The Ben Ocean Lancer, a 490-foot-long drill ship, positioned itself in federal waters about 93 miles southeast of Atlantic City in October 1978 and began boring into the sea floor, a half-mile below the ocean’s surface.
For the next three months, the drillers bored 15,820 feet down, through three miles of rock. Near the bottom, they discovered a “significant” show of natural gas, which the government announced to the public, according to a U.S. Geological Survey report on the well.
Having accomplished their mission, the explorers plugged the well a few days after drilling was completed. The single well, commissioned by 11 oil companies and led by Chevron Corp., cost $12 million at the time — more than $43 million today.
The well was one of 51 drilled off the Atlantic coast between 1976 and 1983, when the industry spent billions leasing and exploring the Eastern Seaboard in the aftermath of the Arab Oil Embargo. Some wells found natural gas, but not much oil. All were plugged and abandoned as “non-commercial” before a moratorium on Atlantic offshore leasing went into effect.
Now oil and gas companies want to take another crack at offshore exploration. And President Trump is eager to get started.
Interior Secretary Ryan Zinke announced on Jan. 4 it would allow new offshore oil and gas drilling in nearly all of the outer continental shelf (OCS), including long off-limits areas such as California, the Arctic, and the Atlantic.
By opening the entire outer shelf for oil and gas exploration, “the United States can advance the goal of moving from aspiring for energy independence to attaining energy dominance,” Vincent DeVito, the department’s counselor for energy policy, said in a statement.
Environmentalists and many state officials decried the announcement, and have mobilized. They say drilling poses a threat, citing the 2010 BP Deepwater Horizon disaster, and that new fossil fuel resources are unneeded.
If the Interior Department’s plans are finalized — a process that could take 18 months — it would conduct 47 lease auctions in 26 offshore “study areas” from 2019 to 2024. Nine of those auctions would be in the Atlantic, including two targeting the North Atlantic study area, which is everything from Delaware Bay to the Canadian border.
Actual production of oil and gas in the Atlantic might not occur for a decade, said Erik Milito, director of upstream and industry operations for the American Petroleum Institute.
And production might not happen at all. Though previous North Atlantic drilling data are public, and thousands of miles of surveys were conducted, there is no certainty that appreciable amounts of oil would be discovered to justify the high cost of extraction.
The greatest prospects for offshore oil are in the Gulf of Mexico and in the Arctic waters of Alaska, according to a 2011 assessment by the Bureau of Ocean Energy Management (BOEM). Atlantic offshore oil and gas fields represent less than 6 percent of the nation’s “technically recoverable” offshore resources, BOEM said.
But that doesn’t mean the industry is not interested. Despite the growth of renewable energy and onshore shale production, the industry says it needs to develop more oil and gas resources because the country will stay heavily reliant on fossil fuel for decades to come.
The BOEM estimates the nation’s offshore areas contain 90 billion barrels of undiscovered oil and 327 trillion cubic feet of undiscovered natural gas that are technically recoverable. In the Atlantic, natural gas is believed to be more prevalent, with an estimated 4.6 billion barrels of oil and 38.2 trillion cubic feet of gas undiscovered and technically recoverable.
But there is much uncertainty over estimates, particularly in areas where no recent surveys have occurred. The Atlantic estimates are based partly on a record of offshore production in Canada, Brazil, West Africa, and the North Sea, which share some underground geologic characteristics with the U.S. coastal areas.
The government and industry would likely want new seismic surveys to assess the potential before opening new offshore leases for bids.
Seismic surveys are conducted by a vessel that measures airgun sound waves reflected off the sea floor, identifying underground rock formations that might be compatible with oil or gas resources. Environmentalists say seismic surveys harm marine mammals, but BOEM says the practice is safe and the fears are exaggerated.
“New resource estimates based on data from modern seismic surveys would yield a much clearer picture of the potential resources in federal waters off our Atlantic coast,” said Nicolette Nye, a spokeswoman for the National Ocean Industries Association.
President Barack Obama, who wavered between lukewarm and cold on offshore drilling, authorized seismic surveys in 2014 in the Mid-Atlantic and South Atlantic study areas — the part south of Delaware Bay. But Obama backtracked by the end of his term, and blocked Atlantic exploration after environmental groups and many East Coast lawmakers opposed the surveys.
The Trump administration took less than a week after it unveiled its offshore drilling plan to begin backtracking when Zinke announced that he was removing Florida from consideration for any new oil and gas platforms because it is “unique” and its coasts are heavily reliant on tourism. The White House also may not want to alienate Floridians this year because the state has a critical Senate election in which the Republicans hope to oust a Democratic incumbent.
The Florida waiver unsettled the oil industry. The eastern Gulf of Mexico, off Florida’s coast, is considered one of the more promising exploration areas because it contains some of the same geologic formations that now produce oil and gas in the central Gulf of Mexico. The industry is likely to push the government to expand Gulf exploration eastward.
Exploration in the Atlantic is another matter. According to state comments filed with the Interior Department, only Maine Gov. Paul LePage and Georgia Gov. Nathan Deal among Atlantic governors support offshore drilling. The industry cites surveys showing that Southern states seem to be more open to offshore oil and gas development than Northern states.
“We’ve seen some pretty strong support from Virginia to Georgia in statewide polling,” said Milito. “When you get further north, it gets more strident in terms of the opposition, so it makes it tougher.”
The industry will focus first on areas where it says there will be greater economic impact – North Carolina, South Carolina and Virginia. According to a 2013 economic study, total spending on Atlantic offshore oil and natural gas development could reach $195 billion by 2035, and more than $56 billion of which would be concentrated on the three Southern states.
New Jersey would see about $5 billion in spending and Pennsylvania would receive $4 billion, according to the industry report.
“We understand there’s only so much the industry can do over five years, so let’s look at it incrementally and see what our best opportunities are going to be for investment, and we’re looking at the eastern Gulf of Mexico, portions of the Atlantic and continued opportunities in the Alaska region,” said Milito.
In the longer term, the industry hopes to conduct seismic surveys off states where the public is less welcoming, so it can at least assess whether the prize is big enough to fight for.