Salazar outlines onshore leasing schedule for 2010

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Nov. 24 -- As he announced that 38 onshore federal oil and gas lease sales have been scheduled for 2010, US Interior Secretary Ken Salazar said his department will continue to make constructive changes in the program.

“We believe our oil and gas leasing is robust, but it also is a program we are bringing back into balance. You wouldn’t know it if you listened to some of the untruths coming out of some corners of the oil and gas industry,” he told reporters during a Nov. 24 teleconference.

Salazar would not specifically identify sources of the criticism, but they apparently include the Independent Petroleum Association of Mountain States in Denver, which issued a 9-page position on paper on Nov. 18 strongly suggesting that federal onshore oil and gas leasing during fiscal 2009 was more anemic than robust (OGJ Online, Nov. 23, 2009).

“Trade groups for the oil and gas industry need to understand they don’t own the nation’s public lands. The public does,” Salazar said. Producers also need to decide whether to support “trade associations, which behave more like the arm of a political party,” or to engage constructively with US Department of the Interior agencies as they develop a more balanced leasing approach, he added.

Salazar disputed statements that the onshore leasing climate has grown significantly less certain because sold tracts have been canceled and proposed tracts have been withdrawn.

“The reason there’s uncertainty is that short cuts were taken in the prior administration, where parcels were leased next to national parks without proper reviews,” he maintained. “We’re reforming the process to make sure the taxpayer gets fair returns from these leases, [and] to make certain we’re leasing the public domain in the right places and avoiding the kind of litigation and protests [the leases] have attracted in the past.”

‘More certainty’
“We are looking at current land use plans to make sure they remain valid in light of changing policy,” said US Bureau of Land Management Director Robert V. Abbey, who also participated in the teleconference. Noting that about 42% of the parcels BLM offered in 2008 and 50% in 2009 were protested, he said: “We’re trying to reduce the protests and litigation to provide more certainty to the industry.”

Salazar noted that the BLM director and Wilma A. Lewis, assistant Interior secretary for land and minerals management, have been thoroughly reviewing BLM leasing and other procedures, and he anticipates they will announce some changes in the future.

He said significant onshore and offshore acreage has been leased already that has not yet been developed. “Offshore, we have 7,735 active leases, of which only 5,211 are now producing. Onshore, we have 55,385 active leases, about 26,000 of which are not producing. Large parts of the public domain have been made available to the oil and gas industry, and large parts of that have not been developed,” he said.

“We should look at economic factors, such as lower oil and gas prices,” Abbey suggested. “That means that companies are idling wells on public and private lands. It’s simple economics at work. We intend to assure the industry that we take our responsibility seriously about including oil and gas as we diversify our resource portfolio.”

Next year’s scheduled onshore federal leases include one on Aug. 11—which would be the first in nearly 2 years within the National Petroleum Reserve-Alaska, Salazar said. The sale will offer available tracts in the northeast and a portion of the reserve’s northwest areas, he said.
 
‘Spurious argument’
Attacks on Salazar’s onshore leasing record have no basis, a Wilderness Society official said following the teleconference. “According to DOI’s own data for fiscal 2008, there were over 48 million onshore acres under lease, with less than 14 million acres actually in development. The industry has a stockpile of nearly 35 million acres which have been issued, but not developed,” said Dave Albersworth, a senior advisor at the environmental organization and also a DOI official during the Clinton administration. “For it to complain that it’s not getting enough acreage is a spurious argument. It has had lots of opportunities on federal lands.”

Albersworth told OGJ that he appreciated Salazar’s statement that the secretary intends to take control of BLM back from the oil and gas industry. “We haven’t seen any proposals. There’s a clear recognition of the problems of the previous administration’s policies. I think they’re committed to having a robust oil and gas program while protecting the nation’s resources. That’s what we’re looking forward to,” Albersworth said.

The American Petroleum Institute and IPAMS also issued statements following Salazar’s press conference.

“While we appreciate the already anticipated lease sale announcement for 2010, the oil and natural gas industry, which supports 9.2 million American jobs, believes more can be done to expand the economy and create new jobs,” API Pres. Jack N. Gerard said.

IPAMS said in a statement, “It’s important to recognize that developing American clean energy requires a partnership with government and community stakeholders. We are all accountable to the American public to ensure that responsible development occurs. As such, we don’t believe it’s unreasonable to ask [DOI] to explain the rationale for its decisions and express concern when trends are not headed in the right direction.”

Federal resource management has profound implications for the cost of energy, job creation, revenue growth, and economic activity, IPAMS’s statement added. “We were very encouraged to hear that Secretary Salazar believes ‘…it is important for the oil and gas industry to have certainty.’ We look forward to meeting with [DOI] to explore ideas about how America can more responsibly develop its federal energy resources,” it said.

Contact Nick Snow at nicks@pennwell.com.

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