Offshore Interests Represented in Obama's FY 2016 Budget

President Barack Obama’s fiscal year 2016 (FY 2016) budget includes a request of $170.9 million to fund the Bureau of Ocean Energy Management’s (BOEM) mission to safely and responsibly manage the Nation's offshore energy and mineral resources. The request would provide BOEM with resources needed to effectively manage oil and gas development, renewable energy, and mineral resources on the U.S. Outer Continental Shelf (OCS) in a way that promotes efficient and environmentally responsible development.

“BOEM’s priorities fully support the Administration’s all-of-the-above energy strategy for safely and responsibly expanding domestic energy production and advancing renewable energy for our clean energy future by using the best available science to inform our decision making,” said BOEM Director Abigail Ross Hopper. “The President’s budget would provide us with the needed resources and personnel to expand our technical expertise to make science-informed policy decisions and effectively oversee the development of OCS resources.”

The President’s budget request focuses on program responsibilities, such as the Five Year Outer Continental Shelf Oil and Gas Program, oil and gas exploration and development plans, offshore renewable energy and environmental analysis and studies. The request includes an increase of $1.1 million over the FY 2015 enacted level, allowing the bureau to fund important initiatives to further develop the risk management program, add personnel needed to support an increase in OCS activity and build on the bureau’s collaborative efforts in ecosystem science.

The budget includes $2.5 million in additional funding that will allow BOEM to operate a more robust risk management program. Initiated in FY 2014, the program seeks to modernize the bureau’s approach to offshore oil and gas financial assurance and risk management in order to better align with the realities of aging offshore infrastructure, and to address potential costs and liabilities associated with offshore energy development.

BOEM-regulated OCS activities have increased in recent years and this trend is expected to continue. Since 2010, BOEM has seen a 36 percent increase in active deepwater drilling rigs in the Gulf of Mexico, leading to a steady increase in the number of plans BOEM must review. The President’s proposal requests $1.1 million to support increasing activity on the OCS and an increased workload resulting from focusing personnel on the timely and thorough completion of reviews of exploration and development plans.

BOEM recognizes the importance of understanding ecosystem science and global change to better inform future decisions. Included in the FY 2016 request is an additional $500,000 to support the bureau’s critical role in supporting the United States during its term as Chair of the Arctic Council and to increase its expertise on ecosystem science.

The President’s $170.9 million budget request includes offsetting collections of $93.0 million from rental receipts and $3.7 million from cost recovery fees. This results in a requested increase of $1.8 million in net direct appropriations for the bureau. The President’s proposal also includes a package of legislative and administrative reforms to bolster and backstop administrative actions being taken to reform the management of Interior’s onshore and offshore oil and gas programs, with a key focus on improving returns to taxpayers from the sale of these Federal resources and on improving transparency and oversight.

Additionally, President Obama’s fiscal year 2016 budget request for the Bureau of Safety and Environmental Enforcement (BSEE) is $204.7 million, providing robust support that will enable BSEE to keep pace with industry activity and the technology developments that are helping to drive deepwater oil and gas development on the U.S. Outer Continental Shelf.

The Administration’s proposal sustains funding increases received in previous years and provides critically needed resources to further strengthen BSEE’s regulatory and oversight capabilities for OCS oil and gas development, as the Administration works to responsibly expand domestic energy production through the President’s all-of-the-above energy strategy.

“The President’s 2016 request fully reflects the Administration’s continued emphasis by ensuring that development of the Nation’s vast offshore energy resources is conducted in a safe and environmentally responsible manner,” said BSEE Director Brian Salerno. “Funds will be used to recruit expert engineers, scientists, inspectors and oil spill prevention specialists to support the development of risk-based approaches to oversight and compliance on the Outer Continental Shelf.”

By the end of 2014, there were 69 deepwater rigs and non-rig units working in the Gulf of Mexico, up from 40 at the start of the year. The Energy Information Administration projects offshore production will continue to grow through 2040, as the pace of development activity quickens and new, large development projects, predominantly in the deepwater and ultra-deepwater areas of the Gulf of Mexico, are brought into production.

The 2016 budget will continue to build a robust culture of safety, with a strong focus on risk reduction. The Bureau will bolster its capacity for analyzing data gained through incident reporting requirements, near-miss reporting, and real-time monitoring. The Bureau will also continue to work with industry to better understand their safety processes, so that BSEE can mitigate and reduce risk. Through these initiatives and others, BSEE will continue to ensure that offshore development occurs in a safe and environmentally responsible way.

The 2016 budget request includes an increase of $1.7 million to establish the Engineering Technology Assessment Center to support the evaluation of new and emerging technologies and develop associated safety and oversight protocols. The increased funding will add greater depth and capacity to the BSEE, so that as industry continues to innovate and develop new capabilities, the BSEE will be able to keep pace. The Center will provide a Bureau-wide focal point for emerging technology evaluation. The FY 2016 request also better aligns inspection fees with BSEE’s risk-based approach to inspections and compliance.

The 2016 request also includes a program increase of $750,000 for establishing the Renewable Energy Inspection Program. The funding will support the development of regulations, inspection guidelines, procedures, and criteria for inspections of offshore renewable energy facilities so that the appropriate regulatory structure will be in place to protect the safety of these facilities as well as the environment.

Anticipated fixed cost increases are funded at $1.4 million. BSEE’s targeted funding increases are largely offset by anticipated savings from continued management efficiency efforts (-$2.4 million) and a reduction in offsetting collections funding (-$1.4 million), for a net funding increase of $46,000 over the 2015 enacted level.

The President’s budget proposes $14.9 million for Oil Spill Research, equal to the 2015 enacted level. The Oil Spill Research program plays a pivotal role in initiating applied research used to support decision-making on methods and equipment to prevent or mitigate oil spills, which is a critical component of the offshore permitting process. The request will address key knowledge and technology gaps in oil spill response, focusing on deepwater and Arctic environments.