March 9, 2018 Kelly Hammerle, Chief, National Oil & Gas Leasing Program Development & Coordination Branch BOEM (VAM-LD) 45600 Woodland Road Sterling, VA 20166-9216 Submitted online at http:www.regulations.gov, Docket ID: BOEM–2017–0074 Re: NRDC Comments for the 2019-2024 Outer Continental Shelf Oil and Gas Leasing Draft Proposed Program Dear Ms. Hammerle: On behalf of the Natural Resources Defense Council (NRDC) and our more than 3 million members and online activists, we submit these comments to the Bureau of Ocean Energy Management (BOEM) regarding the 2019-2024 Outer Continental Shelf (OCS) Oil and Gas Leasing Draft Proposed Program (DPP or Draft Proposal). For more than four decades, NRDC has monitored and engaged in policy processes related to leasing, exploring and producing oil and gas from our nation’s oceans and we appreciate the opportunity to comment on this important issue. The DPP is unprecedented in its scope: it opens 25 out of 26 planning areas for leasing and schedules 47 lease sales, the most of any Five-Year Leasing Program in history. At the same time, demand for offshore oil is decreasing. The United States is poised to become a net oil exporter by 2029 without additional offshore oil leasing that puts coastal communities and marine ecosystems at risk. Global oil demand is projected by many to peak by 2030 and then begin to decline, and oil prices are expected to remain low for the next several decades.1 New offshore oil and gas exploration is also fundamentally inconsistent with efforts to address climate change. We cannot meet our international obligations and avoid the worst impacts of climate change while at the same time exploiting new reserves.2 Renewable energy, energy efficiency, and electric vehicles are viable alternatives to fossil fuels, and we should intensify our efforts to expand the use of them. The use of clean energy and transportation technologies has increased significantly in the past decade, providing clean sources of power and transportation while at the same time growing local economies, reducing climate change-causing emissions, and reducing our dependency on oil. We should focus on continuing to expand the use of renewable energy and transportation, and using energy more efficiently, rather than attempt to exploit new oil reserves. 1 U.S Energy Information Administration. Annual Energy Outlook 2018. [hereinafter “AEO 2018”]. Available at https://www.eia.gov/outlooks/aeo/ 2 McGlade, C. and P. Elkins, 2015, The geographical distribution of fossil fuels unused when limiting global warming to 2 degrees C, Nature 517: 187-190 (Jan. 8, 2015). 1 Not only do we not need this oil, but exploiting this public resource would harm – not benefit – coastal communities, the marine environment, and the public.3 The leasing process for areas in the OCS is already uncompetitive, resulting in low lease bids and minimal returns to the public. Opening a much vaster area of the OCS to leasing in such a short amount of time will further depress lease prices – essentially selling off our public resources at a steep discount. At the same time, the administration is attempting to roll back crucial safety measures that were adopted to prevent another catastrophic oil spill like the Deepwater Horizon from occurring. Exploiting offshore oil at a steep discount when we do not need this oil and cannot afford its climate and environmental impacts is not in our national interest. NRDC does not believe that the DPP meets the requirements of the Outer Continental Shelf Lands Act (OCSLA). For example: • The Draft Proposed Program does not comply with Section 18(a) of OCSLA because it fails to consider relevant climate and energy policy information in developing a leasing program that will best meet national energy needs. The DPP is rooted in the false premise that our nation will need to be developing new sources of offshore oil and gas for the next several decades. It ignores vitally relevant information, including the oil supply glut rendering offshore oil surplus to our energy needs, the climate change implications of its assumptions about future fossil fuel production and consumption, the viability of alternatives like electric vehicles and renewable energy, and our country’s international obligations. • The Proposed Program fails to consider important information about the different OCS regions and the impacts of leasing on the environment, as required by Section 18(a). The DPP does not comply with the OCSLA Section 18 requirements to consider ecological and other information about the different regions, the economic, social, and environmental values of the OCS, and the impacts of fossil fuel development on the marine, coastal, and human environments.4 • The Department of the Interior is unable to demonstrate that the DPP will “obtain a proper balance between the potential for environmental damage, the potential for the discovery of oil and gas, and the potential for adverse impact on the coastal zone.”5 I. The Draft Proposed Program does not comply with Section 18(a) of OCSLA or the Administrative Procedure Act because it fails to consider relevant climate and energy policy information in developing a leasing program that will best meet national energy needs. One of the underlying rationales for the BOEM’s Draft Proposal is that the potential oil and gas resources from these offshore leases will be “fundamental to America’s energy security in the 3 Hilzenrath, D. and Pacifico, N., Drilling Down: Big Oil’s Bidding, The Project on Government Oversight (Feb. 22, 2018) http://www.pogo.org/our-work/articles/2018/drilling-down-big-oils-bidding.html.; Congressional Budget Office, Options for Increasing Federal Income From Crude Oil and Natural Gas on Federal Lands, (April 2016) https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51421-oil_and_gas_options-OneCol- 3.pdf 4 43 U.S.C. § 1344(a)(1) & (2). 5 43 U.S.C. § 1344(a)(3). 2 coming decades.”6 While the DPP notes that the need for imports has been decreasing significantly in the last decade due to growing domestic oil production, it asserts that without offshore drilling this trend is unlikely to continue.7 However, this assertion is misleading for a number of reasons, and thus misconstrues the value and use of new offshore drilling sites in the future. There is no need to develop these offshore oil and gas reserves for the nation’s energy security. Onshore production and company interest, coupled with expected declining demand for oil, are expected to fulfill the nation’s petroleum needs over the next 35 years (the time period for which projections are available in the latest government analysis). An ongoing supply glut, growing onshore production, and weak demand is projected to keep prices low and makes the economics of these proposed leases questionable, especially when considering the alternative uses of these offshore areas and environmental cost of drilling in these waters. First, it is crucial to separate oil and gas: the two markets are different and face separate pressures and drivers. Offshore drilling is primarily associated with oil: around 20 percent of oil production is from federal offshore waters versus just around 5 percent of gas production.8 In the latest U.S. Energy Information Administration (EIA) Annual Energy Outlook (AEO 2018),9 the differences between these commodities and their futures are clear: natural gas is becoming a bigger portion of our energy system, oil is not. In 2017, petroleum made up almost 39 percent of all energy consumed in the U.S. Natural gas was around 28 percent of total energy consumed.10 By 2050, oil is projected to represent just 34 percent of energy demand. Natural gas will be 33 percent of total energy demand.11 Domestic natural gas production is expected to grow twice as fast as that of oil, though both are expected to see significant growth between now and 2050.12 While both see growth in domestic production, domestic consumption trends are less similar. Natural gas consumption is expected to grow due to increasing industrial and power sector demand.13 On the other hand, petroleum use is expected to decline somewhat. The transportation sector (which is the largest consumer of oil) sees a 30 percent reduction in gasoline use between now and 2050 due to rising vehicle fuel efficiency and exponentially growing sales of alternative vehicles, such as electric, hybrid, natural gas, and hydrogen vehicles.14 A. Oil and gas production is expected to increase, but due to onshore resources Domestic oil production is expected to see strong growth, especially in the next few years. In 2018, the U.S. is expected to produce more than 10 million barrels of oil a day, breaking the previous U.S. 6 U.S. DEPARTMENT OF THE INTERIOR, BUREAU OF OCEAN ENERGY MGMT. 2019-2024 National Outer Continental Shelf Oil and Gas Leasing Draft Proposed Program, p. 1. JAN. 2018. [hereinafter “DPP”].Available at https://www.boem.gov/NP-Draft-Proposed-Program-2019-2024/ 7 Id. at page 5. 8 Id. Figure 1-4 and 1-5. 9 AEO 2018. 10 Table 1 of the Annual Energy Outlook 2018, https://www.eia.gov/outlooks/aeo/tables_ref.php 11 Id. 12 AEO 2018. 13 Id. 14 Id. 3 record of 9.6 million set in 1970.15 Production is expected to surpass 11 million barrels a day by 2019.16 By the end of 2018, the U.S. is projected to be a larger oil producer than Saudi Arabia and then surpassing Russia to be the largest oil producer in the world by the end of 2019.17 This projected growth comes solely from onshore oil production (See Figure 1). Offshore oil production is projected to decrease between now and 2050.