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Commerce Dept. FY 2011 Budget Proposal Designed to Implement National Ocean Policy

Tue, 02 Feb 2010 13:40:26 GMT

President Obama proposed an $8.9 billion FY 2011 budget for the Department of Commerce yesterday. One of the goals of the budget proposal is to fund the President's National Ocean Policy, which includes plans for comprehensive coastal and marine spatial planning and provides for coordination between federal, state, tribal, local and regional entities for efficient management of the oceans. For more information on the Commerce Department's proposed budget, click here.

Offshore Energy Development To Get Boost in Funding in FY 2011

Tue, 02 Feb 2010 13:29:06 GMT

President Obama's recently released budget proposes $364.8 million in funding for MMS in fiscal year 2011. This funding package includes $3.5 million to continue development of the agency's Outer Continental Shelf renewable energy program, adding to the $20.4 million appropriated in FY 2010. The budget request also contemplates the phase out and termination of the Royalty-in-Kind program.

Reps. Markey and Van Hollen Introduce Bill to Overturn Kerr-McGee, Recover Royalties

Fri, 29 Jan 2010 12:16:25 GMT

Reps. Ed Markey (D-MA), Chairman of the House Select Committee on Energy Independence and Global Warming, and Chris Van Hollen (D-MA) introduced a bill this week, the "Royalty Relief for Consumers Act of 2010," that seeks to recover up to $54 billion from companies producing in deep waters in the Gulf of Mexico between 1996 and 2000, effectively overturning the Fifth Circuit's decision in Dep't of Interior v. Kerr-McGee, which was recently denied cert by the Supreme Court. The House has approved similar versions of the bill in 2006, 2007 and 2008, but it has yet to be enacted into law.

MMS Confirms Plans to Set Virginia Offshore Leases Adrift Until at Least 2012

Thu, 28 Jan 2010 09:31:53 GMT

MMS has confirmed remarks made by an MMS regional director last week at an industry-only offshore drilling workshop in Texas that the agency plans to wait until at least 2012 to issue any oil and gas drilling leases for the proposed Lease Area 220 offshore Virginia. The Bush Administration's five-year plan had called for the lease of 3 million acres approximately 50 miles offshore Virginia in November 2011. Secretary of the Interior Ken Salazar has said that he will decide this summer whether the Bush Administration's plan will be implemented. Virginia Governor Bob McDonnell wrote Salazar a letter in December 2009 urging MMS to move forward with the Virginia leasing plan. Lease Area 220 is thought to hold 130 million barrels of oil and 1.14 trillion cubic feet of natural gas. In response to the MMS decision, an American Petroleum Institute spokeswoman commented that "this just demonstrates what remains a pattern with the Salazar Interior Department. Delay, delay, delay."

Secretary Salazar Calls Cape Wind Permitting Process a "Laboratory"

Wed, 27 Jan 2010 09:19:18 GMT

U.S. Secretary of the Interior Ken Salazar said Monday that he considers the permitting process used to analyze the Cape Wind offshore wind proposal planned for offshore Massachusetts a "laboratory for us to learn" about offshore renewable energy. Speaking further at a Platts Energy Podium event, Secretary Salazar reiterated his previous comments that the outcome of the Cape Wind regulatory review process would not be "determinative" for the future of offshore wind in the United States. Platts Inside Energy Extra [subscription required] offers additional details.

Salazar to Move Forward on Seismic Testing in Atlantic OCS, Hints at Higher Royalties

Tue, 26 Jan 2010 15:34:45 GMT

Secretary of the Interior Ken Salazar announced yesterday that DOI will begin reviewing proposals to conduct seismic studies of the Atlantic OCS. According to statements by Salazar at yesterday's Platts Energy Podium, Interior will open a 45-day public comment period this Thursday, January 27, on the environmental impact of the proposed studies, which will then be used in reviewing specific seismic study proposals. Seismic studies are an important first step in considering oil and gas exploration off the Atlantic coast. In a related development, Salazar also pledged broader reforms of leasing programs, suggesting that royalty rates for onshore oil and gas leases may be increased. The Houston Chronicle has more details.

MMS Moves to Protect Additional Property from Cape Wind Development

Mon, 25 Jan 2010 12:52:55 GMT

On January 25, MMS published a notice in the Federal Register that it is seeking to revise the original Finding of Adverse Effect relating to the Cape Wind project in order to add five properties that are eligible for inclusion in the National Register of Historic Places. This Revised Finding is part of the ongoing Section 106 consultation process pursuant to the National Historic Preservation Act. Comments regarding this revision are due by February 12.

Report: Offshore E&P in Eastern Gulf of Mexico Will Not Impair U.S. Military Operations

Fri, 22 Jan 2010 15:18:09 GMT

A report released this week by Securing America’s Future Energy concludes that opening the eastern Gulf of Mexico to oil and gas exploration and production would not affect U.S. military operations in the area. Senator Byron Dorgan (D-ND) touted the report to Oil & Gas Journal, saying that its conclusions support his legislation that would open the eastern Gulf of Mexico to oil and gas E&P. Responding to the report, Sen. Bill Nelson released a statement opposing expanding E&P activities in the eastern Gulf, noting that the Pentagon has said that E&P is incompatible with military training operations in the area.

MMS Announces New Deputy Director

Fri, 22 Jan 2010 14:03:11 GMT

The MMS announced that Mary Katherine Ishee has been appointed deputy director. Ms. Ishee will "assist MMS Director Liz Birnbaum in the administration of programs that ensure the effective management of energy resources located on the OCS - including the development of offshore renewable energy - and the environmentally safe exploration, development, and production of oil and natural gas." Ms. Ishee's background includes both public and private positions, including serving as Counsel to the Senate Committee on Energy and Natural Resources.

Sec. Salazar Invites East Coast Governors to Discuss Offshore Wind

Tue, 19 Jan 2010 15:29:48 GMT

The Interior Department announced on January 15 that Sec. Salazar has invited the governor of each Atlantic coastal state from Maine to Florida to an offshore wind summit to discuss "how to support and coordinate the development of this new industry." The February 19 meeting will "provide an opportunity for us to exchange ideas and chart a course forward to advance further development." The announcement of this summit comes on the heels of the January 13 Cape Wind meetings in Washington. Platts Inside EnergyEXTRA [subscription required] provides more details.

California Governor Suggests Offshore Royalties Could Pay for State Parks

Fri, 15 Jan 2010 14:58:19 GMT

California Gov. Arnold Schwarzenegger (R) has suggested that royalties from offshore production in California state waters could help pay for the state's park system. The Santa Maria Times reports that this budget initiative was proposed last year but was not adopted by the state legislature.

Sec. Salazar: Cape Wind Will Not Define U.S. Offshore Wind Industry

Wed, 13 Jan 2010 14:31:38 GMT

Speaking to reporters and media interests, including the Offshore Energy Law Blog, following today's consultations concerning the Cape Wind offshore energy project in Nantucket Sound, U.S. Secretary of the Interior Ken Salazar said that he does not view whether or not the Cape Wind project is built as determinative for the U.S. offshore wind industry. Salazar also highlighted two difficult challenges facing the project: impacts on cultural and archeological resources and impacts on the view sheds from land. The Secretary confirmed that if Cape Wind decides to move its proposed wind farm to a different location, then the company would have to file a new application with MMS for the project.

Interior Secretary Salazar to Host Cape Wind Meetings in Washington

Tue, 12 Jan 2010 10:25:04 GMT

On Wednesday, January 13, Interior Secretary Ken Salazar will host a series of meetings in Washington, D.C. relating to the Cape Wind project. These meetings, which are convened pursuant to the National Historic Preservation Act, will bring together interested parties to consider the National Park Service's finding that the site of the proposed Cape Wind offshore wind farm is eligible for listing in the National Register of Historic Places.

MMS Leaves Civil Penalty for Violations of OCS Regulations Unchanged

Fri, 08 Jan 2010 15:20:16 GMT

Following a statutorily-mandated review of the maximum daily civil penalty for violations of regulations governing oil and gas operations on the OCS, MMS determined that no adjustment is necessary and that the current maximum penalty of $35,000 per violation per day will remain unchanged. The Outer Continental Shelf Lands Act requires MMS to measure these penalties against the Consumer Price Index every 3 years to ensure they are keeping up with inflation. The current rate has been in effect since February 28, 2007.

MMS Releases New Issue of Ocean Science

Fri, 08 Jan 2010 15:00:30 GMT

On January 7, MMS released the latest issue of Ocean Science, its science and technology journal. Among other things, the issue includes articles on coastal and marine spatial planning, offshore oil and gas leasing, and a story on the Interagency Ocean Policy Task Force's Interim Report. To view the publication, click here.

MMS Releases New Issue of Ocean Science

Fri, 08 Jan 2010 14:38:51 GMT

Cape Wind Site Eligible for Historic Place Listing, Prompting Further Delays

Tue, 05 Jan 2010 10:39:17 GMT

In response to petitions by two Massachusetts Indian tribes, the National Park Service (NPS) has determined that the site of the proposed Cape Wind offshore wind farm is eligible for listing on the National Register of Historic Places, further delaying development of the nation’s first planned offshore wind farm. NPS found that Nantucket Sound, where the proposed 24 square-mile wind farm would be erected, is vital to the tribes’ cultural and religious practices. The tribes are concerned that the land beneath the Sound may contain submerged ancestral burial grounds and that the view across the Sound is a culturally significant vantage point for watching the rising sun and nighttime sky.

NPS’s decision will not prevent construction of the controversial wind farm, but it could result in significant delays and may help form a legal argument against the project by the tribes and other vocal opponents. In response to NPS’s decision, Department of the Interior Secretary Ken Salazar pushed to move the project forward by ordering the NPS and the project's developer, Energy Management Inc., to negotiate and reach a compromise by March 1, 2010. Sec. Salazar, who has the authority to decide the project’s future himself, stated: “If an agreement among the parties can’t be reached, I will be prepared to take the steps necessary to bring the permit process to conclusion.” The New York Times provides additional coverage of this story.

Moratorium on Offshore Oregon Oil and Gas E&P Expires

Tue, 05 Jan 2010 10:28:18 GMT

The Oregonian reports that earlier this month a three-year moratorium on oil and natural gas exploration and production in Oregon state waters expired. A number of environmental groups are requesting that the state legislature reinstitute the moratorium or impose a permanent ban on E&P activities when its session begins in February.

Massachusetts Releases Ocean Management Plan

Tue, 05 Jan 2010 10:22:10 GMT

Yesterday Massachusetts released the final version of its Ocean Management Plan that provides for marine spatial planning in Massachusetts state waters. The plan allows for offshore wind turbines near Nantucket and Martha’s Vineyard but protects certain environmentally sensitive areas from commercial development. Read more in the Cape Cod Times.

Virginia Governor-Elect Wants No Delay in Offshore Oil and Gas Lease Auction Planned for 2011

Wed, 30 Dec 2009 11:51:44 GMT

Governor-elect Bob McDonnell (R-VA) wrote to U.S. Secretary of the Interior Ken Salazar this week outlining his incoming administration's views on offshore oil and natural gas production. In his letter, the governor-elect requested that the oil and gas lease auction planned for 2011 be held as scheduled and not be subject to additional delay. Platts Gas Daily [subscription required] offers additional coverage.

Congressional Delegation Requests MMS Place Offshore Energy Office in Massachusetts

Mon, 28 Dec 2009 12:12:20 GMT

Platts Inside Energy Extra [subscription required] reports that the congressional delegation from Massachusetts has requested that MMS place its new regional office for renewable energy along the Atlantic seaboard in Massachusetts. Secretary of the Interior Ken Salazar announced the creation of this office earlier this month, but a site for the office has not yet been selected.

MMS Notifies Offshore Lease Owners of New Inspection Fees

Wed, 23 Dec 2009 15:08:04 GMT

MMS announced yesterday that it will collect new fees ranging from $2,000 - $6,000 per facility to recover the costs of offshore inspections, including safety and environmental inspections of offshore facilities and associated equipment. The fees will apply to inspections conduced on all bottom-founded structures and floating production facilities on the OCS in the Gulf of Mexico during FY 2010. Authority for these new fees comes from legislation signed into law by President Obama on Oct. 30, 2009, directing MMS to collect $10M for safety and compliance inspections in the Gulf of Mexico and certain areas offshore California.

Canadian Superior Plans to File Applications for Liberty LNG Project in Q3 2010

Mon, 21 Dec 2009 13:45:15 GMT

Canadian Superior Energy announced this morning that it intends to file federal and state applications for its Liberty LNG deepwater port proposed for offshore New Jersey in the third quarter of 2010.

New Jersey Governor-Elect Remains Opposed to Safe Harbor Energy LNG Deepwater Port Proposal

Wed, 16 Dec 2009 10:51:07 GMT

A spokesperson for New Jersey Governor-elect Chris Christie (R) told the Queens Courier that the governor-elect remains opposed to the Safe Harbor Energy LNG deepwater port proposal off the coasts of New Jersey and New York due to concerns regarding the project's impacts on the state's coastal economy.

Environmental and Native Groups Challenge MMS Approval of Beaufort Sea Drilling

Wed, 16 Dec 2009 10:24:39 GMT

Yesterday, environmental and Alaska Native groups filed a petition for review in the Ninth Circuit Court of Appeals of MMS's approval of Shell Offshore's plans to drill two exploration wells in Alaska's Beaufort Sea. The groups argue that MMS failed to ensure that the drilling of these wells could occur safely and failed to adequately evaluate the impacts on marine mammals. Before exploratory drilling takes place, Shell must obtain an Application for Permit to Drill from MMS, and its plans must be consistent with the Alaska Coastal Zone Management Program, as well as various air and water quality rules. The petitioners' brief is due March 5, 2010. The case is Native Village of Point Hope v. Salazar, No. 09-73942.

Interagency Ocean Policy Task Force Releases Interim Framework for Effective Coastal and Marine Spatial Planning

Mon, 14 Dec 2009 16:28:57 GMT

Today the White House Council on Environmental Quality released an Interim Framework for Effective Coastal and Marine Spatial Planning ("Framework"). The Framework was developed by the Interagency Ocean Policy Task Force, which is composed of twenty-four senior officials from administrative agencies, departments, and offices, and is led by White House Council on Environmental Quality Chair Nancy Sutley. It was developed pursuant to one of the nine priority objectives proposed earlier this year in the Task Force's Interim Report. While the Framework does not purport to establish actual marine planning zones, it does establish a process for federal agencies to work with state and local governments to develop and implement coastal and marine spatial plans over the next five years.

In a press release announcing the Framework, Sutley stated, "The uses of our oceans, coasts and Great Lakes have expanded exponentially over time...Without an improved, more thoughtful approach, we risk an increase in user conflicts and the potential loss of critical economic, ecosystem, social, and cultural benefits for present and future generations."

Senators Introduce Renewable Energy Research Act

Mon, 14 Dec 2009 15:09:36 GMT

Senators Mark Begich (D-AK) and Olympia Snowe (R-ME) introduced a bill yesterday to establish a comprehensive ocean, coastal, Great Lakes, and atmospheric research, prediction, and environmental information program within NOAA to support renewable energy. The bill, titled the Renewable Energy Environmental Research Act of 2009, would require the Administrator of NOAA to develop a renewable energy research plan that would include a coordinated weather, water, and climate prediction component focused on renewable energy, such as offshore wind and tidal energy, to provide information and decision services to support the development of these energy sources. The proposed Act also focuses on avoidance, minimization, and mitigation strategies to address potential impacts of offshore renewable energy projects on the marine and coastal environment.

Officials to Seek Proposals for Wind Project Planned for Offshore New York

Mon, 14 Dec 2009 14:45:52 GMT

Last week the Long Island-New York City Offshore Wind Collaborative, comprised of a number of state and local agencies and public utilities, announced that it plans to accept proposals to develop a 350 MW wind farm, with potential to expand to 700 MW, planned for 13 miles offshore Long Island. 30 wind developers already responded to a request for information released in July. Project participant Long Island Power Authority's press release provides additional information.

DOE and MMS to Sign MOU for Hydrokinetic Power Project Permitting

Wed, 09 Dec 2009 15:37:31 GMT

A DOE source told Energy Washington (subscription required) that the agency plans to sign a memorandum of understanding (MOU) with the MMS in the next two months to begin developing a streamlined permitting process for hydrokinetic power projects, including those on the OCS. DOE reports that the MOU will broadly cover offshore renewable energy and outline a framework for collaborating on environmental assessments and streamlining the permitting process. In addition, DOE plans to organize a series of meetings with the FERC, NOAA, the Department of Defense, and other federal agencies. Reports of the DOE/MMS MOU follow on the heels of the House Committee on Science and Technology hearing on hydrokinetic energy earlier this month.

Salazar Unveils New Offshore Renewable Energy Office at Copenhagen Conference

Wed, 09 Dec 2009 15:19:28 GMT

During a tour of a wind farm near the U.N. climate summit in Copenhagen, Interior Secretary Ken Salazar announced today that the MMS will establish a new regional office to oversee offshore renewable energy project development off the Atlantic seaboard. Salazar noted "the enormous potential for renewable energy development, especially wind energy, in the Mid- and North Atlantic." The new office will implement and manage MMS's growing offshore renewable energy portfolio, including leasing and environmental programs. Read DOI's press release for more information.

Senate Subcommittee to Consider Bill on Wind Energy Research

Wed, 09 Dec 2009 15:01:31 GMT

On December 8, 2009, a Senate Energy and Natural Resources subcommittee considered H.R. 3165, a bill that would provide $200 million over five years to the Department of Energy's wind energy research program. The proposed goals of the research program are to improve the energy efficiency, reliability, and capacity of wind turbines; optimize the design and adaptability of wind energy systems; and reduce the cost of construction, generation, and maintenance of wind energy systems. One of the stated focuses of the program is the development of wind technology for offshore applications.

MMS Holds First Virginia Task Force Meeting

Wed, 09 Dec 2009 14:41:06 GMT

On December 8, MMS held its first task force meeting with Virginia officials to discuss renewable energy development on the OCS. The meeting is part of an MMS inter-governmental task force that includes local, state, tribal, and federal stakeholders. The task force will work to facilitate the commercial leasing process for OCS renewable energy evelopment offshore Virginia. At the meeting, members discussed options for starting Virginia's offshore leasing program, as well as specific actions and timelines to support Virginia's goal of developing offshore renewable energy. "The MMS Virginia Task Force will provide a forum for efficient review of proposed renewable energy projects on the OCS to move toward the goal of expanding our nation’s energy resource portfolio in an environmentally sound manner, while being responsive to the needs of affected States, localities, and tribes," said MMS Director Liz Birnbaum. MMS has already held similar meetings with Massachusetts and Rhode Island.

Maryland to Buy Offshore Wind Power

Wed, 09 Dec 2009 13:43:44 GMT

Maryland officials recently announced the state is signing long-term contracts to purchase electricity from wind and solar projects in the region, including from the Bluewater Wind project offshore Delaware. The Director of the Maryland Energy Administration, Malcolm Woolf, said the contracts will cover 23 percent of the state's electricity needs, and will help the state obtain its goal of reducing its carbon footprint by 25 percent by 2020. Woolf anticipates the state will buy up to 55 MW from the Bluewater Wind project, and a combined total of 78.5 MW from three other projects.

MMS Approves Drilling in Chukchi Sea, Subject to Strict Environmental Requirements

Wed, 09 Dec 2009 13:30:16 GMT

On December 7, MMS approved Shell Gulf of Mexico, Inc.'s Exploratory Plan to drill three exploratory, information-gathering wells in the Chukchi Sea off the northwest coast of Alaska. Shell's subsidiary paid $2.1 million for the leases during the Chukchi Sea Oil and Gas Lease Sale 193. This 2008 sale was part of the Bush Administration's 2007-2012 Five-Year OCS Oil and Gas Leasing Program. Under the Exploration Plan, Shell will be allowed to drill up to three exploration wells during the July-October open water drilling season. The closest drill site is over 60 miles offshore Alaska.

DOI Secretary Ken Salazar commented, "our approval of Shell’s plan is conditioned on close monitoring of Shell’s activities to ensure that they are conducted in a safe and environmentally responsible manner." He added, “these wells will allow the Department to develop additional information and to evaluate the feasibility of future development in the Chukchi Sea."

European Nations Plan Offshore Wind Energy Supergrid

Wed, 09 Dec 2009 12:08:15 GMT

Nine European nations have signed the North Seas Countries Offshore Grid Initiative, agreeing to examine the construction of an offshore wind energy grid, dubbed a "Supergrid," in the North and North West Seas. The Supergrid would bring to European market electric power generated by North Sea and Baltic Sea wind farms, and would help the EU achieve its objective of 20% of its power generation from renewable energy sources by the year 2020. The initiative plans on preparing a strategic work plan and agreeing on a memorandum of understanding in 2010, each with input from regional stakeholders. The countries who have signed the initiative are the United Kingdom, Denmark, Germany, France, Belgium, the Netherlands, Luxembourg, Sweden and Ireland. The New York Times provides further coverage.

Report Examines Financing Strategies for Electricity Transmission Offshore Massachusetts

Mon, 07 Dec 2009 12:51:23 GMT

The Massachusetts Renewable Energy Trust commissioned a report prepared by Analysis Group, Inc., that examines a number of financing strategies for transmission systems that will be necessary to transport electricity from offshore energy projects, particularly wind. The report discusses financing options ranging from passing costs of transmission through to end users of the electricity to publicly financing an interstate underwater transmission system.

House Committee on Science and Technology Holds Hearing on Hydrokinetic Energy

Fri, 04 Dec 2009 17:05:55 GMT

The House Committee on Science and Technology, Energy and Environment Subcommittee held a hearing Nov. 3 to discuss the role of the federal government and industry in the development of hydrokinetic energy generation. Chairman Brian Baird (D-WA) noted that studies indicate approximately 10% of U.S. electricity demand could be met by hydrokinetic energy sources. Currently, DOE reports that there is only one commercial hydrokinetic project operating in the U.S. (in the Mississippi River). Congress first authorized funding for significant hydrokinetic technology research in the Energy Independence and Security Act of 2007, but DOE’s hydrokinetic R&D portfolio remains modest. This hearing indicates that interest in these projects is growing. Additionally, key agencies such as DOE, FERC, and DOI are considering forming a working group to speed up the regulatory process for permitting in the near future.

Rhode Island Gov. Carcieri: States Should "Find Common Ground" in Developing Offshore Wind Resources

Thu, 03 Dec 2009 09:20:23 GMT

Speaking to approximately 700 attendees at the American Wind Energy Association's Offshore Wind Power Workshop in Boston, Rhode Island Governor Donald Carcieri (R) highlighted his State's support for developing offshore wind power resources, noting that all states should be working together "to find common ground to foster regional solutions" for promoting wind power development and energy independence. Calling development of offshore wind resources a "smart economic strategy," Gov. Carcieri modified a well-known refrain and said his State's motto now is "spin baby, spin."

Cape Wind, National Grid Sign MOU to Negotiate Long-Term Power Purchase Agreement

Wed, 02 Dec 2009 09:33:10 GMT

Governor Deval Patrick (D-MA) is expected to announce today that Cape Wind and the utility National Grid have signed a memorandum of understanding to negotiate a long-term power purchase agreement under which National Grid would purchase electricity produced by the wind turbines at the Cape Wind project. The Boston Globe reports that this agreement will play an important role in securing financing for the construction of the wind farm.

Massachusetts and DOE Break Ground on Nation's First Large Wind Blade Test Facility

Wed, 02 Dec 2009 09:13:19 GMT

On December 1, 2009, Massachusetts and U.S. officials celebrated the groundbreaking of the nation's first facility capable of testing wind turbine blades up to 90 meters long. It is anticipated that research into longer blades will stimulate the creation of large-scale offshore wind power facilities in the United States. Rep. Bill Delahunt (D-MA) noted that the "test center is critical if we are to effectively compete with European companies that are developing advanced offshore wind energy technology in deeper water, away from shipping lanes and fishing grounds, using larger turbines and blades."

The test center will be operated jointly by the DOE's National Renewable Energy Laboratory and the Massachusetts Clean Energy Center. The $40 million facility is supported by $25 million in funds from the American Recovery and Reinvestment Act.

New York Power Authority Issues RFP for Offshore Wind Power Project in Lakes Erie and/or Ontario

Wed, 02 Dec 2009 08:48:09 GMT

On December 1, the New York Power Authority ("Power Authority") issued a Request for Proposals ("RFP") for the development of offshore wind power projects in New York State waters in Lake Erie and/or Lake Ontario, potentially leading to the first wind power development of any kind in a fresh water body in the U.S. The RFP seeks proposals for development of a utility scale project in the range of 120 MW to 500 MW. The Power Authority stated that it prefers projects that will benefit the New York economy and commence commercial operations in 2015. The due date for an optional notice of intent is March 20, 2010, and the due date for proposals is June 1, 2010. Any winning proposals are expected to be awarded by December 2010. Notably, the Power Authority will purchase the full output of any project under a long-term Power Purchase Agreement, which is scheduled to be negotiated by May 31, 2011.

A copy of the RFP is available here.

Senate Committee Holds Hearing on Environmental Impacts of Offshore Energy

Mon, 23 Nov 2009 11:16:57 GMT

The Senate Committee on Energy and Natural Resources held a hearing on the environmental impacts of offshore energy” on Nov. 19. Representatives from MMS, industry, and experts on ocean resource conservation testified. The hearing was held at the request of Sen. Byron Dorgan (D-ND), who stated that he plans to offer amendments to Senate energy and climate change legislation to help expand offshore oil and natural gas production. Sens. Lisa Murkowski (R-AK) and Mary Landrieu (D-LA) said they plan to offer an amendment that would permit costal states that allow offshore drilling in federal waters to receive 37.5% of royalties.

MMS, Massachusetts Initiate Task Force for Renewable Energy Development on OCS

Mon, 23 Nov 2009 11:04:12 GMT

On November 19 MMS met with representatives from Massachusetts, including state and local legislators and tribal leaders, as part of a new inter-governmental task force for the development of renewable energy on the OCS. During the meeting, task force members discussed goals and objectives for offshore renewable energy development and reviewed a draft task force charter. MMS also explained the renewable energy leasing process and discussed strategies to implement it offshore Massachusetts. MMS is currently pursuing similar task forces with Delaware, Rhode Island, New Jersey, and Virginia as part of its framework for facilitating renewable energy leasing and development on the OCS.

Draft Supplemental EIS Available for TORP Bienville LNG Deepwater Port

Fri, 20 Nov 2009 13:51:41 GMT

The Maritime Administration (MARAD) announced this morning in the Federal Register that the Draft Supplemental Environmental Impact Statement prepared for the TORP Bienville LNG deepwater port project is now available in the Regulations.gov system under Docket No. USCG-2006-24644. MARAD also announced that it has scheduled a public meeting to accept comments on the project in Mobile, Ala., on December 9, 2009.

MMS Releases Guide to Offshore Oil and Gas Leasing

Wed, 18 Nov 2009 09:58:15 GMT

Yesterday MMS released a 10-page guide to offshore oil and gas leasing entitled “Oil and Gas Leasing on the Outer Continental Shelf.”

MMS, Rhode Island Initiate Task Force for Renewable Energy Development on OCS

Wed, 18 Nov 2009 09:50:44 GMT

MMS met with officials from Rhode Island yesterday as part of a new inter-governmental task force for the development of renewable energy on the OCS. The meeting took place as part of MMS’s framework for facilitating renewable energy leasing and development on the OCS. During the meeting, the newly formed state-MMS task force discussed options for initiating the offshore leasing process for renewable energy development activities off Rhode Island as well as other OCS development activities and timelines. MMS is currently pursuing similar task forces with Delaware, Massachusetts, New Jersey and Virginia.

Gulf of Mexico Lease Sale Announced; Shorter Lease Terms Proposed

Mon, 16 Nov 2009 12:00:08 GMT

DOI Secretary Ken Salazar announced an oil and natural gas lease sale will commence March 17, 2010. Nearly 36 million acres will be offered, which the DOI estimates could produce up to 1.3 billion barrels of oil and 5.4 trillion cubic feet of natural gas.

The notice also proposes to reduce the length of lease terms as follows: leases in water depths between 1,300 to 2,600 feet would be reduced to 5 years from the current 8-year term, and leases in water depths between 2,600 and 5,200 feet would be reduced to 7 years from the current 10-year term. Both lease terms could be extended by 3 years if the lessee starts an exploratory well.

American Petroleum Institute Presses DOI on Offshore Policy Development

Thu, 12 Nov 2009 15:25:58 GMT

The President and CEO of the American Petroleum Institute (API), Jack Gerard, sent Secretary of the Interior Ken Salazar a letter on November 11, 2009, urging Salazar to fast-track policies to promote domestic oil and natural gas production. In his letter, Gerard expressed displeasure with the DOI's sluggish development of a programmatic environmental impact statement required to allow seismic testing along the Atlantic offshore region, calling it a "glaring example" of the administration's delay. This testing is necessary for gathering information that the DOI has claimed it will need for successful planning and leasing, and consequently is critical to an Atlantic offshore drilling program.

Maryland, Virginia, and Delaware Governors Sign Offshore Wind MOU

Wed, 11 Nov 2009 10:56:16 GMT

On Tuesday, November 10, 2009, Governor Martin O'Malley of Maryland, Governor Tim Kaine of Virginia, and Governor Jack Markell of Delaware signed a Memorandum of Understanding (MOU) to promote offshore wind power in the Mid-Atlantic region. The MOU creates a formal partnership among the states and contains commitments to work together to promote federal policies, transmission strategies, and other issues to advance offshore wind energy in the Mid-Atlantic region.

Rep. Markey Expresses Support for Cape Wind Project; National Park Service to Decide Tribal Issue

Tue, 10 Nov 2009 17:05:15 GMT

Congressman Edward Markey (D-MA) wrote a letter to U.S. Secretary of the Interior yesterday expressing his support for the Cape Wind project planned for offshore Massachusetts. According to the Boston Globe, environmentalists speculate that Rep. Markey's letter is in response to a decision by the Massachusetts state historic preservation officer who recently ruled that Nantucket Sound is eligible to be listed on the National Register of Historic Places because it may contain remains of ancestors of the Wampanoag tribe. This decision is counter to the previous decision of the U.S. Minerals Management Service. The National Park Service now will have 45 days to determine which decision is accurate. Read more in yesterday's Greenwire [subscription required].

Florida Senate President Announces New Review of Offshore Drilling Issues

Tue, 10 Nov 2009 16:28:37 GMT

Sen. Jeff Atwater (R-Palm Beach), President of the Florida Senate, announced on Monday that the Senate Environmental Preservation and Conservation Committee will conduct a comprehensive review of the implications of oil and gas exploration offshore Florida. The announcement will likely delay final passage of a bill, already passed by the Florida House, that would open up Florida waters to offshore drilling. A press release added that "the analysis will be driven by the need for a dispassionate review, not timelines or schedules." The Tallahassee Democrat provides further coverage.

University of Maine to Test Three Deepwater Wind Concepts

Tue, 10 Nov 2009 16:05:52 GMT

E&E Greenwire [subscription required] reports that the University of Maine will use $8 million in grant money from the U.S. Department of Energy to test three stability systems for deepwater offshore wind turbines. The concepts to be tested will include Statoil's Hywind design, a prototype of which has already been installed offshore Norway. The test turbines will be installed at a site in the Gulf of Maine by 2011.

VA Gubernatorial Candidates Push Energy Policies as Campaign Winds Down

Mon, 02 Nov 2009 15:57:59 GMT

The candidates in the Virginia gubernatorial race are pushing their respective energy platforms as voters head to the polls tomorrow. Republican Bob McDonnell has expressed his support for expanding offshore E&P efforts, particularly the economic benefits of offshore natural gas production, while Democrat Creigh Deeds has focused on alternative energy research at Virginia universities. Read more in the News Virginian (Waynesboro, VA).

Florida Debates Offshore Drilling

Thu, 29 Oct 2009 13:15:14 GMT

Yesterday two panels debated whether the State of Florida should repeal a 1990 law banning oil drilling in Florida offshore waters, which extend 10.3 miles from the coastline in the Atlantic and the Gulf of Mexico, respectively. Earlier this year, a bill to repeal the 1990 ban passed the Florida House, but got stuck in the state Senate. Gannett Florida (the parent company of the Tallahassee Democrat) and Florida State University sponsored the two-hour, televised debate. The supporters of drilling and the repeal of the ban include Florida Energy Associates, a limited liability company that has hired a number of the state's top lobbyists, and David Rancourt, a lobbyist with Southern Strategy Group, a regional lobby shop. One economist from Orlando argued that opening Florida's waters to drilling would create 20,000 jobs and generate $2 billion in state revenues. Opponents of drilling and the repeal effort include the Audubon of Florida, among others. Pinellas County Commissioner Kenneth Welch argued that drilling in near-shore waters would threaten Florida's tourism-driven economy. The Tallahassee Democrat and the Orlando Sentinel provide further coverage.

NOAA Joins in Announcing Governors’ South Atlantic Alliance

Tue, 27 Oct 2009 09:31:32 GMT

Florida, Georgia, South Carolina and North Carolina have recently formed an alliance to increase collaboration on the protection and management of ocean and coastal resources. The Governors’ South Atlantic Alliance, which is supported by NOAA and other federal agencies and regional organizations, plans to work together on four priorities: enhancing and supporting healthy ecosystems; sustaining and enhancing waterfront cultural traditions; improving water quality; and preparing for natural disasters. For more information, click here.

Florida Lawmakers Consider Offshore E&P

Thu, 22 Oct 2009 15:38:51 GMT

Members of the Florida House Select Policy Council on Strategic & Economic Planning heard from several stakeholders at a hearing to discuss exploration and production (E&P) of oil and natural gas in state waters at a hearing convened yesterday. The Associated Press reports that Florida Department of Environmental Protection Secretary Michael Sole suggested that the state stood to gain financially from permitting E&P activities but noted that other uses for offshore lands, including shipping, fishing, military training grounds, or alternative energy projects would likely compete for space along Florida's coastal waters.

MMS Conditionally Approves Shell's Exploration Plan for Beaufort Sea

Tue, 20 Oct 2009 11:15:40 GMT

MMS has approved Shell Offshore, Inc.'s plan to drill two exploration wells in Arctic waters. The exploration wells will be located in the Beaufort Sea, off the Alaskan coast, within OCS leases that Shell purchased in 2005 and 2007. (MMS maintains that these leases, which were included in the 2002-2007 5-year plan, are not affected by the recent D.C. Circuit order which remanded the 2007-2012 plan back to MMS for additional analysis, calling into question certain leases sold under it). Before exploratory drilling takes place, Shell must obtain an Application for Permit to Drill from MMS, among other environmental hurdles.

Federal Judge Denies American Petroleum Institute's Motion to Intervene in Ocean Acidification Case

Wed, 07 Oct 2009 13:11:09 GMT

On Monday, U.S. District Court Judge John C. Coughenour denied American Petroleum Institute's (API) motion to intervene in Center for Biological Diversity v. EPA, a suit in federal court in Washington State attempting to force the EPA to consider ocean acidification when evaluating state water quality under the Clean Water Act. The Clean Water Act requires each state to submit an "impaired waters" list to EPA every two years, and EPA must either approve or disapprove each state's list. The Center for Biological Diversity claims that EPA violated federal law by approving Washington's most recent impaired waters list, which did not include any ocean water areas affected by acidification. API sought to intervene in support of EPA, arguing that because some of its members currently hold licenses to discharge into Washington's coastal waters, it has an interest in the litigation that would not be adequately represented by EPA.

Supreme Court Declines to Hear Offshore Royalties Case

Mon, 05 Oct 2009 14:42:14 GMT

Earlier today the Supreme Court denied the government's petition of certiorari in Dep't. of Interior v. Kerr-McGee Oil and Gas Corp. (Docket 09-54), an appeal of a Fifth Circuit ruling earlier this year that held the Deepwater Royalty Relief Act of 1995 did not authorize price thresholds in deepwater oil and gas leases issued between 1996 and 2000.

[Note: The Supreme Court's docketing sheet indicating denial of certiorari is a large document and may take time to download.]

Mass. Official Asks Federal Task Force to Account for States' Different Approaches to Ocean Management

Fri, 02 Oct 2009 15:16:35 GMT

Testifying before a federal task force charged with developing a comprehensive ocean spatial management plan, Deerin Babb-Brott of the Massachusetts Executive Office of Energy and Environmental Affairs requested that the task face take into account the differing approaches taken by different states. However, Babb-Brott noted that states do have some common interests, including streamlined federal permitting processes for offshore projects and easier access to federal databases to assist in state ocean planning. Find further details in BNA Daily Report for Executives [subscription required].

North Carolina Governor Requests Sec. Salazar Not Foist Offshore Leasing Plan on State Prematurely

Thu, 24 Sep 2009 08:17:13 GMT

Last week North Carolina Gov. Bev Perdue (D) wrote to U.S. Secretary of the Interior Ken Salazar to request assurance that he will not compel premature decisions on offshore oil and natural gas leasing programs in states. Governor Perdue notes that although two proposed lease sales could take place for OCS lands offshore North Carolina, her state has only just begun evaluating offshore energy potential. In addition, Gov. Perdue stated that more information is needed regarding location of lease sales, revenue sharing regime for leases off the Atlantic Coast, and potential for offshore renewable energy projects before her state can develop a firm policy on offshore oil and gas leases.

Senator Offers Amendment to DOI Appropriations Bill to Spur OCS Leasing Program

Wed, 23 Sep 2009 10:43:19 GMT

Early this week, Sen. David Vitter (R - LA) introduced an amendment (free registration) to the DOI appropriations bill for FY2010 that would prohibit the use of funds to delay the five-year OCS Oil and Gas Leasing Program. A vote is expected this week.

Interagency Ocean Policy Task Force Interim Report Released for Comments

Mon, 21 Sep 2009 16:19:46 GMT

On Sept. 17 the White House released the Interagency Ocean Policy Task Force Interim Report for comments. The report is in direct response to President Obama’s request for recommendations that will augment national policy on the management of oceans, coasts and the Great Lakes. The Report proposes a National Policy for the stewardship of oceans and outlines governance modifications that would place the White House Council on Environmental Quality and the Office of Science and Technology Policy in charge of an interagency National Ocean Council charged with implementing the National Ocean Policy. In addition, the Report outlines nine National Priority Objectives, including the implementation of comprehensive coastal and marine spatial planning and management and better coordination of federal, state, tribal, local, and regional management of the oceans.

Along with accepting comments, the Interagency Ocean Policy Task Force has two upcoming public hearings on the issue.

Maryland to Examine Potential for Offshore Wind

Fri, 18 Sep 2009 14:21:37 GMT

This week the Maryland Energy Administration (MEA) announced a new initiative to evaluate potential wind resources located offshore Maryland. According to MEA's press release, the initiative will include studies of the wind resources on Maryland's Atlantic coast as well as the OCS. In addition, MEA issued a Request for Expression of Information and Interest to companies interested in offshore wind projects. The Baltimore Sun provides additional coverage.

Salazar Announces End to Royalty-in-Kind Program

Wed, 16 Sep 2009 16:55:42 GMT

In a very significant development, DOI Secretary Ken Salazar announced on September 16, 2009 that he will be "phasing-in termination of the royalty-in-kind program and an orderly transition over time to a more transparent and accountable royalty collection program." Salazar made the announcement in his testimony before the House Natural Resources Committee, which convened to discuss Committee Chairman Nick Rahall's proposed legislation that would create a new Interior agency to handle onshore and offshore lease sales, inspection, enforcement, and revenue collection, as well as an overhaul of the federal royalty program. Salazar's announcement comes on the heels of an August 2009 GAO report that found MMS was losing millions of dollars in royalty revenue. The royalty-in-kind program also made headlines in June 2008 when reports surfaced of MMS employees accepting gifts from oil and gas companies and abusing drugs and alcohol . In his testimony, Salazar told the House Natural Resources Committee that, "The royalty-in-kind program in my view has been a blemish on the department."

DOE Awards up to $14.6 Million to Support Hydropower

Wed, 16 Sep 2009 09:05:39 GMT

Yesterday, DOE Secretary Chu announced the agency will award up to $14.6 million to facilitate the develeopment of advanced water power technologies. Twenty-two projects were selected to share in the award. The winning projects include new hydropower tranmission, new marine and hydrokinetic energy conversion devices at open water project sites, and studies of life-cycle costs for wave, current, and ocean thermal energy conversion technologies.

GAO Reports MMS Loses Millions in Royalty Revenues

Tue, 15 Sep 2009 10:21:17 GMT

In a August 2009 report released yesterday, the Government Accountability Office (GAO) found that MMS does not provide reasonable assurance that it is accurately and promptly identifying and collecting royalty-in-kind gas imbalances. As a result, GAO estimates that the agency is losing millions of dollars. In its report, the GAO cites several reasons why MMS is forgoing these revenues, including that the agency lacks the information necessary to calculate the full amount of revenues due, and that rather than compelling companies to document production and deliveries in a consistent format, MMS analysts spend time gathering and reformatting data instead of identifying and collecting on imbalances.

Judgment Day: California Terminates Second Offshore Drilling Bill

Mon, 14 Sep 2009 17:12:58 GMT

California’s longstanding legislative ban on offshore drilling remains intact after a bill that would have sanctioned the state’s first new offshore oil lease in 30 years died in committee Friday. The bill, A.B. 1536, was designed to support an application by Plains Exploration and Production Co. to drill in state-owned waters. The bill was essentially a rehash of another failed bill originally developed to garner revenue for the struggling state.

House Committee Chairman Introduces Bill to Create New Interior Agency, Overhaul Federal Royalty Program; Hearing on Royalties Legislation Held

Thu, 10 Sep 2009 09:04:10 GMT

The House Committee on Natural Resources will be considering new legislation aimed at offshore energy programs. Chairman Nick Rahall (D-WV) announced that the committee will hold hearings on September 16 and 17 to consider H.R. 3534, a bill Rahall introduced yesterday, based on draft legislation circulated earlier this year. The Chairman's bill proposes a new Interior agency that would handle onshore and offshore lease sales, inspection, enforcement, and revenue collection, as well as an overhaul of the federal royalty program.

In addition, the Energy and Mineral Resources Subcommittee held a hearing today on H.R. 2227, a bill sponsored by Neil Abercrombie (D-HI), as well as over 30 Republicans and conservative Democrats. The bill also addresses the federal royalty program and proposes that federal revenues be shared with coastal states that have offshore production. Under the bill, 30% of royalty revenues would go to states, and the remaining 70% would go towards an extension of renewable energy tax credits, carbon sequestration, and nuclear energy.

Both bills are available on Thomas.gov.

MMS Solicits Comments for Environmental Assessment for Proposed OCS Lease Sale in Gulf of Mexico

Wed, 09 Sep 2009 11:03:52 GMT

The MMS today published a notice of preparation of an Environmental Assessment (EA) for the proposed oil and gas lease sale (215) in the Western Gulf of Mexico Planning Area (off the Texas and western Louisiana coasts), which is tentatively scheduled for mid-2010. The EA will examine the potential environmental effects of and alternatives to the proposed lease sale, based on any changes and any new relevant information not available at the time the Supplemental Environmental Impact Statement for Western Planning Area Sales 210, 215 and 218 was prepared published September 2008). Comments regarding the Environmental Assessment are due by October 9, 2009.

Ninth Circuit Upholds MMS Decision in Beaufort Sea

Thu, 03 Sep 2009 08:44:56 GMT

The U.S. Court of Appeals for the Ninth Circuit in North Slope Borough v. Minerals Management Service et al., Case No. 08-35180, recently upheld MMS's actions regarding the proposed sale of certain oil and gas leases in the Beaufort Sea. North Slope Borough and the Alaska Eskimo Whaling Commission had challenged the MMS's decision not to prepare a supplemental environmental impact statement for a proposed oil and gas lease sale on a tract of the OCS on the Beaufort Sea. The three-judge appellate panel found that MMS's determination that new environmental assessments were unnecessary was not arbitrary and capricious, that the agency satisfied its duties under the National Environmental Protection Act, and that MMS took the required "hard look" at new information related to the impact of rising oil prices. In addition, the court tip-toed around the climate change issues in the case and found that MMS did not act improperly in determining that the cumulative effects of global warming on polar bears could be mitigated. In effect, this decision supports the lower court's finding that "the public interest in energy development favors proceeding with the scheduled sales" of the leases.

DOI to Pilot First Oil and Gas e-Lease Auction

Wed, 02 Sep 2009 16:28:12 GMT

The Offshore Energy Law Blog notes that on September 9, 2009, DOI's Bureau of Land Management will offer 28,489 acres of land in Colorado in the first ever online auction of its kind by the agency. The internet pilot program was mandated by Congress in the Consolidated Appropriations Act of 2008. DOI plans to utilize various security measures to ensure that activists do not disrupt the public auction. For example, bidders will preregister on a website created specifically for the lease sale and will give their credit card number, which will be verified. Although this is related to onshore E&P activities and beyond the scope of our typical coverage, we are interested to see whether the online auction is successful and whether in the future MMS may utilize such a process for future auctions of offshore leases. Stay tuned for an update after September 9.

Virginia, South Carolina Considering Offshore Natural Gas Exploration

Tue, 01 Sep 2009 12:20:38 GMT

Natural Gas Week provides analysis of the ongoing debates in Virginia and South Carolina over offshore natural gas exploration in federal waters. In Virginia, the debate is focused on the looming gubernatorial election where both the Democratic and Republican candidates support offshore drilling. In South Carolina, policymakers are awaiting a report on the feasibility of drilling in state waters from the South Carolina Natural Gas Exploration Study Committee . Although the report has not issued yet, based on media and other reports it appears that the conclusion is going to be that natural gas E&P offshore South Carolina should go forward. Interestingly, Virginia but not South Carolina would be included in legislation introduced earlier this year in the U.S. House seeking to permanently ban offshore drilling in the Mid- and North Atlantic OCS planning areas. [Subscription required]

Energy Group Lobbying for Oil Production in Florida's State Waters

Tue, 01 Sep 2009 10:09:10 GMT

The St. Petersburg Times reports that a group of independent oil producers called Florida Energy Associates has engaged in significant lobbying efforts in the Florida state legislature. The newspaper reports that the group has spent more than $230,000 to support a bill that would permit drilling in Florida state waters off the Gulf coast. That bill passed the state House of Representatives in April 2009 but not the state Senate.

DOE Awards up to $12 Million for Marine and Hydrokinetic Technology Research

Mon, 31 Aug 2009 09:40:54 GMT

The DOE announced last week the selection of six projects for federal funding, each related to research regarding water power technologies, including both offshore marine and hydrokinetic energy. The recipients for marine and hydrokinetic energy project funding are the National Renewable Energy Laboratory (Golden, CO), the Sandia National Laboratories (Albuquerque, NM) and the Pacific Northwest National Laboratory (Sequim, WA), each of which will be partnering with universities, other laboratories, and in some cases private industry.

First Federally Licensed Hydrokinetic Turbine Begins Commercial Operations

Thu, 27 Aug 2009 13:22:44 GMT

Although developments involving energy projects on inland waterways is not the usual focus of the Offshore Energy Law Blog, it is worth mentioning that the first federally licensed hydrokinetic power project has begun commercial operations. The 100-kW hydrokinetic turbine, manufactured by Hydro Green Energy, LLC, began commercial power generation earlier this month in the Mississippi River near Hastings, MN. The company’s press release offers additional coverage.

Report: Global Offshore Wind Capacity Could Reach 55 GW by 2020

Tue, 25 Aug 2009 13:38:52 GMT

A report released this week entitled "International Offshore Wind Market to 2020" predicts electricity from the world's offshore wind projects could reach up to 55 GW by 2020. The report, produced by ODS-Petrodata, also predicts that $61 billion could be invested in the sector by 2020. Power Engineering International provides additional news coverage, and the report is available for purchase on the ODS-Petrodata website.

Waves of Change: White House Task Force Begins Work on New Ocean Policy and Marine Planning Framework

Mon, 24 Aug 2009 13:42:52 GMT

The White House-created Interagency Ocean Policy Task Force has begun work on its new ocean policy recommendation to President Obama that would unify the 20 federal agencies and over 140 distinct laws that address aspects of ocean policy. After a series of listening tours around the country that began last week, the task force is slated to develop recommendations that will focus on protecting the oceans and the Great Lakes, as well as sustaining economic activity that depends on them. The group will then have three months to lay the groundwork for a new marine planning system, which could create a new system of ocean zoning to allocate resources across varying uses from recreation to shipping to renewable energy. NOAA Administrator Jane Lubchenco told Greenwire (carried via the New York Times [free registration required]) that the task force is unlikely to have the specifics of a marine spatial plan worked out by the end of this year, but she expects that the group will have a more detailed road map developed by that time.

MMS Generates $115 Million from Offshore Lease Sale

Fri, 21 Aug 2009 14:38:53 GMT

The MMS's auction of federal oil and natural gas leases in the Western Gulf of Mexico on Aug. 19 pulled in $115,466,321 in bidding. MMS received 189 total bids from 27 companies on 162 federal Outer Continental Shelf tracts. Each bid will now be evaluated to ensure fair market value before the leases are awarded.

FERC, Maine Announce MOU to Coordinate Review of Hydrokinetic Projects

Wed, 19 Aug 2009 15:36:10 GMT

Today FERC and the state of Maine announced that they have signed a Memorandum of Understanding to coordinate review processes and schedules for hydrokinetic energy projects proposed for offshore Maine. This agreement is the first of its kind on the U.S. East Coast and is similar to previous agreements between FERC and the states of Oregon and Washington.

Obama to Nominate Cynthia Quarterman to Lead PHMSA

Tue, 18 Aug 2009 10:08:57 GMT

President Obama plans to nominate Cynthia Quarterman to lead the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA). Quarterman, a member of Obama's DOE Transition Team, previously served as MMS Director during the Clinton Administration. She is currently a partner at a law firm in Washington and has also worked as an engineer for IBM. Quarterman holds a law degree from Columbia University and a degree in Industrial Engineering from Northwestern University.

Ocean Renewable Power Co. to Seek Authorization for Hydrokinetic Energy Project Offshore Maine

Mon, 17 Aug 2009 11:14:29 GMT

Today's Federal Register carries an announcement that Ocean Renewable Power Company, LLC has filed a Notice of Intent to file an application for an original license for a hydrokinetic pilot project proposed for state waters offshore Eastport, Maine. Phase one of the project will include the installation of one 1-megawatt hydrokinetic device located in Cobscook Bay. Phase two of the project includes installing four additional 1-megawatt hydrokinetic devices in Western Passage. The Notice of Intent and additional pre-filing materials were filed July 24, 2009, and comments on the pre-filing materials are due by September 8, 2009.

DOE Launches New Hydrodynamic Testing Facilities Database

Tue, 11 Aug 2009 16:02:00 GMT

Today DOE unveiled a new online database of hydrodynamic test facilities in the US to allow researchers to more easily locate test-phase hydrodynamic and hydrokinetic energy projects. You can access the database here.

Energy, Environmental Interests Present Challenges for Mass. Ocean Resource Planners

Tue, 11 Aug 2009 13:31:30 GMT

National Public Radio provides coverage of the effects of Massachusetts’s ocean resource zoning efforts, including effects on the existing LNG deepwater ports located offshore Boston.

US Extended Continental Shelf Task Force Joins Canadian Agencies to Survey Arctic Continental Shelf

Tue, 11 Aug 2009 09:02:22 GMT

The US Extended Continental Shelf Task Force, comprised of several agencies including the NOAA, State Department, Department of Energy, and Environmental Protection Agency, is partnering with Canadian agencies to survey the Arctic continental shelf on a 41-day mission that began August 7. The goal of the project is to define the outer limits of the U.S. and Canadian continental shelf, in part to delineate control over mineral resources on the shelf and the rights to construct structures such as wind farm and pipelines.

MMS Determines Shell Exploration Plan for Beaufort Sea Complete

Tue, 11 Aug 2009 07:45:13 GMT

MMS Determines Shell Exploration Plan for Beaufort Sea Complete

FERC Chairman Wellinghoff Testifies Before Senate EPW Committee on Offshore Hydrokinetic Energy

Thu, 06 Aug 2009 14:44:03 GMT

Today, FERC Chairman Jon Wellinghoff testified before the Senate Committee on Environment and Public Works (EPW) to address climate change legislation as it pertains to the energy sector. Chairman Wellinghoff used the opportunity to express FERC's support for the development of hydrokinetic energy technologies. As evidence, the Chairman referenced FERC's policy of allowing some hydrokinetic technologies to be tested without a license and others to receive expedited licenses under a "pilot license" process. In addition, the Chairman pointed to FERC's Memorandum of Understanding with MMS clarifying jurisdiction over hydrokinetic projects on the OCS, as well as independent agreements on project development with Washington and Oregon states, as measures FERC has adopted to advance hydrokinetic projects.

MMS Releases Guidelines for Renewable Energy Framework

Thu, 06 Aug 2009 14:23:49 GMT

This week MMS released a set of guidelines designed to clarify the Renewable Energy and Alternative Use framework (REAU) issued by the agency in April of this year. This issuance contains the first six of eleven planned sections of guidelines and provides detailed information regarding the history and goals of REAU, eligibility requirements for participants in the program, OCS maps and descriptions, renewable energy lease and grant conveyance processes, program administration details, and payments.

Sen. Begich Introduces Package of Arctic Legislation

Tue, 04 Aug 2009 11:47:37 GMT

Yesterday, freshman Alaska Senator Mark Begich (D) called for ratification of the Law of the Sea Treaty and introduced a package of seven bills addressing a variety of Arctic policy issues. The energy and shipping related measures in the package include:

Arctic OCS Revenue Sharing Act (S. 1560) - gives Alaska natives the same 37.5% share of royalties from offshore oil and gas production in federal waters that Gulf of Mexico states currently receive. This is similar to the measure introduced by senior Alaska Sen. Lisa Murkowski (R) last week.
Arctic Climate Change Adaptation Act (S. 1566) - provides funding for Alaskans to adapt to the impacts of climate change, including clean energy development.
Arctic Ambassador Act (S. 1563) - creates a new U.S. Ambassador to the Arctic Council.
Arctic Marine Shipping Assessment Implementation Act (S. 1564) - provides funding to replace the U.S. icebreaker fleet and build new forward operating Coast Guard air bases, as well as other measures to ensure safe and reliable maritime transportation in the Arctic region.
Arctic Oil Spill Research and Recovery Act (S. 1561) - calls for more research to improve oil spill prevention and response in the Arctic.
Arctic Science, Coordination and Integration Act (S. 1562) - requires a new study to create a comprehensive strategy to coordinate Arctic research and make recommendations to Congress.

The bills are available through Thomas. You can view Sen. Begich's press release here.

FERC & MMS Issue Joint Guidance on Regulation of Hydrokinetic Energy Projects on the OCS

Tue, 04 Aug 2009 10:43:12 GMT

Today, FERC and MMS issued joint Guidance to further clarify their respective roles in the application and development of hydrokinetic energy projects on the OCS. MMS has jurisdiction to issue leases to these projects and FERC has jurisdiction to issue licenses for these same projects. This Guidance is part of an ongoing effort to clarify each agency's authority and simplify the process for applicants and project developers. This process began in April when DOI and FERC issued a Memorandum of Understanding delineating each agency's responsibilities.

The Guidance follows a "frequently asked questions" (FAQs) format designed to facilitate the process of developing hydrokinetic projects on the OCS. The FAQs are divided into categories, including: general requirements and definitions; provisions for obtaining a lease and license; municipalities and competition; lease and license terms; financial assurance requirements; fee structures; hybrid project considerations; straddle projects; and contact information. Each FAQ provides step-by-step instructions explaining which agency's regulations should be followed throughout the project development process.

Treasury Announces Opening of Application Process for Renewable Energy Grant Program

Fri, 31 Jul 2009 14:21:37 GMT

The U.S. Department of the Treasury announced this afternoon that it is now accepting applications for the renewable energy grant program. That grant program provides a cash grant for the development of certain renewable energy projects, including offshore wind projects, equal to 30% (or 10% for certain non-wind energy technologies) of the eligible costs of the project. The Treasury grant is available in lieu of the Internal Revenue Code (IRC) § 45 production tax credit and the IRC § 48 investment tax credit. Applications must be filed electronically. Find further information on Treasury's guidance regarding this program here.

Sen. Murkowski Urges Interior to Complete Court-Mandated Review of Offshore Leasing Program

Fri, 31 Jul 2009 10:53:28 GMT

Sen. Murkowski (R-AK), the ranking member of the Senate Energy and Natural Resources Committee, released a statement yesterday urging the Interior Department to complete its environmental analysis of the 5-year offshore leasing program (2007-2012) as quickly as possible. The D.C. Circuit ordered this analysis in April when it vacated and remanded the plan, and this week clarified that its order applied only to leases off Alaska.

Salazar Weighs in on DC Circuit's 2007-2012 OCS Oil and Gas Leasing Program Court Ruling

Fri, 31 Jul 2009 09:01:51 GMT

Secretary of the Interior Ken Salazar expressed approval of the U.S. Court of Appeals for the District of Columbia Circuit's clarification of its April decision vacating the 2007-2012 Outer Continental Shelf oil and natural gas leasing program. Salazar commented, "President Obama has made clear that a comprehensive energy plan that reduces America’s dependence on foreign oil must include domestic production and the Court’s ruling allows us to move forward in a balanced way. With respect to the Arctic Ocean and Alaska, we will continue to work expeditiously to address the environmental issues identified by the Court in the existing 2007-2012 5-year plan.”

Federal District Court Rules Against Transocean in Offshore Drilling Technology Case

Thu, 30 Jul 2009 17:25:47 GMT

In a decision handed down yesterday, Judge Kenneth Hoyt of the U.S. District Court for the Southern District of Texas has ruled in favor of defendant Maersk Contractors USA Inc. in patent litigation with Transocean, Inc., finding that dual-activity offshore drilling technology patented by Transocean is the result of years of progress in the industry and not, as the company claims, its own invention. The loss marks a departure from a string a victories, including jury awards and favorable settlements, that Transocean has amassed pursuing infringement claims over its drilling patents.

Transocean claimed that since the mid-1990s, its technology has allowed oil rigs to drill wells faster and more efficiently by combining all the prior time-saving methods into one design. Maersk contested the claims arguing that Transocean's advances did not improve upon methods that had been patented by four separate inventors in the U.S. and U.K. between 1980 and the months before Transocean filed its first patent application. Transocean has stated that it plans to appeal the decision.

Until this ruling, Transocean had been victorious in its previous protection of the "dual-activity" patent. In August 2006, a jury found that GSF had willfully infringed the patents and awarded Transocean $3.6 million. Transocean filed a similar suit over the same patents against rival Noble Corp. in February 2007. The parties settled in July 2007 and signed a licensing agreement in which Noble consented to pay an undisclosed royalty to continue to use the technology. Also in July 2007, Pride International, Inc. agreed to pay Transocean $10 million to use one dual activity rig, plus $15 million for each subsequent rig and a 5% royalty on revenue generated in patented countries.

While Transocean has advised that Judge Hoyt's ruling will not have an impact on the current licensing agreements, it surely will affect Transocean's ability to continue licensing the technology to the Gulf Coast exploration and production industry.

D.C. Circuit Limits Scope of Decision Vacating Interior's 2007-2012 Leasing Program

Wed, 29 Jul 2009 16:18:41 GMT

The U.S. Court of Appeals for the District of Columbia yesterday issued an order which advised the Interior Department that the court's April decision -- which vacated Interior's 5-year leasing program (2007-2012) and remanded the matter back to Interior for reconsideration -- applies only to lease offerings in the Beaufort, Bering, and Chukchi Seas off the Alaska coast. This clarification eases fears held by Interior and others, including Sen. Mary Landrieu (D-LA), that the April decision would derail the upcoming August 19 Gulf of Mexico lease sale, as well as cloud the continuing validity of some 1,800 previously awarded Gulf of Mexico leases.

Murkowski, Landrieu Introduce Revenue Sharing and Eastern Gulf E&P Bill

Tue, 28 Jul 2009 11:12:07 GMT

In a press release issued yesterday, Senator Lisa Murkowski (R-AK) announced the introduction of the Domestic Energy Security Act (S. 1517), which would authorize revenue sharing for any coastal state that allows new oil and gas exploration. Specifically, the legislation would grant coastal states a 37.5% share in revenues generated from oil and natural gas production in federal waters off their shores. In announcing her support as a co-sponsor of the legislation, Senator Mary Landrieu (D-LA) stated, “As our nation weans itself off foreign oil and transitions to the next generation of energy, we need OCS production in U.S. waters to get us there. Coastal states will play a key role in building that ‘energy bridge’ if Congress can guarantee them their fair share of revenue and conservation royalties."

The bill also would permit leasing in the eastern Gulf of Mexico to within 45 miles of Florida's coast and in the Destin Dome area, which reaches to within 10 miles of the Florida coast near the panhandle.

In response, Sen. Bill Nelson (D-Fla.) denounced the new bill, calling it an oil industry bailout. Nelson said, "it's Alaska and Louisiana's senators' plan to boost their own revenues in tough economic times. But even in the toughest of times, there are some things states shouldn't sell out, like Florida's economy and environment.''

California Assembly Terminates Bill to Allow Limited New Offshore Drilling

Tue, 28 Jul 2009 10:26:28 GMT

Last Friday, July 24, the California State Assembly voted 43-30 against new offshore drilling in its state waters. The drilling provision, which would have granted Plains Exploration & Production Co. the right to drill off of an existing platform in federal waters into state waters and would have brought approximately $100 million annually for 15 years in oil royalty payments to the state, narrowly passed the state Senate earlier in the day. The bill lost traction in the lower house, where the pleas of environmental groups apparently swayed the vote. If the bill had passed, it would have authorized the first drilling in the waters offshore California since 1969.

Wind Farm Planned for Offshore Texas

Wed, 22 Jul 2009 13:14:38 GMT

The Monitor (McAllen, Texas) reports that the Texas General Land Office has reached an agreement with Baryonyx Corp. that will allow the company to lease a parcel of land offshore Texas to build a wind farm. The wind farm will be located approximately 10 miles off the coast of South Padre Island and will provide electricity for up to 600,000 homes.

Project Developers, Federal Officials Examine Pros and Cons of Deepwater Offshore Wind Projects

Wed, 22 Jul 2009 13:07:38 GMT

Monday's Boston Globe offers an analysis of the pros and cons associated with deepwater offshore wind projects. According to the piece, project developers hope to design and install wind turbines approximately 20 miles offshore so that the turbines will not be visible from shore, possibly avoiding the local opposition faced by the Cape Wind project.

UK Wind Farm Licenses Extended

Wed, 22 Jul 2009 13:01:04 GMT

In an important development for offshore wind across the pond, license extension requests were recently granted for operators of UK offshore wind farms. The extensions will lengthen leases to 50 years from 22-year or 40-year leases. The additional time will allow wind farm operators to invest in replacing aging turbines and update technology. This development comes on the heels of Scotland’s passage of a Renewable Action Plan to obtain 20% of total energy needs from renewable sources by 2020. Read more in World Gas Intelligence. [Subscription required]

California May Allow Increased Offshore E&P to Plug Budget Gap

Wed, 22 Jul 2009 12:50:26 GMT

The San Francisco Chronicle reports that the state of California may allow increased exploration and production of oil and natural in its state waters as a means to raise revenue for the state and close its $26.3 billion budget gap. The proposal would allow Plains Exploration & Production Co. to drill horizontally from its existing production platforms situated on federal lands into state lands. State Assemblyman Pedro Nava (D) expressed opposition to the proposal in a press release.

North Carolina Advisory Subcommittee to Examine Offshore E&P, Renewable Energy Later This Month

Wed, 22 Jul 2009 12:41:14 GMT

Demonstrating the increasing attention that is being paid by certain East Coast states to offshore energy resources, the Advisory Subcommittee on Offshore Energy Exploration, a legislative research body whose members were appointed by the leadership in the North Carolina General Assembly, will hold a public hearing at the University of North Carolina Wilmington on July 28, 2009. The members of the subcommittee will consider the potential impacts on North Carolina of oil and gas exploration and production proposed for federal waters offshore North Carolina, as well as energy generated from wind, waves, ocean currents, the sun and hydrogen production. The Lumina News (Wrightsville Beach, NC) provides further details.

MMS Announces OCS Oil and Gas Lease Sale 210

Fri, 17 Jul 2009 12:27:15 GMT

MMS announced yesterday that it will hold OCS oil and gas lease sale 210 on August 19, 2009, in New Orleans, LA. The 3,400 blocks available for mineral lease include approximately 18 million acres of OCS lands in the Western Gulf of Mexico Planning Area offshore Texas. Find further information in the Federal Register or the MMS announcement.

DOE Announces $14 Million in Stimulus Grants to 28 Wind Projects

Fri, 17 Jul 2009 10:06:44 GMT

The DOE announced that $13.8 million -- $12.8 million of which is from American Recovery and Reinvestment Act ("stimulus") appropriations -- has been awarded to 28 wind projects. These wind projects are focused on wind turbine research and transmission analysis. DOE also released its 2008 Wind Technologies Market Report, which found that the U.S leads the world in annual capacity growth and that soaring demand for wind power has spurred increased wind turbine manufacturing activity. Said Secretary Chu: "To help meet these [current economic] challenges, the Recovery Act invests significant dollars to put people to work to spur a revolution in clean energy technologies ... Wind energy will be a critical factor in achieving the President's goals for clean energy, while supporting new jobs."

Birnbaum Sworn in as MMS Director

Thu, 16 Jul 2009 15:19:33 GMT

Today, July 15, 2009, S. Elizabeth Birnbaum assumed her duties as Director of the MMS. Birnbaum previously served as Staff Director for the Committee on House and Administration and the Department of the Interior's Associate Solicitor for Minerals Resources. From 2001-2007, she was Vice President for Government Affairs and General Counsel for American Rivers, where she directed advocacy programs for the nation’s leading river conservation organization. Birnbaum has been an officer and member of numerous boards and commissions, including the National Capital Section of the American Water Resources Association; Arlington County Environment and Energy Conservation Commission; and the Environment, Energy and Natural Resources Section of the District of Columbia Bar.

Department of Justice Seeks Supreme Court Review of Kerr-McGee Royalties Decision

Thu, 16 Jul 2009 15:16:17 GMT

On Monday the Department of Justice filed a Petition for Writ of Certiorari with the Supreme Court in Department of the Interior v. Kerr-McGee Oil and Gas Corp., seeking to challenge a Fifth Circuit ruling earlier this year that held that the Deepwater Royalty Relief Act of 1995 did not authorize price thresholds in deepwater oil and gas leases issued between 1996 and 2000. Respondents have until August 12 to reply. View the Supreme Court docket here.

U.S. Department of Treasury Issues Guidance on Renewable Energy Grant Program

Tue, 14 Jul 2009 15:10:22 GMT

The U.S. Department of the Treasury has issued much-anticipated guidance for Treasury's renewable energy grant program. That grant program provides a cash grant for the development of certain renewable energy projects, including offshore wind projects, equal to 30% (or 10% for certain non-wind energy technologies) of the eligible costs of the project. The Treasury grant is available in lieu of the Internal Revenue Code (IRC) § 45 production tax credit and the IRC § 48 investment tax credit. Find further information on Treasury's guidance here.

New England Energy Researchers to Examine Waters Offshore Mass. for Renewable Energy Potential

Mon, 13 Jul 2009 16:45:07 GMT

The New England Marine Renewable Energy Center, located at the University of Massachusetts - Dartmouth, has received nearly $1 million to fund its research on renewable energy resources off the coast of Massachusetts. Find additional details in the Boston Globe.

Offshore Wind Projects Face Challenging Economic Climate

Mon, 13 Jul 2009 16:34:48 GMT

This past weekend the Washington Post examined several proposed offshore wind projects, including Bluewater Wind and Cape Wind, in the context of the current global economic climate. The piece notes that despite encouragement from Washington, D.C., policymakers, the projects face difficult financial and regulatory challenges.

MARAD/USCG Announce Availability of FEIS for Port Dolphin LNG Proposed Offshore Florida

Mon, 13 Jul 2009 16:07:32 GMT

On July 13, 2009, MARAD and the U.S Coast Guard published notice in the Federal Register of the availability of the Final Environmental Impact Statement (FEIS) for the Port Dolphin LNG Deepwater Port license application. The project proposes a deepwater port in the St. Petersburg block of the Outer Continental Shelf. The port would consist of a permanently moored unloading buoy system designed to moor a specialized type of LNG vessel called Shuttle and Regasification Vessels, which have capacities of 145,000 and 217,000 cubic meters. The unloading buoys would connect to a pipeline onshore in Port Manatee, Florida, which would connect with the Gulfstream Natural Gas System and Tampa Electric Company. The project will require approval from FERC for the onshore pipelines, potential permits from the Army Corps of Engineers for the pipeline and structures, and permits from the EPA under the Clean Air Act and the Clean Water Act.

Public hearing will take place in Palmetto, Florida on July 28, 2009. Comments on the FEIS or the application are due by August 23, 2009. As explained in the notice, the FEIS should be accessible soon in Docket No. USCG-2006-28532 on www.regulations.gov.

Senate Committee Turns the Pike for America's Marine Highways

Fri, 10 Jul 2009 12:34:05 GMT

On July 8, 2009, the Senate Commerce, Science, and Transportation Committee approved the Maritime Administration Authorization Act of 2010, which among other things, would create a grant program for "America's Marine Highways" as an extension of the surface transportation system. The provision, authored by Sen. Frank Lautenberg (D-NJ), would encourage more freight to be carried by barges and ships by sea and by inland waterway in an effort to reduce roadway congestion. The bill would also establish a Port Infrastructure Development Program for local jurisdictions and port facilities to improve the capabilities of their port facilities. Senator Lautenberg's press release can be found here. Additional commentary can be found in the New Jersey Politicker blog.

EPA to Announce New Rules to Reduce Vessel Emissions

Mon, 06 Jul 2009 14:38:51 GMT

On July 1, the EPA released a pre-publication rule that would reduce emissions from diesel engines on oceangoing vessels by banning the production and sale of marine fuel oil above 1,000 ppm sulfur, as well as introducing new NOx standards for Category 3 marine diesel engines. Once the proposal is published in the Federal Register (expected before July 24), there will be 30 days to comment.

NMFS Issues Incidental Taking of Marine Mammals Authorization for Neptune LNG

Mon, 06 Jul 2009 14:34:36 GMT

The National Marine Fisheries Service (NMFS) has issued an incidental harassment of marine mammals authorization to Neptune LNG, LLC for one year until June 30, 2010. The announcement is available in the Federal Register.

Massachusetts "Blazing a Trail," Issues Comprehensive Draft Ocean Management Plan

Wed, 01 Jul 2009 14:59:02 GMT

On June 30, 2009, the Massachusetts Executive Office of Energy and Environmental Affairs issued a comprehensive draft ocean management plan that is intended to "serve as the basis for the protection and sustainable use of our ocean and coastal waters." Massachusetts becomes the first state in the nation to release such a comprehensive plan, which is the result of more than a year of consultations, public meetings and scientific and policy analysis. The final plan will be issued by December 31, 2009, after a six-month public review and comment period. The draft plan is now available on the EOEEA website.

MMS Determines No Environmental Impact Statement Required for 5 Offshore Leases off New Jersey, Delaware Coasts

Wed, 01 Jul 2009 14:54:31 GMT

The MMS published a formal notice regarding the leases of five OCS blocks off the coasts of New Jersey and Delaware that were announced last week. The five OCS blocks -- awarded to four companies -- are being leased for the purpose of gathering data about offshore wind potential in those areas.

MMS also released environmental assessments, which found the leases would have no significant effects on the human environment. Therefore, MMS prepared a Finding of No Significant Impact (FONSI) and concluded that no formal Environmental Impact Statement will be required for issuance of these leases.

Sec. Salazar Names New Director of MMS

Fri, 26 Jun 2009 14:33:20 GMT

Yesterday Secretary of the Interior Ken Salazar announced that he has appointed Liz Birnbaum to Director of MMS. Birnbaum previously served as an associate solicitor for mineral rights at DOI.

Interior Issues 5 Exploratory Leases for Offshore Wind Energy Development

Tue, 23 Jun 2009 12:48:19 GMT

Interior Secretary Ken Salazar announced the issuance of five exploratory leases for the installation of meteorological towers on the OCS off of the New Jersey and Delaware coasts. The leases were issued to (i) Bluewater Wind New Jersey Energy, LLC; (ii) Fisherman's Energy of New Jersey, LLC; (iii) Bluewater Wind Delaware, LLC; and (iv) Deepwater Wind, LLC (which received two leases). The leases authorize data-gathering activities and allow for the construction of meteorological towers on the OCS from six to 18 miles offshore to collect site-specific data. The data collected under these leases will be shared with MMS and be used to inform and support future commercial offshore wind projects, although the leases do not give the awardees rights to commercial development of those sites. These five exploratory leases were awarded pursuant to Interior's Interim Policy, established for the purpose of authorizing the installation of offshore data collection and technology testing facilities. Today's Greenwire provides additional coverage [subscription required].

Senate Committee Votes to End Mandatory Royalty Relief for Offshore Oil and Gas Production

Wed, 17 Jun 2009 10:29:44 GMT

In a close vote today, the Senate Committee on Energy and Natural Resources added an amendment to the proposed energy bill that would repeal mandatory royalty relief for oil and gas leases in deep waters off the coasts of the U.S. The amendment gives the Secretary of the Interior discretion to grant or deny royalty relief below certain price thresholds. As has been the case throughout much of the debate on offshore oil and gas drilling, Democrats argued that incentives for oil and gas companies are unnecessary, while Republicans contended that the U.S. needs to increase domestic supplies to end dependence on foreign oil. See yesterday's New York Times for more details.

GreenWave Energy Solutions Submits Proposed Regulatory Schedule for Offshore Wave Power Project

Wed, 17 Jun 2009 09:20:09 GMT

On June 15, GreenWave Energy Solutions, LLC ("GreenWave") filed its proposed schedule of activities relating to its development of the San Luis Obispo Wave Park, a 100MW wave park off the California coast. FERC granted GreenWave a preliminary permit for the project in May, amending the boundaries of the project to bring the entire project within state waters, and thus allowing FERC to issue the preliminary permit under its recent MOU with the Minerals Management Service. GreenWave's proposed regulatory schedule includes: (i) the filing of its First Six Month Report on Oct. 31, 2009; (ii) the filing of a Notice of Intent and Traditional or Alternative Licensing Process Request on April 30, 2010; and (iii) the filing of its License Application on April 30, 2012.

President Obama Orders Development of National Ocean Policy

Wed, 17 Jun 2009 09:16:27 GMT

Last Friday, President Barack Obama issued a memorandum ordering the formation of an Interagency Ocean Policy Task Force, headed by the Chair of the Council on Environmental Quality. The task force will develop recommendations for a national policy on oceans, coasts, and the Great Lakes, as well as develop a "recommended framework for effective coastal and marine spatial planning" within 180 days of the memo.

Senate Committee Votes to Include Amendment in Energy Legislation to Allow Drilling off Florida Coast, Rejects Revenue Sharing Proposal

Tue, 09 Jun 2009 16:31:26 GMT

Today the Senate Energy and Natural Resources Committee approved Senator Byron Dorgan's (D-ND) amendment to the broad energy bill the Committee is currently marking up. Dorgan's amendment proposes opening oil and gas leasing in the eastern Gulf of Mexico up to 45 miles from Florida's coast. The passage of Dorgan's proposal would end a drilling ban across most of the eastern Gulf waters, including in an area known as the Destin Dome which reaches within 10 miles of the Florida coast, and is believed to hold as much as 1 trillion cubic feet of natural gas. Senator Bill Nelson (D-FL) and others voiced strong opposition to the plan, arguing that it would interfere with military training. Further, Senator Nelson threatened to filibuster if necessary to block the effort.

Separately, the Committee rejected Senator Mary Landrieu's (D-LA) revenue sharing proposal, which would have distributed 37.5% of the revenues collected from oil and gas development in the eastern Gulf to nearby states, directed 50% of the revenues toward federal deficit reduction, and 12.5% to the Land and Water Conservation Fund. In particular, Landrieu's plan would have extended a 2006 Gulf leasing law that established a revenue sharing program for several Gulf Coast states to Alaska and other states that may have offshore leasing in the future. Find further information in E&E's Greenwire. [Subscription required]

Maine Officials Seek Stimulus Funding for Deepwater Wind Research Center

Tue, 09 Jun 2009 16:21:02 GMT

Maine Governor John Baldacci (D), U.S. Senators Olympia Snowe (R) and Susan Collins (R), and U.S. Reps. Mike Michaud (D) and Chellie Pingree (D) met with U.S. Secretary of Energy Steven Chu last week to seek funding for a National Deepwater Offshore Wind Research Center to be operated by the University of Maine. According to a media release, the Maine officials asked for $20 million of stimulus package funding for the first year of this project and sought support from Sec. Chu for the program over the next four years.

Five Mid-Atlantic States Pledge Coordination on Offshore Policy

Tue, 09 Jun 2009 14:47:34 GMT

The governors of Delaware, Maryland, New Jersey, New York, and Virginia signed an agreement last week pledging to coordinate their respective states' coastal and ocean policies. The agreement highlights a number of policy areas as priorities for coordination, including renewable energy projects on offshore lands.

South Carolina Receives Federal Money to Promote Offshore Wind Energy

Fri, 05 Jun 2009 15:36:56 GMT

The South Carolina Energy Office received $109,000 from the federal government to educate the public on wind energy potential and advocate for its development off the South Carolina and Georgia coasts. In May, the DOE selected 53 new wind energy projects for federal funding, including this outreach effort, which will be led by the South Carolina Energy Office in collaboration with the Southern Alliance for Clean Energy, the Georgia Environmental Facilities Authority, and various utilities.

DOI Encouraged to Consider Long-Term Impact of Renewable Energy Projects

Fri, 05 Jun 2009 15:08:42 GMT

In a June 3 hearing the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies urged DOI Secretary Ken Salazar to consider the potential negative environmental impacts of renewable projects on surrounding habitats both on- and offshore. Subcommittee Chairman Sen. Dianne Feinstein (D-CA) stated the infrastructure required for renewable projects could make a "huge mark" on areas designated for conservation. Sen. Feinstein asked the Secretary to mitigate those consequences through the DOI permitting process. Ranking Committee Republican Sen. Lamar Alexander (R-TN) suggested that renewable energy developers be required to post bonds that could later be used to remove equipment and restore the natural habitat to its original condition once the projects are no longer viable. Sec. Salazar was receptive to the bond idea, and agreed "what we need to do is make sure that as we are permitting renewable energy projects we are doing it cradle to grave." A webcast of the hearing can be viewed here.

Offshore Energy Law Blog notes that MMS' Final Rule for renewable energy projects on the OCS includes a bonding and decommissioning requirement for such facilities.

FERC and Washington State Sign MOU for Hydrokinetic Projects in State Waters

Fri, 05 Jun 2009 14:59:04 GMT

On June 4, 2009, FERC and the State of Washington signed a Memorandum of Understanding with regard to review of renewable energy projects in Washington State waters that employ hydrokinetic technologies. In FERC's Press Release, the Commission explains the specific details concerning how FERC and Washington will coordinate potential license application review, environmental reviews of proposed projects, and siting plans. The Press Release can be viewed here.

Citing State Budget Deficit, CA Governor Seeks to Expand Existing Offshore Lease

Wed, 03 Jun 2009 12:42:28 GMT

Governor Arnold Schwarzenegger (R) is expected to press the California state legislature to pass a bill that would overturn a State Lands Commission decision denying an application by Plains Exploration & Production Co. to expand an existing offshore lease. State officials say the Governor's action is motivated by a $23 billion deficit in the California state budget and would not run afoul of a 1994 state ban on new offshore drilling. However, the move drew a sharp response from the State Lands Commission, which accused the Governor of making a "naked power grab." Reuters has more details.

Chu to Discuss National Offshore Wind Research Center in Maine

Wed, 03 Jun 2009 12:38:42 GMT

Energy Secretary Chu is scheduled to discuss the possibility of establishing a National Offshore Wind Research Center at the University of Maine. The conference will take place this Friday, June 5, in Washington D.C., where Secretary Chu will meet with Senator Susan Collins (R-ME), Senator Olympia Snowe (R-ME), Representative Mike Michaud (D-ME), Governor John Baldacci (D), and Professor Habib Dagner to talk about the proposal.

DOI to Host Public Workshops on Renewable Energy Development on the OCS

Tue, 02 Jun 2009 12:14:55 GMT

Yesterday DOI Secretary Ken Salazar announced MMS will conduct 12 public hearings in June to discuss the new regulatory program for renewable energy development on the OCS. The final rule was released in April and governs how MMS will grant leases, easements and rights-of-way for offshore renewable energy projects, and delineates how MMS will work with FERC and other agencies on these projects.

The first workshop will take place in Washington, DC on June 4 and will be followed by a series of workshops in 11 coastal states. Sec. Salazar explained the workshops are open to the public and are designed to "ensure that everyone with an interest in the future of offshore renewable energy has the opportunity to learn about this program, gather the information they need, and participate in their government." More information, including the dates and locations of the hearings, can be found on the DOI's website.

Major DOI Bill Proposes to Combine Leasing Offices, Eliminate Royalty-in-Kind, Create New Regional Planning Councils

Wed, 27 May 2009 15:21:19 GMT

A staff discussion draft bill circulating through the House Natural Resources Committee seeks to make major structural and substantive changes to the Department of Interior's (DOI) offshore leasing programs. The draft bill, tentatively titled the "Federal Lands and Resources Energy Development Act of 2009," seeks to respond to major criticism that DOI and the Minerals Management Service faced last year on a variety of issues. The changes it proposes to make include: (1) consolidating all offshore and onshore energy leasing and revenue offices, including offshore renewables, under a new "Office of Federal Energy and Minerals Leasing," which would be headed by a new political appointee; (2) eliminating the royalty-in-kind program; (3) stricter ethics rules for DOI officials; (4) creating new "Regional OCS Councils" to oversee strategic planning; (5) authorizing DOI to issue new "diligent development" regulations for offshore leases; (6) repealing deepwater royalty relief; and (7) other changes to royalty collection procedures, including new criminal sanctions.

The draft bill is currently being reviewed by DOI. It is possible that the bill or sections of the bill may be combined with the House Energy and Commerce Committee's comprehensive energy and climate change bill, which won approval from that panel late last week.

MMS Proposes Rule to Simplify, Re-Organize Regulations Governing Federal Offshore Leasing for Oil & Gas

Wed, 27 May 2009 15:03:53 GMT

The MMS published a notice of proposed rules that would replace certain existing regulations that govern the federal offshore leasing process for oil and gas. The rewritten regulations would not be significantly different in substance, but would be written in simpler language, re-organized to reflect steps in the leasing process that have evolved over time, and standardized by making certain practices uniform among the 3 OCS regional offices.

VA Gubernatorial Candidates Split Over Offshore Drilling Issue

Wed, 27 May 2009 10:40:00 GMT

The Washington Post examines the positions of Virginia gubernatorial candidates on oil and gas exploration offshore Virginia. Terry McAuliffe, former chairman of the DNC and Hillary Clinton's 2008 presidential campaign, supports drilling 50 miles of the coast, while fellow Democrat R. Creigh Deeds favors drilling for gas and potentially oil if environmental impacts can be mitigated. Brian Moran, another Democrat, is the only candidate who opposes all drilling. Republican nominee Robert F. McDonnell strongly supports new drilling.

Chairman's Mark of Climate Change Bill Maintains Marine Spatial Planning in Managing Offshore Renewables

Tue, 19 May 2009 12:35:37 GMT

Chairman Henry Waxman (D-CA) of the U.S. House Energy and Commerce Committee released yesterday an updated version of H.R. 2454, the House bill designed to promote green energy and address global climate change. The document, called a "Chairman's mark" in Capitol Hill parlance, would require that "ecosystem-based management" of ocean resources serve as the foundation for all marine resource planning, as opposed to resource-based management. The bill also mandates a study of regional marine spatial planning by DOI, FERC, and NOAA that would identify a mechanism for formally installing a marine spatial planning regime and requires the U.S. Council on Environmental Quality to determine whether the approach outlined in the study ought to be followed in developing policies for renewable energy on the OCS. An official with the American Wind Energy Association told E&E [subscription required] that her organization is not opposed to marine spatial planning, but that she is concerned that offshore renewable energy projects currently under development could be delayed as the marine spatial planning policy is developed and implemented.

RPSEA Awards Contract for Research into Measuring Oil Production from Ultra-Deepwater Wells

Wed, 13 May 2009 15:16:46 GMT

Research Partnership to Secure Energy for America (RPSEA) joined with several companies including StatoilHydro, BHP Billiton, BP, Shell, Chevron, ConocoPhillips, and Total to award a grant to Letton-Hall Group for research into improving measurement of production from ultra-deepwater oil wells. Find further details in the Houston Business Journal. [Subscription required]

Massachusetts to Receive $25M in Stimulus Money to Build Wind Blade Test Center; Will Advance Offshore Development

Wed, 13 May 2009 10:10:48 GMT

U.S. Energy Secretary Chu yesterday announced that Massachusetts will receive $25 million from the federal stimulus package to build the first commercial facility in the United States capable of testing large wind turbine blades. DOE's press release notes that the ability to produce turbine blades longer than 50 meters domestically will energize large-scale wind power project development, highlighting that one of the important benefits of the site is its "proximity to substantial offshore wind resources."

Sec'y Salazar Seeks Clarification on OCS Court Ruling

Wed, 13 May 2009 06:06:36 GMT

Secretary of the Interior Ken Salazar yesterday asked the Department of Justice to seek clarification from the U.S. Court of Appeals for the District of Columbia Circuit on the scope of its April 17, 2009 decision that Bush Administration officials did not conduct sufficient scientific and environmental analysis before scheduling oil and gas lease sales on the Outer Continental Shelf off Alaska.

DOI Releases FY 2010 Budget

Tue, 12 May 2009 06:59:59 GMT

The DOI's proposed budget for FY 2010 (which begins Oct. 1, 2009) has been released. The 2010 budget includes $24 million for the development of a robust renewable energy leasing program on the OCS.

MMS Signs MOU with Norwegian Petroleum Directorate

Tue, 12 May 2009 06:14:44 GMT

In an interesting and advantageous development for both nations, last week MMS signed a Memorandum of Understanding ("MOU") with the Norweigian Petroleum Directorate ("NPD"). The non-binding MOU will help the American and Norwegian counterparts share scientific and technical information and promote cooperative exploration and production strategies. Commenting on the MOU, MMS Acting Director Walter Cruickshank stated “I am confident this information exchange will enhance our efforts to develop the Outer Continental Shelf resources in a safe and responsible manner, as well as strengthen our and Norway’s practices and procedures.”

Bipartisan House Bill Would Open Door to E&P and Invest in Renewable Energy

Wed, 06 May 2009 16:02:01 GMT

Yesterday, U.S. Reps. Tim Murphy (R-PA) and Neil Abercrombie (D-HI) and a group of bipartisan House members introduced the American Conservation and Clean Energy Independence Act, H.R. 2227. The legislation would approve the 2010-2015 OCS Oil and Gas Leasing Program adopted during the Bush administration and expedite the leasing process for new exploration and production. Under the provisions of the bill, within 30 days of the bill's passage the Interior would be required to conduct a lease sale in each OCS planning area in which there is commercial interest in purchasing federal oil and gas leases for production. The agency would then be required to hold lease sales every 270 days thereafter upon a determination by the Secretary that commercial interest exists in a planning area.

In what would amount to a significant development if the legislation is passed, it would extend the seaward boundary of coastal states to 12 nautical miles from the current 3 miles applicable to most states. However, it appears that the federal government will maintain leasing and regulatory authority over “Federal oil and gas mineral rights” in the 3- to 12-mile zone. In an apparent effort to gain support from critical coastal state members, the legislation grants states the right to “exercise all of the sovereign powers of taxation” in this zone.

Importantly, the legislation would allocate 30% of the expected royalties generated from the exploration and production in the new 12-mile zone to producing coastal states. The U.S. Treasury would receive 10% of the expected revenues, and the remainder, in the ballpark of $1 trillion according to the summary of the bill, would be allocated to offset the costs of the renewable energy tax incentives and credits, and promote clean energy technology development, environmental restoration and protection, and energy efficiency. According to the section-by-section analysis of the legislation available on Rep. Murphy’s website, states also could receive royalties from renewable energy projects up to the 12-mile boundary. However, a close reading of the legislation indicates that this is not the case, as royalties are derived only from oil and gas activities in that zone.

A summary of the legislation is here. Rep. Murphy's press release can be found here.

No word yet on the bill's viability, but it seems to us that there is increasing recognition on Capitol Hill that a balanced energy portfolio, including traditional sources of energy, is in the nation's best interest … and is likely to obtain the most support on both sides of the aisle.

MMS Releases Reports About Gulf of Mexico Oil Production

Wed, 06 May 2009 12:00:00 GMT

Yesterday, MMS announced its release of two reports regarding oil production in the Gulf of Mexico: the Gulf of Mexico Oil and Gas Production Forecast: 2009-2018 and the Deepwater Gulf of Mexico 2009: Interim Report of 2008 Highlights. These reports highlight the trend toward deepwater oil exploration and production. In 2008, oil and gas operators announced 15 deepwater discoveries and began 7 new projects in the Gulf; 57% of all Gulf leases were located in deepwater (defined as water depths of at least 1,000 feet).

Vice President, Sec'y Salazar, and Sen. Carper Discuss OCS Renewable Projects

Wed, 06 May 2009 10:05:31 GMT

On Monday, Vice President Joe Biden, Secretary of the Interior Ken Salazar, and Sen. Tom Carper (D-DE) spoke on offshore renewable energy projects at the University of Delaware. The DOI press release quotes Vice President Biden touting the recently released framework for alternative energy development on the OCS, saying "[w]ith this rule, the Interior Department is unlocking our vast offshore renewable resources." Secretary Salazar echoed the vice president's comments, saying that the framework "will enhance our energy security, create the foundation for a new offshore energy sector and share much-needed revenues from this development with coastal states."

D.C. Circuit Vacates 2007-2012 Leasing Program

Wed, 29 Apr 2009 13:55:44 GMT

In a recently issued opinion carrying potentially far-reaching consequences for the offshore oil and gas industry, the U.S. Court of Appeals for the District of Columbia vacated Interior's current 5-year leasing program (2007-2012) and remanded the matter back to the Secretary of the Interior for reconsideration. The case, Center for Biological Diversity v. U.S. Department of the Interior, involved a challenge to the Secretary's approval of the leasing program on various environmental and procedural grounds. Specifically, the petitioners (Center for Biological Diversity, Alaska Wilderness League, Pacific Environment, and the Native Village of Point Hope) expressed concern that the approved leasing program would adversely impact the areas surrounding the lease offerings in the Beaufort, Bering, and Chukchi Seas off the coast of Alaska.

The court's decision injects some uncertainty into the status of lease sales scheduled under the current leasing program as well as leases already awarded pursuant to the plan. In the near term, the decision may cause the August 2009 Western Gulf of Mexico lease sale to be delayed. Interior has said, however, the impact of the decision needs to be carefully evaluated before it makes any determinations with regard to leases and sales implicated by the current leasing plan. Given that the case focused on lease offerings in Alaska and that many environmental studies have been conducted related to oil and gas activities in the Gulf of Mexico, this decision could have a greater impact on future Alaska sales. In any event, the Secretary will have an opportunity to revisit aspects of the leasing plan formulated by the Bush Administration.

The Petitioners in the case argued that the leasing program violated the Outer Continental Shelf Lands Act (OCSLA) and the National Environmental Policy Act (NEPA) because it failed to account for the impact of climate change in the leased areas and was approved without conducting sufficient biological baseline research for the Alaskan Seas. The Petitioners also claimed that the program violated the Endangered Species Act (ESA) because Interior did not consult with either the U.S. Fish and Wildlife Service or the National Marine Fisheries Service about the potential harm to endangered species. The court ruled that the petitioners' NEPA and ESA claims were not yet ripe for review. The court found, however, that the OCSLA-based challenges were justiciable. Of the three OCSLA-based claims, the court ruled that the petitioners' climate change and baseline data challenges to the leasing program lacked merit.

The Petitioners did prevail on one claim, asserting that the leasing plan violated OCSLA because it irrationally relied on an study by the National Oceanographic and Atmospheric Administration (NOAA Study) when assessing the environmental sensitivity of the leasing program on OCS planning areas included in the leasing program. OCSLA requires agencies to consider "the relative environmental sensitivity of ... different areas of the [OCS]." The Petitioners argued that Interior's sole reliance on the NOAA Study to measure environmental sensitivity was improper. In short, the court held that the NOAA Study only assessed the effects of oil spills on coastal areas, it did not assess the environmental sensitivity of the leasing program on the OCS, which is required by statute. The court stated, "the law plainly requires that Interior examine and compare the environmental sensitivity of different areas of the OCS." Because the court concluded that Interior did not properly assess this impact, it found that Interior is unable to adequately balance competing environmental and commercial interests. The court ruled, therefore, that on remand the Secretary has to conduct a more complete analysis, which includes all planning areas in the current leasing plan.

Florida Legislators Push Forward on Bill to Allow Near Shore E&P

Mon, 27 Apr 2009 12:46:44 GMT

As an update to last week's post, the Florida House of Representatives is moving forward on a bill (H.B. 1219) that would permit exploration and production for oil and gas between 3 and 10.5 miles from the coast. The Miami Herald provides an update on the status of the bill and the lobbying efforts to push the bill through before the end of the legislative session on May 1, 2009 (though the session could be extended, as the state budget has not passed yet). Last week Florida’s Governor Charlie Crist (R) said he was “open minded” on the proposal.

Offshore Blog Note: Late on April 27, the Florida House passed H.B. 1219.

FL Governor "Open-Minded" About Offshore Drilling in State Waters

Fri, 24 Apr 2009 15:52:04 GMT

Governor Charlie Crist (R-FL) said earlier this week that he would like to learn more about a state legislative proposal that would allow the governor and state cabinet to authorize offshore drilling projects in state waters. Gov. Crist noted that he is "open minded to reviewing" the proposal. Two Republican members of the state cabinet also said they would consider the proposal, although one Democratic official expressed opposition to the timing of the proposal. The Miami Herald offers additional coverage of the issue.

Bingaman Reaffirms Support for Traditional Offshore Oil & Gas

Thu, 23 Apr 2009 14:43:46 GMT

Senate Energy and Natural Resource Committee Chairman Jeff Bingaman issued a press release yesterday discussing his continuing intent to pursue a comprehensive energy bill. In the press release, Bingaman reaffirmed his support for developing traditional sources of energy, including offshore oil and gas.

MMS Issues Framework for Developing Renewable Projects on the U.S. OCS

Wed, 22 Apr 2009 15:28:04 GMT

This afternoon MMS released its framework for developing renewable energy projects on the U.S. OCS. The framework addresses topics ranging from siting and permitting to revenue sharing between the federal and adjacent state governments. Find more details in MMS' press statement. Note that the framework is nearly 600 pages long, so expect more focused analyses of the rule over the next few days.

Norway Delimits Arctic Territory, Defining Subsea Minerals Rights

Thu, 16 Apr 2009 10:46:01 GMT

Yesterday, the Kingdom of Norway submitted a proposal to the U.N. Commission on the Limits of the Continental Shelf defining Norway's sovereign territory beyond its continental shelf, becoming the first nation to officially set subsea Arctic boundaries. Under the Law of the Sea Treaty, which Norway is a party to, nations can claim subsea territory up to 200 nautical miles beyond the end of their continental shelves, giving them the rights to subsea minerals. This includes oil and gas, which the Arctic is believed to hold in significant amounts, and which is becoming more and more accessible as rising temperatures cause Arctic ice sheets to recede later and later into the year.

Norway is the largest offshore producer of oil in the world and the third largest exporter of crude. The other nations with potential subsea Arctic territory claims are the U.S., Canada, Russia, and Denmark. The United States is not a signatory to the Law of the Sea Treaty, which has been blocked by conservative Senators who believe ratifying the treaty will result in a concession of U.S. sovereignty to international governing bodies. However, Secretary of State Hillary Clinton has stressed the need to sign on to the treaty, including in her Senate confirmation hearings, where she stated that the failure to sign has left the U.S. "disadvantaged" in the Arctic.

Inslee Bill Would Create Joint Permitting Office for Offshore Renewable Projects

Thu, 16 Apr 2009 09:53:58 GMT

According to BNA's Daily Report for Executives [subscription required], Rep. Inslee (D-WA) plans to introduce a bill in committee later this month that would (1) create a new permitting office for offshore renewable energy projects and (2) increase research, development and deployment funding for such projects. Inslee, a member of the House Energy and Commerce Committee, proposes to combine staffs from the relevant executive offices in order to streamline and simplify the permitting process. This joint permitting office would include staff from MMS, FERC, NOAA, DOE and the Army Corps of Engineers. Inslee's bill also would increase federal R&D funding for offshore renewable projects by increasing the DOE's budget authorization for offshore renewable R&D from the current $50 million to $250 million. As OffshoreEnergyLawBlog has previously noted, there appears to be speculation amongst some members of Congress as to whether the proposed jurisdictional delimitation over offshore renewable energy projects in the recently signed MOU between FERC and MMS is the best outcome for the rapid advancement of such projects. It's probably not a stretch to speculate that Inslee's proposed legislation is intended to address such concerns. Stay tuned 'til after the recess ....

Central California County Signals Opposition to Offshore Oil E&P

Wed, 15 Apr 2009 15:29:56 GMT

The San Luis Obispo County, CA, Board of Supervisors issued a letter opposing further oil exploration proposed for offshore California. The county's action follows a similar move last week by the Board of Supervisors of Santa Barbara County. The counties acted in anticipation of tomorrow's regional public meeting in San Francisco, CA, addressing OCS energy development.

Sec. Salazar Hosts Third Regional Meeting on Future of OCS Development

Wed, 15 Apr 2009 12:07:28 GMT

Yesterday, Interior Secretary Ken Salazar hosted the third in a series of four planned regional public meetings in Anchorage, Alaska, regarding the future of energy development on the OCS. The meeting provided a diverse group of local stakeholders, including Governor Sarah Palin (R), the state's congressional delegation, industry, and environmental groups, with an opportunity to discuss the issue of offshore oil and gas development. The meetings are designed to assist Secretary Salazar and Interior in the preparation of policies that will guide future OCS energy development. Industry supporters and conservationists rallied outside the Dena'ina Civic & Convention Center prior to the meeting, a display that encapsulates the polarizing nature of the issue.

Governor Palin advocated for OCS development and added, that without such production, the trans-Alaska oil pipeline would be in jeopardy of an early shutdown. Governor Palin also noted that natural gas from the OCS is essential to the development of a new pipeline supplying gas to the lower-48. Secretary Salazar responded by saying, "The people who are going to build that pipeline are not going to build it unless they know they have a natural gas supply," an assurance the Secretary suggested can not be given at this time. Both of Alaska's Senators were supportive of sensible efforts to move forward with OCS oil and gas development. Senator Begich (D) said, "Oil and gas will continue to supply the majority of this nation's energy for a long time. I believe most of it should come from secure, reliable domestic production -- especially Alaska." In contrast to state-wide officials, local fishermen and Mayor Edward Itta of the North Slope Borough argued the benefit of OCS development is not worth the risk of a major oil or gas spill. Mayor Itta noted, "spill response [is] virtually impossible in Arctic waters."

Local coverage of the meeting can be found in the Anchorage Daily News. Additional information and a video of the event can be obtained from Interior’s website. The agency's final regional public meeting is scheduled for April 16 in San Francisco, CA

MMS Releases Environmental Documents for OCS Projects

Wed, 15 Apr 2009 09:25:26 GMT

MMS announced today in the Federal Register the availability of Site-Specific Environmental Assessments (SEA) and Findings of No Significant Impact (FONSI), conducted under the National Environmental Policy Act (NEPA) for more than seventy proposals relating to exploration, development, production and transport of oil, gas, and mineral resources on the Outer Continental Shelf (OCS) of the Gulf of Mexico and Atlantic Ocean.

FERC, Interior Delineate Jurisdiction Over Renewable Energy Projects on the OCS

Fri, 10 Apr 2009 06:50:35 GMT

A longstanding skirmish regarding jurisdiction over renewable energy development in the Outer Continental Shelf (OCS) may have been laid to rest. Yesterday, the Federal Energy Regulatory Commission (FERC) and the Department of the Interior signed a Memorandum of Understanding (MOU) further clarifying each agency's respective jurisdictional authority over offshore renewable energy projects. The MOU applies to wind, solar, and hydrokinetic energy projects, including wave, tidal, and ocean current initiatives. The MOU, which is intended to facilitate the development of alternative energy on the OCS, clearly divides the agencies' authorities.

First, the agencies recognize that Interior's Minerals Management Service (MMS) has "exclusive jurisdiction" over the production, transportation, and transmission of energy from non-hydrokinetic renewable energy projects on the OCS, including wind power projects. The agencies do not recognize any role for FERC in the MOU for non-hydrokinetic projects, effectively closing FERC out of regulation in this area of renewable energy development, including, apparently, the transmission of electricity from such projects.

The agencies also agree in the MOU that FERC has exclusive jurisdiction to issue licenses for the construction and operation of hydrokinetic projects on the OCS, pursuant to the Federal Power Act, as well as exemptions for those projects (although the applicability of the referenced exemptions is questionable). In a significant reversal, however, FERC will not issue preliminary permits for hydrokinetic projects located on the OCS. Previously, FERC has stated that it would apply its process for hydroelectric licenses to hydrokinetic projects on the OCS, including the preliminary permit process, which generally allows potential developers to secure sites for projects on an initial basis without a comprehensive NEPA review. This change necessarily will impact several project developers who already have filed applications for preliminary permits with FERC. The agencies thus far have given no indication of how they will treat those existing preliminary applications that were filed in reliance on FERC's existing regulations and policies.

MMS will retain a significant role in the consideration of hydrokinetic projects. Specifically, consistent with MMS' historical authority, the MOU states that MMS has exclusive jurisdiction to issue leases, easements, and rights-of-way regarding OCS lands for hydrokinetic projects. In addition, MMS has the authority to attach terms and conditions to these contracts, which FERC must include in any license or exemption it issues. Moreover, FERC cannot issue a license for a hydrokinetic project unless the applicant already has obtained the appropriate lease, easement or right-of-way from MMS. This places significant power in the hands of MMS and could negatively impact hydrokinetic project proponents who have filed with FERC for a site for which there is also a competing wind power project application pending at MMS.

To this point, FERC and Interior agree in the MOU to work together to develop policies and regulations regarding OCS hydrokinetic projects including processes to address hybrid projects and projects that straddle the boundaries between state and the OCS. This is a critically important piece that has yet to be fleshed out, as many renewable power developers believe that hybrid projects incorporating both hydrokinetic and wind power represent the most economically viable projects.

Although the MOU adds important detail to the agencies' respective jurisdictions, significant gaps remain. It is unclear whether this Solomon-like division of authority actually will result in a more streamlined, efficient consideration of offshore renewable energy projects. Finally, it also remains to be seen whether members of Congress who have strongly advocated for the development of offshore renewable energy will agree with this new framework.

Click here to read the MOU. The agencies' joint press release is here.

Joint Ocean Commission Initiative Report Calls for New Policy Coordinator, Ratification of UNCLOS

Tue, 07 Apr 2009 15:21:26 GMT

Today, the Joint Ocean Commission Initiative released a report calling for the creation of a White House-level ocean policy coordinator and Senate ratification of the U.N. Law of the Sea Treaty. The report also recommends amending the Clean Water Act, creating an ocean investment fund with offshore revenue, and allocating carbon emissions allowances revenue for research.

Rep. Capps Introduces Legislation to Prohibit Drilling Offshore California

Tue, 07 Apr 2009 12:00:33 GMT

Rep. Lois Capps (D-CA) introduced legislation (H.R. 1906) on April 2 that would prohibit oil and gas leasing offshore California.

Secretary Salazar Announces Offshore Wind May Carry a Powerful Punch

Mon, 06 Apr 2009 16:03:49 GMT

At a summit meeting of the 25x'25 America's Energy Future group, on Thursday April 2, 2009, Secretary of the Interior Ken Salazar announced that offshore wind energy is likely to play a very prominent role in America's clean-energy revolution. Salazar remarked that "[m]ore than three-fourths of the nation's electricity demand comes from coastal states and the wind potential off the coasts of the lower 48 states actually exceeds our entire U.S. electricity demand." According to the National Renewable Energy Lab, there is more than 1,000 gigawatts of wind potential off the Atlantic coast and more than 900 gigawatts of wind potential off the Pacific coast. In further comments, Salazar explained, "[w]e are opening our doors not just to oil and gas and coal, but also to the wise development of solar, wind and wave, biofuels, geothermal, and small hydro on America's lands."

These comments come on the heels of the release of a U.S. Geological Survey-Mineral Management Service report commissioned by Salazar. The USGS report found huge information gaps regarding the location and extent of offshore oil and gas resources, and determined that some seismic data on file was nearly 25 years old. This report will be discussed in further detail at meetings around the country addressing offshore energy over the next few weeks. Click here to read the DOI news release.

Senate Rejects OCS Revenue Sharing Amendment, Approves Decreased Dependence Language

Fri, 03 Apr 2009 14:02:36 GMT

On Thursday April 2, 2009, the U.S. Senate rejected an amendment sponsored by Senator Mary Landrieu (D-LA) to the annual budget blueprint (S. Con. Res. 13) that would have given states half of the revenues from offshore oil and gas leases, by a vote of 37-60. Currently, coastal states receive approximately 37.5% of the revenues. Included in the amendment was a provision for revenue sharing for leases in newly opened parts of the Outer Continental Shelf where adjacent states currently have no entitlement to revenues.

After Landrieu's amendment was rejected, the Senate approved by unanimous consent an amendment offered by Senator Kay Bailey Hutchison (R-TX). The Hutchison amendment adds language to the budget bill encouraging expanded offshore oil and gas production as a means to reduce U.S. dependence on foreign energy imports.

House Legislation Seeks to Reinstate Leasing Ban in Parts of the Atlantic

Thu, 26 Mar 2009 13:09:54 GMT

Several East Coast House Democrats introduced legislation (H.R. 1696) yesterday to permanently ban offshore drilling in the Mid- and North Atlantic OCS planning areas. These areas cover offshore lands from Maine through North Carolina. Rep. Frank Pallone (NJ) sponsored the legislation along with Albio Sires (NJ), Steven Rothman (NJ), James Moran (VA), and Kathy Castor (FL). House leaders have, however, said they do not intend to seek a blanket reimposition of the recently elapsed moratorium.

Gulf Coastal States to Receive $25 Million from OCS Lease Sales

Thu, 26 Mar 2009 09:21:43 GMT

This week, Gulf of Mexico coastal states and communities will receive over $25 million from bonus bids and rental fees associated with 2007-08 OCS oil and gas lease sales. Texas, Alabama, Louisiana, and Mississippi will all receive a portion of funds associated with these sales pursuant to the 2006 Gulf of Mexico Energy Security Act (GOMESA). The bulk of the money was received from the March 19, 2008 sale. By law, some of these funds must be used for coastal protection activities, such as mitigating damage to wildlife and natural resources; carrying out a federally-approved marine, coastal, or comprehensive conservation management plans; and mitigating the impact of Outer Continental Shelf activities. A complete list of disbursements can be found here. For more information, see the Department of the Interior's news release.

New York Offshore Wind Farm Passes First Phase of Feasibility Studies

Wed, 25 Mar 2009 17:59:02 GMT

Long Island Power Authority and Consolidated Edison, New York-based electric utilities, announced the successful completion of a feasibility study on a proposed wind farm they plan to construct 13 miles offshore the Rockaway Peninsula, New York. The study found that the interconnection of up to 700 megawatts (MW) of wind power would be feasible with certain transmission system upgrades. Although the proposed wind farm is currently expected to produce 350 MW of generation, it will be designed to expand up to 700 MW, making it one of the largest proposed offshore wind farms in the United States. The next steps include studies of environmental impacts, economic costs, and community impacts. If the utilities move forward with the plan, the project would be subject to the jurisdiction of the U.S. Minerals Management Service under the Energy Policy Act of 2005 and a recently signed MOU between the MMS and FERC. Reuters provides further information.

67 House Dems Ask Obama to Suspend New Offshore Leasing, E&P in Arctic, Citing 'Immediate' Threat

Wed, 25 Mar 2009 17:45:47 GMT

Noting the environmental impacts of climate change and industrial activity in sensitive areas, 67 House Democrats transmitted a letter to President Obama yesterday urging a "science-based" approach to management of the Beaufort and Chukchi Seas and the Arctic National Wildlife Refuge (ANWR). They contend that "[t]he most notable and immediate ... threat is from the aggressive and risky expansion of oil and gas activities in the region from the last eight years." The letter outlines four specific proposals: create an interagency task force to craft comprehensive Arctic energy policy; pass new legislation to protect ANWR; conduct a new assessment of Arctic ecosystems; and suspend new offshore leasing, E&P, shipping, commercial fishing, and mining. The letter was authored by Reps. Inslee (WA), Markey (MA) and McCollum (MN), and key signees include Energy and Commerce Committee Chairman Henry Waxman (CA), Natural Resources Committee Chairman Nick Rahall (WV), and Foreign Affairs Committee Chairman Howard Berman (CA).

Salazar Addresses API Board

Thu, 19 Mar 2009 16:14:13 GMT

Interior Secretary Ken Salazar today addressed the board of directors for the American Petroleum Institute. Interior's news release provides the Secretary's remarks.

Lease Sale 208 Nets Over $700 Million in High Bids

Wed, 18 Mar 2009 17:16:36 GMT

Today's Central Gulf of Mexico Oil and Gas Lease Sale 208, which was attended by Interior Secretary Ken Salazar, attracted $703,048,523 in high bids. Secretary Salazar stated, "today's lease sale will help us make a wise addition to our nation's energy supply." The single highest bid at the sale exceeded $65 million, offered by Shell Gulf of Mexico. Shell submitted the most high bids (39) of any sale participant, followed by BP and Marathon. Before MMS issues the leases, the agency will evaluate each bid to ensure that fair market value is paid. See the MMS press release for more information about Central Sale 208.

MMS Announces OCS Stakeholders' Meetings

Wed, 18 Mar 2009 15:25:44 GMT

On March 18, 2009, the Minerals Management Service (MMS) published notice of four public stakeholder meetings with Secretary of the Interior Ken Salazar. During these meetings, Salazar seeks to gather information and input that will be used to develop a comprehensive plan for the development of conventional and renewable energy resources on the Outer Continental Shelf. Look for logistical information on the MMS website approximately two weeks before the meetings. For more information, and to view a list of the meetings, please see the notice in the Federal Register.

MMS Provides Information on Central Gulf Sale

Wed, 18 Mar 2009 15:12:46 GMT

The Minerals Management Service (MMS) said yesterday that it received 476 bids on 348 tracts of federal lands for offshore oil and gas leases. MMS said that 56 companies submitted bids, but the Associated Press (via the Houston Chronicle) suggests that the interest in these OCS blocks appears to be less than last year’s record-setting lease auction.

FERC and MMS Reach Agreement on OCS Renewable Energy Projects

Tue, 17 Mar 2009 09:02:09 GMT

In a major development for offshore renewable energy on the OCS, FERC Acting Chairman Jon Wellinghoff and Interior Secretary Ken Salazar today announced an agreement between their agencies to facilitate the permitting and siting of renewable energy projects on the OCS. Salazar stated that the agreement "will help sweep aside red tape so that our country can capture the great power of wave, tidal, wind and solar power off our coasts," while Wellinghoff confirmed that the agreement "will help get renewable energy projects off the drawing board and onto the [OCS]." While this agreement appears to settle the jurisdictional dispute, the details have yet to be worked out.

The brief joint statement reaffirms Interior's and MMS's broad "responsibility for the permitting and development of renewable energy resources on the [OCS] .... [i]n particular, [its] permitting and development authority over wind power projects that use offshore resources beyond state waters." It also expressly states that "FERC will have the primary responsibility to manage the licensing of such projects in offshore waters pursuant to the Federal Power Act, using procedures developed for hydropower licenses, and with the active involvement of relevant federal land and resource agencies, including the Department of the Interior." Wellinghoff and Salazar state that they have requested their agencies' staffs prepare a short memorandum of understanding setting forth the principles outlined in the joint statement and "which describes the process by which permits and licenses related to renewable energy resources in offshore waters will be developed."

In addition, testifying this morning before the U.S. Senate Committee on Energy and Natural Resources and commenting on the new agreement with FERC, Salazar indicated that he expects the MMS will be able to move forward in the next couple months to finalize the rules for offshore wind power development on the OCS.

This appears to be a win-win for both agencies. MMS maintains authority over offshore wind power projects and likely will have a cooperating agency role in hydrokinetic projects. FERC will have permitting and licensing authority over offshore hydrokinetic projects. Although there are no details at this point, this appears to resemble the regulatory structure applicable to LNG deepwater ports, in which the U.S. Maritime Administration has lead agency authority over the siting and licensing of the projects, and in which MMS is a cooperating agency granting the appropriate leases and rights-of-way.

While this agreement undoubtedly will provide some regulatory certainty for many project developers going forward, how the two agencies actually flesh out their respective authority remains uncertain. In particular, in offshore locations where there are competing offshore wind and hydrokinetic proposals with overlapping land claims, there is no indication at this point how such claims will be resolved.

Secretary Salazar Discusses Oil and Gas Lease Sales and the Importance of Renewable Energy

Tue, 17 Mar 2009 07:58:43 GMT

On Wednesday, March 18, 2009, Interior Secretary Ken Salazar will attend Minerals Management Service lease sale 208, which will offer 6,458 blocks on the Outer Continental Shelf in the Central Gulf of Mexico Planning Area. It is estimated that this lease sale could produce up to one billion barrels of oil and 5 trillion cubic feet of natural gas. In addition to conventional resources, Salazar also emphasized the important role that renewable energy will play in the DOI's approach to the use of energy resources and creation of energy initiatives. Salazar explained, "I have established a task force to help identify renewable energy zones on public lands that are best suited for harnessing wind, solar, and geothermal power."

On Thursday, March 19, Salazar plans to meet with the American Petroleum Institute's board of directors. During his conversation with oil and gas executives, Salazar intends to explain to the industry that, "they are, and will remain, an important part of our energy future. We need to work together on common sense solutions to the energy challenges we face. We share much common ground. We need an open and honest dialogue. And we need to move forward, with common purpose, to build a comprehensive energy plan for America." For more information, read Interior's news release.

Turf War Between Interior and FERC Slows Down Offshore Energy Development

Mon, 16 Mar 2009 22:15:43 GMT

The New York Times published an article today on the ongoing jurisdictional dispute between FERC and MMS over the siting of hydrokinetic power projects on the OCS. While the dispute centers squarely on which agency has authority to authorize projects in federal waters that generate electric power from ocean tides, waves and currents, offshore wind power appears to be caught in the wake. Offshore project developers have been waiting for months for MMS to issue a set of rules governing the development of all offshore renewable energy resources on the OCS, including wind. Without the rules, it is difficult for any project developer to proceed with certainty. As a result, wind power projects on the OCS, which FERC is not claiming jurisdiction over, also have stalled.

While Both Interior Secretary Ken Salazar and FERC Acting Chairman Jon Wellinghoff (reportedly soon to be named Chairman) have expressed confidence that the dispute will be resolved, Secretary Salazar has characterized the dispute as a significant threat to renewable offshore development, while Chairman Wellinghoff has downplayed its importance by comparison. According to the New York Times article, Interior and FERC are reported to be close to a memorandum of understanding resolving the dispute. Given the Obama Administration's push to aggressively develop domestic renewable energy resources and the growing chorus of complaints about the delay from the offshore renewable energy industry, it seems likely that both agencies are getting significant pressure to resolve this turf war.

Mass. Siting Board Tentatively Grants Public Interest Certificate to Cape Wind

Mon, 16 Mar 2009 22:04:06 GMT

Last week, the Massachusetts Energy Facilities Siting Board tentatively approved granting Cape Wind Associates, LLC, a Certificate of Environmental Impact and Public Interest regarding the construction of two new transmission lines that would interconnect to a proposed wind facility in Nantucket Sound. While the decision is not final, it is an encouraging step for the project developers. The Board expects that a final vote on the Certificate will be taken within 60 days. If approved, the Certificate, comprising nine state and local permits, would overturn the Cape Cod Commission's denial of the project.

In a news release, Cape Wind President Jim Gordon said, "This decision represents a major victory for the people of Massachusetts who are waiting for the clean energy jobs from Cape Wind which will help us become more energy independent and make Massachusetts a global leader in clean offshore wind energy production." Cape Cod Commission attorney, Eric Wodlinger, suggested the Board needs to consider the project's impact on state resources when making a final determination, noting "We argue that the siting board should not put on blinders at the three-mile border." The Cape Cod Times provides additional coverage.

Secretary Salazar Issues Order Making Renewables Top Priority

Thu, 12 Mar 2009 10:33:51 GMT

Interior Secretary Ken Salazar on Wednesday issued an order establishing the Departmental Task Force on Energy and Climate Change ("Task Force"). Secretary Salazar charged the Task Force with "developing a strategy that is designed to increase the development and transmission of renewable energy from appropriate areas on public lands and the Outer Continental Shelf." This strategy will include identifying and prioritizing "renewable energy zones," which will be specific locations in the U.S. that are best suited for large-scale production of solar, wind, geothermal, incremental or small hydroelectric power on existing structures, and biomass energy. The creation of this Task Force and the articulation of its duties make clear that the Obama Administration's "comprehensive" strategy on domestic energy development includes a heavy focus on developing renewable generating facilities, including those located on the OCS. A major part of this strategy will include developing a transmission infrastructure that is capable of delivering renewable energy to the nation's population centers.

Interior Secretary Announces Regional Meetings to Address OCS Energy Issues

Wed, 11 Mar 2009 14:00:09 GMT

Interior Secretary Ken Salazar today announced the schedule for four regional public meetings that will be an important and possibly influential step in the Obama Administration's development of its Outer Continental Shelf (OCS) policy. These public meetings are in connection with the Administration's review of the 5-year Oil and Gas Leasing Program (the "Plan") that was proposed by the Bush administration. The meetings will be held in Atlantic City, NJ on April 6; New Orleans, LA on April 8; Anchorage, AK on April 14; and San Francisco, CA on April 16. At each meeting, Secretary Salazar will present Interior's findings on OCS energy resources and potential environmental impacts, and will solicit public comment. If any interested parties wish to submit comments, but cannot attend one of the four regional meetings, they are encouraged to submit written comments electronically or by mail. Secretary Salazar recently extended the public comment period on the proposed Plan to Sept. 21, 2009.

Bingaman Releases Draft Electric Transmission Bill

Tue, 10 Mar 2009 17:56:14 GMT

On March 9, 2009, Senate Energy and Natural Resources Committee Chair Jeff Bingaman released a draft electric transmission bill. This comes almost one week after Senate Majority Leader Harry Reid released his version of a bill with similar objectives -- to improve and augment the nation's electric transmission infrastructure in order to bring renewable power to consuming markets. Like Reid's draft legislation, Bingaman's bill as written includes renewable power generated from offshore energy facilities.

The Bingaman bill contains significant provisions favoring federal authority over siting of transmission infrastructure and applies to "high-priority national transmission project[s]." Included among the qualifying energy sources identified in the legislation is energy generated from ocean energy, which expressly includes tidal, wave, current, and thermal. Any entity that seeks to operate, construct, acquire, or modify a high-priority national transmission project would be required to submit an application to FERC (assuming the proponent does not already have an existing certificate). Click here to read the draft bill.

The Senate Energy and Natural Resources Committee is slated to hold a hearing on electric transmission on Thursday, March 12, 2009.

Interior Secretary Salazar Pushes for Offshore Wind Energy

Tue, 10 Mar 2009 09:25:56 GMT

In an interview with the Associated Press on Monday, Interior Secretary Ken Salazar called for the creation of "renewable energy zones" to promote the development of offshore wind projects, among other renewable initiatives. He argued that the waters off the Atlantic coast hold some of the country's greatest wind energy potential and, although the "rules to move forward" with offshore energy are not in place, he promised to move aggressively to develop such offshore resources. Commenting on opposition to offshore energy siting, Salazar stated that it is critical that "we get this thing done and not get stuck in a not-in-my-backyard syndrome." He signaled his support for the Cape Wind Project off the coast of Cape Cod, MA, and expressed his desire to review concerns raised by Gov. Tim Kaine regarding oil and gas production offshore Virginia.

Salazar's comments appear to echo Senator Harry Reid's (D-NV) recently introduced renewable energy transmission legislation, which direct the President to designate "renewable energy zones." Under the proposed definitional language, renewable energy would include wind power projects and ocean-based hydrokinetic power projects.

South Carolina to Test Which Way the Offshore Wind is Blowing

Mon, 09 Mar 2009 19:10:13 GMT

Today, Santee Cooper, the Coastal Carolina University, and the South Carolina Energy Office announced the deployment of six buoys in state waters as well as the OCS that will be utilized to gauge the potential for offshore wind energy projects. The buoys, which will measure wind characteristics, will extend six miles from the coastline and may be in place by mid-March. Santee Cooper, South Carolina's state-owned power company, also plans to install an offshore platform about six months after the buoys are placed. Once erected, the platform will collect seasonal data for at least a full year, which will be used to show the possible contribution of wind energy to South Carolina's energy needs. The effort, named the Palmetto Wind Research Project, places South Carolina in position to be a leader in developing offshore wind energy in the United States and could make it the first in the nation to build an offshore wind farm. The buoy project is being funded by Santee Cooper and a U.S. Department of Energy grant administered by the South Carolina Energy Office.

From a regulatory standpoint, those pursuing the Palmetto Wind Research Project will have to grapple with the lack of a federal regulatory framework. The Bush Administration was due to release a framework for the Minerals Management Service's Alternative Energy and Alternate Use Program, but left the ultimate regulatory drafting to the Obama Administration. In addition to any federal regulations, the project will have to be approved to ensure that it does not interfere with shipping lanes, rescue routes for the Coast Guard, habitats and migratory paths for protected bird species, Federal Aviation Administration track equipment, and commercial fishing areas. The Sun News and Carolina Live provide additional information.

MMS Extends Comment Period on the Draft Proposed 5-Year OCS Oil & Gas Leasing Program

Mon, 09 Mar 2009 09:19:58 GMT

On March 4, the MMS formally gave notice that it is extending the comment period on the Draft Proposed 5-Year Outer Continental Shelf (OCS) Oil & Gas Leasing Program ("The Plan"). The 180-day extension moves the deadline for receipt of comment from March 23, 2009 to September 21, 2009. States, stakeholders and affected communities are encouraged to submit comments to the MMS, as the Obama Administration formulates its OCS policy. See the Federal Register for the notice.

Louisiana Senator Not Happy with Energy Production Provisions in Obama Administration's Budget

Wed, 04 Mar 2009 14:26:58 GMT

Senator Mary Landrieu (D-LA) told Environment & Energy Daily [subscription required] that she plans to work with senators from other energy-producing states to address "excessive" increases in taxes and other costs associated with oil and gas production, including production on the OCS in the Gulf of Mexico, in the Obama Administration's proposed budget. Sen. Landrieu noted that raising costs of production could limit development of domestic energy supplies; however, her stance on these provisions places her at odds with Rep. Nick Rahall (D-WV), Chairman of the House Natural Resources Committee, who already endorsed this part of the budget.

Offshore Drilling Debate Heats Up VA Gubernatorial Race

Wed, 04 Mar 2009 09:51:15 GMT

According to a statement earlier this year by Jack Gerard, President of the American Petroleum Institute, "[a] full 70 percent of Virginians in a July poll supported increased offshore development." Currently, the lease sale of a portion of the OCS offshore Virginia is set for 2011. Now, as the gubernatorial race in Virginia heats up, the issue of offshore drilling has become a major point of contention among the candidates.

In 2008, following the expiration of the presidential and congressional moratoria on offshore drilling, Governor Tim Kaine (D) wrote to the Bush Administration requesting a cautious and thoughtful approach to offshore drilling including a delay. The U.S. Minerals Management Service rejected that request. Kaine then penned a second letter in February 2009, this time to new Secretary of the Interior, Ken Salazar, in which he urged Salazar to take a slow approach to opening the outer continental shelf to offshore drilling.

Kaine's efforts to delay offshore development of oil and gas resources are becoming an important issue between the candidates in the gubernatorial race. Candidate Bob McDonnell (R) has voiced a strong support for offshore drilling and is opposed to any delay. In his own letter to Salazar, McDonnell wrote, "[t]he delay advocated by Governor Tim Kaine would eliminate Virginia's ability to start early, and place the commonwealth into the same five-year program underway for other Atlantic states." Other Virginia gubernatorial candidates, Terry McAuliffe (D), Brian Moran (D), and Creigh Deeds (D), have sided with Kaine. McAuliffe explained in a letter to McDonnell that stimulation of the Virginia job sector should be in green and renewable jobs, and that drilling in the offshore area of Virginia should be off limits. Moran has taken a hard stance against offshore drilling in general. Deeds echoed McAuliffe's sentiment on job stimulation in the green sector over offshore drilling. The Northern Virginian Daily and Energy Current provide additional coverage.

The 2011 Virginia lease sale is the only lease sale currently on the table for the East Coast. As currently envisioned, drilling would be limited to a wedge-shaped area of about 3 million acres. Situated 50-140 miles offshore, any platforms would be far enough offshore as to be invisible from the beaches. MMS has estimated that the net revenues from drilling offshore Virginia could be as much as $340 million, and that there could be as much as 130 million barrels of oil and 1.4 Tcf of gas in the area. Absent a federal bill providing otherwise, the state of Virginia would not receive any money paid by oil and gas companies in connection with any offshore drilling. The Virginian-Pilot provides additional information.

EPA Updates OCS Air Regulations for NC, AK

Tue, 03 Mar 2009 18:03:34 GMT

Today the Environmental Protection Agency (EPA) issued a Final Rule and a Proposed Rule to update the OCS air quality standards in North Carolina and Alaska, respectively. These rules are promulgated pursuant the Clean Air Act (CAA). The CAA mandates the routine update of air quality regulations governing OCS sources located within 25 miles of a state’s seaward boundary except for certain areas in the Gulf of Mexico. The OCS standards must be updated to match the corresponding on-shore air quality regulations (COA). These rules will append the Code of Federal Regulations to make the appropriate COA rules applicable to sources on the OCS.

Hearing Update: House Natural Resources Committee

Fri, 27 Feb 2009 16:29:17 GMT

The following subcommittee hearings have been scheduled for March:

March 3: The Subcommittee on Insular Affairs, Oceans and Wildlife - "Managing Our Ocean and Wildlife Resources in a Dynamic Environment: Priorities for the New Administration and the 111^th Congress."

March 3: The Subcommittee on National Parks, Forests and Public Lands - "The Role of Federal Lands in Combating Climate Change."

March 5: The Subcommittee on Energy and Mineral Resources - "Energy Outlooks, and the Role of Federal Onshore and Offshore Resources in Meeting Future Energy Demand."

Rep. Rahall Praises Obama's Budget, Cites Increased Royalties From Oil and Natural Gas Exploration

Thu, 26 Feb 2009 16:20:14 GMT

House Natural Resources Committee Chairman Nick Rahall (D-WV) praised President Obama's fiscal year 2010 budget in a news release, claiming that under it "taxpayers [will] receive a fair return for the extraction of oil and natural gas resources on public lands." The budget's proposals implement ideas that Rahall has advocated for and introduced in the past: "Last Congress, I introduced legislation to reform the royalty collection program, encourage the diligent development of federal oil and gas leases, and require energy companies to pay their fair share for the use of public resources. I am heartened that the President's budget includes all of these initiatives, and also correctly identifies our public lands as an immense potential resource for the development and deployment of domestic alternative energy," Rahall said

President's Budget Seeks to "Close Loopholes" on Royalty Relief

Thu, 26 Feb 2009 15:23:16 GMT

The Office of Management and Budget ("OMB") released the President's budget today, outlining the Administration's spending priorities for fiscal year 2010. The overall budget allocation for the Department of the Interior, which includes the Minerals Management Service, is $12 billion. The fact sheet for Interior states the budget will help "promote energy security with a focus on clean renewable sources and strategies to address climate change." On the revenue side, the budget "includes provisions to encourage responsible development of oil and gas resources, and closes loopholes that have given oil companies excessive royalty relief." Specifically, it calls for "using a new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes" that have provided such relief. It notes that the new tax would not begin until 2011, "after the economy has had time to recover." The budget outline also makes reference to charging user fees for the processing of oil and gas drilling permits on federal lands as well as adjusting royalty rates to secure a greater return on production. This budget provides an outline for Congress to utilize as it developments a federal budget for fiscal year 2010. Both the House and the Senate will start to work on the individual appropriations bills later in the Spring.

Calypso LNG Withdraws Deepwater Port Application

Thu, 26 Feb 2009 09:20:03 GMT

Yesterday Calypso LNG, LLC notified the U.S. Maritime Administration (MARAD) that it will suspend work on its previously filed application to construct an LNG deepwater port planned for offshore Florida. Calypso LNG's announcement follows comments by Florida Gov. Charlie Crist (R) that he would oppose the project. MARAD's press release (courtesy of LNGLawBlog) offers additional details.

Few Fireworks at House Hearing on OCS Drilling

Wed, 25 Feb 2009 18:47:44 GMT

Usually when top executives from the oil and natural gas industry testify before a congressional committee, they come expecting to hear an ear full. At today's House Natural Resources Committee hearing on OCS drilling, however, the executives walked away with relatively few scars. They even agreed with Committee Chairman Nick Rahall (D-WV) on one point -- that the nation is sorely in need of a comprehensive energy policy that considers the panoply of available energy resources, including solar, wind, and biofuels. Despite recognizing the need for a comprehensive approach, it was clear that the industry representatives favored additional access to OCS resources. In his prepared statement, the Chairman noted the benefits of offshore drilling, including jobs and tax income, but also stated that "the amount of additional oil that we could drill offshore is a drop in the bucket of what we need to sustain our economy and meet our energy needs." Citing the American Petroleum Institute's ("API") own figures, he added that even in the most optimistic scenario, opening the entire OCS to drilling would "provide no more than 5% of our total daily energy needs, and displace only 8% of our oil imports" by 2030.

Today's panel included officials from ExxonMobil, BP, Shell, Chevron, Devon (representing API), and the Institute for 21st Century Energy, an affiliate of the U.S. Chamber of Commerce. Each panelist generally agreed that additional OCS drilling will promote energy security, create jobs, and generate more revenue for the U.S. Treasury. Moreover, when the issue arose, each panelist appeared to support revenue sharing with states that host drilling operations off their coastline. Perhaps one of the most prominent themes of the day was that the resource data currently held by the government to establish projections for OCS oil and gas inventory is woefully inadequate. Members of the Committee were repeatedly reminded that current resource projections in the Gulf of Mexico are roughly eight times greater than were originally forecasted. In short, the executives believe that the projected inventories in the OCS areas formerly under moratoria would be much higher if companies were allowed to use current technology to evaluate these areas. Some panelists even expressed a willingness to fund these endeavors, but are hesitant to do so until the federal government provides greater assurances that these areas would be open to development.

Several members of the Committee inquired as to how much money the companies were devoting to the development of renewable fuels. While the panelists responded to this inquiry, Rep. Lois Capps (D-CA) requested these figures to be provided in writing to the Committee. A few members, however, did suggest that the companies were spending an inadequate amount of money on developing alternative energy resources in light of their profit figures for 2008. Rep. John Sarbanes (D-MD) also noted that he is worried that the combination of low prices and additional OCS drilling may inhibit the nation's ability to adequately develop renewable forms of energy.

Another issue raised during the hearing was Interior Secretary Salazar's recent decision to delay the OCS planning process by 180 days. As expected, the companies did not favor this decision. The Ranking Member on the Committee, Doc Hastings (R-WA) took this sentiment a bit further, noting that the Secretary's decision amounts to a reinstatement of the ban on drilling. Rep. Hastings also added that the government needs to examine what it can do to facilitate the development of leases. Rep. Henry Brown (R-SC) further examined the permitting issue, asking the panelists to compare the process in the U.S. with other countries. The panelists appeared to agree that the permitting process, at least in the Gulf of Mexico, is comparable with other countries. The Alaska permitting process does appear, however, to be more difficult, according to the executives.

While this hearing concluded the Committee's first series on OCS drilling matters, we expect the Chairman and others to call for additional hearings to discuss royalties, leasing, and other related issues.

VA Gov. Kaine to Salazar: Delay OCS Lease Sale

Wed, 25 Feb 2009 13:25:10 GMT

Virginia Gov. Tim Kaine (D) sent a letter to Interior Secretary Ken Salazar last week asking him to postpone OCS Lease Sale 220, which includes lands offshore Virginia. Kaine praised Salazar's decision to extend the public comment period for the Department's 5-year OCS leasing plan, which includes Lease Sale 220, but argued that Virginia state laws do not "support exploration for oil or production of gas or oil." Today's Virginian-Pilot has more details.

Coastal States the Focus of House Hearing on OCS Drilling

Tue, 24 Feb 2009 18:05:54 GMT

The House Natural Resources Committee today convened the second in a series of hearings addressing the nation's policy on offshore drilling. In his opening statement, Committee Chairman, Nick Rahall (D-WV), noted that he is "not opposed to drilling," but is "aware of the risks" associated with the development of the OCS. This sentiment was echoed by several of the Committee's members who, while not in favor of reimposing the longstanding congressional drilling moratoria, understand that opening the offshore to greater production will trigger environmental concerns, including the addition of more greenhouse gases to the atmosphere. On this point, several members asserted that it is not yet clear that such activities have significantly contributed to global warming. Not surprisingly, there was generally a clear divide between Committee Democrats and Republicans on these issues, although both sides appeared interested in developing a national energy policy.

The first panel included Reps. Sam Farr (D) and Dana Rohrabacher (R), both from California. Rep. Farr was in favor of reinstating the moratoria, noting that he supports a temporary ban until a more comprehensive approach can be established. Rep. Farr also advocated for "marine spatial planning," a process that allows the government to "assess and then allocate areas of the OCS" for development in a manner that preserves the oceans and benefits the economy. He contrasted this method with onshore development, where certain regions hosting critical habitats are restricted from development. In contrast, Rep. Rohrabacher strongly advocated for OCS drilling while noting that he is an avid surfer and scuba diver. He cited environmental groups as a key obstacle to expanded exploration and production. He added that the lack of OCS production requires the United States to import oil and gas by tanker. Noting that tanker spills cause greater damage than spills from OCS production, he said opponents "ironically make oil spills more likely" by blocking the development of such production. Rep. Rohrabacher also suggested, somewhat facetiously, that providing pleasant "facades" on offshore platforms (e.g., painting trees on them) may help to win the support of environmental opponents.

After a rousing first session, the atmosphere surrounding the second panel was less colorful. The lighting rod on the panel, at least for Republicans, was Secretary Mike Chrisman of the California Natural Resources Agency. Secretary Chrisman was frequently questioned about his state's staunch opposition to offshore drilling. Committee Ranking Member Doc Hastings (R-WA) also asked why California appears to support the importation of liquefied natural gas (LNG) over offshore production, implying that the nation would be better served by producing natural gas domestically than importing from "Saudi Arabia, Venezuela and Brazil." Secretary Chrisman noted that the state is evaluating importing LNG from Australia and that LNG is part of a broader energy policy, which includes a heavy renewable energy component. Virginia State Senator Frank Wagner (R), a longtime supporter of drilling offshore Virginia, noted that he disagrees with Governor's Kaine's support for Interior Secretary Salazar's recent decision to extend the comment period on the 5-year OCS plan by 180 days.

Tomorrow the Committee will host the third hearing in the series, focusing on industrial perspectives. Based on past hearings, this one promises to be the most contentious.

API Chairman Calls DOI OCS Study Potential Stalling Tactic

Tue, 24 Feb 2009 10:46:02 GMT

American Petroleum Institute chairman, Larry Nichols, said the Department of the Interior's plan to evaluate the OCS's oil and natural gas resources will result in a "de-facto moratorium." Nichols views Secretary Salazar's use of the U.S. Geological Survey to conduct the survey as a way to stall moving forward with plans to develop new areas of the OCS. In just over a month, the DOI is due to issue a comprehensive report on the potential impacts of drilling in the OCS. Secretary Salazar has publicly taken a cautious approach to the issue of drilling thus far. Today's Platts Inside Energy EXTRA has more. [Subscription required.]

Secretary Salazar Wants Clarity of MMS’s Authority Over OCS

Mon, 23 Feb 2009 15:35:04 GMT

On the eve of this week's House Natural Resource Committee hearings focusing on offshore oil and gas drilling, Interior Secretary Ken Salazar called for clarity of the scope of the Minerals Management Service’s authority over the Outer Continental Shelf. In addition to MMS's jurisdiction over the leasing of offshore oil and gas resources, the 2005 Energy Policy Act put MMS in charge of alternative energy development on the OCS. The agency has yet to finalize a final rule implementing the renewable energy program. Secretary Salazar suggested that a combination of future legislation and administrative action may be required to further iron out this authority. Today’s E&E Daily has more. [Subscription required.]

FL Gov. Announces Opposition to Calypso LNG Deepwater Port Project

Thu, 19 Feb 2009 11:50:47 GMT

Governor Charlie Crist (R-FL) pledged yesterday to oppose the proposed Calypso LNG deepwater port planned 10 miles off the coast of Fort Lauderdale, Fla., noting that he believes the project is "already in bed. It's gone." Read more in the Miami Herald.

Stimulating Offshore Wind

Tue, 17 Feb 2009 17:01:00 GMT

On February 17, 2009, President Obama signed into law the “American Recovery and Reinvestment Act” (“ARRA”), a $787.2 billion spending and tax cut stimulus package. The following is a summary of the major provisions in the ARRA that may impact offshore wind energy projects.

Production Tax Credit Extension. Internal Revenue Code (“IRC”) § 45 allows a production tax credit (“PTC”) for production of electricity at a “qualified facility” using “qualified energy resources.” PTCs are generally available during the 10-year period beginning on the date that a qualified facility is placed in service. The amount of the available PTC is the product of the amount of electricity produced and an inflation-adjusted amount published annually by the IRS.

A qualified facility must be placed in service before specified dates. The ARRA extended by 3 years, from January 1, 2010 to January 1, 2013, the date before which a wind facility must be placed in service to be treated as a qualified facility.

Election to Claim ITC in Lieu of PTC. Under IRC § 48, an investment tax credit (“ITC”) is available with respect to “energy property.” Prior to the ARRA, the term “energy property” did not include wind facilities. The ARRA expands the ITC to allow taxpayers to make an election to claim with respect to wind facilities (in lieu of a PTC), an ITC equal to 30% of the taxpayer’s basis in the wind facility. The ITC is claimed during construction of the wind facility and/or in the year that the wind facility is placed in service (as compared to the PTC which provides a credit over the 10-year period after a wind facility is placed in service)

Repeal of ITC Subsidized Energy Financing Reduction. The amount of the available ITC is 30% of a taxpayer’s basis in a wind facility. The ARRA amended the ITC so that no reduction in the amount of the tax credit is required for energy property constructed using subsidized energy financing or private activity bonds, the interest on which is tax-exempt. Subsidized energy financing includes financing under a federal, state, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.

Treasury Grant In Lieu of PTC or ITC. In lieu of claiming PTCs or ITCs with respect to wind facilities, the ARRA provides that a grant may be obtained from the Department of Treasury. To qualify for the Treasury grant, either (i) the property must be placed in service during 2009 or 2010 or (ii) construction must begin in 2009 or 2010 and must be completed before January 1, 2013. The amount of the grant is the 30% of a taxpayer’s basis in a wind facility.

Increased Funding for Clean Renewable Energy Bonds. Under current law, the amount of “New Clean Renewable Energy Bonds” available under IRC § 54C is limited to $800 million. The ARRA increases the bond limitation by $1.6 billion.

Innovative Technology Loan Guarantee Program. The ARRA appropriates $6 billion to pay the costs of guarantees made under § 1705 of the Energy Policy Act of 2005, as amended. Eligible projects under § 1705 must commence construction no later than September 30, 2011 and include wind facilities. Unlike previous loan guarantees made under the Energy Policy Act of 2005, those made under § 1705 do not require the facility to employ new or significantly improved technologies.

For additional information on impacts of the ARRA on other forms of renewable energy, please click here.

Rahall Opens OCS Hearings Series with Celebrity Panel

Wed, 11 Feb 2009 15:46:39 GMT

Chairman Nick Rahall (D-WV) and the House Natural Resources Committee held their first in a series of three hearings on OCS leasing policy today, welcoming celebrity ocean advocates Ted Danson and Phillipe Cousteau, the grandson of Capt. Jacques Costeau, as the first panel of witnesses. Rahall opened by responding to advocates of the "drill, baby, drill!" mold, noting that "the United States does drill -- and we drill a lot," and that there are more active rigs in the U.S. than in the rest of the world combined. Danson, arguing that "oil and water don't mix" and that "the oil companies are making us a sucker's offer [in expanding OCS drilling]," proposed reinstating the OCS ban, suspending all Arctic exploration, and holding a new series of hearings on offshore renewable energy such as wind, tidal, current, and geothermal projects. Cousteau, echoing Danson's proposals, also called for a more comprehensive, unified approach to leasing, and the funding of a new Ocean Investment Fund with OCS royalties. Rahall opined that political realities dictate that an OCS ban cannot be reimposed. A lively (and long) round of questioning from Members focused on the difference in environmental impacts from oil versus natural gas exploration, "use-it-or-lose-it" issues with existing leases, and environmental and permitting problems related to offshore renewables.

Rep. Markey Seeks Drilling Ban in Georges Bank

Mon, 09 Feb 2009 10:29:03 GMT

Rep. Markey (D-MA) introduced legislation today (H.R. 790) designed to prohibit oil and natural gas leasing and production in the Georges Bank, off the coast of Massachusetts. Georges Bank supports several of New England's largest fishing ports, including the nation's most productive port in New Bedford, Mass. Given that oil and gas leasing is no longer prohibited on the majority of the Outer Continental Shelf, coastal state members may be inclined to introduce measures prohibiting offshore development in specific areas, such as the Georges Bank. Read Rep. Markey's press release for more details.

Similar legislation (H.R. 204) was introduced earlier this year by Rep. Mike Thompson (D-CA) to prohibit drilling offshore Northern California.

Rep. Rahall Plans Oversight Hearings on Offshore Drilling Policy

Wed, 04 Feb 2009 16:08:00 GMT

House Natural Resources Chairman Nick Rahall (D-WV) has called a series of three oversight hearings focused on offshore drilling. The series consists of: "Environmental and Commercial Perspectives" on Feb. 11; "State Perspectives" on Feb. 24; and "Industrial Perspectives" on Feb. 25. These congressional hearings come at a time when the Obama Administration is trying to decide how aggressively, and under what conditions, to lease federal land located on the OCS for oil and gas E&P. The Committee's Ranking Member, Rep. Doc Hastings (R-WA), argues that job creation should be the primary touchstone when evaluating offshore drilling policy. Chairman Rahall, echoing President Obama, does not fundamentally oppose offshore exploration, but adds that it should be done in a "responsible, environmentally sound and transparent manner." Stay tuned to see exactly what that limiting language means when it comes to energy legislation in the 111th Congress. Today's Greenwire has more. [Subscription required.]

House Republicans Encourage President Obama to Support OCS Energy Production

Wed, 04 Feb 2009 09:52:38 GMT

In a press release issued today, House Minority Leader John Boehner (R-OH) announced that he and several of his Republican colleagues wrote to President Obama and the Department of the Interior to urge them not to block energy exploration on the Outer Continental Shelf. The Members stated OCS energy exploration is critical to lowering energy costs and to job creation.

Sen. Bingaman Proposes 30% Cash Grant for Renewable Producers

Tue, 03 Feb 2009 16:00:00 GMT

Senate Energy and Natural Resource Committee Chairman Jeff Bingaman announced today that he proposes amending the tax code to give renewable producers the option of a 30 percent cash grant in lieu of 30 percent production credit. A related amendment was included in the approved House bill and the current Senate version; however, Bingaman's proposal would be a further incentive/boon to renewable producers than that first amendment. His proposal (and the current tax incentive) apply to a wide range of renewable facilities, and appear at this time to include certain offshore facilities (e.g., offshore wind facilities).

Senator Murkowski: Energy Legislation Not Likely to Address OCS Moratorium

Fri, 30 Jan 2009 10:49:45 GMT

Sen. Lisa Murkowski (R-AK), Ranking Member of the Senate Energy and Natural Resources Committee, suggested that the Committee is not likely to address the recently lifted OCS moratorium in energy legislation expected to be crafted over the next several months. She does, however, expect such legislation to allow for an assessment of current OCS reserves. These and other OCS issues are sure to be the subject of significant debate as the Senate moves forward on energy legislation. Stay tuned. Read more at E&E Daily for more [subscription required].

Subcommittee Chairs Selected for House Natural Resources Committee

Tue, 27 Jan 2009 10:53:52 GMT

Rep. Jim Costa (D-CA) will chair the Subcommittee on Energy and Mineral Resources, which has jurisdiction over energy development on public lands and waters, including oil and gas leasing in the Outer Continental Shelf. The selection by the Democratic Caucus of Costa, whose district includes parts of Fresno and Bakersfield and is entirely inland, means that yet another California Democrat will play an important role in offshore energy development, adding to Senator Barbara Boxer, who chairs the Senate Committee on Environment and Public Works, and Rep. Henry Waxman, who chairs the House Energy and Commerce Committee. Read the House Natural Resources Committee's press release for more details.

Navy Looking to Use Tidal Energy

Mon, 26 Jan 2009 16:47:42 GMT

The U.S. Navy is in the early stages of developing a tidal energy project to produce electricity for its base at Indian Island, Washington. Pending funding for the $2 million project, the plan is to start a one-year pilot program next fall with six submerged turbines. If successful, tidal energy may be used to assist the Defense Department in meeting the National Defense Act of 2007 mandate to obtain 25% of its energy from renewable sources by 2025. The Associated Press (via The Oregonian) provides more details.

Senator Bingaman on DOI Offshore Energy Plans

Wed, 21 Jan 2009 17:01:00 GMT

Senator Bingaman issued a short statement today applauding Interior's analysis of the environmental and safety impacts of the Cape Wind Energy Project proposed for offshore Massachusetts. He also expressed support for a team-oriented approach to offshore drilling, including collaboration from DOI and the coastal states. With the Obama Administration and Secretary Salazar supporting a "thoughtful approach" toward offshore drilling, it seems increasingly unlikely that a comprehensive offshore moratorium on the east and west coasts will be resurrected by Congress.

MMS Publishes Notice of Intent to Prepare PEIS for Atlantic OCS Geological Activities

Wed, 21 Jan 2009 15:29:50 GMT

In today's Federal Register, the MMS published its Notice of Intent (NOI) to Prepare a Programmatic Environmental Impact Statement (PEIS) and Call for Interest for future industry geologic and geophysical exploration on the Atlantic OCS. The NOI initiates the scoping process for the PEIS and also seeks interest from other federal agencies, and state, tribal, and local governments to consider becoming cooperating agencies in the preparation of the EIS.

MMS Issues Request for Comments on Draft Proposed 5-Year OCS Drilling Plan

Wed, 21 Jan 2009 15:26:16 GMT

The Minerals Management Service published a request for comments today on the draft proposed 5-year OCS oil and gas leasing program for 2010-2015. The draft proposal is for a new oil and gas program to succeed the current program that is set to expire on June 30, 2012. In developing the proposal, MMS considered oil and gas leasing in the areas of the OCS that are included in the current 5-year program and additional areas off Alaska, the Pacific and Atlantic coasts, and the Gulf of Mexico. Many of these areas had been subject to an annual congressional moratoria prohibiting oil and gas leasing. This moratoria expired on September 30, 2008. The MMS also announced its Notice of Intent to prepare an Environmental Impact Statement for the proposed 5-year plan.

DOE Announces 2009 Ultra-Deepwater Oil and Gas Plan

Tue, 20 Jan 2009 11:02:41 GMT

The Department of Energy's Office of Fossil Energy has announced the availability of the 2009 Annual Plan for the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research and Development Program. Among other things, the Annual Plan supports oil and gas research and development in the ultra-deepwater areas of the Outer Continental Shelf. After DOE transmits the Annual Plan to Congress, Requests for Proposals will be developed and released for project awards.

Interior Dep't Advances Wider Coastal Leasing Plan

Fri, 16 Jan 2009 16:24:19 GMT

The Bush Interior Department, during its last days in office, has proposed a plan to broaden offshore oil and gas leasing, including regions off both the east and west coasts and the Gulf of Mexico. MMS has jurisdiction over federal oil and gas leases, including the Outer Continental Shelf, over which a decades-old moratorium on drilling recently expired. President-elect Obama has signaled that he supports new offshore drilling, but only as part of a "comprehensive package" on energy. Greenwire provides further coverage.

MMS Issues Final EIS for Cape Wind

Fri, 16 Jan 2009 16:18:00 GMT

The long-stalled wind energy project proposed for offshore Massachusetts received a positive Final Environmental Impact Statement (FEIS) today from the Interior Department’s Minerals Management Service (“MMS”), clearing the way for MMS to issue a lease to the project developer, Cape Wind Associates. While this positive FEIS sets the basis for final approval, the Obama Administration ultimately will determine the future of Cape Wind -- an interesting dilemma for President Obama given his support for renewable energy but the strong opposition to Cape Wind of Senator Ted Kennedy (D-MA), a critical supporter of candidate Obama during the Democratic primary. If approved, this will be the first offshore lease for a wind energy project authorized by MMS.

Woodside Suspends OceanWay LNG Deepwater Port Project

Fri, 16 Jan 2009 11:09:24 GMT

Woodside Natural Gas announced yesterday that it has suspended its OceanWay LNG deepwater port project proposed for offshore Southern California. A company spokesperson told the Los Angeles Times that Woodside plans to revive the project when economic conditions change.

Appeals Court Rules in Favor of Industry in Widely Anticipated Royalties Case

Mon, 12 Jan 2009 11:14:33 GMT

The U.S. Court of Appeals for the Fifth Circuit today ruled in the matter of Kerr-McGee v. Allred that the Deepwater Royalty Relief Act of 1995 did not authorize Congress to include price thresholds in oil and natural gas leases issued between 1996 and 2000. In a unanimous opinion, the court found that Congress clearly intended to provide volumetric royalty relief to producers, noting such relief could not be reduced based on the price of the commodity. While the court’s ruling was clear, there still remains considerable debate in Congress as to the intent of the statute. This ruling has tremendous implications for a related matter involving deepwater leases issued in 1998 and 1999 that did not contain price thresholds. In the wake of the court’s ruling, several members voiced their disapproval and vowed to revisit the issue.

Construction of R.I. Offshore Wind Farm to Begin in 2010

Fri, 09 Jan 2009 11:18:26 GMT

Rhode Island Governor Donald Carcieri (R) yesterday released details about the construction timeline for the state's proposed offshore wind farm. The wind farm will be built in two phases beginning in 2010. The first phase, sited in state waters, is expected to go online in 2012 and will be comprised of wind turbines capable of generating 20 megawatts of electricity. The second, larger phase involves the development of additional turbines on the Outer Continental Shelf. Because of its location, the second phase will be subject to the approval of the Minerals Management Service. SustainableBusiness.com provides more detail.

California Democrats Propose Legislation to Ban Drilling Offshore Northern CA

Wed, 07 Jan 2009 15:52:00 GMT

Two Congressional Democrats from California have proposed legislation aimed at blocking drilling off the coast of Northern California. Rep. Mike Thompson (D-CA) and Rep. Lynn Woolsey (D-CA) introduced separate legislation yesterday in an "effort to protect th[e] area and to keep it pristine." Rep. Thompson’s legislation aims to prohibit oil and gas drilling off Mendocino, Humboldt and Del Norte counties, and Rep. Woolsey reintroduced legislation seeking to expand two national marine sanctuaries off the coast of Sonoma County. The Press Democrat has more details.

Given the unlikelihood of a comprehensive moratorium on offshore drilling on the east and west coasts, targeted legislative efforts at banning drilling in specific locales may become more frequent. More to come ....

Extended OCS Boundary May Make Texas Attractive for Offshore Wind Developers

Tue, 06 Jan 2009 11:31:32 GMT

Is the state of Texas the easiest place for offshore energy developers to begin construction? Texas has exclusive jurisdiction over the outer continental shelf for 9 miles off its shore -- up to 3 times more than most states. That means more space with only one landlord to negotiate leases with. Moreover, the Texas General Land Office, which grants the leases, appears anxious to do so relatively quickly and cheaply, as the state is more concerned with revenue from royalties than revenue from the lease payments themselves. ClimateWire provides additional coverage [subscription required].

DOE Releases Groundbreaking Marine and Hydrokinetic Technology Database

Mon, 05 Jan 2009 11:43:40 GMT

The Department of Energy's Wind and Hydropower Technologies Program released a fully searchable database of information on marine and hydrokinetic renewable energy including wave, current, and ocean thermal energy conversion technologies. The database currently covers around 28 countries, providing information on technology types and specific projects, as well as a glossary of standard definitions. The Progress Alert can be found on DOE's website.

Mass. DEP Approves Waterway Application for Cape Wind

Fri, 02 Jan 2009 11:47:09 GMT

Reuters reports that the Massachusetts Department of Environmental Protection has approved Cape Wind Associates LLC's application to install electrical cables in state waters.

Coast Guard Issues Final Rule on Vessel Response Plans for Oil

Fri, 02 Jan 2009 11:36:30 GMT

The United States Coast Guard issued a final rule amending the Vessel Response Plan salvage and marine firefighting requirements for tank vessels carrying oil. The rule identifies certain salvage and marine firefighting services that must be present in Vessel Response Plans and imposes new response time requirements with the goal of ensuring vessels are appropriately prepared to manage oil spills. The final rule can be found in theFederal Register.

Regulators Reject VA Governor’s Pleas to Delay Drilling Plans

Fri, 02 Jan 2009 11:26:24 GMT

The Minerals Management Service has rejected a request by Virginia Governor Tim Kaine (D) to postpone plans to hold a lease sale off the state's coast. Governor Kaine wanted to delay the process until President-elect Obama had a chance to review the matter. MMS Director Randall Luthi said that the regulatory comment period would be moved back until January 13, citing the recent holidays as the reason for granting a two-week extension. Luthi also suggested that there was no reason to grant the extension because "the next administration can delay the process, speed up the process or imprint the process as they see fit.” While President-elect Obama has stated that he favors offshore drilling as part of a comprehensive energy policy, it remains to be seen how the incoming administration will address such offshore energy issues. The Virginian-Pilot provides additional coverage.

FERC Asserts Jurisdiction Over Hydrokinetic Projects on OCS; Challenges MMS

Fri, 17 Oct 2008 11:30:00 GMT

On October 16, the Federal Energy Regulatory Commission (FERC) announced its position that it has jurisdiction over the licensing of hydroelectric projects, including wave, tidal and other forms of ocean energy, located on the Outer Continental Shelf (OCS). FERC’s jurisdictional claim directly conflicts with the position taken by the U.S. Department of the Interior, Minerals Management Service (MMS), which currently is developing regulations for its Alternative Energy and Alternate Use (AEAU) program. The AEAU program involves the leasing of OCS lands for the development of hydroelectric, wind, solar and other alternative energy projects. FERC’s announcement does not assert jurisdiction over OCS wind or solar projects.

MMS’s Claim to OCS Jurisdiction

MMS derives its authority over hydroelectric projects on the OCS from Section 388 of the Energy Policy Act of 2005 (EPAct), which directs the Secretary of the Interior to grant leases, easements or rights-of-way for activities on the OCS that are related to production, transportation or transmission of energy from sources other than oil and gas. MMS asserts that its authority includes OCS hydroelectric licensing activities, as set forth in its proposed rule for the AEAU program. Specifically, MMS states that FERC’s jurisdiction is limited to issuing licenses and permits for projects located within state waters, which are generally limited to three miles offshore. MMS currently is reviewing comments received on its proposed rule and has stated that it expects to issue a final rule by the end of 2008.

FERC’s Claim to OCS Jurisdiction

FERC asserts that its jurisdiction derives from the Federal Power Act (FPA). Under the FPA, FERC claims that it has jurisdiction to license hydroelectric projects located on “navigable waters” and “streams or other bodies of water over which Congress has jurisdiction.” FERC concludes that these waters include the OCS. In addition, FERC contends that the FPA grants it jurisdiction over hydroelectric projects located on “reservations,” which are any lands owned by the United States, including OCS lands.

FERC further contends that Section 388 of EPAct did not alter its existing authority to permit hydroelectric projects in federal waters, but merely established MMS’ authority, as a federal land management agency, to issue leases, easements and rights-of-way necessary for such projects.

Continued Dispute

FERC addressed the jurisdictional dispute with MMS in the context of a rehearing order on two preliminary permits issued to Pacific Gas & Electric Co. to study the feasibility of developing wave energy projects on the OCS offshore California. FERC also raised the issue in comments it filed to MMS’s AEAU rulemaking, requesting that MMS remove hydroelectric facilities from its proposed program.

Although FERC Chairman Joseph T. Kelliher stated “I am confident that today’s decision puts to rest any questions about FERC’s jurisdiction over hydroelectric projects on the OCS,” this jurisdictional question likely will remain unanswered at least until MMS issues its final AEAU regulations. If MMS concedes jurisdiction to FERC in its Final Rule—an unlikely scenario—project developers will have clarification as to the regulatory process required for project authorization. If, on the other hand, MMS continues to assert jurisdiction over hydroelectric power projects on the OCS—the more likely scenario—the jurisdictional uncertainty may continue, leading to regulatory delay for project developers.

FERC’s order can be found on the FERC website’s eLibrary system in Docket Nos. P-12781 and P-12779.

Sutherland encourages all of its clients with interests in this matter to assess the possible impact on their commercial interests from the potential delay and this interagency jurisdictional conflict, and consider whether any action in response is appropriate.