Salazar planning to meet with API board members

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Mar. 16 -- US Secretary of the Interior Ken Salazar plans to meet Mar. 19 with the American Petroleum Institute's board, which includes chief executives of several major oil companies, he said Mar. 16.

"My message to the oil companies will be simple: They are, and will remain, an important part of our energy future. We need to move forward together to build a common energy plan for America," he told reporters in a teleconference from Denver before boarding a plane to Washington.

"It's important to listen to everyone on the future of energy in America. Certainly API and its members have a stake in this. The oil and gas industry is a very important part of our energy future. Having a direct dialogue with them, giving them a chance to hear where I'm coming from as secretary of the Interior, and hearing their concerns matters to me," Salazar said.

He said several majors, such as BP PLC and ConocoPhillips already are working on clean-energy programs. "We have several areas of common ground, despite the shots you hear from both sides," he said.

API said it looked forward to speaking with Salazar about industry's role in the nation's energy future. "Especially during this tough economic environment, we need to work together on a comprehensive and realistic energy policy that encourages, not discourages, the development of all domestic energy production, including oil and natural gas," it said.

A busy week
The meeting will be part of a busy week for Salazar, which also will include a Mar. 18 trip to New Orleans for the next Gulf of Mexico oil and gas lease sale and a Mar. 17 appearance before the Senate Energy and Natural Resources Committee to discuss US conventional and renewable energy resource development plans.

Salazar said he is establishing development of renewable and alternative energy sources on US public lands as a DOI priority and as a component of a comprehensive national energy strategy to help the US reduce its dependence on foreign oil.

"Oil, natural gas, and coal will play an important role in meeting our nation's energy needs for many years to come. But our long-term economic, environmental, and national security depends on our ability to lead the clean energy revolution. Our traditional energy resources are a bridge to our clean-energy economy of the future," he said.

The strategy includes following an active oil and gas leasing schedule, according to Salazar. He said DOI will hold more than 40 major sales on public lands in 2009, which are expected to generate hundreds of millions of dollars in revenue for American taxpayers as well as billions of barrels of oil and trillions of cubic feet of gas to help meet US energy needs.

He noted that the US Bureau of Land Management has held seven onshore oil and gas lease sales in the last seven weeks, offering 830 leases covering almost 1.2 million acres in the West and selling 326 of them, totaling 254,000 acres, for more than $32 million in revenue. BLM will hold another 32 onshore oil and gas leases around the country in 2009, Salazar said.

Revenue sharing
Salazar said the US Minerals Management Service's Mar. 18 lease sale in New Orleans would offer 6,548 blocks covering 35 million acres in the Central Gulf of Mexico Planning Area and would be the first of two gulf lease sales scheduled this year. This week's lease sale includes the so-called "181 South Area," which will share federal offshore leasing revenue with coastal states for the first time, he pointed out.

Salazar also said a provision in legislation authorizing the upcoming lease sale which he helped write when he was in the US Senate directs 12.5% of the revenue directly to the Land and Water Conservation Fund's stateside grant program to protect open space and build parks. "It is America's first permanent conservation royalty of its kind, and I look forward to talking about it and President [Barack] Obama's vision for LWCF during my visit to the Gulf Coast," he said.

"We need a comprehensive energy plan that includes all aspects of energy, including oil and gas production. With respect to the ups and downs of gas prices, that really is a reflection of the failure of the US for more than 40 years to seize the opportunity to create our own energy independence here at home," Salazar said.

He said he has heard from producers that increasing royalties from production on federal lands would be unfair. "My response is that we have a responsibility to the American citizens who own public oil and gas resources to maximize the returns on their development," he said.

"Many concerns are being raised. The fact is many things in Washington are not being handled as they were in the past. President Obama and his administration have turned the page, and some people and groups may not be happy," Salazar said.

"We have an effort under way to look at royalty reform and terms for oil and gas leases. All the issues are on the table, and we will work through them as the year unfolds. We need to make sure the American citizen gets the best possible return. My second priority is to make sure that we develop funding similar to what's being used in Wednesday's lease sale for the Land and Water Conservation Fund," he said.

Contact Nick Snow at nicks@pennwell.com.

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