Industry Dubs MMS 5-Year Leasing Program 'Too Conservative'

Intelligence Press

A proposed program by the Minerals Management Services (MMS) for five-year leasing (2007-2012) on the federal Outer Continental Shelf (OCS) is "much too conservative," said seven energy-related associations in joint comments filed with the agency.

The associations said they "strongly support" the Interior Department agency's decision to include several key offshore areas in its proposed program, such as areas in the central and western Gulf of Mexico, Cook Inlet, Beaufort Sea, Chukchi Sea and North Aleutian Basin in Alaska, as well as a small area offshore Virginia. "However, we reiterate our concern that the agency is being much too conservative, only proposing to possibly lease less than 12% of the 1.7 billion acres it manages," they said.

"We urge the agency to expand the potential lease sale areas to include all areas of the OCS where there is an interest in hydrocarbon development. In particular, we strongly urge the agency to include all of the area in the 'original sale 181 area' [in the eastern Gulf] rather than just the bulge area, as well as all of the area off the East Coast," noted the groups, which included National Ocean Industries Association, Domestic Petroleum Council, Independent Petroleum Association of America, International Association of Drilling Contractors, Natural Gas Supply Association, Petroleum Equipment Suppliers Association and the U.S. Oil and Gas Association.

"Area-wide lease sales should be continued in the Gulf of Mexico, and scheduled for any other areas possible. Where area-wide leasing may not be possible, the agency should schedule focused leasing for particular areas. For areas that are currently unavailable due to temporary administrative or legislative restrictions, the five-year program should be structured in the manner described in the proposed program, with sales only going forward in those areas if the restrictions were lifted before the analysis and sale process was scheduled to begin. Finally, we urge the agency to make the new plan as flexible as possible, so that the federal government will be nimble in responding to changing circumstances and needs of the country."

Hurricanes Katrina and Rita in 2006 "demonstrated the shortsightedness of limiting our energy production to one small area of the OCS, and the foresight of Congress when it required in the OCSLA [Outer Continental Shelf Lands Act] that there be an 'equitable sharing' among the offshore regions" of the developmental benefits and environmental risks associated with offshore drilling, the groups said.

"We urge the agency to learn from the lessons of Katrina and Rita as it develops the new five-year program, and give the plan maximum flexibility, adding to the areas included in the proposed program, in order to respond to our nation's energy needs, economic growth and national security during the period of 2007-2012," they noted.

In choosing among the eight alternatives identified in the draft environment impact statement on the proposed OCS program, the seven groups said they favored Alternative 1, which calls for 21 lease sales to be held during the five-year period, including six in the central Gulf (one of which will be a sale in part of the 181 area); five in the western Gulf; two in the Beaufort Sea; three in the Chukchi Sea; two in the North Aleutian Basin; two in Cook Inlet; and one in the Mid-Atlantic offshore region. This option "comes closest to meeting the requirements of the OCSLA," the groups said.

"However, we believe that the range of alternatives should also include at least one option for analysis that would propose leasing additional portions of the OCS, particularly more areas in the Atlantic and at least a portion of the eastern Gulf of Mexico."

The industry groups pressed the MMS to be more aggressive with leasing in the Lease Sale 181 area. " the [central Gulf] sale proposed for 2007 for a portion of the 'original sale 181 area,' but strongly recommend that the agency increase the acreage proposed for that sale and for future sales in this area to include the entire 'original sale 181 area' that was specifically identified for leasing by the previous administration because of its importance to national energy supply," they said.

"This is an area that holds great potential for future oil and natural gas finds. It may hold over 12 Tcf of natural gas, a significant resource with the potential to fuel agricultural fertilizer production, numerous domestic industries and millions of American households. Since the area is so close to existing infrastructure, it is also the quickest way to bring new supplies of energy to the American people. And there is bipartisan support for leasing this area, as evidenced by votes in both houses of Congress."

The groups said they opposed the agency's proposal not to analyze any areas in the eastern Gulf for inclusion in the five-year OCS program. "While most of the area is under withdrawal, it is an area of high resource potential and should be included in the plan for analysis so that the program will be more flexible. In particular, we strongly object to the proposal to not include and analyze the portion of the 'original sale 181 area' that is still in the eastern Gulf of Mexico Planning Area."

The seven groups commended MMS for including a small portion of the Mid-Atlantic Planning Area (offshore Virginia) in the proposed program, and for proposing one special interest sale in 2011. "However, we strongly object to limiting the area to this one small section. The entire Mid-Atlantic region should be included for analysis," they noted.

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