Review Clears Path for Seismic Tests of U.S. Atlantic Oil

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Brazil's oil reserves, including recent discoveries in deep waters of the Atlantic Ocean, are of a similar size to those found in the North Sea. Close

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Photographer: Rich Press/Bloomberg

Brazil's oil reserves, including recent discoveries in deep waters of the Atlantic Ocean, are of a similar size to those found in the North Sea.

Seismic measuring of oil and gas off the U.S. Atlantic coast can be done safely under certain conditions, the government said in a report that marks a critical step toward drilling in an area off limits for decades.

Measures to minimize the effects on wildlife, such as a pause in testing during whale migrations and sea turtle nestings, could make oil exploration feasible in the stretch of Atlantic Ocean that runs from Delaware to Florida, the U.S. Interior Department said today in a final environmental impact report.

The Mid- and South-Atlantic Outer Continental Shelf area holds at least 3.3 billion barrels of oil total, which is about half of what the U.S. consumes in a year, according to the Bureau of Ocean Energy Management. The report may restart a fight over offshore drilling between conservationists including Oceana that say seismic testing is a threat to marine wildlife and oil companies seeking to maintain a U.S. energy boom.

The report includes a “strong suite of measures that would apply to any surveying in the region” to protect wildlife, Tommy Beaudreau, director of the Interior Department’s Bureau of Ocean Energy Management, said at a news conference.

Additional monitoring is needed to study the size of the hydrocarbons that could lie under the seafloor, he said.

Environmental groups criticized the report for not presenting enough safeguards for wildlife, including the Right whale, of which there are thought to be 500 left in existence.

“The greenest options are not green enough by far,” Matthew Huelsenbeck, a Washington-based marine scientist at Oceana, said in a telephone interview. “We don’t feel you need to turn the Atlantic into a blast zone to fulfill our energy needs.”

Air Guns

Seismic testing is a process that involves ships towing guns that shoot compressed air underwater. Reflected sound waves give companies a picture of the resources that may lie underneath the seafloor. The tests are 100 times more intense than a jet engine, according to Oceana.

It could be years before drillers actually search for oil and gas off the Atlantic. There are no plans at the Interior Department to open for sale the area that extends from Delaware south to around Cape Canaveral, Florida. A new five-year lease plan under development would start in 2017.

For years the Atlantic area was protected by congressional and presidential drilling moratoriums. While those were lifted in 2008 as a gas-price rise prompted complaints from drivers, President Barack Obama, who took office in January 2009, hasn’t opened the area to bids from producers interested in searching for oil and gas there.

Senator Mary Landrieu, a Louisiana Democrat, said the environmental report’s release was an overdue step toward expanding offshore drilling.

Reliable Estimates

“It’s long past time that we have a sound understanding and reliable estimates of the Atlantic’s natural resource potential so we can produce energy and create high-paying jobs,” Landrieu, the chairman of the Senate Energy and Natural Resources Committee, said in a statement.

The current estimates of 3.3 billion barrels of oil are “outdated and, in all likelihood, grossly inaccurate,” Richie Miller, president of seismic testing company Spectrum Geo Inc., told a House natural resources panel in January.

Beaudreau, of the Bureau of Ocean Energy Management, said nine companies have applied to do seismic testing in the area. He didn’t name them.

Erik Milito, director of upstream and industry operations for the American Petroleum Institute, said seismic testing could begin early next year, though interest might wane if the Interior Department doesn’t signal that portions of the Atlantic will be opened to drillers in the next five-year lease plan.

“We are pleased that this is moving forward,” Milito said in a press call before the Interior Department announcement.

Long-Term Strategy

It could still be a decade before oil and gas starts to flow, partly because companies would have to build infrastructure, such as pipelines, for the area, Milito said.

Kevin Book, managing director for ClearView Energy Partners LLC, a Washington-based research and analysis firm, said in an e-mail that the Atlantic is “probably a long-term strategic option rather than a near-term opportunity” for oil companies.

The gas-price rise in 2008 helped produce the rallying cry of “drill, baby, drill,” a catch-phrase popularized by former Alaska Governor Sarah Palin when she was that year’s Republican vice presidential candidate.

Since then, U.S. onshore oil and gas production has risen sharply, as drilling techniques like hydraulic fracturing have opened up areas including the Bakken formation in North Dakota.

Production Rise

The Energy Information Administration projects oil production to increase to 9.2 million barrels a day in 2015 from 7.4 million barrels daily in 2013.

Milito said expanding offshore drilling is essential to maintaining the energy renaissance.

A group of marine scientists and biologists wrote in a Feb. 20 letter to Obama that the U.S. should delay seismic testing until new guidelines to minimize the risks to wildlife are in place. The Interior Department study said 39 species of marine mammals could be affected, though the effects for most would be negligible if the mitigation measures are followed.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editors responsible for this story: Romaine Bostick at rbostick@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net

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