Bush lifts leasing bans on two OCS areas

Jan. 10, 2007
US President George W. Bush has opened two Outer Continental Shelf areas for new oil and gas leasing after removing tracts in Alaska's North Aleutian basin and the Central Gulf of Mexico from the presidential withdrawal list.

Nick Snow
Washington Correspondent

WASHINGTON, DC, Jan. 10 -- US President George W. Bush has opened two Outer Continental Shelf areas for new oil and gas leasing after removing tracts in Alaska's North Aleutian basin (more commonly known as Bristol Bay) and the Central Gulf of Mexico from the presidential withdrawal list.

Bush announced the action in a memorandum to Department of the Interior Sec. Dirk A. Kempthorne, who immediately said the areas would receive thorough environmental reviews.

"There will be significant opportunities for study and public comment before any oil and gas development could take place in these areas," Kempthorne said.

Sen. Ted Stevens (R-Ak.) said Bush's action was welcome news to people who live and work in the Bristol Bay region. He said he originally requested a moratorium on leasing there during fiscal 1990 after the tanker Exxon Valdez ran aground in 1989 in Prince William Sound farther south. President George H.W. Bush subsequently issued an executive order prohibiting leasing in Bristol Bay, which President Bill Clinton extended through 2012, Stevens said.

Congress also continued to impose moratoria on oil and gas activities in Bristol Bay from fiscal 1990 through 1993 before discontinuing them in fiscal 1994 at Stevens' request, he said. But the moratorium's removal did not clear the way for leasing, Stevens noted. That required a presidential order, which George W. Bush issued on Jan. 9.

Stevens said imported farmed salmon, high energy costs, and the area's remoteness have limited economic growth and contributed to poverty in the Bristol Bay region.

'New opportunities'
"The possibility of oil and gas development in Bristol Bay presents a series of new opportunities to the people of this region. Equally important, offshore development in Bristol Bay will occur under stringent environmental safeguards, using the most advanced technology available to help ensure our fisheries are protected," he said.

"This is not the end of the public process, but rather the start of a dialogue that could lead to important energy development in our state. It is vital for Alaskans to express their views on the upcoming Environmental Impact Statement regarding the 5-year schedule, as well as take advantage of future public comment periods," added US Sen. Lisa Murkowski (R-Ak.).

She said she had spoken with Kempthorne about Bristol Bay's environmental sensitivities and its world-leading sockeye salmon runs. "During those conversations, I received an assurance from the secretary that if leasing is ultimately proposed for the waters, that it will only be conducted with stringent environmental safeguards to protect not just salmon, but also any crab, cod, Pollock and whales, marine mammals, and bird-life that live and pass through the Bristol Bay region waters," Murkowski said.

Last year then-Alaska Gov. Frank H. Murkowski and other local government and Alaska Native leaders said they would support modifying the presidential withdrawal, according to DOI.

Consequently, the 2007-12 OCS oil and gas leasing program, which the US Minerals Management Service is preparing, contains options for one or two lease sales in about 5.6 million acres of the North Aleutian basin, DOI said.

It said MMS previously offered leases in that part of Bristol Bay in OCS Lease Sale No. 92 in 1988. There presently are no oil and gas leases there.

Sale 181 South
The Central Gulf of Mexico tracts, more commonly known as the Sale 181 South area, comprises about 5.8 million acres and is included in both the MMS's proposed 5-year OCS plan and legislation passed by Congress and signed into law by Bush toward the end of 2006.

MMS is expected to release the final OCS program and environmental impact statement this spring, DOI said.

Kempthorne also announced on Jan. 9 that he has increased the royalty rate for most new offshore deepwater federal oil and gas leases to 16.7% (1/6 from the present 1/8). The new rate, which excludes Alaska, will take effect with the first 2007 Gulf of Mexico lease sale scheduled for late August.

Most federal oil and gas is leased at a 12.5% royalty rate both onshore and offshore, according to DOI. The Outer Continental Shelf Lands Act grants the secretary discretion to establish a higher royalty rate, it said.

It said MMS estimates the increased royalty rate for new deepwater offshore leases in the gulf will increase revenue from royalty payments by $4.5 billion over 20 years. MMS estimates that, by 2017, this increased revenue would offset any decline in bonus and rental revenues and any revenue losses from a decline in production.

MMS estimates a decline of bonus and rental revenues at $820 million over 20 years and decline in production at 5%, or 110 million boe, over 20 years, according to DOI.

Contact Nick Snow at [email protected].