Draft OCS leasing plan would expand accessible area

Feb. 9, 2006
The US Minerals Management Service released a draft of a proposed 5-year Outer Continental Shelf oil and gas leasing plan on Feb. 8 that could expand accessible acreage.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Feb. 9 -- The US Minerals Management Service released a draft of a proposed 5-year Outer Continental Shelf oil and gas leasing plan on Feb. 8 that could expand accessible acreage.

The draft proposal considers realigning Central Gulf of Mexico Planning Area boundaries to correspond with new federal OCS administrative areas announced in January.

MMS said the contemplated revision would include part of the OCS Lease Sale 181 area off Louisiana and a deepwater area to the south in the central planning area, and the tracts could be considered for future oil and gas development.

MMS emphasized that it would not offer areas for leasing within 100 miles of Florida's coast formerly part of the Eastern Gulf Planning Area. It also said leasing in the Sale 181 area, which is not under moratorium, would not interfere with US military activities or pose an environmental threat to Florida.

The state's two US senators immediately responded to the proposal's Sale 181 portion.

"It's not as good as we had hoped, but not as bad as we feared," Republican Mel Martinez said. "It does not provide any sort of permanent protection for Florida. So under this proposal, we would be dealing with the issue again in 5 years and losing more and more of the gulf to further and further drilling."

Democrat Bill Nelson was more critical.

"The Bush administration today sided with some two dozen oil and gas companies that have requested new drilling closer to Florida," he said. "The Department of Interior just announced it's lifting a drilling ban in 2 million acres in the eastern Gulf of Mexico. This amounts to the largest expansion of drilling off Florida in our country's history."

The MMS draft proposal does not go as far as a bill that the Senate Energy and Natural Resources committee leadership and two of its members introduced the same day, according to a spokeswoman in Nelson's Washington office.

She said the bill from Sens. Pete V. Domenici (R-NM), Jeff Bingaman (D-NM), James M. Talent (R-Mo.), and Byron L. Dorgan (D-ND) would affect some 4 million acres in the Sale 181 area.

Virginia and Alaska
The draft, the second of four public steps MMS is taking to develop its July 2007-June 2012 OCS plan, also calls for the agency to study the potential for oil and gas development off Virginia and an undeveloped North Aleutian basin area off Alaska.

MMS Director Johnnie Burton said the idea of leasing federal acreage off Virginia coast is a response to discussion in the commonwealth's legislature.

"However, no offshore development will occur off of Virginia unless the state's congressional delegation works to lift the moratorium," she said.

In a Jan. 10 report to the General Assembly, Virginia Commerce and Trade Secretary Michael J. Schewel said the commonwealth should allow exploration for natural gas under specific conditions (OGJ Online, Feb. 6, 2006).

These include an ample environmental assessment, with full public comment; consideration of impacts of an oil spill if commercial oil is discovered; drilling of no wells closer than 50 miles from the coastline; and location of all onshore oil and gas facilities away from Virginia's eastern shore, which depends heavily on tourism.

"MMS must have a leasing plan in place if Virginia seeks to end the moratorium and encourage offshore oil and gas development," Burton said.

She said the draft also included the North Aleutian basin because Alaska requested that the area undergo further analysis.

MMS said the draft program proposes 21 lease sales in seven of the 21 OCS planning areas, some of which are also included in the current 5-year program. The agency is taking comments for 60 days following the program's publication in the Federal Register.

At the same time, MMS has conducted an inventory of OCS oil and gas resources as ordered in the Energy Policy Act of 2005. It estimated that there are 85.9 billion bbl of oil and 419.9 tcf of gas as undiscovered resources that are technically recoverable from all federal OCS areas.

The estimates for both oil and gas increased about 15% from 2001 figures, it said.

The next step in developing the new 5-year OCS leasing program will take place this summer when MMS issues a proposed program and draft environmental impact statement (EIS) for a 90-day public comment period.

It then will issue the proposed final program and EIS during the winter of 2007 for a 60-day comment period before approving the final program.

Other reactions
House Resources Committee Chairman Richard W. Pombo (R-Calif.) applauded the Bush administration for "taking decisive steps to reduce our foreign energy dependence by increasing supplies of American energy" in the OCS leasing proposal.

But he said more needed to be done. "I believe coastal states deserve full and complete control over energy production in the deep waters off their coasts. My Ocean States Option gives the states this power to produce or protect as they see fit," he said.

Pombo suggested that a fair OCS plan would give each coastal state the choice of developing energy resources off its shores or "strengthen the existing moratorium on ocean energy production, rather than fall subject to the whims of Washington, DC. My plan meets all of these needs."

Oil and gas trade associations also responded. "The 5-year proposed program recognizes that the nation must expand the development of offshore energy resources. It's a step in the right direction," said Mike Linn, chairman of the Independent Petroleum Association of America.

"As consumer demand for oil and natural gas rises, the country must meet the supply challenges by securing reliable energy from America's own reserves. Offshore oil and gas producers are ready to meet this challenge but need the federal government to open up the areas that are currently off-limits," he said.

The American Gas Association said the draft would help reduce prices by getting more gas to market but called for its expansion.

Tom Moskitis, AGA's managing director for external affairs, said US homeowners and businesses pay more for gas than nearly anyone else in the world because producers can't keep pace with rising demand.

Contact Nick Snow at [email protected].