MMS chief hopes Obama, Congress won't reinstate OCS bans

Nick Snow
Washington Editor

WASHINGTON, DC, Dec. 9 -- Acknowledging that he will have no direct influence after Jan. 20, US Minerals Management Service Director Randall B. Luthi said he hopes the Obama administration and Congress seriously consider expanded opportunities on the US Outer Continental Shelf.

"We have given the new administration a head-start with this new 5-year OCS leasing program," which US Interior Secretary Dirk A. Kempthorne announced on July 30, Luthi told members of MMS's OCS Policy Committee Dec. 9 as it met in Herndon, Va., outside Washington.

"I would ask the incoming president and Congress not to rush to reimpose moratoriums. Once they are in place, they are very hard to remove," he added.

Luthi said he hopes to have a draft proposed OCS plan for the 2010-15 period completed by early January but emphasized it would be at least two more years before it became final. This will give coastal states and communities, energy producers and consumers, environmental organizations and other groups ample time to supply input, he explained.

The new plan also will consider energy production beyond oil and gas but recognizes that traditional fuels will be needed as alternatives are developed, Luthi said. "We could provide a bridge to renewables with traditional resources. When we release the draft proposed plan in January, it will ask questions about buffer zones, environmental sensitivities and other issues," he suggested.

Luthi said he also hopes MMS can complete a revenue sharing plan with Gulf Coast states required under the 2006 Gulf of Mexico Energy Security Act by Mar. 31, 2009, and a GOMESA-mandated plan for sharing revenue from existing federal offshore leases starting in 2017 by September.

'A real deadline'
"You've all read in your newspapers about so-called midnight regulations from outgoing presidential administrations. That's probably true to some extent. But it's also true that no one is as efficient as when they face a deadline, and Jan. 20 is a real deadline. There are people in MMS who would like to finish what they've been working on," Luthi said.

OCS Policy Committee Chairman Victor G. Carillo said the group was meeting under very different circumstances from its previous session in March. Crude oil prices hit $145/bbl in early July, gasoline cost more than $4/gal, and there were calls for both more conservation and efficiency and more production of domestic energy resources, he said.

US President George W. Bush withdrew presidential OCS leasing bans on July 14 and Congress allowed other remaining moratoriums to expire on Sept. 30, he continued. "We then experienced a remarkable stock and financial market meltdown and growing recession. We also have seen a significant drop in oil and gas prices. Finally, we witnessed a historic presidential election in November and are waiting to see where the US Department of the Interior heads under the Obama administration," said Carillo, who also is director of the Texas Railroad Commission's oil and gas division.

A 2-day workshop a week earlier in Williamsburg, Va., gave MMS an opportunity to hear from stakeholders about a possible lease sale off that state's coast in 2011, Luthi told reporters following his address. "If you're going to make this work, it's all about partnerships with the states, the industry, and environmental and tourism groups," he maintained.

Federal policymakers also should not overlook the fact that MMS and the US Bureau of Land Management, DOI's primary federal resource management agencies, generate federal revenue second only to the US Internal Revenue Service, Luthi continued. "It takes years to plan a sale. They should give the five-year planning process a chance to work and not be in a rush to reimpose moratoriums until the revenue potential has been considered," he said.

Contact Nick Snow at nicks@pennwell.com.

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