06/05/2013

Broad, bipartisan support is building among lawmakers at the state and federal levels for expanding access to offshore oil and gas drilling and development, said Erik Milito, American Petroleum Institute director of upstream and industry operations.

Speaking to reporters during a June 5 conference call from Washington, DC, Milito said increased offshore access would mean increased jobs and revenue for the states of Virginia, North Carolina, and South Carolina.

“The United States must pursue smart federal policies” that would expand the Outer Continental Shelf program, Milito said. “Developing our offshore resources is vital.”

Drilling off Virginia and other Atlantic states will be key to the energy plan that President Obama has promised, Milito said.

“The federal government must schedule lease sales and permit modern seismic surveys,” before oil and gas companies will invest in the activities needed to find and develop offshore oil and gas, he said.

“Part of the problem we see is that no lease sales are associated with the Atlantic,” Milito said. “We need lease sales to drive that seismic gathering…. When you have leasing, it makes investing all that much easier,” he said of API members.

Virginia’s two US senators, Democrats Mark R. Warner and Timothy M. Kaine, have proposed legislation that would revise the US Bureau of Ocean Energy Management’s 2012-17 Outer Continental Shelf program by restoring an oil and gas lease sale off Virginia’s coast (OGJ Online, May 23, 2013).

Previously, Virginia was included in a Department of the Interior lease plan, but that plan was deferred following the 2010 deepwater Macondo well blowout and resulting oil spill off Louisiana.

In April, US Rep. E. Schott Rigell (R-Va.) introduced a bill seeking to make Interior schedule a lease sale off Virginia’s coast as soon as practicable (OGJ Online, Apr. 29, 2013). Separately, Virginia Gov. Robert F. McDonnell (R) advocates oil and gas development off his state’s coast.

Offshore Alaska

‘Ultimately, the industry is committed to developing the offshore Alaska area,” Milito said when asked about US Arctic development.

BP PLC recently announced plans to add $1 billion in new investment and two drilling rigs to its Alaska North Slope fields over the next 5 years. Executives attributed the increased investment to changes in the state’s oil tax policy that Gov. Sean Parnell signed during May (OGJ Online, June 3, 2013).

Earlier this year, Royal Dutch Shell PLC announced it will “pause” its exploration drilling activity for 2013 in Alaska’s Beaufort and Chukchi seas to prepare equipment and plans for a resumption of activity at a later stage.

Shell continues to use its extensive experience in Arctic and sub-Arctic environments to prepare for safe activities in Alaska, the company said (OGJ Online, Feb. 27, 2013).

During 2012, Shell completed top-hole drilling on two wells in the Beaufort and Chukchi seas, marking the industry’s return to offshore drilling in the Alaskan Arctic after more than a decade.

The Kulluk conical drilling unit was driven aground by violent weather while under tow to Seattle. It was grounded Dec. 31, 2012, on the southeastern shore of Alaska’s uninhabited Sitkalidak Island. Contributing factors to the incident were discussed during a hearing hosted by the US Coast Guard in Anchorage.

Contact Paula Dittrick at paulad@nullogjonline.com.