and MMS is pleased that Director Rosenbusch's signature was the fourth one; his signature officially launched the office into existence.

Globalization. Consistent with the trend toward international commerce, today’s offshore oil and gas industry has become more global. Thus, we find ourselves regulating the offshore activities in U. S. waters of an international industry and we are often called upon for our expertise.  From Norway to China, and Kazakhstan to Bangladesh, the MMS has provided scientific and technical information related to offshore oil and gas and mineral activity. The MMS is a world leader in best practices for regulating the offshore industry firmly believing that it is in the interest of all concerned – host countries, the environment, world trade, and the oil industry – to share that knowledge with countries that have developing oil and natural gas interests. Around the world the MMS’s proactive approach continues to pay off in a growing recognition of MMS as a technical expert which will ensure that the U. S. will continue to play a leadership role in shaping oil and gas development in the 21st century.

5-Year Plan. The MMS is just starting to prepare a new 5-year leasing program for 2002-2007.

In mid-November, the MMS asked for comments that would be used to determine what areas to include in the plan. The draft proposed 5-year plan will be issued in the spring of 2001. The program cannot include areas that were administratively withdrawn from leasing by President Clinton until at least 2012. The areas withdrawn are the North Aleutian Basin (Alaska), the entire Pacific and Atlantic coasts, and the Eastern Gulf of Mexico outside the Sale 181 area. Throughout the planning process, the MMS will continue its consensus-building efforts, listening to stakeholders in conducting the remaining lease sales scheduled in the 5-year program for 1997-2002, and remaining in close consultation with interested and affected parties.

Closing Comments.

Ms. Carolita Kallaur congratulated Dr. James Coleman on his reappointment to the Committee by Secretary Babbitt. Dr. Coleman is the first member to be appointed to a new discretionary, no-term-limits seat on the Committee. His selection was based on his scientific eminence as evidenced by numerous national and international awards for professional excellence, induction to prestigious professional academies or societies, and other highly meritorious recognition for scholarship and research as well as distinguished prior service to the Committee. Earlier this year, he was awarded one of Russia’s highest civilian honors, the Kapitsa Gold Medal of Honor, for his outstanding contributions to the field of Petroleum Sciences.

She also welcomed Dr. Lynda Shapiro, a new member who was attending her first Committee meeting.

She announced that there are a few important policy initiatives underway:

Natural Gas Initiative.  One initiative the MMS continues to aggressively pursue is the evaluation of the future role of the OCS in meeting the Nation's natural gas demand in the years to come. The deregulation of electricity and the conversion of electricity generation plants from coal burning to cleaner burning natural gas have created an increasing demand for natural gas. Future demand for natural gas has been estimated by various organizations to reach anywhere from 31.3 to 40.1 trillion cubic feet by the year 2020. Considering that current natural gas usage is about 22 trillion cubic feet per year, this is a large increase that the Nation will have to meet, either through domestic production or from imports. According to the American Gas Association, 87 percent of the U. S. demand today is from domestic production and the remaining 13 percent is imported from Canada. However, more dire statistics show that during the 1990’s, total U. S. gas production increased only by 9 percent, while imports from Canada increased by 111 percent. The MMS will continuously monitor the demand and production scenarios of natural gas and take necessary steps to ensure an optimized natural gas production from the OCS. In 1999, 25 percent of the U. S. demand for natural gas was met by production from the OCS and it is expected that this figure will increase significantly in the future to help meet the increased demand.

This year, MMS completed a study on natural gas and the role of the OCS. A report on this study was published in April, 2000, and is available on the MMS website. Because of the importance of this cleaner burning fossil fuel to the Nation, the OCS Policy Committee established a subcommittee on natural gas at their meeting last month.

The MMS is presently updating the 1995 National Assessment of the Offshore U. S. and expects to release the new assessment in early 2001. A significant increase in natural gas resources is anticipated in the Gulf of Mexico over the previous assessment.

Sustainable Development. This is an issue in which the MMS continues to have an active role. Hydrocarbon resources, especially natural gas, will continue to play a vital role in the economic development of the U. S. and the well being of its citizens. The MMS needs to ensure that these resources are developed in a manner consistent with conservation and wise use. In 2002, the world will take a critical look back at the UN Conference on Environmental Development (RIO) that was held in Rio de Janeiro in 1992. The MMS has offered to assist the Department of State as the U. S. prepares for the RIO+10 meeting. In preparation for RIO+10, the MMS will work with the Department of State as it prepares for the ninth session of the Commission on Sustainable Development which will be held in New York next April.

Deepwater Royalty Relief. Ms. Kallaur presented more detail on Deepwater Royalty Relief. The Deepwater Royalty Relief Act of 1995 sought to encourage new technological development and increased exploration and production in deep water areas of the Gulf of Mexico by mandating royalty suspension volumes for new leases in water depths of 200 meters or more in the Central and Western Gulf of Mexico for all sales held in these areas from 1996 through 2000. The mandatory relief provisions of the Deepwater Royalty Relief Act for deep water leases in the Gulf of Mexico expire the end of November. However, the discretionary authority to include Deepwater Royalty Relief in bidding systems used for lease sales anywhere on the OCS remains intact and falls upon MMS’s shoulders to determine and implement. For future leases, the MMS has designed a program that will allow the use of the existing discretionary authorities to continue providing automatic and case-specific Deepwater Royalty Relief for Gulf of Mexico leases to sustain deepwater activity and the successes fostered and accelerated by the Act.

The MMS is now preparing for the next Central Gulf of Mexico sale that is scheduled for March 2001. The specific elements of the Deepwater Royalty Relief offered for deepwater leases issued in this sale--the precise size and scope (suspension volumes, water depths, price thresholds for when suspensions end) will be included in the Public Notice of Sale. These elements will be targeted to promoting deepwater activity appropriate for the technological and market conditions in the Gulf of Mexico now. Options are being considered for offering Deepwater Royalty Relief incentives to promote increased natural gas development from the Gulf of Mexico shelf areas.

Globalization of Offshore. Another ongoing initiative deals with the globalization of the offshore industry, both in terms of the mobility of the companies – independents and majors from one part of the globe to another – and the growing interest in international guidelines and standards. Up until a few years ago, the MMS traditionally was an agency with a predominant domestic focus. Today, it needs to think and act globally and be active in a wide range of international forums ranging from International Maritime Organization meetings on platform decommissioning requirements to participating in International Organization for Standards meetings to learning about FPSO systems from nations which have experience with them. It also has also been found that the MMS can benefit by partnering with other nations on environmental issues of common concern, such as the work being done with Norway in partnership with industry on deep water blowouts and with the United Kingdom on offshore sand and gravel mining.

The MMS has strong working relations with many nations in addition to Norway -- among them are China, Russia, Australia, and the Caspian Sea countries. Experiences, expertise, and information need to be shared with these nations to assist them in developing safe and environmentally sound oil and gas programs. The MMS teams have made numerous trips over the past year to these and several other countries to share its knowledge and experiences as well as to learn. And, it seems more nations are interested in working with the MMS.

As was the case in Fiscal Year 1999, the MMS remained committed to assist and supplement the U. S. Agency for International Development (USAID) contractors in their efforts toward oil and gas development assistance in the Caspian Basin during Fiscal Year 2000. In coordination with USAID, Hagler-Bailly, and United States Energy Association, the MMS participated in training activities during Fiscal Year 2000 with the Republics of Kazakhstan Turkmenistan and Georgia. Cooperative activities continue under a Memorandum of Understanding between the MMS and China’s Ministry of Land and Natural Resources as well as the umbrella of the U. S./China Oil and Gas Forum. This past September, the MMS organized a simulated lease sale to illustrate principles that apply to the U. S. conveyance of oil and gas rights offshore and to provide an overview of the functions of the MMS. In October, MMS representatives traveled to Beijing to participate in a workshop on Assessing and Maintaining the Integrity of Existing Offshore Oil and Gas Facilities. The workshop, conducted under the auspices of the Asia-Pacific Economic Cooperation (APEC) Marine Resources Conservation Working Group was designed to provide practical guidance to address the issues faced by industry and regulatory authorities in dealing with aging offshore oil and gas facilities. It allowed for an exchange of information and experience APEC-wide. Practical and cost-effective solutions were explored with the goal of understanding the programs currently in effect in the region and avoiding duplication of effort.

Regional Updates

Gulf of Mexico OCS Region. On a Gulf-wide basis there are now over 7,700 active leases in the Gulf of Mexico with 4,008 platforms in place on the OCS. Regarding the latter statistic, this is the first time the 4,000 mark has been broken in the Gulf of Mexico. With regard to deep water—water depths greater than 1,000 feet—industry interest and activity remain very high and continues to grow at a rapid rate. For example, in 1990 about four percent of the oil and less than one percent of the natural gas produced from the Gulf of Mexico OCS was from deep water. By the end of 1999, more than 50 percent of the Gulf of Mexico’s oil production and 20 percent of its natural gas was from that area.

Of special interest is the fact that more and more leasing and development in the ultra-deep waters, that is, water depths of 2,600 feet and greater, is taking place. Companies currently hold more than 3,300 leases in ultra-deep waters.

Recently, the MMS received an exploration plan in 8,902 feet of water and areas in depths of 10,000 feet have already been leased. One of these leased blocks sits in 13,000 feet of water.

One of MMS’s major challenges is keeping abreast of the technological changes and being able to respond in a timely manner. One current challenge is the possible use of FPSO systems in the deep water areas of the Central and Western Gulf of Mexico. To adequately evaluate potential environmental effects from FPSO systems, the MMS has contracted for preparation of an Environmental Impact Statement (EIS) to assess the effects of using these systems. The draft EIS was completed in August and the final EIS will be completed in January 2001. Preparation of the EIS was paid for by industry through the DeepStar consortium.

The MMS-sponsored Comparative Risk Assessment, which looks at the risks associated with FPSO systems in comparison to existing deep water facilities in the Gulf of Mexico, is also expected to be completed in January. Texaco had applied for an application for an FPSO system for their Fuji prospect but have since withdrawn that request. Thus, there are no applications for FPSO systems at this time, although industry has discussed several potential projects with the MMS.

The MMS has taken a very aggressive position regarding deep water environmental studies. This effort has made amazing progress since the Gulf of Mexico OCS Region hosted a Deepwater Workshop in April of 1997. One of the most important actions resulting from this workshop was the formation of the SC’s Deepwater Subcommittee. While working under an extremely compressed schedule, the Subcommittee was able to meet in the Gulf of Mexico’s OCS Regional Office in October 1997, and again in October of 1998, and another meeting is planned for early next year. The Subcommittee’s hard work resulted in one the most extensive and interdisciplinary studies efforts the MMS has ever conducted. Important deep water issues in all disciplines are being addressed simultaneously and involve cooperative efforts with academia, industry, and other Federal agencies.

The effects of seismic exploration on the marine environment have been an issue normally secondary to other concerns in the Gulf of Mexico. During the last few years though, noise in the ocean has been elevated as a significant environmental concern on both the national and international scales. In view of this development and new exploration technology, the MMS issued a contract to have an environmental assessment prepared on all geological and geophysical activities subject to MMS permit in the Gulf of Mexico. This includes seismic operations, side-scan sonar, gravity coring, and related activities. This environmental assessment is expected to be available sometime during Spring 2001.

The Gulf OCS Region completed a draft EIS for the proposed Destin Dome 56 Unit development project in the Eastern Gulf of Mexico, 25 miles off of Pensacola. The draft EIS was released in August 1999 and public hearings were held in September 1999. The final EIS is currently scheduled to be made available for public review in December 2000. The State of Florida has determined that the project is not consistent with its Coastal Zone Management Plan and the Department of Commerce is currently determining its position on this issue. This needs to be resolved before any action can be taken on the development plan.

Lastly for the Gulf of Mexico, the MMS has also just begun the planning process for the first sale to be considered in the Eastern Gulf of Mexico in over 12 years (Sale 181). The sale, if approved, is tentatively proposed for late 2001 and involves acreage off of Alabama and Florida. Most of the acreage to be potentially leased off of Florida is in deep water and well away from the coast.

Pacific OCS Region. For the Pacific OCS Region, the California Offshore Oil and Gas Energy Resources study was completed in January of 2000, and the final report was released and distributed to interested parties. This report is a detailed treatment of the onshore physical infrastructure associated with the processing and transport of offshore oil and gas. The focus is on existing production on developed leases and the possible future production scenarios from 36 undeveloped leases in Federal and State waters. Staffs in Santa Barbara and Ventura counties are already using information from the study for planning purposes and MMS staff is using the information in writing environmental documents for plans submitted for undeveloped leases off Southern California.

Since the last SC meeting, an operator of several major platforms in the Santa Barbara Channel completed the drilling of a second directional well into the Sacate Field from Platform Heritage. These two wells allow Exxon to tap into the field which contain approximately 71 million barrels of oil and 207 billion cubic feet of gas reserves. Production from this unit is approximately 60,000 barrels per day.

Last November the MMS approved operator suspension requests for nine undeveloped units and one lease. During the suspension period, the operators will conduct the necessary technical surveys and environmental analyses that will allow them to properly revise existing or develop new plans for exploration and development. As part of the process, the MMS is committed to carrying out its obligations under the National Environmental Policy Act (NEPA) including the preparation of all appropriate NEPA documents. The State of California will have the opportunity to review revisions to existing plans and any new plans in their entirety to ensure that proposed oil and gas activities are consistent with the requirements of their coastal management program.

On November 17, 2000, the MMS issued a Notice of Intent to prepare an EIS for five to eight delineation wells on undeveloped leases and a cumulative analysis of the effects of offshore development and production and other non-energy activities.

In addition, the MMS is acting as an advisory participant to a Joint Review Panel for the development of an Environmental Impact Report with the California Coastal Commission for the possible development of oil in the Tranquillon Ridge Field in State waters. To date there is no State lease for this area.

Another area of activity off California is the issue of platform decommissioning. Several of the older platforms will have reached their end of life over the next several years, and MMS is working with the State and others to look at various decommissioning options including the potential for conversion to artificial reefs.

The MMS is a member of the Interagency Decommissioning Working Group (IDWG) which reviews critical issues and appropriate mitigation measures for the decommissioning of offshore oil and natural gas facilities. The California State Lands Commission is another major member of the group with a number of facilities in State waters that will eventually require abandonment. The IDWG periodically holds workshops on decommissioning issues and routinely meets every two months.

Alaska OCS Region. The Northstar Development and Production Plan submitted by BP Exploration Alaska was approved by the Alaska OCS Region last September. This is the first development plan approved by MMS in Alaska. The approval is limited to the drilling of wells into the Federal OCS from the Northstar Island which will be located in State of Alaska waters. The Northstar facility and the subsea pipeline are totally within State of Alaska lands and waters and most production will be from State leases. The pipeline will be the first buried in the seabed in an Arctic ice environment and has undergone much scrutiny by State and Federal agencies and the public.

Construction on Northstar started in the winter of 2000 with the first production expected sometime in 2001. Recoverable reserves are estimated at 158 million barrels of oil with peak daily production estimated at 65,000 barrels per day.

As part of the North Slope Oil Spill Contingency Plan, BP and Alaska Clean Seas recently conducted equipment demonstrations and deployment drills for their barge-based oil spill response tactics in broken ice.

Northstar has been undergoing a great deal of scrutiny from Federal and State agencies and the environmental community. Greenpeace has filed two lawsuits, one challenging the approval of the Northstar Development and Production Plan and one regarding a Freedom of Information Act (FOIA) request. The MMS will continue to monitor the progress of these lawsuits. Also, the Alaska OCS Region has been responding to two additional FOIA requests regarding Northstar that are not part of lawsuits.

The Alaska OCS Region is also in the process of writing an EIS for BP’s Liberty Development and Production Plan for a facility on the Beaufort Sea OCS. The proposed Liberty Project is a man-made gravel island with a buried pipeline to bring production to shore. It is located about five miles offshore in Foggy Island Bay and 20 miles east of Prudhoe Bay. Onshore, the Liberty pipeline will connect to already constructed pipeline that transports oil from the onshore Badami Field located about 10 miles away. The prospect is expected to contain 120 million barrels of oil. If the proposed project is approved and stays on schedule, construction could begin in 2003 with first production planned for 2004.

Another issue for the Alaska OCS Region has been the topic of natural gas. The Region has been working on leasing and oil development issues for over 20 years. This year a new issue of gas development has become significant. Industry is considering a route for a natural gas pipeline from Prudhoe Bay, northward to about 4 miles offshore, eastward 300 miles, then southward along the Mackenzie River, and finishing at Calgary, Alberta. Most of the offshore portion would be on the U. S. OCS. (The other major alternatives are onshore.) Industry leaders have indicated they want to select a preferred route by the end of 2001. If the preferred route is on the OCS, the MMS would be responsible for issuing permits. A buried gas pipeline (as opposed to an oil pipeline) under the seafloor of the Beaufort Sea is a new issue. If the Beaufort OCS is the preferred route, the Alaska OCS Region may need to conduct environmental studies on a variety of environmental issues.

The MMS has worked and will continue to work with the environmental groups, the State, other Federal agencies, the North Slope Borough, and the Native villages on the activities in the central Beaufort Sea.

The MMS is pleased that the SC had the foresight to form a subcommittee that participated in the design and implementation of the Arctic Nearshore Impact Monitoring in Development Area (ANIMIDA) study and looks forward to benefiting from further input from the Arctic Monitoring Subcommittee in the design and implementation of more proposed studies.

International Activities and Marine Minerals Division (INTERMAR). Earlier Ms. Kallaur mentioned some of the international activities the MMS has been pursuing in the effort to extend, expand, and share expertise globally. Later in the program, Ms. Carol Hartgen, Chief of INTERMAR, and Mr. Barry Drucker briefed the SC on the marine minerals program status and initiatives and the technical aspects of some of the studies.

Environmental Studies Program. Environmental study highlights in the regions and the summary from the planning workshop held in October 2000 by the Arctic Monitoring Subcommittee would be presented later. On the second day of the meetings, the SC reviewed the regional study plans for next year along with the environmental questions the MMS is trying to answer to help it manage OCS mineral development in as safe and environmentally sound manner as possible. The MMS looks forward to the SC assistance on some of the key challenges it faces as it attempts to formulate research plans on many present and upcoming complex issues. Ms. Kallaur thanked the SC for helping the MMS achieve its goals in the past and looks forward to working with the SC in the future.

OCS Policy Committee Report

Mr. George Banino, Vice Chair of the OCS Policy Committee, briefed the SC on current activities of the OCS Policy Committee.

Sand Gravel Update – OCS Policy Committee

Mr. George Banino, Chair of the Sand and Gravel Subcommittee, explained that this subcommittee was established in 1999 in response to increasing requests for sand and gravel. Public Law 103-426, enacted in 1994, gives the MMS the authority to negotiate non-competitive rights to OCS sand, gravel, and shell resources for public purposes. This Subcommitee worked closely with INTERMAR to develop guidelines for negotiations and to develop a basis for fees for sand gravel. However, in 1999, the Water Resources and Development Act eliminated fees for State and local governments. The Subcommittee supports INTERMAR’s Sand and Gravel Program and supports additional funding for cooperative studies and program management.

In 1996, Amboy Aggregates asked for commercial lease sale offshore and two public meetings were held in New Jersey which had been attended by individuals in favor of and against this commercial lease sale. The Department of the Interior’s Secretary, Mr. Bruce Babbitt, rejected to prepare an EIS on the objections raised and, therefore, the project was terminated.

Mr. Banino requested that the SC have a representative of the sand and gravel mining community appointed to its Committee. This would benefit the MMS in the proper oversight for hard mineral interests in relation to resource studies and environmental studies.

OCEAN Activities Update

Since the release of the Cabinet's report, "Turning to the Sea: America's Ocean Future" in September 1999, the President has issued several key directives for follow-on Federal actions on several aspects related to U. S. ocean policy. These directives, through official memoranda or Executive Order, call for: 1) creation of an Ocean Report Task Force to develop implementation plans for key recommendations in the Cabinet's ocean report; 2) recommendations for the creation of a national system of marine protected areas, enhanced protection for natural and cultural marine resources, development of a list of existing marine protected areas, and an information website for better management of marine protected areas; and 3) creation of an Ocean Exploration Panel to recommend a national strategy of ocean exploration.

In addition, the Pew Charitable Trusts created a private Ocean Commission in May 2000, chaired by Governor Christine Todd-Whitman of New Jersey and vice-chaired by former California Congressman and White House Chief of Staff Leon Panetta to develop recommendations for better protection of living marine resources and biodiversity. In September 2000, Congress passed, and the President signed into law, the Oceans Act which creates an Ocean Commission to look at the full spectrum of marine issues including the need for a coordinated national marine policy.

Dr. Turgeon, MMS Chief Scientist, has been actively involved in the Federal activities as both an MMS and DOI representative, gave a status report on these various ocean initiatives.

Program Status Update/Sand and Gravel Program: Studies Methodology and Results

Since 1991, the MMS has been conducting studies to evaluate the environmental impacts of offshore dredging for sand for beach nourishment activities and for construction aggregate material. The early studies took an overview approach by focusing on collecting available information and literature and on the general nature of available technologies and mitigation. Site-specific studies were initiated in 1995 to examine the biological and physical effects associated with dredging in sites, which have been identified as potential, borrow areas. These studies use traditional biological grab sampling along with sediment profile and video cameras to evaluate the resident benthic communities; numerical wave modeling is being used to look at the physical effects of sand removal on the local wave climate and current patterns. Studies offshore Virginia, Alabama, Maryland, and Delaware have been completed and studies are ongoing offshore New Jersey, North Carolina, and the East Coast of Florida. A site-specific study offshore Northern New Jersey and Long Island, New York, is scheduled to be procured in Fiscal Year 2001.

Public Law 103-426, enacted October 31, 1994, gave the MMS the authority to convey, on a non-competitive basis, the rights to OCS sand, gravel, or shell resources for shore protection, beach or wetlands restoration projects, or for use in construction projects funded in whole or part or authorized by the Federal Government. The Shore Protection Provisions of the Water Resource Development Act of 1999 (S. 507 as passed by Congress on August 4, 1999) amended that law by prohibiting charging non-Federal interests a fee for using OCS sand. To date, MMS has provided sand to the U. S. Navy to restore the beach at the Navy’s Fleet Combat Training Center at Dam Neck, Virginia, to Duval County, Florida, to renourish Jacksonville Beach, to the City of Virginia Beach to renourish Sandbridge Beach, to the Park Service and the State of Maryland for the restoration of portions of Assateague Island, and to Brevard County, Florida, to renourish beaches near Cape Canaveral.

Recently, a decision was made not to proceed with a competitive sale for offshore sand and gravel for construction aggregate offshore northern New Jersey due to public concern over environmental and other issues. However, the MMS continues to conduct research in the United Kingdom to provide relevant information on the biological and physical effects of offshore dredging. These studies, which are providing critical data relative to the extent of the surface and benthic plume created during the dredging process, will be used to formulate a computer model to help evaluate the biological impacts associated with both aggregate and beach dredging operations.

In addition, a study was initiated in Fiscal Year 2000 to design/develop biological/physical monitoring templates to ensure that adverse impacts do not occur in areas where the long-term use of sand from offshore borrow sites is anticipated. The study is also examining the feasibility and appropriateness of convening oversight/management groups that include Federal, State, and local interests for responsible, environmentally sound long-term management of Federal offshore sand areas.

Ms. Carol Hartgen, Chief of INTERMAR, presented a program status update on the Sand and Gravel Program and Mr. Barry Drucker, oceanographer, reported on the studies, methodology and results of that program.

Environmental Studies Program Highlights

Alaska OCS Region

Drs. Cleve Cowles, Environmental Studies Chief, and Dick Prentki, oceanographer, reported on Alaska activities:

Overview of Current ANIMIDA Activities. ANIMIDA is a multi-year, mulit- disciplinary study to monitor impacts associated with development activities and initial production of oil from the Northstar and Liberty units in the nearshore portion of the Alaska OCS in the Beaufort Sea. Phase I, a 1.5-year program, is nearing completion and includes initial program design, a literature synthesis, a preliminary (Year 1) field sampling and analysis program, database management, and overall program management and reporting. Phase II is now partially funded and builds on Phase I components.

Phase II is a 4-year program and includes further literature review updates and adds specific tasks on: 1) monitoring hydrocarbon and metal concentrations in sediments and sediment biota; 2) annual assessments of subsistence whaling near Cross Island and perceived industrial effects; 3) sources, concentrations, and dispersion of suspended sediments; 4) monitoring the Boulder Patch; 5) partitioning of potential contaminants between dissolved and particulate phases in the water; and 6) baseline characterization of persistent organic pollutants in the ANIMIDA study area. The project is being closely coordinated with related ongoing MMS-managed studies and studies being conducted under the MMS/University of Alaska Fairbanks cooperative Coastal Marine Institute.

A contract was awarded to Arthur D. Little, Inc., on June 30, 1999, to perform Phase I tasks and to serve as Program Manager for the duration of the study. Total estimated cost of the ANIMIDA multi-year monitoring project is estimated to be $3,217,000 through Fiscal Year 2003.

Summary of October 2000 Planning Workshop. A workshop was held October 23 in Anchorage, Alaska, to discuss Phase I program results and the Phase II program status.

Pacific OCS Region

Dr. Fred Piltz, Environmental Studies Chief, reported on the Pacific OCS Region activities:

Platform Fisheries Ecology Study. The U. S. Geological Survey, Biological Resources Division has been conducting a study of the ecology of rockfish found around and under oil and gas platforms in the Pacific OCS Region. Two years of fieldwork have been completed and an interim progress report was published in 1999. A report on the results of the first two years of field studies will be published this winter.

Biotechnology Initiative. The MMS recently signed a cooperative agreement with the University of California Santa Barbara to begin research identifying possible biologically active compounds in marine organisms found in the fouling communities on oil and gas platforms. A similar cooperative agreement has been signed with Louisiana State University.

Coastal Recreation and Tourism Inventory. The MMS Pacific OCS Region has entered into a contract with the University of California Berkeley to extend the development of a general model of beach valuation to the area of Ventura, Santa Barbara, and San Luis Obispo counties. The effort is structured in two phases with Phase I being concentrated on the model development and Phase II with data collection and model output comparisons with a similar effort being done in Los Angeles and Orange counties by the State of California.

Gulf of Mexico OCS Region

Gulf of Mexico OCS Region Perspective. Mr. Oynes, Regional Director, gave an update on shallow water and deep water activities including exploratory wells and new production as well as the status of several environmental efforts including FPSO systems’ EIS’ and what environmental study contract results are due out in the next 1-2 years.

Dr. Gilbert Rowe, Professor, Biological Section, at Texas A&M University and Program Manager of the Study of Life on the Floor of the Gulf of Mexico, stated that the exploration in the Gulf of Mexico for and commensurate production of fossil fuel deposits are expanding rapidly from the continental shelf offshore across the continental rise into depths of several thousand meters. Little is known of how this expansion might affect potential fisheries resources at these depths. Knowledge of the structure of open-water offshore biological communities on the sea floor of the Gulf of Mexico, where oil and gas exploration is particularly intense, is restricted at the present time to a limited number of rough estimates of species composition and abundances. The general patterns in the Gulf of Mexico appear to be similar to other continental margins with several remarkable exceptions. While the typical Gulf of Mexico bottom communities are depauperate in numbers and biomass compared to comparable depths in many regions of the world, the slope is also characterized by seep communities that receive their energy from fossil hydrocarbon deposits that are leaking into the bottom water. It is a broadly held assumption that the nature of communities is determined by the input of organic matter to the sea floor. Mathematical models can be generated based on this principle to predict the amount of biomass that can be supported in a bottom community, given enough information on surface primary production, water depth, and the nature of the organic matter flux down to (or up through) the bottom. In the present paper, several models are presented that contrast the upper slope, where living resources are abundant with deep water where desert-like conditions persist. Additional scenarios can be added to the models that mimic potential effects from offshore platforms. Unfortunately, to date none of these models for the Gulf of Mexico have been validated.

Sites in the Gulf of Mexico. U.S. Department of the Interior, Minerals Management Service - 2000 to Present.  Dr. Alan Hart, Science Director of Continental Shelf Associates, stated that Continental Shelf Associates, Inc., is performing a multiyear study of "Effects of Oil and Gas Exploration and Development at Selected Continental Slope Sites in the Gulf of Mexico." The objectives of this study are to determine: 1) the physical impacts of the operations on the seafloor including muds/cuttings accumulation, anchoring systems, and debris; 2) physical/chemical modification of sediments; and 3) biological effects in the benthos and demersal fishes. The study sites include three post-development sites (all drilling activities completed), two exploration sites, and a single site where approximately 800 barrels of synthetic based mud was spilled. Both water based and synthetic based muds were used in the drilling of the development wells and will be used in the drilling of the exploration wells. The development sites will be surveyed once. The exploration sites will be surveyed before and after drilling and the spill site will be surveyed once. The post-development and exploration sites are in approximately 1,000 meters water depths and the spill site is in approximately 670 meters of water. The physical impacts will be determined using deep-towed side-scan sonar/high resolution chirp sonar and acoustic reflectivity will be mapped. The physical/chemical sediment environment will be sampled using a box core and sediment profile imaging system. Sediment grain size, mineralogy, texture, radionuclides, metals, total organic carbon, and hydrocarbons will be analyzed. Samples for pore water, redox chemistry, and sediment toxicity (10-day acute test) also will be collected. The biological community will be sampled using a box core, still photographs, and bottom traps. A number of biological parameters will be measured: 1) microbiotal activity, biomass, and community structure; 2) meiofauna including harpacticoid taxonomy/genetic diversity/reproductive status and nematode feeding groups; and megafaunal taxonomy and metal/hydrocarbon concentrations in tissues of selected animals. Interpretation and synthesis of the data will include the testing of hypotheses concerning differences in chemical and biological parameters between areas in the vicinity of exploration, development, and spill sites and reference areas. The tests of hypotheses will provide insight into the effects on the continental slope biota. A screening level ecological risk assessment for the activities also will be performed.

MMS/NMFS Pilot Sperm Whale Study. Dr. Bill Lang, oceanographer, Gulf of Mexico OCS Region, gave background information on the Pilot Sperm Whale Study which is a cooperative research with the National Marine Fisheries Service (NMFS) initiated on June 27^th to conduct studies on sperm whales and deepwater acoustics in the Gulf of Mexico. Dr. Keith Mullin, Gulf Coast Research Laboratory, explained in detail the outcome of a month-long pilot study cruise that was conducted from the National Oceanic and Atmospheric Association’s research vessel Gordon Gunter. The cruise was successful, far exceeding expectations. It was designed to test a variety of new equipment and research methods directed at studying sperm whales in the Gulf of Mexico and to characterize the acoustic environment they inhabit. While increasing noise in the marine environment and the potential to damage marine mammal hearing and/or interfere with crucial vocal communications are valid reasons for concern, the information to scale those concerns to actual effects is lacking. The NMFS’s task is to determine what levels and types of underwater noise are harmful to marine mammals. The MMS must determine if offshore industry noise and marine seismic operations represent a threat to marine mammals and, if so, means to mitigate those effects. In June 1999, a workshop on protected species environmental concerns for the Gulf of Mexico was sponsored by the MMS. The workshop identified sperm whales as a key species to study for possible acoustic effects. Sperm whales are an endangered species and appear to reside in areas of industry activity off the Mississippi River delta.

Deepwater Program. Dr. Pat Roscigno, Chief, Environmental Studies Chief, briefed the Committee on leasing in deep water. Deep water leasing has proceeded in an unprecedented rate fueled by emerging technologies and the Deepwater Royalty Relief Act of 1995. The ESP is providing information for the safe and environmentally sound exploration and production in deep water. This information is diverse in nature and ranges across a broad spectrum of social sciences and environmental sciences. Immediate information needs to focus on a model to estimate the transport and fate of deepwater subsea oil spills near the seafloor. In order to better understand the benthic slope communities, a comprehensive survey of the environment was initiated. Another study examines the effects of oil and gas exploration and development at slope sites. Social science studies are underway to examine the impact of deepwater development on industry labor needs, workforce availability, and commenting patterns. Future emerging issues will require information on gas hydrates that have the potential to be geohazards and are associated with chemosynthetic communities.

Physical Oceanography Slope and Rise of the Gulf of Mexico Workshop.  Dr. James Coleman, OCS Scientific Committee member, summarized the results of the workshop. He stated that oil and gas exploration in the Gulf of Mexico at depths greater than 1,000 feet has increased considerably. An initial workshop held April 22-14, 1997, addressing environmental factors of deep water exploration recommended a three-component physical oceanography approach. The approach would increase the MMS’s understanding of physical oceanographic processes. The first component would reanalyze existing observations and suggest a field program design. The second component was to use numerical models to enhance understanding of physical processes in the region. The final component was to conduct a field program to gather measurements to characterize the processes and provide information on environmental assessment and oil spill assessment tracking. Current measurements made during these exploratory studies revealed surprisingly strong currents in deep water. Because of these findings and recommendations of the SC, the MMS conducted a workshop on September 12-14, 2000, on physical oceanography of the Gulf of Mexico. The main objective of this workshop was to review the design submitted from the reanalysis effort and suggest modifications to ensure its information yield and successful deployment.

National Program

Social Science in the ESP. Dr. Rodney Cluck, MMS sociologist, stated that in 1999, the MMS/ESP held a national Social and Economic Planning Conference. Social scientists from around the U. S. and Canada joined MMS social scientists to discuss pressing issues in the Gulf of Mexico, Alaska, and the Pacific regions. Indeed, the conference complimented the ESP planning process; it added methodological insights and was an open forum for constructive criticism and information exchange. One-year later, national and regional social scientists in the ESP are using this information to aid in planning future study efforts. This session discussed major issues, current findings, and future directions of social science in MMS.

Deep Spill Modeling. Mr. Robert LaBelle, Environmental Division Chief, reported that one area of concern with the increasing industry activity in deep water is the threat of an oil spill from a blowout or pipeline rupture. This presentation provided a brief overview of a recent successful field experiment off the coast of Norway where oil and gas were released at 800 meters and observations were made. The data will be used to calibrate deep spill trajectory models and support spill response planning. The research is being sponsored by MMS a long with 23 companies via a Joint Industry Project.

 November 29, 2000

This day focused on breakout sessions regarding future work and whether proposed programs will meet the needs for each Region. Reports from the breakout sessions were given in the afternoon along with the Alaska and Pacific OCS Regions presenting their regional priorities.

November 30, 2000

Dr. James Coleman was presented a plaque thanking him for presiding over the OCS SC as Chair since 1996. Dr. Coleman was also appointed to the Committee as its first member to be retained in a discretionary seat on the Committee. This appointment is based on his scientific eminence as evidenced by national and international awards for professional excellence, introduction to prestigious professional academies or societies, and other highly meritorious recognition for scholarship and research as well as distinguished prior service to the Committee. Dr. Coleman recently was appointed as a member to the Russian Academy of Natural Science and was awarded the Kapitsa Medal of Honor, one of the highest civilian honors from the Russian government.

Dr. Lynda Shapiro was appointed Vice Chair to the Committee.

The Gulf of Mexico OCS Region presented their regional priorities to the Committee.

Dates of future meetings were discussed and it was decided that the yearly meetings should be held earlier than in November, preferably April or early May June. Subcommittees will meet when needed.

For more information, contact Julie Reynolds.