WATCHING WASHINGTON OCS LEASING PLAN HIT

June 10, 1991
With Patrick Crow Oil companies and associations are urging the Minerals Management Service to hold the line against further dilution of the proposed 5 year U.S. offshore leasing program. Comments they have filed with MMS reflect frustration with the reduced scope of the leasing plan (OGJ, Mar. 4, p. 16) and the knowledge that MMS will not add sales to it. J.L. Whitmire, Phillips Petroleum Co. vice-president for North American exploration and production, said the program essentially is a Gulf

Oil companies and associations are urging the Minerals Management Service to hold the line against further dilution of the proposed 5 year U.S. offshore leasing program.

Comments they have filed with MMS reflect frustration with the reduced scope of the leasing plan (OGJ, Mar. 4, p. 16) and the knowledge that MMS will not add sales to it.

J.L. Whitmire, Phillips Petroleum Co. vice-president for North American exploration and production, said the program essentially is a Gulf of Mexico and Beaufort Sea leasing plan.

MINIMUM EFFORT

Robert Stewart, National Ocean Industries Association president, told MMS the plan is the minimum necessary to sustain a meaningful Outer Continental Shelf leasing and development program. "We urge you to defend it as vigorously as possible."

William Hopkins, executive director of the Alaska Oil & Gas Association, said, "Fewer sales will likely translate into smaller scale evaluation programs with attendant fewer personnel assigned to evaluation efforts. Fewer people will generate fewer ideas, especially innovative applications to older areas, and consequently less and less attention will be focused on the OCS program."

Hopkins said the area-wide approach is better, and MMS's idea of "limiting a sale to cover only fractional portions of a planning sale area ... will only further inhibit industry's efforts to explore and develop."

Steve Chamberlain, American Petroleum Institute exploration director, called the plan inadequate to prevent further declines in production of oil and gas on the OCS.

He noted MMS gave "no legitimate environmental reasons" for deciding to limit eastern gulf sales to 200 tracts and Middle and South Atlantic sales to 250.

J.E. Golden, vice-president and general manager of BP Exploration Inc.'s U.S. exploration, said, "An arbitrary limit on blocks offered at a sale will inhibit a company from assembling sufficient capital and acreage to economically explore and develop the province."

R.E. Galvin, Chevron USA Inc. senior vice-president for exploration, said the plan should have included Central and northern California sales, but "until there are more assurances we could explore, produce, and transport resources ... we would be reluctant to allocate manpower or funds to them."

He said Chevron would spurn a Middle Atlantic sale until North Carolina allows Mobil to drill its offshore blocks.

Several companies said MMS should space Central and western Gulf of Mexico sales 6 months apart and lease tracts in more than 400 m of water for 10 years rather than 8.

INCENTIVES SOUGHT

Phillips suggested MMS offer unspecified incentives for gulf exploration in more than 6,000 ft of water. "Given the technology, complexity, and expense of exploration in that water depth, some blocks are likely to go untested during the next 5 year plan without some incentives."

E.A. Williamson, Amoco Production Co.'s exploration vice-president, suggested MMS give companies a $1,000/ft exploration incentive credit for the first wildcat on each OCS lease, up to 20% of total exploratory well costs.

He said the credit, which could be applied against delay rentals or royalties, would especially help Alaskan exploration.

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