The U.S. Interior Department has proposed only 18 Outer Continental Shelf oil and gas lease sales in its new 5 year schedule.
Eleven of the sales are in the Gulf of Mexico, one off the East Coast, none off the West Coast, and six off Alaska.
Congress has 60 days in which to reject the 5 year lease sale plan but is not expected to. An earlier draft plan called for 23 sales (OGJ, Mar. 14, 1991, p. 16).
The Minerals Management Service, which administers the offshore leasing program, said the new schedule emphasizes leasing of gas prone areas.
Scott Sewell, MMS director, said, "We went after the areas with the highest potential."
He noted the present lease sale plan, covering 1987-92, had 38 sales offering 800 million acres, but only 18 were held. The proposed new 18 sale plan covers 207 million acres.
Sewell said, "This 5 year program is presented to the American people at a time when more than 50% of the oil we consume is imported ... Today costs of oil imports have risen to $51 billion/year, an amount equal to 77% of our nation's trade deficit.
"Most Outer Continental Shelf production is natural gas, which is safe, economical, and environmentally benign. Every cubic foot of gas and each barrel of oil we produce at home makes Americans less dependent on foreign sources.
"Production of natural gas and oil resources as outlined in the 5 year program will help maintain thousands of OCS related jobs in the U.S. Without this production, these jobs will be lost."
THE LEASING PROGRAM
The planned 1996 Mid and South Atlantic sale will offer 916 blocks for bidding, but no more than 250 will be sold.
Industry found significant-but uneconomic-gas volumes on the northernmost of those blocks in the late 1970s (OGJ, Apr. 30, 1979, p. 119).
Sewell called the gas structure, 65 miles off Delaware, "one of the largest potential natural gas prospects off the U.S."
The 1995 eastern Gulf of Mexico sale will not include 868 blocks within 10 miles of the Florida Panhandle shoreline.
No more than 200 blocks will be sold in the sale, all west of 84 W. Long. and north of 26 N. Lat.
Annual central and western Gulf of Mexico sales may feature more deepwater tracts in the future.
MMS dropped plans to lease 87 tracts off southern California in 1996 because it could not complete environmental studies in time.
David O'Neal, assistant Interior secretary for lands and minerals, said local sentiment is so strongly against offshore leasing "if you had a lease sale today on those 87 tracts off California, no one would come
Sewell said the Alaska sale schedule, although several sales smaller than last proposed, is "an aggressive program."
The Cook Inlet/Shelikof Strait offering will sell no more than 250 blocks, less than one fourth of the 1,093 blocks in the planning area.
In the St. George basin sale, MMS may decide not to issue leases within 50 miles of the Pribilof Islands for environmental reasons.
REACTIONS
Robert Stewart, National Ocean Industries Association president, said the new 5 year program is driven by politics that dictate ever decreasing OCS access in exchange for a perceived advantage at the polls.
He said although MMS will continue annual lease sales in the central and western Gulf of Mexico, it also needs to give industry more access to frontier areas.
"The sale schedule for the Mid and South Atlantic is a waste of time," Stewart said. Companies holding leases in that area have been blocked from exploring. Because some companies are seeking to recoup their losses and leave the area, it seems doubtful that others would rush in to take their places."
The American Petroleum Institute "reluctantly" supports the 5 year plan.
API said, "We are discouraged by a federal policy that closes promising areas to leasing and development on the basis of unfounded claims of environmental harm. The Gulf of Mexico is the source of 25% of domestic natural gas production and 15% of domestic oil production. In the absence of a more aggressive leasing program, the continuity of the existing program must be maintained.
"Clearly, our disappointment with the proposed leasing program is largely because it does not offer leasing opportunities in the most promising domestic OCS areas, such as California and Southwest Florida. The decision to exclude these areas from leasing constitutes a serious public policy error.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
