Sale 181-an opportunity missed?

July 9, 2001
The George W. Bush administration took a bold step in grappling with the thorny question of what the long-term US energy policy should be.

The George W. Bush administration took a bold step in grappling with the thorny question of what the long-term US energy policy should be. For the effort alone, it should be commended.

On its merits, however, the policy suffers from a fundamental flaw that sacrifices its own god of attaining reliable energy security through development at the altar of short-term political expediency.

The policy picks, as its number one prodevelopment battle cry, a call to open the Arctic National Wildlife Refuge coastal plain to oil and gas leasing. This call goads the environmental interests while giving the development proponents only rhetorical comfort.

Obscured in the gimmickry of that battle is the more important real-time policy issue of leasing a portion of the eastern Gulf of Mexico, Sale 181, for oil and gas exploration and production (OGJ Online, July 2, 2001). That should be the true test of whether the administration has the political will to proceed with environmentally sound development. By refusing to engage that issue, the policy shows that, when push comes to shove, that type of development is still held hostage by narrow and parochial constituencies.

Sale 181 is not more important because of the size of the potential oil and gas resources at stake. ANWR's coastal plain is said to have recoverable oil of 5.7-16 billion bbl. By comparison, the Sale 181 area has much less potential, only 370 million bbl of oil and 3.2 tcf of gas.

However, the potential of the latter is much more cognizable, because it is based on more information concerning a heavily explored producing region. ANWR development requires Congressional approval, which the administration itself has doomed. And, whereas a sale in ANWR is "dead on arrival" in Congress, a sale in the eastern gulf only requires executive action.

There are more than 8,000 existing leases, more than 100 operators, and thousands of miles of oil and natural gas pipelines in the Gulf of Mexico. Holding Sale 181 will have a more widespread immediate effect on the industry and the nation's domestic oil and gas production than a lease sale in the expensive, expansive, and remote Arctic, where only a handful of companies currently produce mostly oil. Equally important, it has been shown that development of Sale 181 will have a relatively benign impact on the environment.

To its credit, the policy does recognize the vital importance of the Gulf of Mexico to increasing domestic energy supplies. It states that the gulf is "predicted to play an increasingly important role in the future, accounting for a projected high of 40% of domestic oil production by 2010."1

Given that acknowledgment and the potential of other areas on the outer continental shelf, the policy recommends reexamining "the current federal legal and policy regime [for the OCS] to determine if changes are needed" and "continuing OCS oil and gas leasing and approval of exploration and development plans on predictable schedules."2 Although the policy mentioned ANWR leasing specifically, there was no such specific recommendation regarding Sale 181.

Sale 181 background

Sale 181 was first proposed by the Department of the Interior's Minerals Management Service during the formation of the 5-year OCS leasing program for 1997-2002.

In 1996, Interior issued an environmental impact statement that included a sale in a portion of the eastern Gulf of Mexico planning area directly off Alabama and more than 100 miles off Florida. That area was in one of the few unleased offshore areas without any congressional or presidential moratoriums, but with the promise of prolific natural gas production and minimal environmental consequence.

The sale area was carefully tailored to reconcile the diverse and often divergent positions of the nearby coastal states. Alabama objected to leasing within sight of shore (designated as 15 miles), and Florida objected to leasing within 100 miles of its coast. The states struck a compromise and reached a consensus that satisfied both conditions as well as the then-governors, Fob James of Alabama and Lawton Chiles of Florida, who assented to the sale going forward.

The sale was tentatively scheduled for December 2001, and a full environmental analysis was to have been performed. If that went well, the rest would be history. Sale 181 had become President Bill Clinton's "trip to China." He dared to go where no recent president had gone before.

However, the new administrations in Florida and Washington have changed all that. Whereas Sale 181 was once a given, it has taken on mythic proportions.

The governor of Florida has asked the president to halt the sale. Of course, the governor must be heard, like any other governor, and the interests of each potentially affected state must be weighed against the national interest.

In this case, however, the press ac- counts interpret the administration's "cold feet" as a case of the president refusing to be a "Romulus," sacrificing his brother, "Remus," at the altar of the new Rome. If this is true, it is unfortunate.

The real test of whether the administration is serious about a national energy policy is boldness, not only in its gimmicks and reporting, but also in its doing.

Doubtless, proceeding with Sale 181 requires a tough political choice of the kind that every president is entrusted to make. Whether or not that choice amounts to the political equivalent of fratricide, the administration must remember that it took a Romulus to build a Rome. An energy policy that is economically and environmentally sound dictates that Sale 181 go forward as originally proposed and in a predictable manner. Anything short of that would be a real tragedy.

References

  1. National Energy Policy, 1-13, May 2001.
  2. Ibid., 5-8.

(For updated status of Sale 181, see Newsletter, p. 7.)

The author

Click here to enlarge image

Cynthia L. Quarterman is a partner in the Washington, DC, office of Steptoe & Johnson LLP where she specializes in energy, natural resource, and environmental law. The opinions stated here are her own and not that of the firm or any of its clients. During March 1995 through February 1999, she was director of the Minerals Management Service at the US Department of the Interior and oversaw the development of the 5 Year OCS leasing program for 1997-2002, including Sale 181.