```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

 
EVALUATING PRESIDENT OBAMA'S OFFSHORE DRILLING PLAN AND IMPACTS ON OUR 

                                FUTURE
=======================================================================

                           OVERSIGHT HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                         Wednesday, May 9, 2012

                               __________

                           Serial No. 112-110

                               __________

       Printed for the use of the Committee on Natural Resources

         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov

                  U.S. GOVERNMENT PRINTING OFFICE
74-145                    WASHINGTON : 2013
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20402-0001

                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
            EDWARD J. MARKEY, MA, Ranking Democratic Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      Betty Sutton, OH
Scott R. Tipton, CO                  Niki Tsongas, MA
Paul A. Gosar, AZ                    Pedro R. Pierluisi, PR
Raul R. Labrador, ID                 John Garamendi, CA
Kristi L. Noem, SD                   Colleen W. Hanabusa, HI
Steve Southerland II, FL             Paul Tonko, NY
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
PJon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
               Jeffrey Duncan, Democratic Staff Director
                David Watkins, Democratic Chief Counsel
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, May 9, 2012...........................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     1
        Prepared statement of....................................     3
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts.....................................     4
        Prepared statement of....................................     5

Statement of Witnesses:
    Beaudreau, Tommy P., Director, Bureau of Ocean Energy 
      Management, U.S. Department of the Interior................     6
        Prepared statement of....................................     8
        Response to questions submitted for the record...........    12

                                     

 OVERSIGHT HEARING ON ``EVALUATING PRESIDENT OBAMA'S OFFSHORE DRILLING 
                   PLAN AND IMPACTS ON OUR FUTURE.''

                              ----------                              

                         Wednesday, May 9, 2012

                     U.S. House of Representatives

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room 1324, Longworth House Office Building, Hon. Doc Hastings 
[Chairman of the Committee] presiding.
    Present: Representatives Hastings, Duncan of Tennessee, 
Gohmert, McClintock, Thompson, Duncan of South Carolina, 
Flores, Harris, Landry; Markey, Kildee, Pallone, Napolitano, 
Holt, Costa, and Tonko.
    The Chairman. The Committee will come to order. The 
Chairman notes the presence of a quorum, which, under our 
rules, are two Members. And thank goodness the Chairman and the 
Ranking Member are here this morning. After last night, I 
suppose--wait, I forgot. Mr. Kildee is here. So we are 50 
percent over our quorum. That is good.
    Today the Committee on Natural Resources is meeting today 
to hear testimony on an oversight hearing on evaluating 
President Obama's offshore drilling plan and impacts on our 
future. Under Rule 4(f), opening statements are limited to the 
Chairman and Ranking Member. However, I ask unanimous consent 
that all Members be allowed to submit an opening statement, as 
long as it is into the Committee prior to the close of business 
today.
    [No response.]
    The Chairman. And without objection, so ordered.
    I will now recognize myself for my opening statement.

    STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    The Chairman. American offshore energy production plays a 
vital role in our country's economic security. It supports over 
a million American jobs, accounts for 30 percent of our 
Nation's oil production, reduces our dependence on foreign oil, 
and generates billions of dollars in Federal revenue.
    Now more than ever, with gasoline prices still hovering 
near $4 a gallon, and unemployment above 8 percent, the United 
States should be doing everything it can to ensure the timely 
and responsible production of our domestic energy resources.
    Unfortunately, the Obama Administration is instead pursuing 
an agenda that keeps 85 percent of our offshore areas closed to 
new American energy production.
    Every five years, the Federal Government releases a plan 
directing the development of our offshore resources. It 
includes specific locations and timelines for where and when 
energy production will occur. This Administration's draft plan 
includes no new areas, no goals, and no new energy resources. 
It is a plan that reinstates the drilling moratoria lifted in 
2008, and locks up vital American energy resources.
    When President Obama took office, there was a plan in place 
to conduct lease sales in the new areas that were no longer 
under the moratoria. Instead of seizing this opportunity to 
vastly increase American energy production, President Obama 
discarded that plan and canceled lease sales, including one off 
the coast of Virginia that was scheduled for 2011.
    The draft plan released last fall from the Obama 
Administration closes the entire Atlantic and Pacific Coasts to 
drilling, along with parts of the Arctic. The only areas this 
plan would allow energy production are in the Gulf of Mexico 
and, very late in the plan, in small parts of Alaska, areas 
that have been open in some cases for decades.
    President Obama claims to support expanded offshore 
drilling, but the reality is that no new drilling will occur 
anywhere during his term in office. Or, if this plan is 
enacted, for the next half decade.
    What is even more troubling is that, due to this 
Administration's delays, on July 1, 2012, the United States 
will have no plan to develop our offshore energy resources. 
Offshore drilling plans are subject to multiple levels of 
public comment and review. One of the final steps is that the 
plan must be submitted to Congress for a 60-day review. That is 
the law.
    In order to complete all the legally required steps to have 
a new plan in place by the time the current one expires on June 
30th, the President would have had to submit his plan to 
Congress by May 1st. They let that deadline come and go without 
any action.
    This will be the first time the U.S. will not have a plan 
in place since that requirement became law in the 1970s. And I 
also want to quickly address the Obama Administration's 
deliberately misleading claim that their draft plan opens 75 
percent of the known offshore resources. This is a calculated 
and outdated talking point meant to provide cover for a failed 
record on offshore drilling.
    This Administration is using seismic data from the 1980s to 
estimate offshore oil and natural gas potential. Using 
scientific data nearly 30 years ago to shape significant energy 
policy is not only completely unacceptable, but shows a 
fundamental lack of understanding of offshore energy 
development. We don't know the oil and natural gas potential of 
new areas until we begin development of those areas.
    For example, just over a decade ago, the USGS believed that 
the undiscovered technically recovered resources of the 
Marcellus Formation was 1.9 trillion cubic feet of natural gas. 
Today, it is estimated that Marcellus has 44 times that amount. 
Certainly nobody here is using a computer from 30 years ago. 
And this Administration shouldn't rely on 30-year-old data.
    The United States' economic competitiveness is at risk if 
we don't act now to expand production of our resources. Last 
week, the Chinese announced an offshore plan to double output 
by 2030. World markets are not waiting for us. And if we don't 
plan for increased energy production now, we will surely pay 
for it in the future through increased dependence and higher 
energy prices.
    Now is the time to make these important decisions and set 
the stage for an energy renaissance in the United States.
    And with that I yield back my time and recognize the 
distinguished Ranking Member, Mr. Markey.
    [The prepared statement of Mr. Hastings follows:]

          Statement of The Honorable Doc Hastings, Chairman, 
                     Committee on Natural Resources

    American offshore energy production plays a vital role in our 
country's economic security. It supports over a million American jobs, 
accounts for 30 percent of our Nation's oil production, reduces our 
dependence on foreign oil and generates billions of dollars in federal 
revenue.
    Now more than ever, with gasoline prices still hovering near $4 a 
gallon and unemployment above 8 percent, the United States should be 
doing everything we can to ensure the timely and responsible production 
of our domestic energy resources.
    Unfortunately, the Obama Administration is instead pursuing an 
agenda that keeps 85 percent of our offshore areas closed to new 
American energy production.
    Every five years, the federal government releases a plan directing 
the development of our offshore resources. It includes specific 
locations and timelines for where and when energy production will 
occur. President Obama's draft plan includes no new areas, no goals and 
no new energy resources. It's a plan that reinstates the drilling 
moratoria lifted in 2008 and locks up vital American energy resources.
    When President Obama took office, there was a plan in place to 
conduct lease sales in the new areas that were no longer under 
moratoria. Instead of seizing this opportunity to vastly increase 
American energy production, President Obama tossed aside that plan and 
canceled lease sales--including one off the coast of Virginia scheduled 
for 2011.
    The draft plan released last fall from the Obama Administration 
closes the entire Atlantic and Pacific coasts to drilling, along with 
parts of the Arctic. The only areas this plan would allow energy 
production are in the Gulf of Mexico and, very late in the plan, small 
parts of Alaska--areas that have been open in some cases for decades.
    President Obama claims to support expanded offshore drilling, but 
the reality is that no new drilling will occur anywhere during 
President Obama's term in office, or if this plan is enacted, for the 
next half decade.
    What's even more troubling is that due to the Obama 
Administration's delays, on July 1, 2012 the United States will have no 
plan to develop our offshore energy resources.
    Offshore drilling plans are subject to multiple levels of public 
comment and review. One of the final steps is that the plan must be 
submitted to Congress for a 60-day review. That's the law. In order to 
complete all the legally required steps to have a new plan in place by 
the time the current one expires on June 30th, the President would have 
had to submit his plan to Congress by May 1st.
    The Obama Administration let that deadline come and go without any 
action. This will be the first time the U.S. will not have a plan in 
place since it became a requirement in the 1970s.
    I also want to quickly address the Obama Administration's 
deliberately misleading claim that their draft plan opens 75 percent of 
the known offshore resources. This is a calculated and outdated talking 
point meant to provide political cover for a failed record on offshore 
drilling.
    The Obama Administration is using seismic data from the 1980s to 
estimate offshore oil and natural gas potential. Using scientific data 
from over 30 years ago to shape significant energy policy is not only 
completely unacceptable but shows a fundamental lack of understanding 
of offshore energy development. We don't know the oil and natural gas 
potential of new areas offshore until we begin development.
    For example, just over a decade ago, the USGS believed that the 
Undiscovered Technically Recoverable Resources of the Marcellus 
Formation was 1.9 trillion cubic feet of natural gas. Today, it is 
estimated that Marcellus has 44 TIMES that amount. We know that 
technology has come a long way in 30 years--certainly no one here is 
using a computer from 30 years ago--and the Obama Administration 
shouldn't be relying on 30 year old data.
    The United States' economic competitiveness is at risk if we don't 
act now to expand production of our resources. Last week, the Chinese 
announced an offshore plan to DOUBLE output by 2030. World markets are 
not waiting for us and if we don't plan for increased energy production 
now, we will surely pay for it in the future through increased 
dependence and higher energy prices.
    Now is the time to make these important decisions and set the stage 
for an energy renaissance in the United States.
                                 ______
                                 

  STATEMENT OF THE HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Markey. Thank you, Mr. Chairman, very much. The beloved 
children's writer, Maurice Sendak, passed away yesterday. But 
here in the Natural Resources Committee, witnesses still get to 
come to the place where the wild questions are.
    So, welcome, Director Beaudreau, to the place where 
proponents of drilling gnash their terrible teeth, show their 
terrible claws, and roar their terrible roars. But before we 
let the wild rumpus start, let us just consider a few facts. 
Because today, once again, is Groundhog Day in the Natural 
Resources Committee, where the Majority has a hearing based 
upon knowingly erroneous premises, but they continue to try to 
propound them to the American public.
    The Interior Department's proposed five-year offshore 
drilling plan would make more than 75 percent of our offshore 
oil and gas reserves available for drilling. Oil production has 
increased under the Obama Administration. In fact, last year, 
onshore oil production was as high or higher than it was during 
each of the last three years of the Bush Administration. Oil 
companies are drilling in the Gulf. In fact, there are now 
nearly one-third more floating rigs working in the Gulf than 
there were before the BP spill. By the end of the year, there 
will be nearly 50 percent more floating drilling rigs in the 
Gulf, according to the industry analysts, than were there 
before the BP spill.
    But the Interior Department's plan for offshore drilling is 
only one aspect of the all-of-the-above energy plan we should 
be debating. We need a plan to end excessive Wall Street 
speculation in oil markets. We need a plan to get oil companies 
to start drilling on the tens of millions of acres they already 
have under lease, and to ensure that they are doing so safely. 
We need a plan to ensure that American fuel and natural gas 
stays here to help American consumers, and is not just 
exported.
    Yet, the Republican Majority in the House tried to cut the 
funding for the Commodity Futures Trading Commission, the cops 
on the Wall Street speculation beat, by 30 percent last year. 
The Majority should end its opposition to fully funding the 
CFTC Wall Street cops to end excessive speculation in oil 
markets and protect consumers. The Majority has also opposed 
Democratic efforts to get oil companies to start drilling on 
the leases they already have. Oil companies already hold the 
offshore drilling rights to an area the size of Kentucky on 
which they are not producing a single barrel of oil.
    Last year the Interior Department found that there was 
nearly as much oil and more natural gas under these non-
producing leases--non-producing because the oil companies 
refuse to drill on them--than we could ever get from drilling 
up and down the entire East and West Coast of the United 
States.
    The Majority has refused to debate legislation that I have 
introduced to implement the recommendations of the independent 
BP Spill Commission, improve the safety of offshore drilling. 
The Spill Commission recently gave this Congress a grade of D 
on its legislative response to the worst environmental disaster 
in American history, and only refrained from handing out an F 
because it didn't want to ``insult the whole institution.''
    And the Majority has repeatedly voted down Democratic 
amendments to ensure that the oil and natural gas produced from 
public lands here in the United States stays here in the United 
States to benefit American consumers here in the United States, 
even as oil companies exported more than one billion barrels of 
American fuel last year to other countries, rather than selling 
it here in the United States to American consumers. The 
increase in gas prices we saw this spring was not the result of 
the White House. It was the result of Wall Street speculators. 
It was not about Obama. It was about OPEC.
    The Interior Department's all-of-the-above energy strategy 
includes a five-year offshore drilling plan, but it also 
includes permitting five times the amount of renewable energy 
approved by all previous Administrations, combined. It is part 
of a larger strategy that has reduced our dependence on foreign 
oil from 57 percent at the end of the Bush Administration to 45 
percent last year.
    But once again, those on the other side of the aisle appear 
focused solely on a drill baby, drill strategy that only 
benefits big oil. It is time to debate the other pieces of a 
real energy plan that benefit all American consumers and our 
economy.
    I yield back the balance of my time.
    [The prepared statement of Mr. Markey follows:]

     Statement of The Honorable Edward J. Markey, Ranking Member, 
                     Committee on Natural Resources

    Thank you, Mr. Chairman.
    The beloved children's writer Maurice Sendak passed away yesterday, 
but here in the Natural Resources Committee witnesses still get to come 
to the place where the wild questions are. So welcome, Director 
Beaudreau [pronounced Bo-Dro], to the place where proponents of 
drilling gnash their terrible teeth, show their terrible claws, and 
roar their terrible roars!
    But before we let the Wild Rumpus Begin, let's just consider a few 
facts.
    The Interior Department's proposed five-year offshore drilling plan 
would make more than 75 percent of our offshore oil and gas reserves 
available for drilling.
    Oil production has increased under the Obama Administration. In 
fact, last year, offshore oil production was as high or higher than it 
was during each of the last three years of the Bush Administration.
    Oil companies are drilling in the Gulf. In fact, there are now 
nearly one-third more floating rigs working in the Gulf than there were 
before the BP spill. By the end of the year there will be nearly 50 
percent more floating drilling rigs, according to industry analysts.
    But the Interior Department's plan for offshore drilling is only 
one aspect of the ``all of the above'' energy plan we should be 
debating. We need a plan to end excessive Wall Street speculation in 
oil markets. We need a plan to get oil companies to start drilling on 
the tens of millions of acres they already have under lease and to 
ensure that they are doing so safely. We need a plan to ensure that 
American fuel and natural gas stays here to help American consumers and 
is not just exported.
    Yet the Republican Majority in the House tried to cut the funding 
for the Commodity Futures Trading Commission--the cops on the Wall 
Street speculation beat--by 30 percent last year. The Majority should 
end its opposition to fully funding the CFTC Wall Street cops to end 
excessive speculation in oil markets and protect consumers.
    The Majority has also opposed Democratic efforts to get oil 
companies to start drilling on the leases they already have. Oil 
companies already hold the offshore drilling rights to an area the size 
of Kentucky on which they are not producing oil. Last year, the 
Interior Department found that there was nearly as much oil and more 
natural gas under these nonproducing leases than we could ever get from 
drilling up and down the East and West Coasts.
    The Majority has refused to debate legislation that I have 
introduced to implement the recommendations of the independent BP Spill 
Commission improve the safety of offshore drilling. The Spill 
Commission recently gave Congress a grade of ``D'' on its legislative 
response to the worst environmental disaster in American history, and 
only refrained from handing out an ``F'' because it didn't want ``to 
insult the whole institution.''
    And the Majority has repeatedly voted down Democratic amendments to 
ensure that the oil and natural gas produced from public lands here in 
the United States stays here to benefit American consumers, even as oil 
companies exported more than 1 billion barrels of American fuel last 
year.
    The increase in gas prices we saw this spring was not the result of 
the White House, it was the result of Wall Street speculators. It was 
not about Obama, it was about OPEC.
    The Interior Department's ``all of the above'' energy strategy 
includes a five-year offshore drilling plan but it also includes 
permitting five times the amount of renewable energy approved by all 
previous administrations combined. It is part of a larger strategy that 
has reduced our dependence on foreign oil from 57 percent at the end of 
the Bush Administration to 45 percent last year.
    But once again, those on the other side of the aisle appear focused 
solely on a ``drill, baby, drill'' strategy that only benefits Big Oil. 
It is time to debate the other pieces of a real energy plan that 
benefit American consumers and our economy.
    I yield back.
                                 ______
                                 
    The Chairman. I thank the gentleman for his statement. And 
I am very pleased to welcome on our panel today Director Tommy 
Beaudreau, the head of the Bureau of Ocean Energy Management. 
Welcome back. As we spoke earlier, I am happy to see you are 
getting your feet wet now in your new responsibilities. No pun 
intended, I might add.
    You have been here before, and you know how the timing 
lights work. When the green light is on you are doing very, 
very well. Yellow light means you have one minute left. And 
when the red light comes on, it means your five minutes have 
expired. Your full statement, however, will appear in the 
record. So I invite you to summarize.
    And with that, Director Beaudreau, I welcome you to the 
Committee. And you are recognized for five minutes.

            STATEMENT OF TOMMY BEAUDREAU, DIRECTOR, 
               BUREAU OF OCEAN ENERGY MANAGEMENT

    Mr. Beaudreau. Thank you, Chairman Hastings, Ranking Member 
Markey, and members of the Committee on Natural Resources. I 
appreciate very much the invitation to appear before you today 
to discuss the Department of the Interior's proposed Outer 
Continental Shelf Oil and Gas Leasing Program for 2012 to 2017, 
referred to as the Five Year Program.
    My Agency, the Bureau of Ocean Energy Management, is 
committed to promoting safe and responsible oil and gas 
exploration and development offshore the United States as a 
cornerstone of the all-of-the-above energy strategy that the 
President has stressed is necessary to grow America's energy 
economy and continue to reduce our dependence on foreign oil.
    BOEM is working to finalize our Five Year Program for 2012 
to 2017. I would like to take a moment to discuss what we are 
doing to promote responsible development by providing industry 
with access to vital offshore oil and gas resources, which 
fundamentally is what the Five Year Program is about.
    Simply put, our plan proposes leasing where the oil is. 
BOEM's current offshore oil and gas resource estimates, updated 
last November, make this clear. The central Gulf of Mexico 
remains, by far, the offshore area with the richest oil and gas 
potential: nearly 31 billion barrels of undiscovered but 
technically recoverable oil. The Chukchi Sea is second, with 
about half that, approximately 15 billion barrels. Next are the 
western Gulf of Mexico and the Beaufort Sea, with more than 12 
billion and 8 billion barrels, respectively.
    All of these areas are included in the proposed Five Year 
Program. Together, these areas, along with the Cook Inlet and 
the portion of the eastern Gulf of Mexico not subject to 
congressional moratorium, which are also in the proposed Five 
Year Plan, contain more than 75 percent of the untapped oil and 
gas resources that we estimate exist offshore of the United 
States.
    Our program is premised on resource development and leasing 
strategies that are specifically tailored to the resource 
potential and conditions of individual regions. In the Gulf of 
Mexico, where the resource potential is the highest, and the 
infrastructure to find resources, bring them to market, and 
respond in the event of an accident is the most mature, we 
propose continuing with annual area-wide lease sales. We held 
an extremely successful sale in the western Gulf last December, 
and we will be holding a central Gulf sale next month on June 
20th. We anticipate holding the first lease sale under the new 
Five Year Program in the western Gulf in November or December 
of this year. This is consistent with the traditional rhythm of 
alternating annual lease sales for the two major Gulf of Mexico 
planning areas.
    The proposed Five Year Plan includes potential lease sale 
in each of the Alaskan Arctic planning areas, the Beaufort and 
the Chukchi Seas. We are taking a careful and balanced approach 
to leasing in the Arctic that considers resource potential, the 
unique environmental needs and sensitivities in the Arctic, and 
concerns about native Alaskan culture and the reliance of many 
North Slope communities on subsistence hunting and fishing. We 
are already working on planning related to a potential special 
interest sale on the Cook Inlet. And in March we issued a 
formal request to gauge whether industry is interested in oil 
and gas exploration in that area.
    Now, turning to the mid and south Atlantic, we are pursuing 
a specific strategy to develop modern scientific information 
about oil and gas resource potential in that region, both the 
size of the resource and its location. As the Chairman pointed 
out, seismic data that currently exists for these areas is 
decades old.
    Therefore, in March, BOEM issued a draft EIS concerning the 
seismic surveys necessary to understand the magnitude and 
location of potential oil and gas resources in the mid and 
south Atlantic. We expect to complete this EIS by the end of 
the year, which may enable seismic surveys to move forward 
early next year.
    The other major issue that must be thought through as we 
consider the future of potential oil and gas exploration in the 
mid and south Atlantic is reconciling offshore oil and gas 
activity with existing uses, including military training and 
operations.
    For example, the Defense Department has raised substantial 
concerns about the compatibility of military operations in the 
Atlantic with oil and gas activity. For example, DoD identified 
significant conflicts in the Sale 220 area offshore Virginia, 
such that it believed that ``no oil and gas activity'' would be 
appropriate in 72 percent of the sale area, and that no 
permanent oil and gas facility should be located in an 
additional 5 percent of the Sale 220 area.
    For all of these reasons, I believe our proposed Five Year 
Program is a major step forward in helping secure the Nation's 
energy future by making areas containing the vast majority of 
our shared OCS oil and gas resources available for development, 
while also protecting sensitive environmental areas, respecting 
other uses such as fishing, subsistence, and military 
operations, and considering the interests of the states in what 
happens off of their shores.
    Thank you very much.
    [The prepared statement of Mr. Beaudreau follows:]

   Statement of Tommy P. Beaudreau, Director, Bureau of Ocean Energy 
          Management, United States Department of the Interior

    Chairman Hastings, Ranking Member Markey, and Members of the 
Committee, I am pleased to appear before you today to discuss the 
Bureau of Ocean Energy Management's (BOEM) offshore oil and gas leasing 
under the current Five Year Outer Continental Shelf (OCS) Oil and Gas 
Leasing Program (Five Year Program), as well as our development of the 
next Five Year Program for 2012-2017. As the President has stressed, 
the Administration is committed to promoting safe and responsible 
domestic oil and gas production as part of a comprehensive, all-of-the-
above energy strategy to grow America's energy economy and continue to 
reduce our dependence on foreign oil. Expanding safe and responsible 
development of the nation's offshore oil and gas resources through 
leasing under the Five Year Program is an important part of that 
strategy.
Leasing Under the 2007-2012 OCS Five Year Program
    BOEM's offshore leasing activity under the current Five Year 
Program reflects the Administration's overall approach to promoting 
safe and environmentally responsible oil and gas resource development, 
including encouraging exploration and development in the Gulf of Mexico 
(GOM), where resources and industry interest are most extensive, and 
where mature infrastructure exists to support oil and gas activities. 
Since the start of this Administration, BOEM and its predecessor agency 
have held four lease sales in the GOM under the current Five Year 
Program, generating more than $2 billion in bonus payments, as well as 
more than $144 million in rental and royalty payments.
    Most recently, on December 14, 2011, BOEM held Western GOM Lease 
Sale 218. This lease sale was the first offshore oil and gas sale 
following the Deepwater Horizon explosion and oil spill and DOI's 
implementation of sweeping safety and environmental reforms, which 
heightened standards and improved oversight of offshore drilling. Sale 
218 followed supplemental environmental analysis that considered new 
information--including information in light of the Deepwater Horizon 
event. The sale offered over 21 million acres for oil and gas 
exploration and development, and BOEM received bids on blocks covering 
over one million acres. The sale netted over $324 million in bonus bids 
and over $11 million in first year rentals.
    BOEM will hold Consolidated Central GOM Lease Sale 216/222, the 
last remaining sale scheduled in the current Five Year Program, in New 
Orleans on June 20, 2012. The sale will include all available unleased 
acres in the Central Planning Area offshore Louisiana, Mississippi and 
Alabama. The proposed lease sale includes approximately 7,250 unleased 
blocks covering nearly 38 million acres in the Central GOM, a region 
that BOEM estimates contains close to 31 billion barrels of oil and 134 
trillion cubic feet of natural gas that are currently undiscovered and 
technically recoverable. BOEM estimates that the Central GOM sale could 
result in the production of 1 billion barrels of oil and 4 trillion 
cubic feet of natural gas. Sale 216/222 also follows the completion of 
supplemental environmental analysis in light of the Deepwater Horizon 
event.
    The terms of recent sales reflect a range of administrative 
measures to ensure a fair return to taxpayers and encourage prompt and 
diligent development, consistent with policies articulated in the 
Administration's Blueprint for a Secure Energy Future. These include 
escalating rental rates to encourage prompt exploration and development 
of leases, as well as the opportunity for additional time if the 
operator demonstrates a commitment to exploration by drilling a well 
during the base period of the lease. The durational terms of leases are 
graduated by water depth to account for differences in time needed for 
analyses, planning safe and appropriate exploration, and if resources 
are found, production facility design and construction.
    Moreover, beginning with Sale 218 last fall, BOEM increased the 
minimum bid for deepwater to $100 per acre, up from only $37.50, to 
ensure that taxpayers receive fair market value for offshore resources 
and to provide leaseholders with additional impetus to invest in and 
hold only those leases that they are reasonably likely to develop. 
Rigorous analysis of the last 15 years of lease sales in the Gulf of 
Mexico showed that deepwater leases that received high bids of less 
than $100 per acre, adjusted for energy prices at time of each sale, 
experienced virtually no exploration and development drilling.
    The terms of BOEM's lease sales also include a number of conditions 
to protect the environment. For example, the forthcoming Central GOM 
Lease Sale 216/222 will include stipulations to protect biologically 
sensitive resources, mitigate potential adverse effects on protected 
species, and avoid potential conflicts associated with oil and gas 
development in the region.
The 2012-2017 OCS Oil and Gas Leasing Program
    With the current Five-year Program nearing its end date, BOEM is 
finalizing the Proposed Final OCS Oil and Gas Leasing Program for 2012-
2017. We are also completing the corresponding Programmatic 
Environmental Impact Statement that analyzes the potential 
environmental effects of the Five Year Program and provides the basis 
for subsequent environmental analysis throughout the implementation of 
the Program. DOI expects to finalize and issue both documents by the 
end of June, when the current Five Year Program expires. The first 
lease sale under the new Five Year Program is tentatively scheduled in 
the Western GOM in November or December of 2012.
The Proposed 2012-2017 OCS Oil and Gas Leasing Program
    BOEM published the Proposed Five Year Program for 2012-2017 in 
November 2011. It proposed making available offshore areas that contain 
more than 75 percent of undiscovered technically recoverable oil and 
gas resources that the OCS is estimated to hold. It will, as the Outer 
Continental Shelf Lands Act requires, represent a proper balance among 
the potential for environmental damage, the potential for the discovery 
of oil and gas, and the potential for adverse impact on the coastal 
zone.
    Two primary guiding principles underlie this Proposed Program. 
First, the Proposed Program is designed to promote the diligent 
development of the Nation's offshore oil and gas resources, which are 
and will remain central to the Nation's energy strategy, economy, and 
security. The Proposed Program is in alignment with the 
Administration's energy Blueprint, which aims to promote the Nation's 
energy security and reduce oil imports by a third by 2025 through a 
comprehensive national energy policy that includes a focus on expanding 
safe and responsible domestic oil and gas production.
    Second, this Proposed Program is grounded in the lessons learned 
from the Deepwater Horizon tragedy, which caused the deaths of 11 
workers and resulted in the release of nearly five million barrels of 
oil into the GOM. Since the Deepwater Horizon event, DOI has raised 
standards for offshore drilling safety and environmental protection in 
order to reduce the risk of another loss of well control in our oceans 
and improve our collective ability to respond to a blowout and spill. 
While offshore oil and gas exploration and development will never be 
risk-free, the risk from these activities can be minimized and 
operations can be conducted safely and responsibly, with appropriate 
measures to protect human safety and the environment.
    Based on these principles, the Proposed Program provides for lease 
sales in six offshore areas where there are currently active leases and 
exploration and where there is known or anticipated hydrocarbon 
potential. This represents a regionally targeted approach that is 
tailored to the specific needs and environmental conditions of 
different areas in order to best achieve the dual goals of promoting 
prompt development of the Nation's oil and gas resources and ensuring 
that this development occurs safely and with the necessary protections 
for the marine, coastal and human environments. This approach accounts 
for the differences between different areas--including differences in 
current knowledge of resource potential, adequacy of infrastructure to 
support oil and gas activity, accommodation of regional interests and 
concerns, and the need for a balanced approach to our use of natural 
resources.
    Therefore, the Proposed Program in the GOM is designed to be 
commensurate with the maturity of the infrastructure necessary to 
support offshore oil and gas activity, including infrastructure for 
spill containment and response, as described below. I would also like 
to emphasize that OCS leasing should not be ``one size fits all,'' and 
consideration of lease sales in the Beaufort and Chukchi Seas will be 
specifically tailored to those regions. The traditional area-wide 
leasing model that has been used in the Western and Central GOM is not 
appropriate for the Arctic, and BOEM is working to develop alternative 
leasing strategies specifically for the Arctic in order to focus 
potential leasing on areas that have significant resource potential 
while also mitigating the impact of offshore oil and gas activity on 
the unique Arctic environment and its subsistence resources. I will 
address our regionally-tailored approach to offshore oil and gas 
leasing under the next Five Year Program below.
Gulf of Mexico
    Of the 15 lease sales included in the Proposed Program, 12 are in 
the GOM, where infrastructure is unparalleled and the oil and gas 
resource potential is best understood and known to be most prospective. 
The GOM currently supplies more than a quarter of the Nation's oil 
production, and both current and ongoing evaluation of offshore 
resources in the GOM is extremely sophisticated, contributing 
significantly to industry's and BOEM's understanding of this region's 
oil and gas potential. Moreover, the infrastructure supporting the oil 
and gas industry, to bring resources to market and to respond in the 
event of an emergency, is the most mature and well developed in the 
GOM. Therefore, the Proposed Program schedules regular, area-wide lease 
sales in the Western and Central GOM throughout the Five Year Program. 
The Proposed Program also includes lease sales gauged to accommodate 
anticipated industry interest in the portion of the Eastern GOM that is 
not currently subject to congressional moratorium. Other areas in the 
Eastern GOM are not included in this Proposed Program because they are 
under a congressionally-mandated leasing moratorium until June 30, 
2022.
Alaska
    The Proposed Program schedules one sale each in the Beaufort and 
Chukchi Seas, deliberately set late in the Program, as well as a 
special interest sale in the Cook Inlet if industry demonstrates 
sufficient interest. With respect to the Cook Inlet Planning Area, BOEM 
published a Request for Interest in the Federal Register on March 27, 
2012 to gauge industry interest in a potential lease sale in that area 
under the next Five Year Program. The period to respond to that Request 
for Interest closes on May 11, 2012.
    The schedule with respect to the Beaufort and Chukchi Planning 
Areas is designed to allow for the development of a leasing approach 
that is appropriate for these Arctic areas and fully considers their 
resource potential, their specific environmental needs and 
sensitivities, concerns related to Native Alaskan culture, and the 
reliance of many Arctic communities on ocean resources such as marine 
mammals and fish for subsistence. The later scheduling of the potential 
sales in the Beaufort Sea and Chukchi Sea Planning Areas represents a 
balanced and careful approach to leasing in the Arctic. This approach 
takes into account the significant inventory of existing offshore 
leases in the Beaufort and Chukchi Seas. Most important, this approach 
is designed to allow time for further work in a number of critical 
areas.
    First, the schedule allows time for further scientific study and 
environmental assessment of the Arctic. In June 2011, the United States 
Geologic Survey issued its Evaluation of the Science Needs to Inform 
Decisions on Outer Continental Shelf Energy Development in the Chukchi 
and Beaufort Seas, Alaska, as requested by the Secretary of the 
Interior. The report recognizes that a substantial body of scientific 
work and knowledge exists with respect to the Arctic and recommends 
areas of focus for ongoing and future study, as well as further 
synthesis of existing scientific information from various sources 
within and outside of the government. Moreover, this approach is 
consistent with Executive Order 13580, which was issued by President 
Obama in July 2011 and established a high-level Interagency Working 
Group on Coordination of Domestic Energy Development and Permitting in 
Alaska. This working group is chaired by the Deputy Secretary of the 
Interior and is focused on facilitating coordinated and orderly 
decision making in Alaska, including development and sharing of 
scientific information in support of regulatory processes.
    Second, the Proposed Program is specifically designed to ensure 
that planning and designing lease sales in the Beaufort and Chukchi 
Seas take into account any information about geology and resource 
potential that may be developed as a result of exploration of current 
leases in those areas. Exploration may provide valuable data for 
defining the best areas for potential development and for assessing 
reservoir characteristics such as volumes and pressures that are 
central to ensuring that appropriate safety measures and spill response 
resources are in place.
    Third, as offshore exploration and development in the Arctic moves 
forward, so too must the development of spill response preparedness and 
infrastructure. Current spill response planning is focused on certain, 
limited near-term proposed drilling operations in the Arctic OCS. 
Longer term planning and infrastructure development are also necessary, 
particularly if major oil deposits are found and producers seek to 
engage in year-round production activities. Longer term planning is 
another major focus of the interagency working group. The potential 
evolution toward additional drilling activities in offshore waters in 
the Arctic could raise significant additional complexities regarding 
the availability of adequate response capability and infrastructure in 
this difficult frontier environment. The Proposed Program provides time 
for contingency planning and infrastructure development that is needed 
to address these issues.
Atlantic
    This Proposed Program does not include lease sales in the North-
Atlantic, Mid-Atlantic, and South-Atlantic planning areas based on, and 
in alignment with, the principles that underlie the entire Program. 
Many Atlantic states expressed concerns about oil and gas development 
off their coasts. While an OCS development strategy announced in 2009 
included the Mid- and South-Atlantic under consideration for potential 
inclusion, a number of specific considerations supported the 
Secretary's decision not to schedule lease sales in these areas under 
this Proposed Program. Accordingly, BOEM is proceeding with a specific 
strategy to address these considerations and support decision-making on 
whether potential lease sales in the Mid- and South-Atlantic would be 
appropriate in the future.
    First, the oil and gas resource potential in the Mid- and South 
Atlantic is not well understood and surveys of these areas are 
incomplete and out of date. Prior to scheduling lease sales in these 
planning areas, it is prudent to develop information evaluating the oil 
and gas resource potential of these regions. Accordingly, BOEM is 
moving forward expeditiously to facilitate resource evaluation in these 
areas, including conducting a programmatic Environmental Impact 
Statement (EIS) relating to seismic surveys in the Mid- and South- 
Atlantic. BOEM announced on March 28, 2012 the publication of the draft 
EIS and has just concluded a series of public hearings across the Mid- 
and South-Atlantic states. Second, there are complex issues relating to 
potentially conflicting uses, including those of the Department of 
Defense, which should be addressed so that any potential future leasing 
activity in these areas is designed appropriately. Finally, while 
evaluation of the resource potential of the Mid- and South Atlantic 
regions moves forward, so too should analysis and planning regarding 
the additional infrastructure necessary to support potential oil and 
gas activities, including spill response resources.
Pacific
    Areas off the Pacific coast are not included in this Proposed 
Program. This approach is consistent with Section 18 of OCSLA, which 
gives priority leasing consideration to areas where the combination of 
previous experience; local, state, and national laws and policies; and 
expressions of industry interest indicate that potential leasing and 
development activities could be expected to proceed in an orderly 
manner. The Proposed Program specifically seeks to accommodate the 
recommendations of governors of coastal states and local government. 
The exclusion of the Pacific Coast is consistent with state interests, 
as framed in an agreement between the governors of California, 
Washington, and Oregon signed in 2006, which expressed their opposition 
to oil and gas development off their coasts. Western states have 
continued to voice these concerns.
Finalizing the 2012-2017 OCS Oil and Gas Leasing Program
    The Proposed Program, released in November of 2011, led to a 
significant outpouring of public interest. BOEM received over 280,000 
comments during the 90-day comment period that followed the release of 
the Proposed Program. These comments came from a variety of sources, 
including affected states and local governments, including Native 
Alaskan villages and associations; congressional members; Federal 
agencies; the energy industry; non-energy industries, including small 
businesses; public interest and environmental groups; and the general 
public.
    In addition to receiving written comments, BOEM held a series of 
public hearings in GOM states, Washington D.C., and across Alaska's 
North Slope. I personally presided over a number of these hearings--
including a number of the hearings in Alaska, which provided an 
invaluable opportunity to hear directly from native communities about 
their needs and concerns, and to learn from their traditional knowledge 
about the environment, marine mammal populations, and other natural and 
cultural resources. BOEM is committed to integrating this critical 
information into the scientific and environmental analysis that informs 
our decision-making.
    My agency takes this input very seriously, and we are working hard 
to consider the feedback we received and to integrate comments into our 
Proposed Final Program, as you will see in the coming months.
Conclusion
    BOEM is working to help secure our energy future by contributing to 
an all-of-the-above energy strategy, including safe and responsible 
development of our conventional energy resources on the OCS. Mr. 
Chairman, thank you again for the opportunity to be here today to 
discuss the Bureau's effort in creating an oil and gas leasing program 
that will safely and responsibly reduce our dependence on foreign oil 
and create jobs through the development of these important energy 
resources. I am happy to answer any questions that you or the Committee 
may have.
                                 ______
                                 

 Response to questions submitted for the record by Tommy P. Beaudreau, 
  Director, Bureau of Ocean Energy Management, U.S. Department of the 
                                Interior

Questions from Chairman Hastings:
1.  In your testimony, you alluded to a solicitor's opinion supporting 
        the ability of Bureau of Ocean Energy Management to issue a 
        Notice of Sale and take other steps to move forward with lease 
        sale plans prior to the final enactment (under Section 18 of 
        OCSLA) of the upcoming 5-Year Plan, which as you clarified in 
        testimony will not complete its 60 day Congressional review 
        prior to July 1, 2012. Please provide the Committee with the 
        full documentation of that opinion and any other support for 
        the Bureau's opinion that moving forward with a sale without 
        having a final plan in place can occur.
    Response: On February 10, 1986, then-Solicitor Tarr issued 
Solicitor's Opinion M-36954, 93 I.D. 125; 1986 LEXIS 10, which 
concludes that the Department of the Interior may engage in pre-sale 
procedures for a lease sale before the approval of the five-year 
schedule on which it is listed. Therefore the Department can notice 
this fall's Western Gulf of Mexico lease sale before the Five Year 
Outer Continental Shelf Oil and Gas Program has been finalized. We have 
routinely issued the proposed notices of sale for a program's first 
sales prior to the finalization of a program, going back to the first 
Five Year Program issued in 1980 and this practice is consistent with 
the requirements of the OCS Lands Act. I also want to clarify a 
statement made during the hearing that this would be the first time the 
July 1 date has not been met for finalizing a program. The Five Year 
Program for 1987--1992 was finalized after July 1, 1987. As will be the 
case with the upcoming Five Year Program, this had no effect on the 
lease sale schedule.
2.  In testimony, you mentioned a letter that you had received from the 
        Department of Defense expressing significant concern over 
        offshore drilling in certain areas of our nation's OCS. Please 
        furnish the Committee with a copy of that letter. In addition, 
        can you update the Committee steps you have taken to address 
        the concerns raised by the Department?
    Response: Attachment 1 is an April 30, 2010, letter from the 
Department of Defense to the Director of the then-Minerals Management 
Service. The letter provided DoD's review of the Preliminary Revised 
Five Year Program for 2007-2012.
    The Proposed Final Five Year Program for 2012-2017 does not include 
areas off the Atlantic coast for leasing. The Bureau of Ocean Energy 
Management is pursuing a specific strategy for the Atlantic that is 
focused on expediting efforts to facilitate updated resource evaluation 
to support future leasing decisions. This includes completing an 
environmental review that could support approval of new seismic and 
other survey activity in the Mid- and South Atlantic as early as 2013. 
BOEM continues to work with DoD and others to identify and resolve 
potential conflicts that have been identified in this region.
3.  Can you define for the Committee the differences between the 
        position of the Department of Defense with regards to lease 
        sale 220 as expressed in the question above and the responses 
        that the Bureau received from the Department of Defense during 
        the development of the 2007-2012 OCS plan that included the 
        Virginia sale area in the 2007 plan when the Defense Department 
        agreed to the sale inclusion in the plan?
    Response: There is no difference between the position of the DoD 
with regard to Sale 220 and its comments concerning the Mid-Atlantic 
area. DoD expressed concerns over the lease sales in the Mid-Atlantic 
throughout the preparation of the 2007-2012 Five Year Program, as 
indicated in Attachments 2 (April 10, 2006, letter on the February 2006 
Draft Proposed Five Year Program) and 3 (November 27, 2006, letter on 
the August 2006 Proposed Five Year Program). As noted in the response 
to the previous question, DoD's April 30, 2010, letter on the 
Preliminary Revised Five Year Program for 2007-2012 presented its 
analysis of possible oil and gas activities in the area.
4.  Can BOEM provide to the Committee an estimate of the amount of 
        undiscovered technically recoverable resources in the Southern 
        California OCS Planning Area in lease blocks that currently 
        remain undeveloped, but are accessible from existing developed 
        lease blocks using modern technological advances?
    Response: The longest reach well in the Pacific OCS Region is 
slightly greater than six miles, therefore BOEM estimated resources 
within six miles of existing platforms. BOEM estimates of potential oil 
and gas resources located within 6 miles of existing Santa Maria Basin 
and Santa Barbara Channel OCS platforms range from about 146 million 
barrels of oil and 130 billion cubic feet of natural gas for Contingent 
Resources (defined below), to about 650 million barrels of oil and 
1,090 billion cubic feet of natural gas for Undiscovered Resources 
(also defined below).
    To add perspective to these numbers, BOEM expects the production of 
the remaining reserves of the producing Pacific OCS fields to be about 
307 million barrels of oil and 667 billion cubic feet of natural gas.
    As noted above, two categories of resources were identified and 
assessed: Contingent Resources, and Undiscovered Resources. These 
categories are distinguished by the level of uncertainty of both the 
existence and volume of recoverable oil and gas of the postulated 
accumulations.
    Contingent Resources consist of accumulations that have been 
discovered by drilling, but where certain factors prevented commercial 
development of the accumulation. Based on our level of knowledge, this 
category can be considered informally as ``probable resources.''
    Undiscovered Resources consist of resources postulated to exist on 
the basis of geological and geophysical information, but not yet 
drilled and discovered. This category can be considered informally as 
``possible resources.'' The estimated volume of Undiscovered Resources 
is less certain than the volume of Contingent Resources.
Questions from Rep. Hanabusa:
1.  Several of the official reports on the Deepwater Horizon spill 
        noted the need for increased understanding of our oceans, 
        including assessments of baseline environmental conditions. The 
        Gulf Coast Ecosystem Restoration Task Force report specifically 
        noted the need for a robust data collection regimen. In light 
        of the budget pressures facing your agency, how does the FY 
        2013 budget baseline support environmental data collection 
        activities? Is the Department of the Interior considering 
        persistent, unmanned vehicles to enhance these data collection 
        efforts?
    Response: The increases requested in BOEM's Fiscal Year (FY) 2013 
Budget consist of $700,000 for Environmental Studies.
    In each fiscal year, the majority of the Environmental Studies 
Program's budget supports data collection activities and generates the 
scientific information needed to support decision making for the 
Bureau. A list and description of all environmental studies proposed 
for consideration in FY 2013 are contained in the BOEM Environmental 
Studies Development Plan, which is available on the BOEM website at 
http://www.boem.gov/uploadedFiles/2013-
2015_Studies_Development_Plan.pdf. The approved studies list for FY 
2013 will be available on the BOEM website in the near future. BOEM has 
requested an additional $700,000 for high-priority baseline 
characterization and monitoring studies.
    The use of autonomous underwater vehicles is a topic of much 
discussion within the federal and academic research communities, and 
BOEM is a highly active participant in these discussions.
2.  At the recent Offshore Technology Conference, Dr. Watson discussed 
        the importance of the offshore oil and gas industry adopting 
        innovative technologies to improve spill response 
        capabilities.'
   What role does your agency play in the development and adoption of 
        these technologies?
    Response: The Bureau of Safety and Environmental Enforcement, 
through the Oil Spill Response Research Program, evaluates industry 
innovations in spill response technology and uses these evaluations in 
the Oil Spill Response Plan review process. Frequently, these 
evaluations are conducted at Ohmsett--the National Oil Spill Response 
and Renewable Energy Test Facility (www.ohmsett.com). Ohmsett is a 
unique oil spill response research test facility located at the U.S. 
Naval Weapons Station Earle, Leonardo, New Jersey which is managed by 
BSEE and operated by a contractor.
    With an increased budget allocation for oil spill response since FY 
2011, BSEE has initiated a development project to utilize ultrasound 
technology to determine the effectiveness of subsea dispersant 
applications by measuring oil droplet size in the immediate vicinity of 
the subsea release. Additionally, BSEE is examining possibilities for 
modifying conventional dispersants to accommodate the dispersion of 
emulsified oil. In FY 2012, BSEE awarded funding for research and 
development projects geared toward advancing technology to enable 
detection and mapping of oil under ice, as well as subsea containment 
systems.
    All research that is not deemed proprietary is published on the 
BSEE web site and is thus publicly available to inform science and 
promote innovations in mechanical and alternative response 
technologies.
    BSEE cannot endorse specific products, but requires operators to 
show that they have under contract the appropriate response equipment 
to respond to a worst case discharge scenario from one of their 
facilities. BSEE has recently funded a research project to assess 
planning standards for offshore operations and will use the data to 
establish new policies that will promote the use of the best available 
technology, thus incentivizing the development, acquisition, and use of 
newer technologies that promise greater recovery or treatment 
efficiencies in offshore environments.
    BSEE and BOEM are members of the Interagency Coordinating Committee 
on Oil Pollution Research, a committee mandated by the Oil Pollution 
Act of 1990 in order to coordinate research activities, disseminate 
research findings, prepare National research priorities, and report to 
Congress on completed research as well as plans. BSEE staff also 
participate in the National Response Team Scientific and Technical 
Subcommittee, providing yet another venue for sharing information on 
research, coordinating interagency research programs, and establishing 
policies on the use of new technologies.'
   Is the Department of the Interior considering the use of unmanned 
        maritime platforms to allow immediate detection of and response 
        to oil spills?
    Response: Offshore facilities are already equipped with safety 
devices that can detect drops or spikes in pressure, changes in flow 
rates, and other variables that can be indicators of system upsets or 
leaks, and, based upon these variables, are equipped to shut down 
affected production systems or pipelines as needed. These safety 
systems are subject to routine inspection by BSEE staff and are 
effective in immediately activating block valves and/or subsurface 
safety valves to stop oil flow at the source. Immediate detection and 
abatement is thus already built into offshore safety systems.
    BSEE has participated in a pilot program with the National Oceanic 
and Atmospheric Administration on the use of satellite imagery for the 
detection and delineation of oil spills in offshore waters and has also 
funded research on other remote sensing devices that can be deployed on 
fixed wing aircraft.
Questions from Rep. Tonko:
1.  Mr. Beaudreau, I have several follow-up questions regarding the 
time and investment required to develop oil and gas resources in the 
Arctic, and the potential challenges and risks associated with expanded 
development of oil and gas resources in the region. Is the current 
infrastructure, including facilities the Trans-Alaskan pipeline, that 
supports production and distribution of oil from Prudhoe Bay sufficient 
to support additional safe oil and gas production and distribution from 
leases in the Beaufort and Chukchi Seas?

'   Are the potential environmental impacts of any additional 
        infrastructure that may be needed to support development and 
        distribution of oil and gas resources from these two areas 
        included in the impact evaluation done by the Bureau?'
   What are the estimated amounts of private and government investment 
        in additional infrastructure that would be required to support 
        development of these resources and to ensure that it is done 
        safely including the infrastructure required to support 
        additional personnel working the industry who would be based in 
        the area?'
   You indicated in your testimony before the Committee that there is a 
        significant inventory of existing offshore leases in Beaufort 
        and Chukchi Seas. How many of these are currently being 
        development?
    Response: BOEM does not have jurisdiction over onshore pipelines, 
and it would be difficult to project future infrastructure needs at 
this time--given significant uncertainty regarding future activity 
levels and the need to account for findings from any near-term 
exploration. However, BOEM actively coordinates with agencies across 
the Federal government with jurisdiction over issues related to long-
term infrastructure planning. This is an important area of focus for 
the Interagency Working Group on Coordination of Domestic Energy 
Development and Permitting in Alaska, established by executive order in 
July 2011 and chaired by the Deputy Secretary of the Interior. BOEM 
will continue to factor new information and projections into the 
environmental and economic analyses that support leasing decisions.
    There are 670 current leases offshore Alaska. A complete list of 
current leases is available on BOEM's website at: http://www.boem.gov/
uploadedFiles/BOEM/Oil_and_Gas_Energy_Program/Leasing/Regional_Leasing/
Alaska_Region/detailed_active_leases.pdf. Of the 670 current leases, 19 
are currently active--including those covered by proposed or 
conditionally approved exploration plans. Current information regarding 
the status of current exploration plans on existing leases is also 
available on BOEM's website at: http://www.boem.gov/About-BOEM/BOEM-
Regions/Alaska-Region/Leasing-and-Plans/Plans/Index.aspx.
2.  The U.S. is not the only country interested in expanding oil and 
        gas production in the Arctic. A recent report by the largest 
        insurance company, Lloyd's of London, ``Arctic Opening: 
        Opportunity and Risk in the High North'', predicts the Arctic 
        region is likely attract significant investment over the next 
        decade especially in the oil and gas, mining, and shipping 
        industries. The report also points out unique risks and 
        challenges associated with expansion of these activities in the 
        Arctic region, and the need to develop strategies to address 
        them. The report also notes there are major differences between 
        regulatory regimes, standards and governance across the Arctic 
        states, and that some spills or accidents that may occur will 
        impact more than one nation's resources.'
   As the Bureau is developing its policies to govern oil and gas 
        exploration in the OCS, are we also working with other nations 
        through the Arctic Council to ensure that exploration and 
        development occurring in other Arctic nations will not place 
        communities and resources in Alaska at undue risk?
    Response: The Department, acting through BSEE, is a leader in the 
work of the Arctic Council on spill prevention, preparedness and 
response, including development of the Arctic Offshore Oil and Gas 
Guidelines and Guidelines for In-Situ Burning, an Arctic-wide 
instrument for Emergency Prevention, Preparedness and Response, and 
other projects. Examples of work with other Arctic nations include 
shared research between the U.S. and Canada in spill response in the 
U.S.-Canada Northern Oil and Gas Research Forum. Results of these 
studies, assessments, programs, as well as our experience in offshore 
Arctic operations, are valuable to Arctic nations. Our active 
participation in the Arctic Council and communications with other 
northern nations complement efforts within the Federal government to 
ensure readiness to respond in the event of an oil spill.
Questions from Rep. Markey:
1.  Mr. Beaudreau, the Department recently reached an agreement on the 
exploration and development of oil and natural gas reservoirs along the 
maritime boundary between the United States and Mexico in the Gulf of 
Mexico to remove uncertainties regarding the development of oil and gas 
resources in the area. This agreement will allow for the development of 
nearly 1.5 million acres of the Gulf containing as much as 172 million 
barrels of oil and 304 billion cubic feet of natural gas, according to 
the Department. The Department will soon be submitting legislation to 
Congress relating to the Transboundary Agreement. Why is legislation 
action needed by Congress and what would happen to the possibility of 
developing these substantial resources should Congress not act? When 
does the Department anticipate leasing and development would occur in 
these areas?

    Response: On Monday, February 20, 2012, the Agreement between the 
United States of America and the United Mexican States Concerning 
Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico was signed 
by U.S. Secretary of State Hillary Clinton and Mexico's Foreign 
Minister Patricia Espinosa at a meeting of the Group of 20 nations in 
Los Cabos, Mexico. The Agreement was approved by the Mexican Senate on 
April 12th. Legislation is needed to enable the United States to fully 
comply with the agreement and the Administration looks forward to 
working with Congress.
    The main area of interest is in the Perdido Fold Belt area of the 
Alaminos Canyon Protraction Area, in the Western Gulf of Mexico 
Planning Area about 225 statute miles off the coast of Galveston Texas. 
To date, no transboundary reservoir has been discovered by drilling, 
but there are 8 active U.S. leases adjacent to the maritime boundary 
and a few dozen additional leases within 10 miles of the boundary. 
Shell operates the Perdido Hub production facility 7 to 8 miles from 
the maritime boundary, with the capacity to produce 100,000 barrels of 
oil per day and 200,000 cubic feet of gas per day.
2.  Director Beaudreau, how does the fact that the United States has 
        not yet ratified the Law of the Sea treaty affect our ability 
        to lay claim to oil and gas resources in areas such as the 
        Arctic or the Gulf of Mexico where we share maritime boundaries 
        with other nations? Is industry less willing to make 
        investments to access oil and gas resources unless a Nation has 
        had their territorial claim approved by the Law of the Sea 
        Commission on the Outer Continental Shelf, as evidenced by the 
        fact that the American Petroleum Institute, the International 
        Association of Drilling Contractors, and the National Ocean 
        Industries Association, along with many other industry trade 
        groups support ratifying the Law of the Sea? Does the 
        Department have estimates for the amount of oil and natural gas 
        that could be accessed if the United States ratified the Law of 
        the Sea treaty and was able to resolve territorial claims in 
        the Arctic or in the Gulf of Mexico?
    Response: The U.S. has the world's second longest coastline, so we 
benefit greatly from the Convention's favorable provisions on offshore 
natural resources. Only as a Party to the Convention can the United 
States fully secure its sovereign rights to the vast resources of our 
continental shelf beyond 200 miles from shore (the ``extended 
continental shelf''), an area likely to be at least 385,000 square 
miles and potentially extending beyond 600 nautical miles off the coast 
of Alaska. The Convention provides the needed international recognition 
and legal certainly regarding shelf areas beyond 200 nautical miles 
that will allow oil and gas companies to attract the substantial 
investments needed to extract these far-offshore resources. The energy 
resources contained in the U.S. extended continental shelf are believed 
by many to be significant, potentially equaling billions of barrels of 
oil and trillions of cubic feet of natural gas.
3.  In explaining the decision to keep the Atlantic off the table in 
        the proposed 2012-2017 OCS Oil and Gas Leasing Program, BOEM 
        cited ``lack of infrastructure to support oil and gas 
        exploration and development, as well as spill preparedness and 
        response.'' Drilling in the Arctic comes with these same 
        challenges on an even greater scale. Please explain the 
        Department's decision to include new lease sales in the Arctic 
        Ocean in the new plan despite the clear lack of infrastructure 
        and spill response capabilities.
    Response: The region-specific strategies reflected in the Proposed 
Final Five Year Program's approach to offshore areas across the OCS are 
designed to take into account current and developing information about 
resource potential, the status of resource development and emergency 
response infrastructure to support oil and gas activities, recognition 
of regional interest and concerns, and the need for a balanced approach 
to our use of the Nation's shared natural resources.
    In the Arctic, current spill response planning is focused on 
certain, limited near-term proposed drilling operations. Longer term 
planning and infrastructure development are also necessary, 
particularly if major oil resources are found and producers seek to 
engage in year-round production activities. As offshore oil and natural 
gas exploration under existing leases moves forward, so too must near- 
and long-term planning with respect to infrastructure, including spill 
response preparedness. Potential, single sales in the Beaufort and 
Chukchi Seas are deliberately set late in the program, in part to 
provide time for the contingency planning and infrastructure 
development needed to address these issues.
                                 ______
                                 
    The Chairman. Thank you very much, Director Beaudreau, for 
your testimony. We will now begin the question period, and I 
will recognize myself for five minutes.
    The offshore drilling plan that you are about to complete 
originated in 2008, which is nearly 4 years ago. And that plan 
was originally proposed to begin on July 1, 2010 to be the 
2010-2015 plan. That plan has had repeated delays. And now you 
are working on a new plan for 2012. But it now appears that 
that deadline, as I alluded to in my opening remarks, will not 
be met on July 1st, because of the 60-day requirement. Now, 
that is the first time, as I also mentioned in my testimony, 
that that deadline has not been met by any administration.
    So, my question to you, then, when will the new deadline 
that was July 1st now be, in order to satisfy the 60-day 
requirement of notice to Congress?
    Mr. Beaudreau. Thank you, Mr. Chairman. Just to be clear, 
the current plan under which we are holding lease sales--we 
held a lease sale on the western Gulf last November under the 
current plan, we are holding a central Gulf sale on June 20th 
under the current plan----
    The Chairman. I understand.
    Mr. Beaudreau [continuing]. Does not expire until the end 
of June.
    The Chairman. I understand. I am talking about the new 
plan.
    Mr. Beaudreau. Right. So there is a plan in place. The new 
plan, which covers 2012 through 2017, will be issued by the 
Department of the Interior, the EIS completed, which takes into 
account the effects following the Deepwater Horizon oil spill 
only two years ago, and is a major consideration in the 
development of our current plan. The EIS will be complete, and 
the program will be issued by the Interior Department before 
the expiration of the current plan, which is June 30th of this 
year.
    The Chairman. So, June 30th--and so then, the 60-day clock 
for us, then, starts on June 30th. Is that correct?
    Mr. Beaudreau. We will issue on or before June 30th. It 
will be delivered to the Hill. There are some mechanics, and 
then the congressional review period under OCSLA will begin at 
that time.
    The Chairman. So June 30th--and so that means that the end 
of August is when the 60-day review period would apply. Is that 
correct?
    Mr. Beaudreau. Approximately, depending on the mechanics. 
And there are no lease sales anticipated during that period. 
And so there is absolutely no consequence or significance to 
the timing of the issuance of this plan. The first sale--which, 
again, is consistent with the traditional rhythm of alternating 
lease sales in the Gulf of Mexico--is scheduled for November or 
December, later this year.
    The significance of having a plan in place is under OCSLA 
you can't have a sale unless the plan is in place and approved 
by Congress, or has gone through that process. We are not in 
jeopardy of postponing any sales as a result of the issuance of 
our plan.
    The Chairman. Well, depending on the timing of that, then, 
let me just ask this question. Do you have an opinion that you 
can notice a sale before this plan is complete?
    Mr. Beaudreau. Yes. We are going through that process right 
now. For example, in the Cook Inlet, we have already issued 
request for industry interest, whether they would be interested 
in a sale in the Cook Inlet under the new plan, assuming that 
plan is approved and goes forward.
    And so, the machinery----
    The Chairman. But my observation was, do you have an 
opinion that you can notice a sale prior to this plan being 
completed?
    Mr. Beaudreau. I believe we can go forward----
    The Chairman. I can understand the interest. I am sure 
there is a lot of people that have an interest. I am talking 
about the procedure of noticing the sale.
    Mr. Beaudreau. Yes. We can go through all the mechanics 
based on the Secretary of the Interior's approval of the plan, 
go through all the mechanics that we need to, the regulatory 
process that we need to, in anticipation of this sale.
    Now, if for some reason Congress delays the finalization of 
the program, and we don't have a plan----
    The Chairman. That hasn't happened, to my knowledge. So, 
assuming everything goes well--my question to you is this. The 
timing of the final plan kicks in a 90-day requirement for the 
notice of a sale. And so, you said you think it is going to be 
the end of June. That means that the end of August is when the 
final plan would be. Then your 90-day kicks in after that.
    So, my question is, can you proceed with the notice of a 
sale prior to the finalization of the plan?
    I understand everybody is going to be looking at this. It 
doesn't come out of mid-air, saying, ``OK, all of a sudden we 
want to bid.'' I understand the interest. I am talking about 
the legal requirement of noticing before a final plan.
    Mr. Beaudreau. Yes. Based on the Secretary of the 
Interior's issuance or approval----
    The Chairman. Would you share that with the Committee, that 
opinion?
    Mr. Beaudreau. I have shared that opinion now, but----
    The Chairman. Well, but--I mean there has to be some 
written statement, I guess, in order for that.
    Mr. Beaudreau. Yes.
    The Chairman. If you could share that with the Committee, I 
would very much appreciate it. All right.
    My time has expired. I recognize the gentleman from 
Massachusetts.
    Mr. Markey. I thank you, Mr. Chairman, very much. As I said 
earlier, Director Beaudreau, the bipartisan BP Spill Commission 
led by William Reilly, who was the EPA Administrator under 
George Bush I, has given the Congress a D for its legislative 
response to the BP spill.
    Now, the Department, DoI, has taken a number of reforms and 
put them in place in response to the spill. But there are many 
other reforms which you do not have the actual authority to 
implement. So, my question to you is, would you support 
codification of your reforms, so that they are not just 
temporary, but permanent, so that those safety reforms that you 
have already put on the books are not rolled back in the 
future?
    Mr. Beaudreau. Yes. And I believe we, the Interior 
Department and the Administration, have been very clear in our 
support for that type of legislation. And to be clear--and I 
believe the Commission, in its report card, said this as well--
there have been attempts in Congress to pass that sort of 
legislation. Unfortunately, they have been stymied for various 
reasons. But we continue to be supportive of that----
    Mr. Markey. But you do want that, your reforms, made 
permanent?
    Mr. Beaudreau. Yes.
    Mr. Markey. And next, an increase in the liability cap to 
ensure that oil companies are held fully responsible for their 
spills. You do want to see a legislative----
    Mr. Beaudreau. Yes.
    Mr. Markey [continuing]. Increase in the liability----
    Mr. Beaudreau. Yes. We have done what we can, 
administratively, to increase that liability cap. We are 
continuing to explore ways to effect that administratively. But 
legislation would be extremely helpful.
    Mr. Markey. And creating a dedicated funding stream paid 
for by the oil industry for offshore regulators, that area has 
been woefully funded, historically. You do agree that that 
should be put in place?
    Mr. Beaudreau. Yes. Secure funding for both of the new 
Bureaus established following the Deepwater Horizon oil spill 
is a major priority to ensure that offshore oversight remains 
vigorous, and that safety enforcement remains vigorous.
    Mr. Markey. And you also want 80 percent of the Clean Water 
Act fines to go to the Gulf States. Is that correct?
    Mr. Beaudreau. Consistent with legislative proposals that 
the Administration----
    Mr. Markey. We did not pass that legislation, either. And 
you also support an increase in the civil penalties for 
companies who violate the law, so that it is a real financial 
deterrent. Is that correct?
    Mr. Beaudreau. Absolutely. And again, we have done what we 
can, administratively. But legislative solution to increase 
those penalties, again, would be extremely helpful.
    Mr. Markey. Again, none of that has happened. None of that 
legislation has yet been brought up by the Majority in order to 
ensure much greater safety for drilling in the United States. 
And, as you know, in 2010 the Democrat-controlled House passed 
that legislation that would have effectuated those kinds of 
reforms so that they would be on the books permanently as a 
deterrent to the kind of nefarious activity that BP and the 
other companies were engaging in in the Gulf of Mexico.
    And Director Beaudreau, the Majority has alleged that 
offshore drilling has slowed. But according to industry 
analysts, there are now nearly one-third more floating rigs 
operating in the Gulf than there were before the BP spill. And 
by the end of the year there are scheduled to be nearly 50 
percent more rigs operating in the Gulf.
    So, that is a sign, is it not, of success, that now the oil 
industry is viewing the Gulf of Mexico has a place where they 
want to drill if there is going to be upwards of 50 percent 
more drilling rigs by the end of this year than there were 
before the BP spill?
    Mr. Beaudreau. I meet frequently with operators to discuss 
their forward-looking plans, strategic plans for activity in 
the Gulf of Mexico. And I do this for a lot of reasons, 
including to have an understanding so that we can align our 
resources with those plans.
    Industry, in my view, is extremely optimistic about the 
Gulf of Mexico, and is making aggressive capital plans to 
expand exploration and development in the Gulf of Mexico, all 
being done more safely now, in light of the heightened 
standards that we put in place since the Deepwater Horizon 
spill. That is good news.
    Mr. Markey. No, and I think it is a big success story for 
President Obama. He has cleaned up a mess that had been 
created, put in place the safety standards--although it would 
be great if the Republican Congress would pass the additional 
safety standards, especially the penalties on oil companies, we 
just wish that they would do that so that, going forward, even 
more rigs--that is, it is not just a 50 percent increase in the 
total number of rigs that were there during the Bush 
Administration, which is what Obama has done, but an even 
higher number.
    And I know that is President Obama's goal. And I hope that, 
you know, this Congress would recognize that and praise him for 
his excellent work in restoring confidence by the oil industry 
in the--drilling possibilities in the Gulf of Mexico.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from Louisiana, Mr. Landry.
    Mr. Landry. Thank you, Mr. Chairman. Mr. Beaudreau, I would 
like to commend you for reaching out to the industry. What you 
just said earlier is a testament from what I hear back home. 
And I appreciate you working on solutions to get the people of 
South Louisiana and the Gulf Coast back to work.
    Do you have a production goal that you all are going to try 
to set for the new Five Year Plan?
    Mr. Beaudreau. No, we do not. As the Government, we do not 
set production goals for private industry. We have projections, 
based on the resource potential and anticipated levels of 
activity that we believe is the potential there. But actual 
production over time, especially over a long period of time, 
depends on a lot of different factors, including prices and 
other factors.
    Mr. Landry. And, of course, and one key component of that 
would be actual expiration, actually drilling test wells. Well, 
you know, first of all, doing seismic drilling test wells, 
trying to see what the reserves are.
    My concern is that the general manager for the Chinese 
national offshore company last week in Houston made a comment 
that their goal in the South China Sea was to have a 159-
reserve replacement ratio in 2011. And that is a very 
aggressive replacement of minerals in that area and to that 
country. I mean I don't know that we have that type of 
replacement going on in the OCS.
    And so, I wanted to mention that to you because there has 
been a lot of criticism about speculation and speculators. And 
I believe that the President, if anyone is affecting 
speculators, it would be the President. Because when you take 
off the table potential reserves, or the ability to determine 
what other areas of the OCS have the potential for finds such 
as the Gulf of Mexico, then you affect a speculator, because he 
recognizes that there is going to be a restriction in supply.
    And we know right now, because of a downturn in the 
European economy which could affect the globe, we are seeing a 
depression of all prices. So we do know that supply and demand 
affects the price. And if there is anyone that is guilty of 
causing speculators to raise the price, I believe that it is 
the Administration, by taking off the table the ability of the 
United States to adequately tap the supplies that are out 
there.
    And so, I wish you would take that message back up the 
chain of command. Because I think if we went out and we did 
some good seismic data out in the Mid-Atlantic, we would find 
that there are great potentials out there. I mean 20 years ago 
they said the Gulf of Mexico was dead. That is what the 
Government estimates were. And think about where we are today.
    And so, I just would appreciate if you would take that back 
to the Secretary, and let them know that these Five Year Plans 
are important, not only to Americans for lowering their costs, 
but also to the markets, as well.
    Thank you, Mr. Chairman. I yield back.
    Mr. Beaudreau. May I respond?
    Mr. Landry. Sure.
    Mr. Beaudreau. Thank you. Let me just respond by making 
clear that the Five Year Plan--and we designed it specifically 
for this reason--does include the areas that we know have the 
most abundant resource potential, that those areas are well 
understood, there is good seismic in those areas, and good 
resource potential, and we understand that potential.
    With respect to other areas such as the mid and south 
Atlantic, while we don't schedule lease sales, we understand 
and agree with what you just said about the need to develop 
additional scientific information about the resource potential 
in those areas. It is for that reason that my agency issued a 
programmatic EIS, a draft programmatic EIS, last month 
regarding geological and geophysical surveys in the mid and 
south Atlantic. We aim to finish that EIS by the end of this 
year, after receiving public comment, which would put us in a 
position to permit seismic surveys in the mid and south 
Atlantic as early as next year to develop that type of 
information, and to supplement our knowledge of the resource 
potential in that area.
    And so, we are moving forward with that. That is the 
Administration policy.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from Michigan, Mr. Kildee.
    Mr. Kildee. Thank you, Mr. Chairman. Director Beaudreau, 
last week BP unveiled a 500-ton spill containment device that 
is designed to be flown to any part of the world at a moment's 
notice. BP's containment kit would be flown on 5 huge cargo 
planes with wing spans approaching the size of a football 
field, as well as 2 Boeing 747 planes.
    Director Beaudreau, has the Department evaluated the 
efficiency of BP's new containment device, which the company 
claims can operate at depths of 10,000 feet and withstand 
pressures up to 15,000 pounds per square inch?
    Mr. Beaudreau. One of the major reforms coming out of the 
Deepwater Horizon oil spill was we established the requirement 
that companies operating in U.S. waters and deep water in the 
U.S. need to have the ability to cap a well. That didn't exist 
prior to the Macondo accident, as we are all painfully aware. 
And those systems were improved and developed on the fly to 
respond to that incident, and took nearly three months. That is 
not the case any more. So any deep water operation in U.S. 
waters must have a system.
    Now, the Secretary of the Interior has leaned forward very 
hard on the international front to encourage the development of 
these systems around the world, any place where deep water 
activity is happening, because the risk potential is there, as 
well.
    And so, speaking for myself, I applaud BP's efforts to make 
a mobile system available globally for its operations in order 
to respond in the event of an accident in the North Sea, off of 
Africa, any place else that these multinational oil companies 
have interests and are drilling. I think it is extremely 
important.
    We have not--BSEE, our counterpart agency, as far as I 
know, has not tested that system. But again, I applaud BP for 
developing this technology and making it available for their 
operations, globally.
    Mr. Kildee. Has the Department evaluated whether BP would 
be able to deliver this containment device to remote locations 
such as the Arctic?
    Mr. Beaudreau. With respect to----
    Mr. Kildee. It is a huge device, huge combination of 
devices. Is it deliverable, practically?
    Mr. Beaudreau. We have not analyzed the delivery of that 
system you are referring to. But with respect to potential 
operations in the U.S. Arctic, such as Shell's operation that 
is contemplated for this summer, we are requiring specific 
containment systems to be on hand in the Arctic, not dependant 
on, you know, mobile deployments or anything else, but to have 
a tested containment system on hand if those operations go 
forward. So they are not dependent on the logistics and 
mobilization that BP describes with respect to that system.
    Mr. Kildee. Would you comment on the Department's 
evaluating BP's new device if it could be used in U.S. waters?
    Mr. Beaudreau. Under our regulatory regimes, under our 
requirements, we are not dependent on the mobilization of 
equipment such as the system that you are describing that BP 
has developed. We require those systems to be on hand already, 
where the drilling is. That is our policy for operations in the 
U.S. waters, including the Arctic.
    Mr. Kildee. Should all oil companies be required to have 
such a device?
    Mr. Beaudreau. Operating in deep water, in light of the 
risks of deep water? I believe so, yes.
    Mr. Kildee. Thank you. Thank you very much.
    The Chairman. Would the gentleman yield?
    Mr. Kildee. Happy to yield to the Chairman.
    The Chairman. I am very pleased that Director Beaudreau 
applauded BP, and I will take the opportunity to extend that to 
the whole industry. Because over a year ago we had a Committee 
meeting in Houma, Louisiana, where in testimony, the industry 
had come together, and to a direct question that I asked, if 
something similar to a BP spill had happened, would they be 
able to respond to it, in both cases, two independent--one 
witness represented a consortium of a number of companies and 
another was a private company--said that they would be able to 
respond and have it capped in a timely manner--a very timely 
manner--like less than, I think, within the 60 days.
    And so, I appreciate the line of questioning that the 
gentleman from Michigan presented, because I have said right 
from the get-go on this that the industry has a responsibility 
to respond. And I appreciate the Director's remarks in that 
regard, and I appreciate the gentleman from Michigan for 
bringing that to attention.
    The Chair recognizes the gentleman from Texas, Mr. Gohmert.
    Mr. Gohmert. Thank you, Mr. Chairman. Thank you, Mr. 
Beaudreau.
    Let me just follow up on that. With regard to the Gulf 
Coast, you had indicated that you are utilizing more strict 
scrutiny with regard to safety violations. You know, we came to 
find out through hearings and evidence that was obtained that 
British Petroleum had had nearly 800 egregious safety 
violations out there in the Gulf. Was there any other operator/
driller in the Gulf that even came close to having that many 
egregious violations?
    Mr. Beaudreau. With respect to the safety records of 
companies in general, I don't know the answer to that question. 
I will say that----
    Mr. Gohmert. You don't know if anybody has got up to 800 
safety violations, but you are using strict scrutiny to check 
them out?
    Mr. Beaudreau. Yes----
    Mr. Gohmert. They don't seem to be in concert with each 
other.
    Mr. Beaudreau. Our standards, particularly the heightened 
standards in place following the spill, apply to all operators 
in the U.S.----
    Mr. Gohmert. And that, the new standard, would apply even 
to companies--as far as I know, British Petroleum was the only 
operator in the Gulf Coast that was about to endorse the 
Administration's cap and trade bill, and were negotiating for 
the big rollout of that endorsement at the very time Deepwater 
Horizon blew.
    So you are saying the new policy now, even if a company is 
willing to endorse cap and trade and Obamacare, you are still 
going to scrutinize them closely. Correct?
    Mr. Beaudreau. Absolutely.
    Mr. Gohmert. All right.
    Mr. Beaudreau. Politics has nothing to do with our safety 
regime following the spill----
    Mr. Gohmert. Well, I don't think you can honestly say that 
when Deepwater Horizon blew.
    But let me take you over to the Southern California Coast. 
We know that from 30 years ago, information existed that there 
was perhaps 5.74 billion barrels of oil just off the Southern 
California Coast. We know there are some old rigs in the area 
that are offshore that are producing.
    You know, you had said that your plan opens up 75 percent 
of undiscovered resources. So let me ask you. Since our old--
our analysis of the Southern California oil is so old, if it 
turned out there were seven or eight billion barrels of oil off 
the coast of Southern California, would you then be willing to 
allow permits in that area?
    Mr. Beaudreau. Our resource estimate for Southern 
California is that there are 5.32 billion barrels----
    Mr. Gohmert. Well, that wasn't my question. So if you 
would, just answer my question. I am asking you a hypothetical. 
You say you are going after resources. If it turned out that 
there were information that came out that there were seven or 
eight billion barrels of oil, and it was reliable information, 
would you then open up that area to permitting for drilling?
    Mr. Beaudreau. So resource potential is one factor. Another 
factor that we must consider under OCSLA is the interest of the 
States off of whose coast this activity would be----
    Mr. Gohmert. OK. So it is OK to mess up the Louisiana 
Coast, but Southern California, being Democratic, is much more 
delicate to allow to be----
    Mr. Beaudreau. There has been consensus from all of the 
West Coast States for decades, across Administrations, 
Republican and Democrats----
    Mr. Gohmert. All right. Well, that is not what I am asking. 
I am asking if there were seven or eight billion barrels of 
oil, and it could be established by a clear evidence, would you 
then open that area up?
    Mr. Beaudreau. There are nearly six billion barrels that we 
believe exist there. That is one factor. Other factors are the 
States' interests in those----
    Mr. Gohmert. If there were 10 or 15 billion barrels of oil, 
would you open that area?
    Mr. Beaudreau. We would still have to consider other 
factors, including----
    Mr. Gohmert. If there were 20 to 50 billion barrels of oil, 
would you open that area up for the good of our own national 
security?
    Mr. Beaudreau. I am describing the OCSLA process. Resource 
potential is one issue. The fact is, the resource potential----
    Mr. Gohmert. So you can't say, even if there were 50 
billion barrels, that you would open that area, that that would 
be so persuasive that you--and you knew how many billions of 
dollars we were sending to people that are funding terrorism, 
you would still say it is too politically indelicate to risk 
smudging the California beaches like we did the Florida 
beaches.
    Mr. Beaudreau. I am saying I always respect the interests 
of the states that are involved. That is an important factor 
for us to continue, and we will always consider that.
    Mr. Gohmert. Well, that is apparent. Thank you. I yield 
back.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from New Jersey, Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman. I wanted to say right 
from the beginning that I have great concerns with the 
Department of the Interior's Five Year Plan, and the path it 
has placed on us.
    In particular, I strongly oppose the plan to move forward 
with seismic testing in the Atlantic Ocean. And my opposition 
includes any preparatory steps, including seismic testing in 
our waters off the Atlantic Coast. The time and resources that 
the Department of the Interior is allocating to seismic testing 
could be better used on higher priorities that will allow us to 
move away from dirty fuels and faster achieve U.S. energy 
independence through renewables, such as wind and solar power.
    New Jersey's beaches, like those up and down the Atlantic 
Coast, are incredibly important, not only to residents, but 
also for countless visitors. They are the primary driver of the 
New Jersey tourism economy that supports nearly 500,000 jobs 
and generates 38 billion in economic activities each year. 
Seismic testing is the first step in the direction of opening 
up the Atlantic Coast to oil drilling.
    In the two years since the BP spill, none of the proposals 
recommended by the National Commission on the Deepwater Horizon 
Oil Spill and Offshore Drilling have been put in place. And 
most of the drilling off the Atlantic will be in deep water, 
which is at least as deep as the--or even greater, I should 
say--than with the BP oil spill. And the BP spill, in my 
opinion, the technology doesn't exist, and the protections are 
not available to prevent another BP spill from happening off 
the coast of the Atlantic.
    I am simply asking--which I have many times in the past--
that the Department halt the process that will lead to drilling 
off the coast of the Atlantic. There isn't enough potential in 
the Atlantic to offset the potential damage to the tourism and 
economy, and the jobs it generates at the off-the-Atlantic 
Coast.
    Recently the Department held a public listening session in 
Atlantic City, New Jersey on the process leading to seismic 
testing. Local environmental organizations, fishermen, divers, 
and people from all backgrounds were there to oppose this 
decision. And I really call on the Department to earnestly 
listen to the concerns and opposition.
    I don't want to get into the comments you made about the 
West Coast, but it is certainly true that on the Atlantic Coast 
there is overwhelming opposition to offshore drilling. And I 
don't really understand how you can say that, you know, you are 
listening to the people off the Western Coast and saying there 
shouldn't be drilling there, yet when we do the same thing off 
the Atlantic Coast and say we shouldn't have drilling, that 
somehow it is going to be allowed here. It makes no sense to 
me. I think the decision that led the Administration to say 
that the West Coast is off the table should be the same for the 
Atlantic Coast.
    I have a couple of questions in the two minutes that I have 
left here. So let me just say that, as I said, we should be 
prioritizing the development of clean, renewable energy. Yet 
the Department is clearly placing considerable funds and 
resources toward drilling in the Atlantic that will not yield 
any reduction in price at the pump for years to come.
    How much will it cost BOEM and the Department of the 
Interior to manage this program over the next 10 years? What is 
the cost of, you know moving forward with the seismic testing 
and other things that would lead to drilling off the Atlantic?
    Mr. Beaudreau. Yes, thank you for those comments. And I do 
want to be clear that we do respect the interests of the States 
along the Atlantic, as well. There are no lease sales planned--
--
    Mr. Pallone. No, I understand that. But look, to suggest 
that you can do it in Virginia or Delaware and that it is not 
going to impact New Jersey is absurd. I mean we know that the 
BP spill, which was off of Louisiana, was impacting the coast 
of Florida, which is much further away than from Virginia to 
New Jersey. So no use going down that road. It doesn't----
    Mr. Beaudreau. Well, and that is why, despite the fact that 
New Jersey, strictly speaking, it doesn't border the planning 
areas we were talking about, we did have a hearing in New 
Jersey, out of consideration that any activity may----
    Mr. Pallone. No, I appreciate that. But could you answer my 
question? The cost.
    Mr. Beaudreau. The cost? We don't conduct these surveys 
ourselves. And so the costs for our bureau relate to the 
environmental assessment of the potential impacts these surveys 
may have.
    Mr. Pallone. Well, --could I ask you, Mr. Chairman, if they 
could get back to us in writing with--to respond to the 
question about the costs? I would appreciate that.
    The Chairman. If the gentleman would yield, this is 
typical. And I would ask--there are further questions--and this 
is a very legitimate question--and so I would ask that the 
Department do respond in due time with that.
    Mr. Beaudreau. Yes, absolutely.
    Mr. Pallone. Let me just ask one more thing, because I only 
have 30 seconds.
    The DoI has said that these seismic surveys will be needed 
for renewable energy siting. But explain how knowing what is 
buried miles below the seafloor helps us to understand where 
to--I don't understand how this seismic testing helps you with 
renewables. How is that the case?
    Mr. Beaudreau. It doesn't. The EIS covers geological and 
geophysical surveys, geological being bottom surveys. The EIS 
relates to that. Seismic surveys, I agree with you, they don't 
have relevance to the siting of renewable----
    Mr. Pallone. Mr. Chairman, let me just express my 
opposition to one more thing. We had requested extending the 
deadline for the 60 days comment period, and that was denied. I 
wish you would reconsider that.
    I mean this plan took your office two years to come up 
with, and yet you ask us to, you know, to turn around the 
comments in two months. I really don't understand why they 
didn't--they rejected the request to extend the comment period 
beyond the 60 days. And if you could reconsider that, I would 
appreciate it.
    Mr. Beaudreau. I will take that into consideration.
    Mr. Pallone. Thank you. Thank you, Mr. Chairman.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from Pennsylvania, Mr. Thompson.
    Mr. Thompson. Thank you, Chairman. Good morning, Director.
    Director, in some of the past hearings you suggested that 
the reason the Administration is prohibiting drilling in new 
areas is because you are focusing on areas where there are 
known resources.
    Let me tell you a story about my home state, Pennsylvania. 
Ten years ago the Federal Government thought that the Marcellus 
Shale Formation contained 1.8--1.925 trillion cubic feet of 
natural gas. You know what the Federal Government believes we 
have today? 84.2 trillion cubic feet. That is 44 times the 
amount that the Federal Government ``knew'' we had, and that 
was in 2002. If you look at other analyses, the size of 
Marcellus is over 500 trillion cubic feet.
    Now, the data you are using to come up with these 
assessments for areas off the coast of Virginia were--quite 
frankly, where they want to drill--is from the late 1970s and 
early 1980s, at best. I mean that is the era of the floppy 
disk.
    Mr. Beaudreau. That is true.
    Mr. Thompson. The advancements since then have been 
amazing. Major places like the Marcellus Shale have changed the 
face of natural gas in our country, and gas--natural gas prices 
are a sixth of what they were in 2008. And I can tell you 
firsthand that it has generated thousands of well-paying jobs 
in Pennsylvania, as well as provided very affordable energy.
    Now, as we see in Pennsylvania, when areas are made 
available, generally production will happen. So, a couple of 
questions.
    Do you believe that this plan that opens no new areas for 
offshore drilling is going to keep our Nation competitive in 
the coming years?
    Mr. Beaudreau. I do. This plan keeps areas open that have 
established resource potential, that we know have significant 
resource potential----
    Mr. Thompson. So, if you could, tell me what has changed 
since 2002, when known resources--you used that term again in 
just your current statement, and I referenced that before. I 
mean the Government was only off by a factor of 44 in 2002. So 
what has changed that would make me believe that the Federal 
Government has any--has done a better job of going in and 
assessing what actual resources are owned by the American 
taxpayers?
    Mr. Beaudreau. Going to your earlier point about how dated 
the geological information is in the mid and south Atlantic, I 
agree with you completely. It is 30 years old. We don't know--
we don't have modern data about the magnitude of the resource 
or the location of the resource. It is for that reason that we 
are moving forward with this EIS, to allow seismic surveys to 
go forward in the mid and south Atlantic, so that we can 
develop that scientific information.
    Mr. Thompson. Well----
    Mr. Beaudreau. That is exactly why we are doing it.
    Mr. Thompson. I appreciate that. But let me speak to the 
practical parts of that. You are going to allow them to go 
forward. I mean do you really think operators are going to go 
out on that limb and--given the performance, especially the 
past number of years--to invest in seismic activity conducting 
that, when that land is not open to--and I don't see any 
prospects of the Federal Government at this point, or this 
Administration, opening that land to actually production? Why 
would somebody make that kind of a business decision?
    Mr. Beaudreau. I believe that the oil and gas industry has 
every incentive to develop that scientific information about 
the resource potential for exactly the reason you describe. 
Find out what is there. Find out if it is worth the investment.
    When you are talking about drilling, you are talking 
about--especially in Deepwater, you are talking about the 
investments of hundreds of millions, billions of dollars. These 
seismic surveys, compared to that, are relatively inexpensive. 
And I believe industry has every incentive to move forward with 
them. We have had expressions of interest from seismic 
contractors to do just that. We need to have the EIS completed 
so that we can make sure that this activity is done in an 
environmentally responsible way, including marine mammal 
protections. But we are moving forward with that----
    Mr. Thompson. Well, I----
    Mr. Beaudreau [continuing]. For exactly the reasons you 
described.
    Mr. Thompson. You know, the best predictor of future 
performance is past performance. I don't see that in the 
actions of locking that, and making that out of bounds, I don't 
see where that message is coming through. And so I really doubt 
that seismic activity is going to occur. And it is the Federal 
taxpayers that are the losers. Let's not just talk about 
energy, but do you know how much money in taxes the oil and gas 
industry pays to the Federal Government?
    Mr. Beaudreau. I don't know the specific number. I know 
that there are----
    Mr. Thompson. It is obviously a significant amount. Now, 
granted, this is onshore and offshore, but it is about $87 
million a day. So, just from that point, when we are in a 
budget situation that we are in today--so--but appreciate your 
candid responses.
    Thank you, Chairman.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from New Jersey, Mr. Holt.
    Dr. Holt. Thank you. Let me just say a word about drilling 
off the Atlantic Coast. It doesn't make sense for all sorts of 
reasons, not the least of which is strong public opposition to 
it. And so, it does not make sense to be proceeding with the 
preliminaries now.
    I would also join in the request that the comment period be 
reopened. The plan to move forward with seismic exploration is 
not necessary. Nothing is going to be happening soon, and it 
shouldn't be.
    Now, the draft EIS for seismic surveys, you know, is out 
there. It is my understanding that some of my Republican 
colleagues have proposed legislation--and this is in keeping 
with what Mr. Thompson was asking about--proposed legislation 
to provide taxpayer subsidies for the oil companies to conduct 
this seismic work. Do you see any reason for that at all?
    Mr. Beaudreau. No.
    Dr. Holt. Any reason for additional taxpayer subsidies to 
oil companies to do this?
    Mr. Beaudreau. No, no.
    Dr. Holt. Good. Well, thank you. Recently Representatives 
Waxman, Bobby Rush, Ranking Member Markey, and I sent a letter 
to the Department having to do with enforcement of air 
standards for drilling activities in the Arctic Ocean. The 
other signers, Representatives Waxman and Rush, are involved in 
legislative oversight of the Clean Air Act, which doesn't apply 
exactly here.
    And so, we are asking that the Department apply all 
existing regulations in a way that would protect the air 
quality if this were done in other locations. When can we 
expect a reply from the Department on this?
    Mr. Beaudreau. It takes more time to respond to letters 
that are as thoughtful as yours, frankly. It touched on a lot 
of the same issues that we are considering internally, and I 
found it to be an extremely helpful letter.
    And so, we are lining up some of the suggestions in that 
letter with our work that is ongoing with respect to how to 
implement this authority that was bestowed upon us last 
December. We will get back to you promptly. I want to provide 
you with a thorough response that reflects the thoughtfulness 
that went into the letter.
    But let me just say this. We are--and we talked a little 
bit about this in my last appearance before this Committee--we 
are taking an approach on air permitting in the Arctic that is 
very focused on ensuring that the highest evaluation of air 
quality and the highest application of air quality standards is 
made use of in the Arctic. That includes through our regs, it 
includes through NEPA, it includes our close work with the 
operator and with the EPA, to make sure that there is no 
slippage in the evaluation of air quality. And we are also 
working on how we evaluate air quality in the Gulf of Mexico, 
as well. So these are significant issues for us.
    Dr. Holt. I appreciate hearing you say that. The flattery 
in saying that we gave you a thoughtful letter----
    Mr. Beaudreau. Was sincere.
    Dr. Holt [continuing]. In no way diminishes our 
determination to get from you a prescription for strong 
protection of the air.
    Offshore wind leasing, I think, requires a different 
approach from the purely financial auction approach that has 
been used for offshore oil and gas leasing. And I am very eager 
to see this move along. We have only a couple of seconds, but 
considering the fact that offshore wind doesn't actually exist 
as an industry, what can you say about the role of States in 
determining the feasibility of the projects and the ability to 
go ahead with leasing?
    Mr. Beaudreau. Yes, and especially on the economic terms, 
we are working very closely with States, including New Jersey, 
to make sure that our auction process lines up with the States' 
goals and the States' incentives with respect to standing up 
offshore wind projects. And so we are quite focused on that, we 
are quite engaged on it. I meet with Commissioner Martin on 
this issue.
    We are also focused on making sure that once leases are 
issued, that analysis and development actually happens. And so, 
I know that is a concern that many States have, that these 
leases may lie fallow. And so we are developing lease terms to 
ensure diligence in the development of those leases, as well, 
so that these projects come to fruition.
    Dr. Holt. Thank you. And thank you, Mr. Chairman, for your 
generosity.
    The Chairman. I will note that, for future reference.
    [Laughter.]
    The Chairman. The Chair recognizes the gentleman from 
California, Mr. McClintock.
    Mr. McClintock. Thank you. I would like to continue the 
line of questioning that Mr. Thompson started, to which you 
informed us that the Administration is confining its 
exploration activities, its development activities, to those 
areas where we have known reserves. Did I hear you correctly?
    Mr. Beaudreau. The Five Year Program, which is a leasing 
program, covers areas where there are active leases.
    Mr. McClintock. Right.
    Mr. Beaudreau. We are pursuing strategies with respect to 
other areas, such as the mid and south Atlantic, that do not 
currently have active leases.
    Mr. McClintock. But again, if we are confining it to areas 
where we know we have resources, we are not looking for new 
resources.
    You know, I remember in the 1960s we were told that we were 
going to run out of petroleum by the 1980s. I remember the dire 
warnings of Jimmy Carter that we were going to be out of oil by 
the turn of the century. And the funny thing about that is we 
kept looking for oil where we didn't know it was, and we kept 
finding it. If we had confined our development to areas of 
known reserves back in those days, we would have run out of 
oil. But we kept looking in the areas where we didn't know.
    That seems to be the difference between this and prior 
Administrations, is when the President said we are--he is 
directing his Administration to open more than 75 percent of 
our potential offshore oil and gas resources, we began 
scratching the surface of that and found out that is the areas 
where we have already explored. It excludes the entire Atlantic 
Coast, the entire Pacific Coast, nearly all of the eastern Gulf 
of Mexico, which have been little explored. If the 
Administration would allow leasing in those areas, exploratory 
work could proceed, and we would have a much better sense of 
what is out there, which is probably a lot more than the 
Administration assumes.
    The fact remains that, under these policies, about 85 
percent of our offshore areas remain off limits. And what my 
constituents want to know of this Administration is what in the 
world are you people thinking?
    Mr. Beaudreau. So, let me give you an example of just what 
you described, that through the development of scientific 
information, through the development of technology, areas that 
once upon a time were predicted to be limited or near 
exhaustion actually have tremendous potential. And that is the 
central Gulf of Mexico.
    I meet with operators regularly----
    Mr. McClintock. But why is that an argument not to look 
everywhere else within our vast borders?
    Mr. Beaudreau. The central Gulf of Mexico is--and it is 
funny to talk about it this way, but this is the way the 
companies talk about it--is a burgeoning frontier for oil 
development, because of developments in technology-related----
    Mr. McClintock. Well, pardon me, but the oil companies make 
money by producing lots of oil. They produce lots of oil 
because they go out and look for it and they find it. And it 
seems to me that is what this Administration is standing in the 
way of.
    You know, those who know me know I have very few nice 
things to say about the Bush Administration. But at least it 
did one thing. It passed on to the Obama Administration a 
thriving U.S. oil and gas industry. The industry was investing 
record sums in new exploration and development, which meant 
record investments in our communities, as well as huge streams 
of revenues for our States and Federal Government.
    When this Administration took office, this industry was 
poised to produce more American energy than we had at any time 
in our past. And the Federal Government stood as a ready 
partner to provide reliable, predictable, regulatory structure, 
and an ambitious agenda of opening public lands and waters to 
develop for the public's benefit. That is a pretty stark 
contrast with what we have three years later.
    This Administration has sharply reduced the acreage 
available for offshore leasing. It has increased the length of 
the regulatory process. It has removed any shred of certainty 
that that process once held. And that is just for offshore 
development. When you look at what the Department of the 
Interior is doing to promulgate new regulations for onshore 
development, where our shale reserves alone dwarf those of 
Saudi Arabia, you begin to realize what damage this 
Administration's policies have done to our energy situation.
    I mean, can people honestly say that our Nation is more 
energy-independent today than it was four years ago? I think 
not.
    Mr. Beaudreau. I think the facts bear out that we are, in 
fact, more energy independent, through the development of 
domestic resources' increased efficiency and other factors. We, 
in fact, are.
    And if you look at the production estimates, especially 
offshore--onshore, as well, but offshore is my area--EIA, all 
objective observers, anticipate burgeoning production offshore, 
as well, a large part coming out of the Gulf of Mexico. It is 
the crown jewel of the U.S. OCS.
    Mr. McClintock. Because that is about the only area that 
you are allowing American enterprise to develop. And that is an 
outrage.
    Mr. Beaudreau. And it is being done more safely than it 
ever has been before, as well.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from New York, Mr. Tonko.
    Mr. Tonko. Thank you, Mr. Chair. Director Beaudreau, 
welcome.
    In your response to a letter from Ranking Member Markey 
sent to the Secretary earlier this year regarding the December 
Gulf of Mexico lease sale, you state--and I quote--``While 
there are well over 100 companies qualified to operate on the 
OCS, only a relatively small subset of them has the technical 
capability and financial wherewithal to manage or operate deep 
water projects while meeting the environmental and safety 
standards required. In addition, the costs in deep water limit 
the number of projects any one company will invest in and 
undertake.''
    In the December lease sale on the western Gulf, just 20 
companies bid on 191 offshore tracts covering 1.1 million 
acres. More than 3,700 tracts covering 20 million acres 
received no bids at all. ConocoPhillips, ExxonMobil, and BP 
combined to submit 71 percent of the bids. This is typical. The 
oil industry does not even bid on most offshore areas that are 
offered to them.
    If oil companies apparently cannot handle the volume of 
valuable areas currently being offered, do you think that they 
could quickly and effectively develop new areas where there is 
little or no existing infrastructure, such as off the East and 
West Coast, as the Majority has proposed?
    Mr. Beaudreau. I do not. I believe, for a number of 
reasons, including the current economic environment and the 
prices of oil, that they are going to go where they know the 
resource is, and they are going to develop that resource as 
quickly as possible.
    Mr. Tonko. And, Director, as Mr. Markey asked earlier, 
right now oil and gas companies hold roughly 26 million acres 
offshore on which they are not producing oil. Last year the 
Department concluded that there was nearly as much oil and more 
natural gas under these idle leases than there is off the East 
and West Coasts. The Department has implemented a number of 
reforms designed to incentivize more timely production 
offshore, such as establishing and increasing a rental rate for 
leases that are not producing, and shortening the length of 
leases.
    What is going on here, when oil companies already are not 
producing oil on an area offshore that is the size of the State 
of Kentucky, but are saying that we need to open up new areas 
in the Atlantic and Pacific, and risk those coastal economies?
    Mr. Beaudreau. It is hard for me to speculate on what the 
companies' interests are, or what they believe is in their 
interests. Let me just say that--and this is part of the reason 
why we have raised the minimum bid--if we open an area up for 
sale, and we don't have robust information about the resource 
potential, or we are selling it for too cheap, the companies 
will purchase those leases. Why not? Hold them in their 
inventory.
    The strategy this Administration is taking is to make areas 
available where the resource potential is there, where we know 
companies can bring the resources to market, provide fair value 
to the American taxpayer, and for other areas that may be more 
marginal, or there may be less information about. Keep that in 
the people's inventory, develop information about it, and then 
consider leasing only when we have that scientific information.
    Mr. Tonko. Thank you. Director Beaudreau, you stated in 
your testimony that the central GOM lease sale will include 
provisions to protect biologically sensitive resources, 
mitigate potential adverse effects on protected species, and 
avoid potential conflicts associated with oil and gas 
development.
    Would you elaborate on these provisions, and just how do 
they differ from requirements for other lease sales?
    Mr. Beaudreau. So, in light of Deepwater Horizon, we had 
to, and this was the right call. We had to take a step back, 
and we had to evaluate what the impacts of that oil spill may 
have been, develop some baseline information about what those 
impacts may have been, before moving forward with the sales. 
So, we did supplemental EISs in both the western and the 
central Gulf to inform the decision as to whether to go forward 
with the lease sales.
    Now, of course, we have. But it was only after doing an 
analysis of the best available information of what the impacts 
of those spills might have been.
    Mr. Tonko. Thank you. And what infrastructure is available 
now, and what additional infrastructure is required to support 
safe oil and gas development in the Beaufort and Chukchi Seas?
    Mr. Beaudreau. So, Shell has pending applications to move 
forward with drilling in the Beaufort and Chukchi Sea this 
summer. One of the key systems that they must have online and 
must be tested by our counterpart agency, BSEE, before it goes 
forward, is a devoted capping and containment system in those 
theaters before any activity may go forward. That 
infrastructure has to be established on a case-by-case basis at 
this point.
    Part of our strategy on the Five Year Plan is to consider 
if any additional lease sales are to be held in the Arctic, 
what established infrastructure--rather than working on a case-
by-case basis, what established infrastructure would be 
appropriate for the Arctic.
    Mr. Tonko. Thank you. Thank you, Mr. Chairman.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from South Carolina, Mr. Duncan.
    Mr. Duncan of South Carolina. Thank you, Mr. Chairman. And 
what we see out of this Administration, it appears that they 
are wanting really to handcuff or hold the reins back on 
American energy independence. I go back to the days in the 
latter years of the Bush Administration, when I served on the 
Five Year Planning Subcommittee under MMS, and a precursor to 
your agency, and the discussions that went on during that time 
about the next Five Year Plan, the input that we had to get 
from the outside groups, the citizens, before we made the 
recommendation to the whole OCS Planning Committee of what we 
thought the next Five Year Plan should look like.
    And I know it is a long, convoluted process to pick those 
areas that the Nation is going to say, ``You know what? We 
believe we have the resources there. We need to put our efforts 
there, we need to have a lease sale there, we need to allow the 
exploration to happen there, we need to allow the production 
there to meet the Nation's energy needs.'' And there is a lot 
of input from the States, there is a lot of input from the 
environmental groups during that process.
    The delaying tactics of the Administration--if you look at 
some of the information we were provided that goes from 
chronological order from 2007 to current, and you see the 
delaying tactics of a Five Year Plan, and even the court being 
involved, as well, I am reminded of the words of Senator John 
Kerry about 10 or 11 years ago when he said, you know, even if 
we open up areas to exploration and drilling, and we started 
drilling, it would be 10 years before those resources came 
online to meet our energy needs. That was 10 years ago, pushing 
11 years ago. Those resources would be online, providing 
gasoline and hydrocarbon products to the Nation today. But yet 
we keep delaying, and keep tying the hands.
    I think the gentleman from California was exactly correct 
in that we are finding more and more resources as we, as a 
Nation, allow that exploration to take place.
    Off the coast of South Carolina in the Atlantic Ocean there 
hasn't been any seismic or exploration work done in at least 30 
years. Probably longer. But you are going to make the 
determination that there is probably not any resources out 
there. And I am not saying today, I am just talking about over 
the last--since the Bush Administration opened up the whole OCS 
for exploration, we seem to hear from the Administration that, 
``Oh, we don't believe there is any resources out there, so we 
are not going to allow the exploration to take place, we are 
not going to allow the lease sale, we are going to close these 
areas that the Bush Administration--and Congress, I might add--
had opened up for energy exploration. Not necessarily 
production, but the exploration side of it, to find out what is 
out there.
    So, the question I have--you said earlier that it was 
fundamentally important to consider the opinion of the State 
when you are crafting the future lease sales. And we see in 
Virginia that Virginia's Governor, their General Assembly, the 
bipartisan congressional delegation, all supported going 
forward with a Virginia lease sale. And that was 220, I 
believe. So why, exactly, were they kept out of your plan?
    Mr. Beaudreau. There are a couple of reasons why we didn't 
schedule lease sales at this time in the current Five Year 
Plan. One is the need to develop exactly the type of seismic 
scientific information that you described, both to inform the 
magnitude of the resource, but also its location, so that if a 
lease sale occurs in the future it is situated properly where 
the resource is.
    Mr. Duncan of South Carolina. But----
    Mr. Beaudreau. The other major issue is there are major 
concerns expressed by the Department of Defense about their 
activity, which I know we all respect. Everybody on this 
Committee respects the mission of the military in protecting 
our shores and our country's interests. We need to work through 
those issues with DoD.
    Mr. Duncan of South Carolina. Let me ask you this, because 
before you--and even the Obama Administration felt like it was 
appropriate back then. That is why it was in the last plan. So 
why is it inappropriate now? Why, all the sudden, is that 
inappropriate?
    Mr. Beaudreau. For the reasons I described. One, we need to 
find out what the resource is. Two, we need to resolve the 
conflicts with DoD. DoD, after the definition of the Sale 220 
area, sent a letter to the Interior Department saying, ``We 
have major issues with 80 percent of that area.'' How could we 
go forward with a lease in that area encumbered by concerns 
from the military? What would an operator even do with it?
    So we are very serious about resolving those conflicts, 
understanding what the resource potential is here. We haven't 
kicked the can. We are moving forward with a concerted strategy 
to develop exactly the type of information you described about 
what is the resource potential, where is it, and can it be 
developed in an unconflicted way. That is what our strategy is.
    Mr. Duncan of South Carolina. It appears to us, as 
Americans, that it is a delaying tactic before you have a lease 
sale. And so my time is up, Mr. Chairman. But----
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentlelady from California, Mrs. 
Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair. And it is very 
interesting. I don't have any areas that I have direct concern 
with, but California has a white coast, a long stretch, and 
listening to some of the comments of my colleagues makes me 
wonder. If they had as many earthquakes as we do in California, 
you expose them to seismic exploration--you know, those 
tectonic plates do move--and conceivably we could have more 
frequent, heavier earthquakes, or more--stronger than the 7.5 
that we have had not too past.
    There is very strong public opposition from all of the 
Western Coastal states that I know. The Nation enjoys the 
revenue that California produces, whether it is in 
transportation, agriculture, the tourism. All of that has an 
impact on what the rest of the Nation gets, so to speak. So, to 
me, I am very sure that folks understand that they may--there 
are leases offshore, I just don't know how many.
    I would like to ask a question and be able to have a 
response to all the members of this Committee of how many 
current leases there are off the coast of California, Oregon, 
and Washington. How many are active? How many have been taken 
out but not put into effect? So that we have a better idea of 
what is happening in that coast or not happening, for that 
matter.
    We do need to leave resources for future generations. We 
can't just go in--and I am--he is--the gentleman was right, it 
does take over 10 years for even just the beginning, from 
determining where they can drill or how much they are going to 
drill.
    The opposition isn't for the drilling, it is for the 
drilling. It is for the safety of the drilling for the spills 
that are going to affect--maybe some of the other States like 
to have the additional work, which is very, very commendable, 
of the drilling, the revenue it brings in to the coastal 
cities. And yet--Texas and Louisiana, they have enjoyed for 
years, and I commend them. We just want to be sure they are 
safe in the future, as we want to be safe in our area.
    I am not sure whether I have really a real critical 
question. But could you tell us, this Committee, the drilling 
industry, how are they, the industry itself, how are they 
responding to your drilling safety rules and the workplace 
safety rules?
    Mr. Beaudreau. Yes, I will say this. The industry has--
following the accident, Deepwater Horizon, the industry has 
stepped up in a number of ways. While it is our requirement 
that they have these systems, the industry invested tens of 
millions of dollars into the development of sub-sea containment 
systems that could respond to a blowout like Macondo and 
Deepwater. Industry, through two consortia, have made that 
investment. And they deserve all the credit in the world for 
doing that. They have invested not only in the development of 
the systems, but in ongoing readiness in the event that the 
systems need to be deployed. They conduct drills, they conduct 
testing, and we are continuing to oversee that and push them on 
that. But industry deserves credit.
    For the most part, industry--and it has taken time and it 
has taken hard work, both on industry's side and on 
Government's side, on our side, to promote compliance with the 
new standards. And industry, in large part, has done that. And 
that is the reason why we are seeing the increased activity in 
the Gulf of Mexico that we have been.
    There is increased activity. I anticipate that that 
activity will grow even further. And deep water drilling will 
be conducted more safely and more environmentally responsibly 
than it ever has been before. Industry deserves its share of 
credit for that.
    Mrs. Napolitano. Thank you, Director. And having been born 
and raised in southern Texas off of the shores of, well, Padre 
Island, to be exact, and also being a Californian now and 
taking my children over to the beaches, and sometimes finding 
the pollution of tar on those beaches is not necessarily 
something that anybody would look forward to. So, the more we 
protect those coastlines and keep them clean and safe so that 
it is not only recreation, but it is safe for the environment 
and for the rest of the folks that want to be able to see it 
stay clean.
    I don't have any other questions. I may have some, and I 
will submit them for the record. Thank you, Mr. Chair.
    Mr. Beaudreau. Thanks.
    The Chairman. The time of the gentlelady has expired. The 
Chair recognizes the gentleman from Texas, Mr. Flores.
    Mr. Flores. Thank you, Mr. Chairman. Thank you, Mr. 
Beaudreau, for being here today. I have a few questions for 
you.
    First of all--and I have a statement that seismic activity 
and oil and gas activities does not cause earthquakes. I need 
to disabuse anybody of that notion.
    Now, what is the definition of an area with known 
potential, in the eyes of your agency?
    Mr. Beaudreau. [No response.]
    Mr. Flores. I mean you refer to that many times in your 
report. You are making areas with known potential available. 
What is the definition of that?
    Mr. Beaudreau. So we do a resource evaluation of all the 
OCS areas. And as I have described, there are varying amounts 
of resource available in those areas. They are not all created 
equally. The resource isn't spread evenly across the OCS.
    Mr. Flores. OK.
    Mr. Beaudreau. So the areas that are included within our 
lease sale are areas where: A, have the most significant 
resource potential; and B, there are active leases there.
    Mr. Flores. OK.
    Mr. Beaudreau. So, there have been exploratory drilling----
    Mr. Flores. So my next question is there are areas that are 
not included in your lease sale that do have known potential, 
though, correct?
    Mr. Beaudreau. That we have estimates around. And speaking 
of the mid and south Atlantic, we have recognized and want----
    Mr. Flores. Just yes or no. I mean the answer is yes, 
right? There are areas that are off limits in your lease sale 
plan that do have known resource potential.
    Mr. Beaudreau. That we estimate have a certain degree of 
oil and gas----
    Mr. Flores. OK, thanks. Now, why do companies lease? I mean 
they lease because they want to find oil and gas, right?
    Mr. Beaudreau. Right. Presumably, yes.
    Mr. Flores. OK. So, if there is an area that is in a lease 
sale area that is available, but it is not leased--this is to 
Mr. Tonko's point, who is not here--the reason they are not 
leased is because the companies that would notionally lease 
that area don't think there is anything but goat pasture there, 
so they are not going to lease it. Right?
    Mr. Beaudreau. As to specific decisions about leasing----
    Mr. Flores. I will just answer it. The answer is yes. They 
don't lease it because there is nothing there. It doesn't mean 
that they are trying to inventory acreage, or hold acreage off 
for some, you know, hidden reason.
    Mr. Beaudreau. And I wasn't being pejorative about it. 
There are----
    Mr. Flores. No, I am just trying to be quick, because I 
have only got a limited amount of time.
    In the areas that are off limits, are we allowing any sort 
of seismic data activity to go there? Seismic acquisitions, so 
that we can determine with better fidelity what is available?
    Mr. Beaudreau. Yes, that is our----
    Mr. Flores. OK.
    Mr. Beaudreau [continuing]. Specific strategy with respect 
to the mid and south Atlantic.
    Mr. Flores. OK. So we are allowing seismic activity. That 
is good.
    Mr. Beaudreau. We are trying to move forward in that 
direction.
    Mr. Flores. I applaud you for that. Eastern Gulf areas that 
are currently excluded from the sale, do they have known 
resource potential?
    Mr. Beaudreau. We have resource estimates. The areas that 
are not included in the eastern Gulf are currently subject to 
congressional moratorium.
    Mr. Flores. Correct. But there is--I mean--I an not trying 
to--I am just saying they have known resource potential.
    So we got in a jam and we wanted to drill and there was no 
mandate--no moratorium, we could drill?
    Mr. Beaudreau. If Congress took action in that area, we 
would consider what to do there.
    Mr. Flores. OK. The Atlantic. One of the questions--one of 
the statements says that the reason you are not doing anything 
in the Atlantic is because there is no infrastructure and no 
containment. So this is kind of what comes first, the chicken 
or the egg. How do you--how are you ever going to develop the 
infrastructure if you never allow the leases to take place?
    Theoretically, you know, when I was in the oil and gas 
business, we would lease an area and then the infrastructure 
would follow. So, you know, we are not going to have somebody 
just plunk down the tens or hundreds of millions of dollars to 
build the infrastructure or build the containment capabilities 
if the lease is not available--I mean if you are not going to 
put it in the plan, right?
    Mr. Beaudreau. Yes. I want to be clear on that. What we say 
in the plan is we need additional information about the 
resource. We need to deconflict. While we are doing that, as a 
matter of smart planning, let's think through and start talking 
about what infrastructure--both to bring the resource to 
market, but also to deal with the potential of an accident--
would have to be in place there, and to work with the States on 
that.
    Mr. Flores. OK. And Mr. Duncan covered my issue about, you 
know, on one coast you listen to the Governors, on the other 
coast you don't listen to the Governors.
    Now, what are you doing in terms of deconflicting with the 
DoD? I mean are you having substantive discussions, or just 
say, ``OK, we have buried this baby for five years, we don't 
have to worry about it''?
    Mr. Beaudreau. No, I personally met with officials from DoD 
a number of times----
    Mr. Flores. OK.
    Mr. Beaudreau [continuing]. On this issue.
    Mr. Flores. OK. Very good. I will yield back the balance of 
my time, and then I will have more questions later, if somebody 
yields time to me.
    The Chairman. OK. The gentleman yields back. The Chair 
recognizes the gentleman from Tennessee, Mr. Duncan.
    Mr. Duncan of Tennessee. Well, thank you, Mr. Chairman. And 
I will yield my time to the gentleman from Texas, Mr. Flores.
    Mr. Flores. Thank you, Mr. Duncan. What is the resource 
potential off the Pacific?
    Mr. Beaudreau. Our current estimates from November is--for 
Southern California, 5.32 billion barrels of oil; central 
California, 2.4 billion barrels; northern California, 2.08 
billion barrels; and Washington/Oregon, .4 billion barrels.
    Mr. Flores. OK, so it----
    Mr. Beaudreau. All oil. Natural gas estimates is----
    Mr. Flores. Right, OK. Substantial resource potential, 
then. I mean has there been any conversation with the Governors 
to talk about the impact on their economic activity that this 
could have? The potential to help alleviate the energy resource 
concerns from a--probably--you know, California probably, per 
capita, uses more energy than anybody else.
    So, I mean, are we having any of those discussions to say, 
``Hey, you know, why don't we try to find a middle ground where 
we can make some of these areas available for your own economic 
benefit?'' I mean California's fiscal situation is a basket 
case. I would think they would want to be looking at something 
like this.
    Mr. Beaudreau. Just to put those numbers in perspective, 
though, to understand how they fit--you know, the central Gulf 
of Mexico, for example, is 31 billion barrels----
    Mr. Flores. I understand.
    Mr. Beaudreau [continuing]. Of potential. So those numbers, 
on their own, are less significant than if you compare them 
with other regions.
    Mr. Flores. I understand, but----
    Mr. Beaudreau. With respect to the West Coast and the 
Governors' offices there, yes. In the context of our evaluation 
under the Five Year Plan and the EIS that we conducted with 
respect to the Five Year Plan, there has been engagement with 
the States on those issues. They expressed a point of view, as 
representatives of their States, and we take that into 
consideration.
    Mr. Flores. OK. Back to Virginia for a minute, how long do 
we think it will take to have--conclude the deconflict 
conversations with DoD?
    Mr. Beaudreau. I don't know. And it will require creative 
thinking on both parties. I mean I will say this. The 
Department of Defense has not been--the Department of Defense 
has been cooperative on this, they really have been.
    Mr. Flores. I assume that they----
    Mr. Beaudreau. Yes. They have legitimate needs, legitimate 
concerns. We all respect it. But they are not, you know, 
putting us off. They are engaging on it. They are willing to 
make accommodation where they can. So----
    Mr. Flores. What----
    Mr. Beaudreau [continuing]. I can't predict how long that 
process will take. But I will tell you that I am pleased with 
the constructive tone of the conversations.
    Mr. Flores. I mean do we have a feel? Are we talking 1 
year, 2 years, 10 years?
    Mr. Beaudreau. I can't predict it, I am sorry.
    Mr. Flores. I would think that shorter would be better than 
longer. I mean, after all, the military is one of our biggest 
users of fuels, and it is important to our national security, 
as we go forward.
    Mr. Chairman, I think that is all I have for today. I yield 
back to Mr. Duncan, if he has any----
    Mr. Duncan of Tennessee. No.
    The Chairman. OK. The gentleman yields back his time.
    Director Beaudreau, thank you very much for being here. And 
as I stated earlier in response--kind of follow-up to what Mr. 
Pallone--a lot of times there are questions that are--come up 
after testimony, and they will obviously be submitted to you in 
a very timely manner. And I ask your response be submitted also 
in a timely manner.
    Two other issues. One I covered on the solicitor's opinion 
that you and I talked about in my line of questioning. If you 
could just simply give us that solicitor's opinion, I would 
very much appreciate it. And the other one is regarding the 
Gulf of Mexico, the trans-boundary legislation that the 
Administration is going to send up. One of the ironies of this 
is that Secretary Salazar was somewhat critical of our not 
acting on it--of course it hasn't been sent up. Now, I 
understand we have our view and they have their view.
    So, my question to you is when will that be sent up, and 
can you tell us what likely will be in that legislation?
    Mr. Beaudreau. Yes. It will be sent up very soon.
    The Chairman. OK.
    Mr. Beaudreau. It is going through final review. The 
Secretary, obviously, is quite anxious to get it to you. And we 
will do that very soon.
    It is a straightforward piece of proposed legislation for 
you to consider that simply codifies and implements the 
agreement. And so we, in working with State Department and 
others, try to craft the legislation to be as bare bones and 
straightforward as possible, with an eye toward making it 
easier for you to consider.
    The Chairman. OK, very good. I appreciate that. And if you 
could convey to the Secretary that, you know, we will pass 
something when we get it, I--you get my point.
    Mr. Beaudreau. I do.
    The Chairman. OK. With that, if there is no other business 
that comes before the Committee, thank you very much again, 
Director Beaudreau, for being here.
    The Committee stands adjourned.
    [Whereupon, at 11:39 a.m., the Committee was adjourned.]

                                 
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