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Obama White House Favors 'Use-It-or-Lose-It' Approach to Leases

The new White House website, which debuted as President Obama took his oath last Tuesday, says the new president plans to eliminate oil imports within the next decade by, among other things, adopting a "use-it-or-lose-it" approach to existing oil and natural gas leases.

The "use-it-or-lose-it" strategy would force a producer to give up an existing lease that it was not actively pursuing so another producer could have a shot at the lease. House Democrats offered a bill last summer to adopt the "use-it-or-lose-it" approach for leasing, but it ultimately was defeated (see NGI, June 30, 2008). Democrats at the time argued that the oil and gas industry was sitting on 68 million acres of nonproducing leased public land.

Major producers, however, countered that Democrats' claims that producers are sitting on leases were groundless and reflected a lack of understanding of how the federal government's oil and gas lease system works. Oil and gas leases are options to explore, with no guarantee that they hold any commercial quantities of oil or gas, said a producer group, adding that "in fact, most don't."

As part of a comprehensive energy plan, the White House website also said Obama would promote responsible domestic production of oil and natural gas. In addition, it said construction of a long-line natural gas pipeline from Alaska's North Slope would be a priority of the new administration to bolster supply and create jobs.

To provide short-term relief to American families, the website said the Obama administration plans to crack down on excessive energy speculation, and to swap oil from the Strategic Petroleum Reserve to cut prices.

Obama's comprehensive energy plan further calls for 10% of the nation's electricity to come from renewable sources by 2012 and 25% by 2025; implementation of an economywide cap-and-trade program to cut greenhouse gas emissions by 80% by 2050; and $150 billion to be spent during the next decade to catalyze private efforts to build a clean energy future.

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