U.S. Secretary of the Interior Ken Salazar today announced his department's approval of the planned Cape Wind project. Secretary Salazar's comments during his announcement of the decision today note that his department's Record of Decision on the project includes a number of conditions, including decreasing the scale of the project from 170 turbines to 130 turbines and requiring additional surveys of marine archeological resources. Addressing a number of criticisms of the lengthy review process for the Cape Wind project, Sec. Salazar said there were "multiple layers of review upon layers of review" and that there is "no question that the review of the project has been thorough." He went on to note, however, that there is "no reason why an offshore wind project should take a decade to review and approve." Joining Sec. Salazar at the announcement, Massachusetts Gov. Deval Patrick (D) said that he expects construction on the project will begin within a year, additional announcements would be issued in the coming weeks, and that "Massachusetts will lead the nation in offshore wind development." The New York Times provides further information. The formal Record of Decision should be available later today.
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The Senate Energy and Natural Resources Committee will hold a full committee hearing on Thursday, May 6, 2010, to discuss a variety of issues related to offshore oil drilling. The agenda is slated to include DOI's recent five-year planning announcements, as well as issues related to the recent Gulf of Mexico offshore oil rig accident.
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MMS has released its formal Request for Interest (RFI) regarding commercial wind leases for offshore Delaware. The RFI was announced last week and appears in today's Federal Register.
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On April 20, 2010, Senator Landrieu (D-LA) spoke out in favor of coastal states receiving royalties for offshore drilling activities in federal waters off their shores. Earlier this week, Senators Bingaman (D-NM), Dorgan (D-ND), and Rockefeller (D-WV) sent a letter to their colleagues voicing their strong opposition to such revenue sharing. In her statement, Senator Landrieu explained, "if there's no drilling, the interior states get no money," adding that, "there is not going to be any drilling unless there is revenue sharing." See yesterday's story in EnergyWashington [subscription required] for more information.
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DOI announced today that it will issue the nation's first Offshore Wind Request for Interest for an area offshore Delaware, consistent with the final rule issued last year for offshore renewable energy development. Industry response will be used to gauge specific interest in the commercial development of wind resources off the state's shores. DOI notes that if there is no competitive interest in this area, it may proceed with the noncompetitive lease process. The Request for Interest will be published in the Federal Register on April 23, 2010.
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On April 19, Senator Sherrod Brown (D-OH) introduced S.3226, a bill co-sponsored by Sens. Carper (D-DE), Collins (R-ME), Snowe (R-ME), and Kaufman (D-DE). The bill is aimed at stimulating a domestic offshore wind power industry and would require the Department of Energy to develop a roadmap to assist and coordinate offshore wind power implementation efforts. In addition, the bill calls for the appropriation of $75,000,000 for each of fiscal years 2011 through 2015 to establish an Offshore Wind Power Research and Development Program that would assist in the implementation of the roadmap.
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Today, Senators Bingaman (D-NM), Dorgan (D-ND), and Rockefeller (D-WV) expressed their opinion that redirecting revenues from energy development on the Outer Continental Shelf from the U.S. Treasury to coastal states should not be allowed. In a letter to their colleagues, the Senators noted their strong opposition and reminded their fellow Senators that state revenue sharing amendments were defeated twice in 2009. They further argue that coastal states already receive significant revenues from offshore drilling activities, the revenues from which they estimate will total about $6 billion in 2010. See today's story in Greenwire [subscription required] for more information.
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Florida Rep. Dean Cannon (R) said last week that he has withdrawn his bill that would lift the ban on oil and gas exploration and production in Florida state waters, citing difficulties in shepherding the bill through the Florida Senate. Business Week reports that Rep. Cannon hopes to revive the effort next year.
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MMS on April 19 published a final rule that sets limits on the flaring or venting of natural gas into the atmosphere. The rule also amends current regulations that limit production rates from offshore wells. "This rule gives us better tools to monitor closely the amount of flaring and venting that occur from offshore oil and gas production," said MMS Director Liz Birnbaum. "We believe that these improvements will ultimately help us reduce the amount of greenhouse gases emitted from MMS-regulated facilities."
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On April 14, MMS held its first task force meeting with Maryland officials to discuss renewable energy development on the OCS, pursuant to MMS' framework for facilitating offshore renewable energy leasing and development. "The MMS-Maryland Task Force will provide a forum for everyone to work together on siting proposed renewable energy projects off the coast of Maryland," said MMS Director Liz Birnbaum. "MMS looks forward to the input, advice, and participation of this task force as we initiate planning for offshore commercial renewable energy leasing." MMS is establishing inter-governmental task forces with a number of states, and has already met with officials from Virginia, Massachusetts and Rhode Island.
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MMS announced that it has recently funded four research studies to identify technological and operational safety issues related to the future development of offshore renewable energy on the OCS. The studies focus on inspection methodologies and design characteristics of offshore wind turbines, installation and removal costs of ocean energy devices, and potential seafloor effects associated with the installation of renewable energy devices. "We are continuously evaluating existing regulations and standards to adapt to these new technologies," said MMS Director Liz Birnbaum. "We are contributing to both safety and efficiency through studies, risk assessments, and inspections."
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All twenty Republicans on the House Natural Resources Committee sent a letter to Committee Chairman Nick Rahall (D-WV) yesterday requesting a full committee hearing "at the soonest possible time" on the Administration's new offshore drilling plan. The letter calls for testimony from Interior Secretary Ken Salazar, Director of the White House Office of Energy and Climate Change Policy Carol Browner, and MMS Director Liz Birnbaum, among others, on the economic impacts of the plan. Committee Republicans, led by Ranking Member Doc Hastings (R-WA), are concerned that the plan will impact new job creation by closing off areas to offshore drilling and delaying leasing plans. In response, Blake Androff, the Democratic spokesman for the Committee, stated Chairman Rahall had already decided to hold a hearing on the plan "in the near future."
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Reuters reports that the Interior Department will study the royalty collection systems of other nations as part of its effort to ensure that the federal government maximizes royalty revenue, including royalties from offshore production. This new study follows a 2008 Government Accountability Office report that found the United States gets lower returns on oil and gas leases than other countries.
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The U.S. Government Accountability Office (GAO) released a report which concludes that the North Aleutian Basin, located in the Alaskan OCS, could hold substantial amounts of oil and natural gas, although the upper ranges of its estimates are highly uncertain. The GAO also identified certain challenges that MMS faces in meeting federal requirements for development of oil and gas in the Alaskan OCS, including the need to prepare a comprehensive NEPA guidance handbook. The GAO report was requested by Chairman of the Appropriations Subcommittee on Interior, Environment, and Related Agencies Rep. Norman Dicks (D-WA).
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On the heels of the release of the five-year offshore drilling plan, Rep. Edward Markey (D-MA) announced last week that he plans to re-introduce legislation designed to eliminate royalty relief for certain deepwater leases issued between 1996 and 2000. Similar to bills considered by the House in the past, the bill would allow companies to choose whether to continue to drill in these existing leases, or bid for new leases opened for drilling under the five-year plan.
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Last week Plains Exploration & Production Co. agreed with a number of environmental groups on a plan to move forward on a proposal to drill for oil and gas in the Tranquillon Ridge in California waters. However, the agreement would also phase out Plains’s oil and gas drilling off the California coast beginning in nine years and halt all of the company’s oil and gas drilling offshore California in fourteen years. Read more in Business Week.
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A research report published in the Proceedings of the National Academy of Science this week suggests that connecting offshore wind projects with submerged high-voltage electricity transmission cable could help to level power generation from these projects. The study was conducted across five years at eleven offshore sites and concludes that offshore wind project developers ought not simply seek the windiest single site for a project. Instead, developers should approach wind projects by analyzing broad meteorological data and load requirements across an entire region in order to optimize total power output.
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MMS published a Federal Register notice on April 2 requesting comments on the Preliminary Revised 2007-2012 Five-Year OCS Oil and Gas Leasing Program for lease sales covering the 2007-2012 timeframe. The comment period will be open through May 3, 2010. The Preliminary Revised Program was required by order of the U.S. Court of Appeals for the District of Columbia in Center for Biological Diversity v. U.S. Dept. of Interior. The Revised 2007-2012 Plan includes an expanded environmental sensitivity analysis and re-affirms the role of the Gulf of Mexico as the primary producing region, retaining the eight sales that have already occurred there and the four remaining on the schedule. However, regarding development off of Alaska, the Revised Plan schedules no lease sales in the North Aleutian Basin or Beaufort Sea, and none in the Chukchi Sea other than Sale 193 (which took place in 2008).
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Last week Gov. Bob McDonnell (R-VA) notified the Governors' Wind Energy Coalition that he was terminating Virginia’s further participation in the coalition. According to the letter of termination (available via The Hill), Gov. McDonnell ended Virginia’s participation in the group because of a letter sent to the U.S. congressional leadership advocating a national renewable energy standard (RES). Governor McDonnell claims that the letter included his name and implied that his administration supports a national RES policy, but he does not agree with the policy and did not approve the letter before it was released. The letter also notes that Virginia will continue to participate in the Atlantic Offshore Wind Energy Consortium.
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The Advisory Council on Historic Preservation conveyed to Secretary of the Interior Ken Salazar its final comments regarding the proposed Cape Wind project - including its conclusion that Secretary Salazar not approve the project. The Council found that "the historic properties affected by the Project are significant, extensive and closely interrelated " and that the "adverse effects on historic properties will be direct and indirect, cannot be avoided, and cannot be satisfactorily mitigated." Under the National Historic Preservation Act, Secretary Salazar must take the Council's recommendation into consideration, but is not obligated to follow it. Upstream Online provides further coverage.
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The New York Times details the competing strategies adopted by Massachusetts and Rhode Island to advance wind projects off their respective coasts. The piece notes that Rhode Island has engaged in a state-funded three-year project to study its offshore wind resources, while Massachusetts has used a private developer, Cape Wind, to direct research of the state's offshore wind potential.
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Yesterday the U.S. Department of the Interior (DOI) announced that it will hold Western Gulf of Mexico Lease Sale 215 on April 18, 2010, in New Orleans. Secretary of the Interior Ken Salazar said in a press release that “continued responsible development in appropriate areas of the Outer Continental Shelf is a key component of our efforts to move forward on a comprehensive energy plan, to reduce our country’s dependence on foreign oil, and to create jobs here at home.”
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Governor Bob McDonnell (R-VA) is scheduled to sign today two pieces of legislation designed to advance Virginia’s developing offshore wind industry. One will grant a tax credit to encourage the development of offshore wind farms. The second will create the Virginia Offshore Wind Development Authority, which will represent a number of different interests through members appointed by the governor. Find further information on InsideNoVa.com.
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The EPA has issued an air permit to Shell Gulf of Mexico, Inc. (Shell) for the drilling of three exploratory wells in the Chukchi Sea, off the coast of Alaska. This permit is reportedly the first "major-source" air-quality permit ever issued for the Arctic OCS. MMS approved Shell's Exploratory Plan related to these three wells in December.
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On the heels of President Obama's 5-year offshore drilling plan announced yesterday, Rep. Edward Markey (D-MA) stated his intention to revive legislation to provide oil companies with strong incentives to drill in offshore areas where they already hold leases before purchasing new leases. The so-called "use-it-or-lose-it" legislation would impose escalating fees on oil drilling rights that remain unused, and was approved by the House several times during the 110th Congress. The concept has also been debated in the 111th as well as included in the Obama administration's recent budget request.
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