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21–988 2017

S. HRG. 114–469 

THE BUREAU OF OCEAN ENERGY MANAGEMENT’S 

2017–2022 OUTER CONTINENTAL SHELF OIL 

AND GAS LEASING PROGRAM 

HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

MAY 19, 2016 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://fdsys.gov 

(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

ELIZABETH WARREN, Massachusetts 

COLIN HAYES, Staff Director 

PATRICK J. McCORMICK III, Chief Counsel 

KIP KNUDSON, Professional Staff Member 

TRISTAN ABBEY, Senior Professional Staff Member 

ANGELA BECKER-DIPPMANN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SCOTT McKEE, Democratic Professional Staff Member 

STEPHANIE TEICH-McGOLDRICK, Democratic Congressional Fellow 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska ................... 1 

Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from Washington .................................................................................................................... 3 

WITNESSES 

Hopper, Abigail Ross, Director, Bureau of Ocean Energy Management, United 

States Department of the Interior ...................................................................... 5 

Hopson, Jr., Hon. John, Mayor, City of Wainwright, Alaska ............................... 11 

Boesch, Dr. Donald, President, University of Maryland Center for Environmental Sciences .................................................................................................... 17 

Knapp, Dr. James, School of the Earth, Ocean, and Environment, University 

of South Carolina ................................................................................................. 24 

Manuel, Athan, Director, Lands Protection Program, Sierra Club ..................... 33 

Mason, Dr. Joseph, Hermann Moyse, Jr./Louisiana Bankers Association Chair 

of Banking, E. J. Ourso College of Business, Louisiana State University ...... 47 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Atlantic Energy Alliance: 

Statement for the Record ................................................................................. 91 

Boesch, Dr. Donald: 

Opening Statement ........................................................................................... 17 

Written Testimony ............................................................................................ 19 

Responses to Questions for the Record ........................................................... 81 

Cantwell, Hon. Maria: 

Opening Statement ........................................................................................... 3 

Cassidy, Hon. Bill: 

Editorial dated December 9, 2015 entitled ‘‘Obama’s climate hypocrisy’’ 

which ran in The Hill ................................................................................... 56 

Hopper, Abigail Ross: 

Opening Statement ........................................................................................... 5 

Written Testimony ............................................................................................ 7 

Responses to Questions for the Record ........................................................... 68 

Hopson, Jr., Hon. John: 

Opening Statement ........................................................................................... 11 

Written Testimony ............................................................................................ 13 

International Association of Drilling Contractors: 

Statement for the Record ................................................................................. 97 

Knapp, Dr. James: 

Opening Statement ........................................................................................... 24 

Written Testimony ............................................................................................ 26 

Responses to Questions for the Record ........................................................... 83 

Manuel, Athan: 

Opening Statement ........................................................................................... 33 

Written Testimony ............................................................................................ 36 

Responses to Questions for the Record ........................................................... 84 

Mason, Dr. Joseph: 

Opening Statement ........................................................................................... 47 

Written Testimony ............................................................................................ 49 

Responses to Questions for the Record ........................................................... 89 

Page

IV 

Murkowski, Hon. Lisa: 

Opening Statement ........................................................................................... 1 

Native Village of Pt. Lay (Alaska): 

Resolution for the Record ................................................................................. 101 

(1) 

THE BUREAU OF OCEAN ENERGY MANAGEMENT’S 2017–2022 OUTER CONTINENTAL 

SHELF OIL AND GAS LEASING PROGRAM 

Thursday, May 19, 2016 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The Committee met, pursuant to notice, at 2:53 p.m. in Room 

SD–366, Dirksen Senate Office Building, Hon. Lisa Murkowski, 

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. LISA MURKOWSKI, 

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. The Committee will come to order. 

I apologize that we are starting a little bit late, but we had votes 

that we had to take care of and move forward on two Appropriations bills. Although that was good for the order, it does mean that 

we are starting just about a half hour late today, and it probably 

means that some of our colleagues who would otherwise have 

joined us here, we might not be seeing because of scheduling 

issues. 

I appreciate the opportunity this afternoon to conduct oversight 

on the Outer Continental Shelf (OCS) oil and gas leasing program. 

More specifically, the five-year program for 2017 through 2022 that 

is being prepared by the Bureau of Ocean Energy Management. 

We can start by recognizing that the natural endowment of the 

United States is virtually unrivaled. We have open spaces, wilderness, vast forests, national parks, productive seas and coastal regions. We have wild rivers, rivers that have been harnessed for our 

economy, soils that have ended famines and feed the world and 

mineral and energy deposits that underpin the international financial system and supply a global economic system. 

Congress delegated the management and stewardship of one portion of that endowment, our nation’s Outer Continental Shelf, to 

the Department of the Interior in the 1950’s. Since then, it has become a valuable source of energy for our nation creating economic 

growth and providing security as it reduces our imports from other 

countries. 

Over the past seven years, however, I have also watched the Department’s slow but steady abrogation of duty to manage this endowment properly. It pains me to say this, but we now, effectively, 

have a Gulf of Mexico leasing program and the shadow of a program for three major planning areas in Alaska. 

2 

The Department has concluded after years of study that just 13 

percent of our nation’s OCS acreage should be available for leasing. 

It has canceled sales in Alaska where development has overwhelming support and has produced only a bare minimum plan for 

2017 through 2022. I find that unacceptable. 

The Energy Information Administration (EIA) tells us that OCS 

oil production will rise from 17 percent of the U.S. total this year 

to 21 percent in 2017. We could pat ourselves on the back about 

that, or we could recognize that it is the result of decisions made 

years ago, likely in 2007 or perhaps even earlier. That in turn 

should make us consider what kind of production the program before us today will yield for our nation in 2027 and beyond. 

We are at a rare moment where we can plan ahead to meet our 

future needs without facing a supply or price-related emergency, 

yet we are not taking advantage of it. By choosing not to produce 

here, we are telling other countries, some of them rather nefarious, 

that we would rather buy from them. We are giving away the jobs, 

the revenues, the growth and the security that would all come with 

that energy development. 

The Bureau of Ocean Energy Management (BOEM) removed the 

single Atlantic lease sale in its proposed program. A 2014 study estimated that a robust Atlantic leasing program could result in new 

oil production of 1.3 million barrels per day and 280,000 new jobs 

by 2035. Even if the Atlantic’s resources are not that prolific, Interior’s decision will still cost our country for years to come. 

The Department’s treatment of the Alaska OCS is also extremely 

frustrating. The proposed program includes just three sales with 

targeted acreage, not the area-wide sales that Alaskans have advocated for this past decade. Department leaders have implied there 

is waning interest in Alaska, but above all it is the chaotic Federal 

regulatory regime that is discouraging investment. 

The economic activity that we are sending overseas due to lack 

of proper Alaska OCS management means Alaska Native communities that have survived for thousands of years in the harshest environment on Earth may have to choose between schools, health 

clinics or home heat. Just as our oil pipeline, our infrastructure of 

national significance and vital to the entire West Coast is at risk 

of becoming uneconomic and then by law, dismantled. 

I am disappointed by the proposed five-year program for 2017 

through 2022. Oil prices may be relatively low today but they will 

not stay that way, especially if we refuse to provide access to new 

supply. Instead we will find ourselves giving away the gains of recent years as our imports, once again, rise, our economy, once 

again, suffers and we, once again, find ourselves at the mercy of 

OPEC. 

The Energy Security Leadership Council released a new report 

this morning, and I would urge members to read it carefully. Their 

Council, with CEOs, former military leaders and more, recommends reopening the five-year program for 2017 through 2022. 

I had hoped that we would not reach that point, but we have and 

especially if the lease sales for Alaska are not maintained, we will 

do just that. 

With that, I will now turn to Ranking Member Cantwell for your 

opening comments, and then we will go to our witnesses. 

3 

STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM 

WASHINGTON 

Senator CANTWELL. Thank you, Madam Chairman, for scheduling this hearing to examine the 2017–2022 Outer Continental 

Shelf oil and gas leasing program and I thank the witnesses for 

being here today. 

Offshore oil and gas production is an important part of our domestic energy portfolio today, and I acknowledge its role in regional and local economies where production takes place. 

As we have discussed today, we keep in mind that the potential 

for oil and gas resulting in these lease programs will not contribute 

to the energy markets in a meaningful way for a decade or more. 

But, during this time, we will see major changes in our energy 

landscape. So we need to plan leasing activities in the context of 

what those future economies will look like. 

Last month was the sixth anniversary of the BP Deep Water Horizon explosion and oil spill, which was an epic human, economic 

and ecological disaster. Eleven members of the crew were killed in 

an explosion, and 17 others were injured. Oil spewed into the ocean 

for nearly three months, a mile below the surface, resulting in the 

largest offshore oil spill in the history of the United States. The 

134,000,000 gallons of oil released is about 12 times more than the 

Exxon Valdez Spill. What we are learning about the damage from 

the final natural resource damage assessment released just this 

month is the following things: 

First, the Deep Water Horizon spill caused the public to lose 

more than 16,000,000 user days of boating, fishing and beach-going 

experiences. Total recreational use damages due to oil spills were 

estimated at $693.2 million. 

Second, the deep water corals killed by this spill were hundreds 

of years old. 

Third, in some of the species of dolphins, the oil spill caused 35 

percent increase in death, a 46 percent increase in failed reproduction and a 37 percent increase in adverse health risk. Tens of thousands of sea turtles were killed by the spill, including three of the 

most critically endangered species of sea turtles in the Gulf. 

There are many examples of response activities causing more 

damages than just the oil spill. We must incorporate new science 

about those damages into our decision-making for oil spill response 

and into decisions where we are going to allow oil and gas exploration and production. 

It is clear that the Deep Water Horizon disaster could have been 

avoided. Multiple blue ribbon panels all concluded that immediate 

causes of the blowout preventers could be traced to a series of systematic failures in risk management and a broken safety culture. 

The final version of offshore drilling safety regulations published 

last month addressed some of the primary causes of the disaster. 

It codifies the advances made by industry experts and regulators 

over the last five years. The Department of the Interior is continuing its work to finalize the Arctic drilling rule. But we cannot 

stop there. 

Other recommendations by the Oil Spill Commission still need to 

implemented by Congress and action taken. After all, the Coast 

Guard, NOAA and oil spill experts have testified time and time 

4 

again that the United States is not prepared to handle a large oil 

spill. And yet, our response plans and infrastructure have not been 

updated. Nevertheless, we are moving into deeper and deeper 

water and going after oil in increasingly challenging environments. 

The Coast Guard has repeatedly stated that we do not have the 

ability to clean up oil in ice, and a spill in an ecologically-sensitive 

area can have dramatic consequences. 

We also have not completed basic navigation charting nor do we 

have some of the forecasting capabilities, in the Arctic, despite unpredictable and severe weather conditions that contribute to the 

possibility of a spill. 

All of this poses significant risk for exploration activities, which 

should be considered when making decisions about final leasing 

programs. 

The question must be asked, can we afford the risk at this stage? 

We need to ensure that we can drill safely and respond to spills 

before exploration moves forward in ecologically sensitive areas. I 

urge the Interior to consider the greater risk posed while operating 

in a dynamic and challenging offshore environments. 

Lastly, I believe the Atlantic region was rightfully removed from 

the program due to strong local opposition, conflicts with other 

ocean uses and market dynamics. The Department of the Interior 

recognized the potential for environmental and economic impacts in 

competing ocean uses. For example, the economic value of commercial fishing in the mid-Atlantic area was worth $1.5 billion, and 

ocean-dependent tourism accounts for about $10 billion of economic 

activity. For these reasons, it is not surprising there was significant opposition and that citizens and local officials responded in 

those communities. 

Interior should also work to prevent harmful seismic air gun 

testing in areas which impact marine mammals, sea turtles, birds, 

and valuable fish species. With Atlantic drilling off the table, we 

should not subject marine mammals to negative impacts such as 

those that have occurred. 

Once again, I thank the Chair for holding this hearing and I look 

forward to hearing the testimony of all the witnesses. 

Thank you. 

The CHAIRMAN. Thank you, Senator Cantwell. 

We will now turn to our distinguished panel. Welcome to all of 

you. 

We will be led off this afternoon by Abigail Ross Hopper, who is 

the Director of the Bureau of Ocean Energy Management (BOEM) 

at the Department of the Interior, welcome. 

We are joined by Mayor John Hopson, who has come all the way 

from the city of Wainwright, Alaska at the top of the world, literally. It is a long journey, Mr. Hopson, and we appreciate you 

being here today. 

He will be followed by Dr. Donald Boesch, who is a Professor of 

Marine Science and the President at the University of Maryland 

Center for Environmental Sciences. 

James Knapp is also with us from the School of the Earth, Ocean 

and Environment at the University of Southern California, welcome to you. 

Mr. Athan—— 

5 

Mr. KNAPP. That would be South Carolina, Madam. 

The CHAIRMAN. Oh, South Carolina. Okay. I put you on the 

wrong coast. I am sorry. Thank you for the correction. [Laughter.] 

Mr. Athan Manuel is with the Committee this afternoon, who is 

the Director for Lands Protection Program with the Sierra Club, 

welcome to you. 

The panel will be rounded out by Dr. Joseph Mason, Hermann 

Moyse, Jr./Louisiana Bankers Association Chair of Banking at the 

E. J. Ourso College of Business at Louisiana State University. 

Thank you all for joining us this afternoon. 

I would ask that you try to keep your comments limited to five 

minutes this afternoon. Your full statement will be incorporated as 

part of the record. We look forward to your statements today. 

Ms. Hopper, if we can begin with you? 

STATEMENT OF ABIGAIL ROSS HOPPER, DIRECTOR, BUREAU 

OF OCEAN MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR 

Ms. HOPPER. Certainly, thank you. Good afternoon. 

Chairman Murkowski, Ranking Member Cantwell and other 

members of the Committee, I’m pleased to appear before you today 

to discuss the Bureau of Ocean Energy Management’s development 

of the 2017–2022 Outer Continental Shelf oil and gas leasing program. The Administration is committed to ensuring safe and responsible domestic oil and gas production as well as developing offshore renewable energy as part of a comprehensive energy strategy 

to grow America’s energy economy and continue to reduce our dependence on foreign oil. 

As you know the Outer Continental Shelf Lands Act, or OCSLA, 

requires BOEM to propose a schedule of leases every five years. 

This is referred to as the five-year program. We are currently in 

the process of developing that five-year program for 2017 to 2022. 

In June 2014 we published a request for information and comments and received approximately 500,000 comments. On January 

29th of 2015, the Department published the 2017–2022 draft proposed program (DPP) and simultaneously published a notice of intent to prepare a programmatic environmental impact statement 

(EIS). During the 60-day comment period following the DPP, 

BOEM received over one million comments and held 23 public 

meetings in communities across the nation. 

The critical information received from the public was integrated 

into the scientific, environmental and social analysis that informs 

the Secretary’s decision-making, and that decision-making process 

is defined by statute. As laid out in Section 18 of OCSLA, the Secretary of Interior must consider a number of factors and balance 

the potential for environmental damage, discovery of oil and gas 

and adverse impact on the coastal zone to determine the size, timing and location of lease sales. 

After the Secretary weighed the required factors and conducted 

the appropriate analysis on March 15th of this year, BOEM announced the proposed program in the draft EIS. BOEM subsequently hosted 12 meetings in Alaska and the Gulf of Mexico region and one here in Washington. 

Excuse me. 

6 

I personally had the privilege of attending five of those meetings 

on the North Slope of Alaska including one in Point Lay where I 

met many of the community leaders that are here today sitting behind us. I also participated in the public meetings as well as one 

on one meetings with community leaders in Kaktovik, Nuiqsut, 

Point Hope and Kotzebue. 

Additionally, I have recently met with both Governor Walker and 

Lieutenant Governor Malloy—Mallott, excuse me, about the fiveyear program. And while I did not attend the Wainwright meeting, 

my colleagues did and therefore I did not meet Mayor Hopson and 

his community. I recently met with officials from the Laguna Corporation when they were here in Washington. 

I’ve also attended the public meetings in New Orleans and Houston and DC. And since the release of the proposed program, I’ve 

met with representatives from the oil and gas industry, from the 

environmental community and other government officials. It is incredibly important to me, personally and to my Bureau, to hear 

from interested parties, community members and stakeholders 

across this country. 

So the comment period for the draft EIS closed on May 2nd. We 

received about 75,000 comments, and the comment period for the 

proposed program remains open. It closes on June 16th. 

After a review of those comments and conduct further analysis, 

we anticipate publishing the proposed final program and final environmental impact statement in late 2016. 

So allow me to describe briefly the proposed program. As you 

know it’s the second in a three proposal process. It includes 13 potential lease sales, ten sales in the Gulf of Mexico and three offshore Alaska. 

In Alaska, the proposed program continues to take a balanced 

approach to development utilizing the targeted leasing strategy set 

forth in the current program by identifying one potential sale each 

in the Beaufort, the Cook Inlet and the Chukchi Sea planning 

areas. And at a request by Governor Walker, we’re considering 

moving the Beaufort Sea sale up to 2019. 

The proposed sale also includes ten sales in the Gulf of Mexico, 

obviously one of the most highly productive basins in the world, 

where resource potential and industry interest are high and oil and 

gas infrastructure is well established. 

The proposal includes a new approach to lease sales by proposing 

two annual sales that combine the western, central and eastern 

Gulf of Mexico, not subject to moratorium. 

And then lastly, there are no sales scheduled for either the Pacific area or the Atlantic. 

Madam Chairwoman, thank you for this opportunity to be here 

today to discuss our efforts to create an oil and gas leasing program, and I look forward to your questions. 

[The prepared statement of Ms. Hopper follows:] 

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The CHAIRMAN. Thank you, Director Hopper. 

Mayor Hopson, welcome. 

STATEMENT OF HON. JOHN HOPSON, JR., MAYOR, CITY OF 

WAINWRIGHT, ALASKA 

Mr. HOPSON. Chairman Murkowski, members of the Committee, 

my name is John Hopson, Jr. I’m the elected Mayor for the city of 

Wainwright and the North Slope Borough Assembly as well. I’m 

also a whaling captain and a Commissioner on Alaska’s Eskimo 

Whaling Commission. 

Wainwright is one of eight villages on the North Slope. We are 

located on the Chukchi Sea with a population of about 550 people. 

Ninety percent of our residents are Inupiat. The North Slope Borough is our local government encompassing 95,000 square miles 

across Northern Alaska. None of the Borough’s eight communities 

are connected by road. 

I’m a shareholder of the Native Corporation for Wainwright and 

also the Native Regional Corporation, ASRC. Like many of you 

here I share the heavy responsibility of providing for my family. 

I’m also responsible for outfitting my whaling crew. 

As an elected official I have a responsibility to our residents who 

wish to protect their traditional way of life while also enjoying employment and modern public facilities and services. 

As a Commissioner of AWC I work diligently to protect our 

bowhead whale harvest while ensuring the safety of our whalers. 

I serve a community that faces a different reality than most 

Americans. We don’t have Costcos or Ford dealerships. We are not 

connected to an electric grid or to the road system. Wainwright relies on a subsistence way of life. We hunt bowhead whales, caribou, 

walrus, and seals. It is a way of life we have fought hard to protect. 

Our community is empowered by oil and gas development. We 

have proven the two can coexist. Though our communities are remote we invest in modern public services, water and sewer, health, 

education, police, fire. Our community depends on jobs to support 

our families. 

As BOEM itself has indicated, the Arctic OCS has incredible resource potential. Continued exploration activities lead to continued 

investment and development that our communities are dependent 

on. 

BOEM has expressed concern that Arctic oil and gas activities 

could impact small, isolated communities within our region. Wainwright is one of them. We urge BOEM to take seriously its responsibility to provide for development in a way that will support our 

communities. 

I have six children that rely on subsistence food—80 percent of 

their diet is what we do. I also provide for elders and others who 

cannot hunt. Subsistence takes money. It costs money to buy gas, 

bullets. To put it simply, though we work hard to protect our subsistence way of life, we cannot hunt without jobs that provide an 

income. Many people would like to see us move toward alternative 

energy like wind, but wind won’t power my boat. 

BOEM has already invested heavily in recent years in research 

in the Arctic region and outreach to our communities. They also 

have worked hard to incorporate traditional knowledge into its 

12 

OCS management activities to better support the coexistence of 

Arctic ecosystems, subsistence and OCS oil and gas exploration. 

Why don’t we let the program that has been developed work? 

Our Native Corporations have created their own offshore development company, Arctic Inupiat Offshore. Where else in America 

does BOEM find indigenous people investing proactively in offshore? For BOEM to set aside vast areas of the Beaufort and 

Chukchi or give up completely on its Arctic OCS program would be 

to completely fail our communities. 

Some environmental groups and some Members of Congress apparently are in love with their own version of the Arctic and are 

engaged in a national effort to stop Arctic oil and gas. Extreme environmental protections would mean the end of our Arctic communities. Where is the balance in that? Not with me and not with my 

community. 

As an elected official for Wainwright and the North Slope I support retaining Arctic lease sales in the OCS in a way that protects 

our communities and the environment. My responsibility as an 

elected leader is to protect our subsistence way of life and to provide for financial stability in our region. 

Thank you for the opportunity to provide comments today. 

[The prepared statement of Mr. Hopson follows:] 

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The CHAIRMAN. Thank you, Mayor, we appreciate it very much. 

Mr. Boesch, welcome. 

STATEMENT OF DR. DONALD BOESCH, PRESIDENT, UNIVERSITY OF MARYLAND CENTER FOR ENVIRONMENT SCIENCES 

Dr. HOPSON. Senator Murkowski and Senator Cassidy, my name 

is Donald Boesch, and I’m the President of the University of Maryland Center for Environmental Science. But I’m here today because 

I was one of the seven members of the National Commission on the 

BP Deep Water Horizon oil spill in offshore drilling, so my testimony includes perspectives on the Commission’s recommendations 

implementing those recommendations. 

I’ve also been involved as a witness in the trial of BP Clean 

Water Act violations as an advisor to government on aspects of the 

eventual settlement which was concluded just a month or so ago. 

The proposed OCS leasing program on which the hearing focuses 

should be evaluated in the context of steps taken by government 

and industry to reduce environmental and safety risk in response 

to the recommendations and not only our Commission but other investigative bodies. So let me briefly review those. 

First, the Department of the Interior has taken a number of substantive executive actions in response to our recommendations and 

the other recommendations. The former Minerals Management 

Service was reorganized to separate the development, revenue and 

safety enforcement functions thus alleviating the inherent conflict 

of interest of those functions. So therefore, we now have the Bureau of Ocean Energy Management and the Bureau of Safety and 

Environmental Enforcement, BSEE. 

The Department of the Interior also required that offshore operators demonstrate, for the first time, the ability to contain deep sea 

blowouts, if they occur. BSEE had more technically trained staff 

and compliance officers; however, it should be pointed out that a 

GAO report recently found that BSEE has made rather limited 

progress in enhancing its investigative capabilities, has restructured in a way that actually could weaken environmental compliance and has made limited progress in enhancing environmental 

enforcement. 

BSEE required that the use of the Safety and Environmental 

Management System, SEMS II, backed by third party audits and 

these are moving forward. But these fall short of what the Commission recommended based on the experience in the North Sea, the 

safety case of the North Sea. 

Investigations following our Commission reveal significant deficiencies in the design, maintenance and operation of the Deep 

Water Horizon blowout preventer. And just last month BSEE, six 

years after the blow out, BSEE issued the final well control rules 

for the design manufacture, repair and maintenance, BOPs, the 

blowout protectors. The American Petroleum Institute, however, 

has strenuously criticized the new rule as too costly and too prescriptive. Congress has taken some action in response to our recommendations. 

On the positive side, it provided more resources for planning in 

BOEM as well as in better safety procedures in BSEE. It passed 

the RESTORE Act which provides 80 percent of the Clean Water 

18 

Act penalties for long-term environmental and economic restoration 

in the Gulf region; however, Congress has not passed legislation to 

codify this reorganization of the former MMS to create BOEM and 

BSEE. 

Congress has also not raised the oil spill liability limits which was raised after the spill from $75 million to $134 million by 

BSEE. But that falls well short of the kinds of responsibility liabilities that could occur in a major spill, mindful of the fact that BP 

has expended over $55 billion to deal with the consequences of the 

spill at this point. 

Congress has also not enacted legislation that requires the industry to pay for support of the appropriate environmental science and 

regulatory review, including the comprehensive environmental program, environmental monitoring program, that was conceptualized 

when Congress passed OCSLA. And Congress has also not passed 

the legislation to provide whistleblower protection for the offshore 

oil and gas industry, workers in that industry. 

Now having said that, Congress—the oil and gas industry has 

undertaken many steps to reduce the risk of offshore exploration 

and production. In general, most compliance companies, most companies, have approved their safety culture and procedures quite a 

bit. Notably in response to Department of the Interior’s requirement for deep water containment, a consortia of companies have 

formed the Marine Well Containment Corporation and the Helix 

Well Containment Group. 

So I see my time is running out, and you have my written testimony. I’m happy to cover in response to any of your questions, the 

other issues that I’ve raised in my review. 

Thank you, Madam Chair. 

[The prepared statement of Dr. Boesch follows:] 

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The CHAIRMAN. Thank you, Dr. Boesch. 

Mr. Knapp, welcome. 

STATEMENT OF DR. JAMES KNAPP, SCHOOL OF THE EARTH, 

OCEAN, AND ENVIRONMENT, UNIVERSITY OF SOUTH CAROLINA 

Dr. KNAPP. Good afternoon, Madam Chair Murkowski and other 

honorable members of the Senate Committee on Energy and Natural Resources. It’s my great pleasure and high honor to be here 

today, and I thank you both for holding this hearing and assembling, what I perceive to be, a very diverse group of voices and perspectives on the issue before us. 

For the record, I am James H. Knapp, Professor in the School of 

the Earth, Ocean and Environment at the University of South 

Carolina. I currently serve as Past Chair of the Faculty Senate at 

the University of South Carolina, Columbia campus. 

By way of background, I was born and raised in California, so 

I did grow up close to the University of Southern California, have 

lived in six and traveled to 49 states with the notable exception of 

the great State of Alaska. So I can’t wait to be there. And through 

my profession as an Earth Scientist I’ve worked in and visited 

more than 40 countries. I hold a Bachelor of Science degree with 

distinction in Geological Sciences from Stanford University and a 

Ph.D. in Geology from the Massachusetts Institute of Technology. 

From 1988 to 1991 I worked with Shell Oil where I participated 

directly in oil and gas exploration in the Gulf of Mexico. For 25 

years since then, my research team and I have carried out both 

fundamental and applied research in the Earth Sciences including 

the design, acquisition, processing and interpretation of seismic 

surveys both onshore and offshore. Many of my former students remain gainfully employed in the energy sector despite the significant downturn the industry over the last two years. 

For the past eight years I have been a vocal advocate for the acquisition of new seismic data on the Atlantic OCS both such that 

the Bureau of Ocean Energy Management might fairly execute its 

statutory obligation to adequately evaluate the resource potential 

of this essentially frontier petroleum province and so that those of 

us in the scientific community might perpetuate the fundamental 

and historic legacy of this continental margin. 

One hundred years ago our knowledge of the geology beyond the 

shoreline, not only here in the United States but worldwide, was 

a gross state of ignorance. Beyond simplistic soundings of water 

depth in near shore areas or primitive measurements of ocean currents, the nature of ocean basins and the submerged portions of 

continents or continental shelves, was largely unknown. 

Beginning in the late 1920’s pioneering scientists here in the 

United States first developed a theoretical basis for and subsequently the practical application of marine seismic surveys, ironically, right here on the Atlantic Coast at the mouth of the Chesapeake Bay no less than 150 miles from where we currently sit. This 

marine seismic work which evolved over the ensuing decades here 

on the Atlantic margin of North America was literally the stuff of 

legends involving dedicated teams of scientists operating heavy 

25 

equipment at risk of life and limb in the challenging marine environment, all in the name of the public interest. 

These seminal studies ultimately led to the recognition that the 

continents are composed of fundamentally different rocks than 

those underlying the ocean basins, discoveries that laid the ground 

work for the eventual scientific revolution of plate tectonics in the 

1960s. Given the long standing significance of these marine seismic 

surveys we still routinely recount this history in our introductory 

textbooks and courses in geology for thousands of college students. 

Obviously neither seismic surveying or offshore exploration are 

new to the Atlantic OCS. More than 240,000 line miles of 2D seismic reflection data were acquired off the shores of the U.S. Atlantic 

between the late 1960s and the late 1980s in support of an earlier 

phase of petroleum exploration during which 51 offshore wells were 

drilled. In preparation for these activities extensive environmental 

impact studies were carried out by Federal agencies, much as they 

are today, evaluating the potential impacts of seismic surveying 

and offshore drilling on tourism, commercial and recreational fishing and marine shipping and commerce. 

These other uses of the marine and near shore environment have 

continued to pace over the last 50 years despite the previous efforts 

for offshore energy development belying the claim that such activities are mutually exclusive. 

These legacy seismic data released by the Federal Government 

following a 24-year moratorium or 25-year moratorium are providing fundamental new insights on the geologic evolution of eastern margin North America. 

Not only does it appear that a significantly larger portion of the 

Southeastern U.S. was once a part of the African South American 

continent than previously thought, but these data are helping to 

identify previously unrecognized faults on the continental margin 

which may pose a significant earthquake and tsunami risk to coastal communities along the eastern seaboard. 

We are also analyzing these same data through federally-funded 

research projects to evaluate the potential for wind energy development and geologic storage of CO2 in the offshore. 

Despite the enormous scientific value of these legacy seismic 

data, fully 80 percent of the territory that was included in the draft 

five-year plan has never been evaluated with commercial seismic 

surveys. Furthermore, modern seismic surveys driven globally by 

exploration activities over the last two decades have ushered in 

fundamentally new models for how continents break and what continental margins evolve. 

I see I have exceeded my time so if I need to stop I will. 

[The prepared statement of Dr. Knapp follows:] 

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The CHAIRMAN. Thank you, Mr. Knapp. We will be sure to ask 

some questions about where we are with the seismic. I appreciate 

it. 

Mr. Manuel, welcome. 

STATEMENT OF ATHAN MANUEL, DIRECTOR, LANDS 

PROTECTION PROGRAM, SIERRA CLUB 

Mr. MANUEL. Thank you, Chairman. Thank you for that welcome 

and thank you to Ranking Member Cantwell, Senators Cassidy and 

Heinrich. My name is Athan Manuel, and I direct the Sierra Club’s 

Lands Protection Program. 

Sierra Club, as you probably know, is the largest grassroots environmental group in the United States. And we have 2.4 million 

members and supporters spread out over 65 chapters and 450 

groups nationwide, and we have active members in every state in 

the country. It’s my pleasure to comment today on BOEM’s fiveyear plan for the 2017–2022 OCS oil and gas leasing program. 

We see this five-year plan not just about drilling but as an opportunity to really talk about climate and energy policy, and we feel 

like climate change is one of the most pressing global challenges 

our nation faces. And we think that new offshore oil and drilling 

or offshore oil and gas drilling would keep the U.S. dependent on 

fossil fuels and harm our fight against climate change. 

The U.S. under the Obama Administration is leading the world, 

we think, in the fight against climate disruption and new offshore 

drilling and leasing would undercut that leadership. 

So far we’ve been pleased with the trajectory of the five-year 

plan. We’re very happy that in March the Obama Administration 

and Secretary Jewell announced that the Atlantic was coming out 

of the five-year plan. We were also happy, we were happy that it 

came out but also very happy that BOEM cited the overwhelming 

grassroots opposition from coastal communities, coastal businesses 

to having the Atlantic included in that five-year plan. 

That said, we do encourage BOEM to deny the permits for seismic testing. Since drilling is not going to happen there, we don’t 

see the need for further seismic testing in that region, testing that 

could harm marine mammals and other marine values there off of 

our coast. 

We’re not happy though, unfortunately, that there are still 13 

lease sales in the draft plan, that we see 10 lease sales happening 

in the Central and Western Gulf of Mexico and then three off in 

Alaska, two in the Arctic Ocean. We obviously oppose any new 

drilling in the Outer Continental Shelf. We think it’s incompatible 

with coastal businesses and coastal ecosystems. 

And as others have mentioned, Mr. Boesch, in particular, in the 

Deep Water Horizon’s spill which killed 11 workers and was the 

largest environmental disaster in U.S. history is, kind of, the latest 

evidence that drilling is incompatible with our coastlines. 

But again, we mention that really think this isn’t just about 

drilling, it’s about climate change. We think this fight, the climate 

fight, makes this campaign much more urgent. For us, the evidence 

is clear. The National Climate Assessment says unequivocally the 

planet is warming and over the last half century this change has 

34 

been driven, predominately, by the burning of fossil fuels like oil 

and gas. 

The President has acknowledged that if we’re serious about fighting climate change two thirds of the fossil fuels need to stay under 

the ground where they are now, the coal, the oil and the gas. And 

we agree with the scientific community that we need to keep this 

oil in the ground if we’re serious about fighting climate change. 

Again, we mentioned how happy we are about the Obama Administration’s fight on climate. The Paris Agreement and the recent treaty with Canada are just two of the most recent examples 

of that fight, and we think we can continue that by dropping the 

Arctic and the Gulf of Mexico and Cook Inlet out of the five-year 

plan. 

And again, we talked about climate but we’re starting to see that 

some of these catastrophic impacts of climate change, they’re already starting to happen here in the United States, including in 

states that would be impacted by the five-year plan. 

In Louisiana, that state loses a football field’s worth of land 

every hour. The state is also home to some our nation’s first climate refugees, the Choctaw and the Houma, who are losing their 

traditional lands and homes due to sea level rise and some of the 

impacts of climate change. 

The same is true on Alaska’s North Slope, where 26 communities 

have been impacted by climate change. Alaska’s warming up more 

than most places in the country. The temperatures there have 

risen over six degrees just in the summer. 

As I mentioned there are 26 communities that have been suffering. There are residents here from Point Lay and Shishmaref, 

who have suffered the impacts of climate disruption. And so it’s interesting that these villages are being impacted but also so is oil 

and gas infrastructure where the drilling season has been disrupted because of the impacts of climate change. 

So and then the last thing about the industry itself is it’s interesting that BOEM has continued to keep the Arctic in the five-year 

plan even though Shell and the oil industry itself seems to be less 

interested than they were before. 

We saw Shell have a very bad experience there in 2012 trying 

to drill an exploratory well that didn’t work for them in 2015. They 

didn’t find a significant amount of oil. And just last week we found 

out through our friends at Oceania, who found out that most of the 

companies who have leases right now in the Arctic Ocean have renounced those leases. 

So you’re seeing even it’s not just the environmental community 

that’s questioning how viable the Arctic should be as an oil and gas 

field, but the industry itself is starting to question that. 

Finally, I know we’re running out of time, but we’re very optimistic about solving the climate problem. We think clean energy is 

affordable. It’s cheaper in many cases than dirty fuels, and those 

are the kind of energy future we want to see for the country and 

also want to see just transition, in terms of energy policy, but also 

the workers and the communities so they can find good paying jobs, 

represented jobs and jobs that are clean and go into the future. 

But thank you for the time, and I appreciate the opportunity and 

look forward to our discussion and questions later. 

35 

Thank you. 

[The prepared statement of Mr. Manuel follows:] 

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The CHAIRMAN. Thank you, Mr. Manuel. 

Dr. Mason, welcome. 

STATEMENT OF DR. JOSEPH MASON, HERMANN MOYSE, JR./ 

LOUISIANA BANKERS ASSOCIATION CHAIR OF BANKING, E. 

J. OURSO COLLEGE OF BUSINESS, LOUISIANA STATE UNIVERSITY 

Dr. MASON. Thank you, Chairwoman Murkowski, Ranking Member Cantwell, members of the Committee for inviting me to testify 

today on the BOEM’s 2017 to 2022 OCS oil and gas leasing program. 

I’m an economist. I’m not here today to opine on environmental 

science. I leave that to my daughter, who is pursuing a Ph.D. in 

environmental biology and spending considerable in Alaska in the 

course of her studies. She always puts me right. [Laughter.] 

Rather, I am here to discuss the sometimes perverse incentives 

created and destroyed by energy policy. 

Overall, the BOEM plans to cut leasing in the Arctic, the Atlantic and the Gulf of Mexico. The BOEM’s 13 planned sales are down 

from 15 in the prior five-year plan and 16 in the plan before that. 

It’s not surprising then that many view the current plan as a cut 

back. 

But despite recent low oil and gas prices, oil and gas leases are 

more valuable to the industry than ever, as well as being crucial 

to income and state and local tax revenues and jobs in the Gulf region. 

Most development projects take five to ten years from discovery 

to production. As a result, the first barrel of oil from projects under 

the current plan will not be sold until roughly 2022 to 2027. Today’s prices are certainly lower than at the time of the prior fiveyear plan, but today’s interest rates in an environment of low inflation expectation are also lower. 

We teach in finance that interest rates can often be much more 

important for valuation than flat prices, and the current case is no 

exception. Yet, BOEM uses a flat three percent in their analyses. 

Consider that in March 2009, Moody’s seasoned Baa corporate 

bond yield was 8.42 percent while today it is 4.79 percent. On that 

basis, the value of an even stream of production across the period 

starting five years from now and lasting for another 15 years, is 

more than six percent greater than in 2009 despite the low oil and 

gas prices. 

With higher risk projects the gains are even greater. B of A Merrill Lynch Emerging Markets Corporate Plus Index Effective Yield 

started 2009 at 14.45 percent while today it is 4.86 percent. Solely 

because of lower interest rates the value of an even stream of production, again, across the period starting five years from now and 

lasting for another 15 years, is 51 percent greater than in 2009. 

So counter to lay intuition, market interest rates can matter 

more to lease values than prices, thus the Federal Government is 

better off selling leases today rather than waiting for inflation expectations to rise. As I showed in some of my prior studies substantial economic benefits of such leasing of crude, even in the shortterm. 

48 

For instance, Shell sunk more than $7 billion into the development for drilling in Alaska before abandoning the Chukchi Sea 

project. It’s estimated that Shell will spend another $1 billion before they wrap up obligations relating to the leases. Shell’s experience is by no means unique. Since the early 2000’s large scale 

projects have required considerable upfront investment. 

Using the estimation method for my prior studies of the economic 

contributions of Gulf Energy resources, the lease plan under consideration today will contribute roughly some $457 million to $747 

million in annual GDP to the Gulf states, create 1,604 to 2,567 jobs 

for the duration of the development, contribute wages of roughly 

$91 to $146 million to the region annually and result in state and 

local tax revenues of $21 to $34 million annually just during the 

developmental phase. 

The take away here is that every lease that’s withheld sacrifices 

considerable economic growth. Economic growth that the Gulf 

states and Louisiana can’t spare in the present business environment. 

But before I conclude, I want to add one additional detail that 

I don’t think my daughter will object to. Counterintuitively, the 

BOEM’s cutbacks have a perversely adverse effect on CO2 and 

global warming. A recent research project out of Stanford University and the University of Calgary, funded by the Carnegie Endowment, estimating the total carbon footprint of oil from 30 different 

regions around the world, shows that oil from the Gulf of Mexico 

is some of the cleanest. So by restricting clean output in the Gulf, 

BOEM is not only sacrificing jobs and growth in the Gulf region, 

it’s incentivizing dirtier production elsewhere in the world. 

We need a smart energy policy that can tail off the dirtiest production, not encourage it without needlessly sacrificing jobs and 

growth for our fellow countrymen. 

Thank you. 

[The prepared statement of Dr. Mason follows:] 

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53 

The CHAIRMAN. Thank you, Mr. Mason. 

I want to start where you have left off this afternoon, because 

we had a hearing before the Energy Committee just a couple weeks 

ago about how the Federal Government should respond in a low 

price environment such as what we are experiencing now. You 

have outlined some of what you have described as, kind of, the perverse outcomes and outcomes that one might not expect in a low 

price environment. 

I think you have outlined well that it is not just the price that 

you need to look to, it is the interest rates as well and that BOEM 

should respond now, taking advantage of the fact that we are in 

this environment. 

Director Hopper, let me ask you to respond to that because I 

think what Mr. Mason has outlined is very important. When we 

withhold the leases, particularly at this time, you do constrain economic opportunity. How do you respond within BOEM to what he 

has outlined here this afternoon? 

Ms. HOPPER. Thank you for that question. 

So I would point to two things. One is that we, under our current 

lease plan, as we are in a low oil price environment at the moment, 

we are continuing with the lease sales in the Gulf of Mexico. And 

if you look at the trajectory over the last few years the amount of 

acreage we’re offering is consistent but the number of leases that 

are being bid on by companies has declined steadily. And I think 

that speaks to, kind of, the economic realities that companies are 

facing in this oil price environment. 

And so, I think I would argue that’s not just an interest rate, but 

sort of the available capital that those companies have. 

And then in our plan for the next five-year program, we do look 

at different price scenarios. So we don’t make any assumption 

about what the oil price will be. We look at $40, $100 and $160 

barrel prices, sort of, to game out different scenarios that would 

happen. I think that kind of sensitivity analysis addresses some of 

his concerns about sort of locking us into any particular price point. 

The CHAIRMAN. Well in recognizing the long lead times that it 

takes, particularly in a place like the Arctic, I think we recognize 

that if you had Arctic lease sales being held today that Americans 

don’t see the benefit from that oil for years, considerable years, 

from where we are. 

Again recognizing what you have outlined Mr. Mason in terms 

of the multiple factors that are at play there, I would like to think 

that it is not a low price environment that would drive some of the 

decisions coming out of BOEM. 

Director Hopper, you know that my top priority for the ’17 

through ’22 plan has been to maintain the three Alaska sales that 

BOEM has proposed. The entire Alaska delegation has submitted 

a letter to you. Governor Walker has joined in the support as well 

as the vast majority of Alaskans. 

Now you mentioned in your opening comments that part of the 

rationale for removing the Atlantic sale was opposition from some 

coastal communities and citizens. You have also outlined in your 

statement the meetings that you have attended with folks up in 

the states in various communities. How would you describe the 

54 

views of most Alaskans and of the Alaska State Government in 

terms of supporting or opposing lease sales in the OCS right now? 

Ms. HOPPER. I’ll start with the second half of your question because I think it’s a little simpler that the meeting with your Governor, your Lieutenant Governor, obviously reading the letters from 

you, I would say there’s consistent support to keep the Alaska sales 

in the next five-year plan. 

In my meetings with, and I was in—on the North Slope, I would 

say there was a real variety of opinion. I did not leave with one 

consensus opinion. There were folks like the Mayor who were very 

articulate in their support for keeping offshore oil and gas development in the next five-year plan. There were others who were equally articulate and passionate about removing those sales. So I think 

it is a much more complicated and nuance conversation then some 

I’d appreciate. 

The CHAIRMAN. I am assuming you are aware of the many public 

opinion polls that have been conducted including one from 2014 

that showed more than 70 percent of Alaskans support development within our region of the OCS? So it is not just going to specific communities. 

Ms. HOPPER. Right. 

The CHAIRMAN. And talking to a few key individuals, but the 

broader statewide support for advancement of these sales in the 

Arctic OCS. 

Ms. HOPPER. Yes, yes, Chair. Madam, I’m aware of that, thank 

you. 

The CHAIRMAN. I guess the bigger question is whether you will 

treat that lack of local opposition and the overwhelming support of 

Alaskans in favor of development as a reason to retain the three 

Alaska OCS sales in the final program? 

Ms. HOPPER. I think, Chairman, it would be premature to make 

any statement about the fate of those Alaska sales in the final program. The Secretary, as I mentioned, as you know, she has several 

factors that she has to consider, the position of the state government is one of them. The other uses of the ocean is another important one which is where some of the local input comes in. And so, 

she will take those as well as the other statutory factors in her decision. 

The CHAIRMAN. Well I appreciate you saying that. I did happen 

to notice that today, as you were meeting with a group of Alaskans, 

and hopefully a group that I am going to be visiting with very 

shortly, you tweeted a picture out of them, which I do not have any 

problem with that. In your tweet, you clearly outlined that they are 

opposed to drilling in the Arctic. 

I looked at it and said it does not necessarily show me that there 

is impartiality within BOEM. I looked at it and said, you know, 

how do we not conclude that the die is already cast and that your 

agency has already decided what it is that you are going to be 

doing? 

Ms. HOPPER. Well, I didn’t write that tweet, but I am familiar 

with it. I’m sorry if you took that impression from it. Our agency 

tweets a lot of pictures from our meetings. We think it’s a good way 

to represent the many stakeholders that we visit with. 

55 

The CHAIRMAN. Have you or your office tweeted a picture after 

a meeting with Alaskans who actually support drilling in the Arctic? 

Ms. HOPPER. We certainly have tweeted many pictures from all 

of our public meetings and there were certainly Alaskans who were 

very supportive of oil and gas. So I wouldn’t want to opine, you 

know, who exactly is in the photos, but we certainly have tweeted 

a variety of stakeholders that we’ve met with. 

The CHAIRMAN. I want to get to my colleague from Louisiana 

here. I looked at your tweet and I thought this would appear to me 

that you are not acting with the level of impartiality that we expect 

the Agency to do. 

Senator Cassidy. 

Senator CASSIDY. Thank you, Madam Chair. 

First I request that I be permitted to submit for the record an 

editorial we wrote. My office looked at the same research that Dr. 

Mason referred to that the Gulf of Mexico oil is far cleaner than 

that oil produced, say, by Iran. When we see market share it actually releases tons more greenhouse gases. That is not hyperbole; 

that is literal. I think it is 365,000 tons per year, if I remember 

correctly. So—— 

The CHAIRMAN. We will include that within the record. Thank 

you for bringing that up. 

Senator CASSIDY. Thank you. 

[The information referred to follows:] 

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Senator CASSIDY. Ms. Hopper, hello. 

When you took the Atlantic lease sales off the table I guess you 

gave several reasons, local opposition, being one you mentioned. 

Yet when I look at this—all four Governors of the affected states, 

all eight Senators, the majority of the congressional delegation, the 

majority of the public comments received by the agency and by 

polling, the majority of the folks polled in these states. 

So just it just take a vocal minority showing up to derail that 

which governors, congresswomen and congressmen, Senators, those 

polled, etcetera, would otherwise want? 

Ms. HOPPER. Senator, as you know there are many factors and 

many of which we cited in our decision. So the position of the state 

is one of them. The many uses of the ocean, the other uses of the 

ocean is another. 

Senator CASSIDY. I will come to that. 

Ms. HOPPER. Certainly. 

Senator CASSIDY. But first, can a small vocal minority override 

the will of the majority of the people in a state, the Governors, the 

Senators and the Congress folk, specifically when the regulation 

suggests that you are supposed to consider the position of the governors and the governors are all for it? 

Ms. HOPPER. That position was considered. 

Senator CASSIDY. So back to my question. Does a small vocal minority override that overwhelming other wide support? 

Ms. HOPPER. I can’t answer that question because it was not the 

only consideration. 

Senator CASSIDY. Okay, then let’s go to some of the other reasons. 

I think one of the other reasons given was about dual use. Other 

places, other entities have to use it. Now, the Gulf of Mexico has 

like 50,000 oil wells. We have a far more productive fishery than 

the Atlantic. We have 11 of the top 20 ports in the nation, and we 

have at least two air bases that use that area and the Atlantic is 

about 70 times bigger. Do I have that number right? How much? 

Seventy-five percent bigger. 

So if we are going to have a problem with competing use it seems 

like we would have seen it with the 50,000 oil wells in the Gulf of 

Mexico not with a proposed oil well or oil wells in the Atlantic. 

So tell me again the rational for that competing use and why it 

is such an issue here but it has not been seen to be an issue in 

the Gulf of Mexico? 

Ms. HOPPER. Sure. Certainly. 

I think one of the really important differences between the Gulf 

and the Atlantic is that in the Gulf there is a long history of coexistence. Those industries developed and co-existed together. And 

you didn’t start with 50,000, you started with a couple and those 

have grown together. 

On the Atlantic, we were looking at a potential lease sale in an 

area that did not have development. There’s certainly been a few 

exploratory wells in the past, but no development. And as you look 

at the, you talked about fishing, which is an important industry on 

the East Coast, the recreation I think Senator Cantwell—— 

Senator CASSIDY. Now can I come back to the recreation? There 

is a 50-mile buffer. 

59 

Ms. HOPPER. Certainly. 

Senator CASSIDY. So it is beyond the sight line. 

Ms. HOPPER. Right. 

Senator CASSIDY. And it is beyond where most recreational people would be. 

As we speak of that, again, I have a sense that BOEM decided 

what they wanted and they worked backwards to find rationale. I 

am looking at your answers and I do not mean to be disrespectful, 

but there is a lot at stake here, a lot of jobs, a lot of royalty, the 

prosperity of our country. So let me ask you this. You did approve 

for wind. BOEM has approved for wind farms offshore that obviously competes. It takes place. It still takes some construction. 

What is the difference between the wind farms and the wells? 

Why would there not be an issue of competition with one, there is 

a competition with—and by the way, let me just also say, you also 

would not start it with 50,000 wells in the Atlantic either. It would 

gradually grow, if it grew at all. 

But let’s move on. So wind farms are okay but oil wells are not? 

Ms. HOPPER. I think one of the important differences is as you 

look at development you have to look at the risk of an oil spill. 

There’s no system we have in place that can guarantee there will 

be no oil spill. And so, that obviously is not a concern with wind 

farms. It is a concern with oil and gas development. 

Senator CASSIDY. So it is an existential threat? 

Ms. HOPPER. No, I wouldn’t say it was existential, sir. 

Senator CASSIDY. In the sense that it could occur, absolutely can 

occur and it has occurred in the past. 

We do not venture so in a sense everything else, kind of, let’s put 

it to the side because a vocal minority overriding is that is not as 

important. 

And the competing use. Well, we have other reasons we will do 

windmills. 

And the recreational. It is 50 miles off the border. 

It ultimately comes back to the fear of the oil spill. 

Ms. HOPPER. None of these are dispositive. They are—it’s a cumulative analysis. And so if you try to get me to say one of them 

was the deciding factor, I’ll not be able to do that. 

Senator CASSIDY. I have to say that the original three and not 

a very good case has been made for it. I say that not to be 

assaultive, I don’t. But when I look at your original three rationales that we discussed, none of them seem compelling. They just 

seem to kind of support where you already were if you decided to 

decide that way. 

Okay, well in that case, we cannot prove a negative, right? We 

can never prove that something bad will not happen. So if we cannot prove a negative it sounds like we are going to be paralyzed 

in terms of never, ever, considering any other development because 

there might be something bad that happens. Fair statement? 

Ms. HOPPER. I would not say that for every planning area I will 

say that’s—that was one of the things we thought about—— 

Senator CASSIDY. Well if you cannot prove a negative and if that 

is a strong rationale as to not proceed, it just seems like that follows. 

Ms. HOPPER. I don’t agree. 

60 

Senator CASSIDY. Then how would you phrase it differently? 

Ms. HOPPER. I would say that in some of our other areas in the 

Gulf of Mexico and in the lease sales in Alaska, we weighed those 

many factors and came to a different decision. 

Senator CASSIDY. So the oil containment policies that you have 

in the Gulf of Mexico are not adequate for the Atlantic, that consortium that has been placed by the major oil companies to control 

any underwater oil spills? Is that inadequate? 

Ms. HOPPER. I believe that if there was a similar kind of containment system—you keep trying to make me say that it was one 

piece and therefore that was inadequate, and I’m not willing to 

cede that point. It was several, several factors. 

Senator CASSIDY. But it seems like it is, and again, not to be disrespectful, but Director, it seems as if none of them are very strong 

but cumulative they seal the deal which again, seems kind of 

counterintuitive. In fact, it just seems odd. None of the individual 

arguments are strong, but cumulatively they become strong. With 

all due respect it just seems as if you had a decision and you 

worked backward. 

I will yield to the Chair, and I assume you have a second round? 

[Laughter.] 

Ms. HOPPER. Thank you, Senator. 

The CHAIRMAN. Yes, we do. 

Well Director Hopper, you raised the risk associated with exploration in the Arctic OCS and the study or the review directed by 

Secretary Moniz to the National Petroleum Council, the review of 

Arctic development. I think that, perhaps, surprised a lot of people 

because of really the very, very favorable responses towards opportunities within the Arctic and recognizing that there are challenges 

out there. 

I think dispelling some of the myths as to how hard or as to how 

risky. I do not know if I could ask you what recommendations out 

of that review you were perhaps most taken with, but I think clearly there is a recognition that you look to the potential that we 

have, you look to what we know with regards to our abilities to operate in the offshore. Certainly within the Arctic some of the risk, 

I think, has perhaps been overstated or the difficulty, the degree 

of difficulty, again, has been overstated. 

I want to direct some questions to you, Mayor Hopson. Can you 

describe for the Committee the extent of the interactions that you 

have had as Mayor with BOEM on the development and evaluation 

of the 2017–2022 plan? To what extent have you been involved in 

consultation? 

Mr. HOPSON. We had a meeting about a month ago with the— 

BOEM came in and had a community meeting, and in that meeting 

there was no opposition to oil and gas and OCS. There are concerns 

of the set asides that BOEM has introduced. It would be restricting 

the ability for our communities as well, and we’ve made that clear 

with BOEM. We’ve had one meeting. That’s the extent, and I hope 

they understand our position. 

The CHAIRMAN. So they came out to you, presented and you were 

able to express support or opposition? 

61 

Mr. HOPSON. I had asked the community to see if anybody is objecting to my comments in supporting oil and gas, and there was 

no one that stood up and objected to what I had said. 

Another member of the community spoke in support of development. I’ve also asked the community if they objected to his statements, and there were none. 

It’s very clear that we need development, eight communities on 

the North Slope. As an Assembly member I have to figure out how 

I’m going to provide school, police, fire, health clinics and the budget is about $400 million. The Federal Government will not give our 

region $400 million a year to sustain us. 

Find me an alternative, and I’ll be willing to work with you or 

the Department, the Administration. Find me an alternative revenue source to provide a livelihood for my communities. We have 

no timber, we have no fisheries and we have no tourism. We are 

very isolated, and we have to rely on what we have which is a tax 

base from the Prudhoe Bay oil fields. Ninety-five percent of the 

board’s budget comes from oil and gas, so every one of our eight 

communities is surviving on oil and gas money. 

The CHAIRMAN. Mayor, I have made OCS revenue sharing a significant priority of mine. My colleague from Louisiana, a host, as 

a state of major offshore development. They have long fought for 

fair and equitable revenue sharing. They and the other Gulf Coast 

states. Alaska is not part of a revenue sharing proposal. 

You have mentioned finding the resources whether it be to provide for policing or schools or roads. How significant would revenue 

sharing be to a community like Wainwright? 

Mr. HOPSON. Revenue sharing would be a big thing in my community. We have an NPRA grant process for development or leasing in the NPRA, and we use funds to provide services for children, 

for elders and the community in general and to provide local government support for my city. 

Revenue sharing from OCS would be a big thing, even to a small 

community like mine. And it may help, and it would help and will 

help other coastal communities as well in finding funding to provide recreation, just to name one, for our children. 

The CHAIRMAN. You have mentioned that Wainwright and the 

other coastal villages up there, subsistence is how you live. It defines you, the hunt for the whale, not only as a food source but so 

much more. There is a recognition that subsistence takes money in 

order to go out to hunt, in order to go out to whale, it does take 

resources. 

I think that perhaps there has been this misconception that it is 

an either/or proposition. You are either able to have an oil and gas 

development up on the North Slope and subsistence will no longer 

exist, that the whale will be gone, that the caribou will leave, or 

nothing. So it is an either/or choice. 

Do you believe that is the case or do you believe that you can 

have development in your region that will allow for economic opportunity for jobs and revenue while still having the subsistence 

lifestyle that you and your family and families for generations have 

lived off of? 

Mr. HOPSON. For the life of Prudhoe Bay it is proof that our communities can coexist with oil and gas with subsistence. A snow maVerDate Nov 24 2008 14:41 Feb 28, 2017 Jkt 021988 PO 00000 Frm 00065 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21988\C21988.TXT C21988
62 

chine runs anywhere from $10,000 to $12,000. A boat runs, just an 

18-foot boat with a motor, can run you anywhere up to $20,000. 

Last year we were paying over $7 a gallon just to drive my truck, 

my boat, my four-wheeler. 

We need development. We need infrastructure to be able to tax 

so that we can employ people so they have the opportunity to hunt. 

The world is banking on saving animals without thinking of my 

life, my children’s life. Where are we going to live? If we shut down 

development we’re—what are my options? Anchorage? Juneau? 

Washington, DC? Is that where I’d have to move to? 

That’s what we’re looking at if we don’t have the opportunity to 

develop. It’s our only revenue to be able to live at home. 

Hunting, you have to buy bullets. You have to buy supplies to 

outfit your hunt. 

They talk about alternative energy. Wind-powered boats are not 

going to cut it. Solar-powered. We need oil and gas. We need unleaded fuel. We live off of diesel to heat our homes, and we need 

that as well. Every one of our communities, with the exception of 

Barrow and Nuiqsut, who has natural gas, all of us have stove oil 

to be able to do that. 

I have to pay for my heating bill. I have to pay for my utilities, 

my telephone while at the same time buying supplies to go hunt. 

We have proven the two can coexist, development and subsistence. 

People have been put to work when Shell came up. A lot of our 

community members were working. When Shell pulled out we are 

trying to find areas of where people can go back to work. They’re 

unemployed. We need development. It just amounts to that. 

Climate change is a big topic that I heard today as well. How are 

we allowing the Federal Government’s public dollars to be spent 

here in Washington, DC if the Administration truly believes in climate change and the next 50 years in all models this city will be 

underwater? But you’re not, the Government is not allowing us to 

build that home. That—where’s the balance in that? 

What about my life? We’re the endangered species, not the animals, the people are. 

The CHAIRMAN. Mayor, thank you. 

I promised that I would let you finish your comment, Mr. Knapp, 

about seismic, and you have indicated that in terms of the updates 

in the Atlantic OCS. 

I think I heard you right in saying that 80 percent of the data 

that we have has not been evaluated. I have a question on that as 

well as if we are to do new seismic surveys what would we see that 

is different from what we were able to obtain in the 70’s and in 

the 80’s? 

Dr. KNAPP. Thank you for that question, Madam Chair. 

So to clarify the reference to the 80 percent, that’s 80 percent of 

the territory that was included in the draft proposed plan, has 

never had any surveying of a commercial nature. 

So all of the previous surveying that had taken place was basically on what we call the Continental Shelf. But there’s vast areas 

of the edge of the continent that were under consideration that 

have not only never had a well drilled but they’ve never even been 

imaged by seismic data. And that was the 80 percent. 

The CHAIRMAN. Okay. 

63 

Dr. KNAPP. So I guess it gets to the issue about the new seismic 

data. 

There’s still vast areas on the Outer Continental Shelf which 

have never been imaged with any seismic data. But beyond that, 

the analogy I would make for the need for the new seismic data, 

I would say is with the Hubble Telescope when it was launched 

with great expectation and it all of a sudden came clear that there 

were problems with it. We couldn’t see much. When they went up 

to actually fix the lens on the telescope all of a sudden we can see 

the whole universe. 

And the analogy is that the way that seismic technology has 

evolved since these surveys were last acquired on the Atlantic is 

on that scale. It’s amazing the level of technology and sophistication that goes into these modern seismic surveys. And then, so it’s 

not just a matter of going out and retreading the same ground but 

it’s ground that we simply can’t see the level of detail that we 

would need to or any exploration company would, if they were serious about going to explore for oil and gas. 

And part of that is also that essentially all of the data that were 

collected in the 70’s and 80’s were what we refer to as 2D data. The 

state of the art nowadays is not only 3D but typically 4D data, and 

that just doesn’t exist here on the Atlantic. 

The CHAIRMAN. Right. 

So with the absence of a scheduled lease sale in the Atlantic you 

have folks that are saying well, there is no value in collecting any 

new seismic in the Atlantic OCS. What do you say to that? 

Dr. KNAPP. I would challenge that assumption because, first of 

all, as I said in my testimony, the Federal Government is congressionally-mandated to do an evaluation. 

The CHAIRMAN. Right. 

Dr. KNAPP. Of the resource potential of the OCS, and I would 

submit that that’s impossible to do with the current data. But beyond that I would say there are two additional issues. 

One, if there were to be a lease sale sometime in the future, it 

would be entirely prudent to engage in the acquisition of the data 

and the analysis of it now such that we can fairly evaluate whether 

a sale is even appropriate, whether there is a resource base there. 

I think that’s the way I understand the OCSLA legislation having 

been established. At first you evaluate the resource and then see 

if there’s an economic incentive to go explore for it. 

And the other issue that I would bring to the table is that in today’s world it’s become clear from a scientific standpoint that we 

learn a lot about one continental margin by looking at the opposing 

continental margin. And if we look to the continental margin of 

West Africa it’s awash with new discoveries of oil and gas on a regular basis. And a part of the strategy, I think, is even in the absence of a lease sale there would be an interest to collect new seismic data on this margin to better understand what’s going on in 

Africa. 

The CHAIRMAN. Well, I appreciate what you have said and would 

concur that the imperative to understand what it is that we have 

so that we can make rational decisions, so that we can put lease 

sales up. It seems to me that you do it when you have the knowledge based on the inventory. 

64 

Let me ask you, Director Hopper, your analysis of the connection 

between industry interest in investing whether it is in Alaska or 

the Atlantic. If industry has a good sense as to what the resources 

may be within an area they are probably going to have greater interest or greater likelihood to participate in lease sales. It takes a 

lot of money up front to be competitive in these. Is what Mr. Knapp 

saying what you folks in BOEM concur with? 

Ms. HOPPER. Yes, thank you, Chairman. 

Let me go back to it. I just want to address one thing you raised 

because it’s been bothering me since we last spoke. 

If there was anything about our twitter feed, and I certainly will 

go back and take a careful look at it, that gave the impression that 

there was some predetermined outcome or that BOEM was not impartial, I personally apologize for that. That is not at all the way 

that we operate, so. 

The CHAIRMAN. That was my impression. It might not be others, 

but—— 

Ms. HOPPER. Well, I just wanted us to be clear with each other. 

So thank you for raising it. 

So in July 2014 BOEM put out a record of decision, our final programmatic environmental impact statement on G and G, so seismic 

testing on the Atlantic. And since that time we’ve been looking. We 

have permits pending. 

We can have a long conversation about why they’re still pending 

which I’m happy to do, but I do think that we would agree that 

more information is always better. And we have actually used some 

of those analogous coasts, specifically Africa, to update our assessment. 

So we do, every five years, we do update the assessment of the 

oil and gas resource around the nation. Because we did have new 

data from those analogous studies, we updated, sort of off cycle, the 

Atlantic in 2014. 

So, yes, would I agree with the professor that more information 

is better and provides good decision making? Absolutely. 

The CHAIRMAN. Let me ask Dr. Knapp, if you can speak to the 

risks that may be posed to marine mammal populations when marine seismic surveys are conducted? 

Dr. KNAPP. Well let me say at the outset I am not a marine biologist, so I could not claim to be an authority in that respect. But 

I think there’s a—I’ve testified previously in other hearings that in 

1991 the Federal Government, through the National Marine Fisheries Service, started monitoring what are called unusual mortality 

events in U.S. waters. 

And in the succeeding 25 years that they’ve been monitoring, 

these are unusual mortality events of large populations of marine 

mammals. And if you look at the data that they’ve assembled, 

they’re equally divided between the Pacific, the Atlantic and the 

Gulf of Mexico. Two of those areas there’s been no commercial seismic activity, the Pacific and the Atlantic. And yet in the Gulf of 

Mexico, there’s been continuous seismic activity over that period of 

time. 

So I think there are any number of ways in which the data that 

we have suggests that there’s no correlation, there’s no demonstrable correlation between seismic activities either here in the 

65 

U.S. or worldwide that shows that there is a significant or longlasting threat to either marine mammals or the marine environment. 

The CHAIRMAN. Thank you. 

We have gone over by about 15 minutes longer than I had 

planned for this hearing, but I want to ask one last question of you, 

Director Hopper. 

We, in the state, have great interest, as you know, in offering 

area wide lease sales, and the lease sales in the Gulf have traditionally been on area wide acreage across a planning area. 

Now I understand the proposed program is offering lease sales 

across Western and Central planning areas. Again, the State of 

Alaska, I think, has been persistent, consistent on its request to 

move to the area wide approach within the state. We keep getting 

pushed back and resistance on that. Why is that? 

Ms. HOPPER. I think that the reason why we have done targeted 

leasing, identified targeted leasing in this current five-year plan, as 

well as the one that is pending, is because we think it is, sort of, 

let’s all of us focus on the areas that are the most important to industry and do a good evaluation of those. 

And so there are important environmental concerns to think 

about, subsistence needs to think about. And if industry can highlight for us the areas that they’re most interested in we can understand those areas and target our thinking in those areas. 

The CHAIRMAN. But that is unique to Alaska. 

Ms. HOPPER. Alaska is a frontier area as—and the Gulf of Mexico 

is not. 

The CHAIRMAN. Alaska, we were pretty busy in the 1980’s. 

Ms. HOPPER. True. 

But there is just the one that is producing, the one area in the 

Beaufort that is producing the reservoir. But there is not a Federal 

facility yet. So we still consider it frontier. 

The CHAIRMAN. Oh, I understand that. I understand that a great 

deal. 

I just, I recognize that we use, perhaps, terms of convenience in 

describing Alaska as perhaps this wild, unknown frontier that we 

do not happen to know a lot about. Truth be told, the amount of 

exploration that was conducted in the 1980’s was quite significant. 

I think the beauty of it is that we have forgotten all about it because we did not have any problems. We did not have the issues 

and the concerns that many had feared and simply did not materialize. 

Now there were events that led industry to look other parts 

around the world after that, but to suggest that somehow or other 

this is so special and so unique that we are going to treat it differently than we treat any other area within the OCS when it 

comes to the planning for the sales, I understand that there are 

differences. 

Again I think we have been very clear and very persistent and 

consistent on this, and we continue to be pushed back by the Administration in a request for area wide lease sales, something that, 

I think, would make good sense for all that are involved. 

66 

I could probably spend most of my afternoon with you all but we 

are not able to do so. I will thank you for the time that you have 

given the Committee. 

Know that while, again, many others were not participating this 

afternoon they have expressed great interest to me about what we 

have taken up this afternoon and great interest in the future of our 

OCS and its opportunities. 

So I will thank you for your contributions this afternoon and look 

forward to future discussion. 

And with that, the Committee stands adjourned. 

[Whereupon, at 4:18 p.m. the hearing was adjourned.] 

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