Offshore Oil and Gas More Economical Left Alone

Offshore Oil and Gas imageIn December 2013 CSE in consultation with New York University’s Institute for Policy Integrity (IPI) filed its opening brief in a lawsuit seeking a halt to the Bureau of Ocean Energy Management’s (BOEM) five-year oil  and gas leasing program on the outer continental shelf (OCS). The suit was filed in the District Court for Washington, D.C. The litigation is novel. We argue that the BOEM cannot justify the program on economic grounds because it failed to take into account the benefits of leaving oil and gas leases in the ground – at least for now – given the enormous uncertainty over whether or not deep sea drilling is safe, the recent glut of oil and gas production in the U.S. onshore, and the fact that a significant portion of the refined products made from OCS oil will be exported rather than used to meet America’s energy needs.

The opening brief was delayed by the American Petroleum Institute’s almost routine tactic of trying to keep the Court from hearing the case and instead having CSE excluded from legal proceedings based on the notion that the organization and its members have no standing to challenge the federal government’s decision in this matter. Fortunately, the Court has allowed CSE to proceed, even though the standing claim may come up again as the Court considers all the issues raised. CSE’s opening brief stands on eight key claims, including:

  1. The BOEM’s economic model erroneously assumes that new oil and gas leasing will create net environment benefits to the nation and assigns those benefits to each region in an arbitrary manner.
  2. The BOEM failed to analyze significant environmental costs associated with onshore oil and gas infrastructure necessitated by new leasing even though it has all the methods and data to do so.
  3. The BOEM failed to account for the fact that the vast majority of its recent leases have not been developed at all and so the purported economic benefits associated with new leasing are not grounded in reality.
  4. The BOEM failed to account for the portion of final energy products refined from OCS oil and gas that will be exported to foreign consumers and not meet America’s energy needs.
  5. The BOEM erroneously assumes that in the absence of new oil and gas leasing, America will increase its foreign imports even though onshore production is now more than adequate to offset the small increment of new production associated with the five-year program.
  6. The BOEM ignored the benefits of delay and failed to utilize standard economic methods to calculate these benefits.
  7. The BOEM ignored the vast economic benefits of intact marine and coastal ecosystems and the goods and services they provide in their undeveloped state.
  8. The BOEM hastily prepared and published its economic analysis after the public comment period closed and so avoided public scrutiny.

Unless the schedule is revised, the case will be fully briefed by March 28, 2014.

For a copy of the opening brief and related litigation materials please click here to visit the project page.

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