Bingaman urges DOI to push lessees' prompt development

Nick Snow
Washington Editor
WASHINGTON, DC, July 16 -- Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) and 30 other US Senate Democrats urged Interior Secretary Dirk A. Kempthorne to act immediately to encourage development of federal oil and gas leases totaling millions of acres.

"Federal lands both onshore and on the Outer Continental Shelf that are already leased, but not producing, are our biggest opportunity to provide needed oil and gas supply in the near term. However, we are concerned that policies of the [US Department of the Interior] do not result in the timely production of these resources," the lawmakers said in a July 15 letter to Kempthorne.

The message reflected congressional Democratic sentiment that access to additional federal acreage should not be granted to oil and gas producers if they are not diligently developing tracts they already have leased. US Minerals Management Service officials and producers have said that this demand does not recognize the time it takes to evaluate a lease once it has been granted or capital, equipment, and personnel constraints.

Bingaman and the other senators, including Majority Leader Harry M. Reid (D-Nev.), asked Kempthorne to immediately clarify that oil and gas producers holding federal leases are required to diligently develop the tracts, exercise his full authority for appropriate OCS lease term lengths and lease rates to ensure diligent development, and require lessees to regularly report their progress in diligently developing the tracts.

"It appears that the policy emphasis of this administration has been on having more lease sales, but we believe that not enough emphasis has been placed on encouraging the diligent development of federal lands once leased. While it is generally true that leases must be produced within certain time frames, we are concerned that federal agencies are not exercising their substantial discretion in managing these leases to require production in the timeliest fashion," the letter said.

Recent lease sales have failed to generate bids for significant OCS tracts that already are available, including about 300 million acres in the Gulf of Mexico, it added. "If we want to get serious about increasing oil and gas production, a logical place to start is with the federal acres that have already been leased but are not yet producing," Bingaman said as he released the letter.

Contact Nick Snow at [email protected]