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OCR for page 231
~PP~DI~ ~
MMS'S OCS OBL ED GAS Al CISBO~ PROCESS
(Prepared by NRC and MMS staff)
~IALYSI S 12[QUII [D BY
SLCT10~1 1N OF THI OCS MODS ACT
The leasing program consists of a schedule of proposed lease sales Cat
indicates as precisely as possible the timing, size, and location of leasing
activity that the secretary of the interior determines watt meet the nation's
energy needs for He 5-year period following He schedule's approval
(MMS, 1991a [OCS National Compendium through October 19901~. The
current 5-year plan, approved in July 1992, is for m~d-1992 through m~d-
1997. Section IS of He Outer Continental Shelf Lands Act (OCSLA, § 43
U.S.C. 1344) requires that MMS analyze He different OCS regions to
consider the following before it determines where the leased sites will be
(MMS, 1992c [1992-1997 Proposed Final Comprehensive Programed:
Geographical, geological, and ecological characteristics.
Equitable Caring of benefits and environmental risks of development.
Location with respect to regional and national energy needs and energy
markets.
Location with respect to other users of He sea.
Petroleum industry interest.
231
OCR for page 232
232 OCS DECISIONS: ALASKA
Laws, goals, and policies of the affected states.
Relative environmental sensitivity and marine productivity.
· Relevant environmental and predictive information.
The U.S. portion of the OCS is divided into 26 planning areas (a
geographic subdivision of the OCS that is used for planning and adminis-
trative purposes) to facilitate the Proposed Final Comprehensive Program's
analysis arm program management as required by Section IS. The Section
IS analysis is to determine the value to the nation as a whole of all the
estimated of! and gas resources in each of 14 OCS planning areas proposed
for leasing consideration in MMS's July 1992 Proposed Final Comprehen-
sive Program. Cost-benefit aralysis is used to determine a lease site's value
to the nation. The aralysis compares the net economic value of oil and gas
to be produced against environmental externalities that can be quantified as
social costs (costs not borne directly by of} and gas producers). The OCS
program areas (an area within one or more planning areas that is proposed
for leasing consideration in the Proposed Final Comprehensive Program
(1992-1997~; Mere are 14 program areas made up of portions of 15
planning areas) are then ranked in groups in order of descending value
(MMS, 1992c). Group ~ has the highest net social value; Group 5 has the
lowest net social value. The Beautort Sea and Chukchi Sea planning areas
are in Group 2, and the Navarin Basin is in Group 3.
In addition to net social value, MMS's Proposed Final Comprehensive
Program analyzes five other components. The first is the additional costs
and benefits, such as indirect benefits related to price effects and national
income effects, the potential costs of proposed environmental regulations,
and Me nonquantifiable costs analyzed in final Environmental Impact
Statements (EISs); the findings of this analysis were not grouped in the
current 5-year plan.
Second, an analysis of the relative marine productivity and environmental
sensitivity is broken into Tree components: coastal habitats, marine habi-
tats, and marine biota. Estimated total primary productivity and average
primary productivity are given for each planning area, rather than for each
program area, because of difficulty in applying the information to smaller
areas. The current 5-year plan estimates Mat the Navarin Basin has
moderate primary productivity and that the Chukchi and Beautort seas have
low primary productivity relative to other areas.
The third analysis is of He equitable sharing of development benefits and
environmental risks among OCS regions. This analysis presents Be means
OCR for page 233
APPENDS 233
of distributing developmental benefits and compensating costs associated
wan the OCS oil and gas program. It also includes a review of the effects
of constraints beyond the control of Me Department of the Interior, such as
congressional moratoria, on the program.
The fourth analysis reviews industry interest in leasing, exploration, and
development of of} and gas resources in We program areas.
The fifth analysis comes directly from Section IS language. The
secretary is to choose He leasing program that "he determines will best
meet Be national energy needs for the 5-year period following its approval
or reapproval" and "to the maximum extent practicable, to obtain a proper
balance between He potential for environmental damage, the potential for
discovery of of} and gas, and He potential for adverse impact on the coastal
zone." In this analysis, the secretary is to evaluate and balance four
considerations. The first is developmental benefits, such as increased na-
donal income, economic acidity, and job opportunities and reduced national
deficits in international trade and in the federal budget. The second is He
potential for environmental damage from such activities as placement of
infrastructure, operations, and accidents. The Gird consideration is more
general and includes aesthetics and special concern for marine mammals or
endangered species. The fourth consideration is the comments of interested
or affected parties.
A~" I VALUAT10~ AD D[CIS10~ FOCI US
In the first step in the oil and gas leasing process (called the Area
Evaluation and Decision Process), MMS prepares a proposed 5-year of] and
gas leasing schedule for review by the public, industry, states, and other
affected agencies, as well as by other agencies within He department, such
as the National Park Service (NPS) and the Fish and Wildlife Service
(FWS). The Information Ban Review process gathers specific information
on geology, resource estimates, the environment, and economics. The
specific information on geology and resource reports is requested from the
states, other federal agencies, NPS, and FWS, and is used to define the area
in which of} or gas could be found. Once He potential areas of resources
have been Refire, a public notice of Request for Interest and Comments is
published in He Federal Register. The degree of response to a request
indicates the degree of industry and public interest in an area.
Next, a Call for Information and Nominations and a Notice of Intent to
OCR for page 234
234 OCS DECISIONS: ALASKA
Prepare an EIS are published in the Federal Register. The call solicits
comments from the of} industry, government agencies, environmental
groups, and the general public. The notice of intent announces the scoping
(information gathering and evaluation) process that watt be followed for the
EIS. During this process, important issues that deserve study in an EIS are
identified. A 45~ay comment period follows. After the call closes, the
comments from the public, industry, states, and other federal agencies,
including NPS and FWS, are reviewed. in addidon, MMS evaluates po-
tential impacts on multiple uses~fishing, tourism, shipping, etc. in the EIS
process. An area for proposed leasing is identified at this point and subm~t-
ted to Me secretary for approval.
If the area is approved by the secretary, the scoping process ensues. It
is open to input from the public, industry, states, and other federal agencies,
including NPS and EWS. The process allows for early identification of im-
portant issues that deserve review in an ElS. Afterwards, a draft ElS and
a Proposed Notice of Sale are prepared. A 60~ay comment period and
public hearings on the draft EIS and public notice are publicized by a Notice
of Availability in the Federal Register.
A final EIS and a Proposed Action and Alternatives Memorandum, which
are submitted for the secretary's approval, are prepared in the appropriate
regional office. The memos um's purpose is to assist Me secretary in de-
termining whether to proceed with, delay, or cancel further development
and analysis of a leasing proposal. If the secretary decides to proceed, a
tentative sale decision is made; the proposed sale is publicized by a Notice
of Availability in the Federal Register. A 60~ay comment period and
public hearings follow. The state governors are notified of the proposed
sale and are asked for input. During He 60 day comment period, the sec-
retary holds a meeting to decide on areas, terms, and conditions.
If the secretary gives final approval for the sale, a final Notice of Sale
is published in the Federal Register at least 30 days before the sale.
IrKlus~y bids are received within schedules identified in the notice. On the
day of the sale, the bids are opened and read publicly. No decision on the
adequacy of Me bids is made at that time. The Department of Justice and
Be Federal Trade Commission Den review Me bids. The sale results also
are reviewed in the regional office, which then determines whedler to
accept a bid. If a bid is accepted, a lease is issued by Me regional office to
Me highest bidder (MMS, 1991a [OCS National Compendium Trough
October 1990]).
Aver a lease has been issued, all exploration, development, and produc-
tion activities, except for preliminary activities, must be conducted in
OCR for page 235
APPENDIX A 235
accordance wig an Exploration Plan (EP) or a Development and Production
Plan (DPP) approved by MMS. Preliminary activities, including geophysi-
cal, geological, and over surveys, can be conducted to gather information
for preparation of an EP or DPP. These surveys may not result in physical
penetration of Me seabed more than 500 feet nor may they result in any
significant harm to natural resources of Me OCS.
[XPLO~AT10~ PLED
Once a lease has been issued, Me lessee may submit an EP, which is
reviewed and comments on by the state governor, with input from federal
agencies. The EP provides a concise description of the proposed offshore
operations and must be modified by He lessee if sigruficant changes are
made to Be lessee's proposal. The EP is based on information collected by
Me lessee during preliminary activities, including, but not limited to, geo-
physical, geological, cultural, and biological surveys. It is reviewed by
MMS to ensure that it is complete within 10 working days of receipt. If it
is not complete, it is returned to the lessee for modification or supplemental
information. Once the EP is complete, it is deemed submitted. Within 2
working days, Me plan is sent to the affected states' governors, the Coastal
Zone Management agencies, NPS and EWS, and local governments that
request copies.
While the EP is being reviewed by state and over agencies, MMS
conducts a technical review of the proposal. Concurrently, MMS regional
staff analyze all activities proposed in Me EP as required by the National
Environment Policy Act in an Environmental Assessment (EA). The EA
reviews whether the proposed EP will have a significant impact on Me
environment. If no significant impact is identified, Me plan proceeds
Trough the approval process.
If the EP is rejected, it goes back to the lessee for modification or for
supplemental information, and Me process starts again. The plan may be
resubmitted if conditions change. Leases can be canceled at this point in
accordance wig OCSLA § 43 U.S.C. 1334, although no such cancelation
has occurred to date.
Al Al LOPMI AT MID P~ODUCT10~ Pow
Aver Me EP is approved, the lessee must submit a DPP, which describes
OCR for page 236
236 OCSDEClSIONS: ALASKA
Me specific work to be performed; Me drilling vessels, platforms, pipelines,
and facilities to be used; Me location and depth of proposed wells; geolog'-
cal and physical data; environmental safeguards and standards to be met;
and a schedule of development and production activities. If Me DPP is
deemed complete by MMS, it must be reviewed by Me affected state and
federal agencies, NPS and FWS, and Me public, which is notified through
Me Federal Register. The technical review is similar to Mat for an EP, ex-
cept that Me review must be completed within 120 days after tile plan is
deemed completed. If it is determined that an ElS must or should be pre-
pared, tile 120~ay restriction does not apply.
I ~VIQO~MI - AL IMPACT STATI MINT
An EIS addresses Me environmental effects of the proposal, including
seismic risks, descriptions of areas of high ecological sensi~vi~ and of
hazardous bottom conditions, and Me uses of new or unusual technology.
It is prepared either when MMS determines Mat approval of a DPP
constitutes a major federal action that would sign~ficandy affect Me quality
of Me environment or for an initial DPP activity in a frontier area (i.e., an
area in which no oil or gas development or production has occurred).
When an EIS is deemed necessary, particular consideration is given to
addressing He significant adverse effects on Be marine, coastal, or human
environment resulting from Me construction of new onshore and offshore
facilities. Cumulative impacts are also considered.
Once the EA has been reviewed, the DPP is approved if He Coastal
Zone Management agencies have no objections. Coast Guard and U.S.
Army Corps of Engineers permits are sought at this point. If approved and
die permits are issued, a platform verification review is done in some cases;
for example, in newly permitted areas where Here are hazardous condi-
tions, such as ice, and over climatic hazardous or oceanic conditions.
APPLICATIVE FOR PI I MIT TO DRILL
Next, the Application for Permit to Drill (APD) is submitted by the
lessee. If it is issued, a National Pollution Discharge Elimination System
(NPDES) permit is sought from the Environmental Protection Agency.
OCR for page 237
APPENDIX A 237
MMS Den determines whether He APD is technically acceptable. An APD
must be filed and approved each time a well is proposed to be drilled,
deepened, or plugged and abandoned. Extensive details about Be drilling
program are required, including information about Me blowout prevention
system and casing, cementing, and drilling-mud programs. MMS uses tills
information to evaluate Me operational safety and pollution prevention
measures of a proposed operation. Conditions of approval are often at-
tached to the APD as a result of MMS's review of it.
If the APD is approved, Me lessee is given an Exploration Drilling
Permit to drill a test well. The lessee must also obtain a Coast Guard
permit, a U.S. Army Corps of Engineers Navigation Permit, and an EPA
NPDES permit. Once Me required permitting is complete, exploratory
drilling may begin.
Next, Me lessee must submit a Pipeline Permit Application. MMS pre-
pares an EA, including off-lease right-of-way, which must take Department
of Tran~ortadon regulations into consideration and undergo review by NPS
and FWS. After the EA has been prepared, the Coastal Zone Management
agencies notify MMS of any objections they have. If there are no objec-
tions, MMS approves a pipeline permit. Next the lessee must obtain a U.S.
Army Corps of Engineers construction permit, after which pipeline
construction and production can begin.
Once production has begun, the lessee must report its royalties and send
monthly production reports to MMS's Office of Official Records, Title
Actions. After production has ceased, relinquishment occurs. Shutdown
requires weld abandonment, platform removal, and clearance of the seafloor
within one year.
TC~MI~AT10~ OF OPI RATIONS
The lessee must obtain MMS approval before beginning to permanently
or temporarily abandon operations. The lessee must adhere to strict stand-
ards for removing platforms and subsea wellheads, and it must clear the
seafloor of all other obstructions. MMS must consult with other federal
agencies to ensure Mat abandonment operations do not harm natural
resources in the vicinity of these operations.
OCR for page 238
Representative terms from entire chapter:
final comprehensive
