The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) recently responded to our petition to reconsider its leasing policies. They commit to further review of our recommendations and mention the possibility of incorporating our findings in the next 5-year leasing program.
The petition included the content of our recent report on option value. In it, authors Michael Livermore and Gaia Larsen argue that treating off-shore drilling as a now-or-never decision, ignoring the option of waiting to lease and drill in the future, could lead to over-drilling at the expense of the taxpayer. It often results in sales of leases for significantly less than they are worth, while the exposing the public to the risks of aggressive drilling.
BOEMRE responded that it would continue to study the concept of option value and possibly include it in the design of future lease sales or in the decision on whether or not to lease specific tracts. This would be an important step towards a responsible drilling policy that fairly compensates taxpayers.