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Interior, API Square Off over Impact of Obama Policies on Leasing

The Interior Department and American Petroleum Institute (API) President Jack Gerard engaged in a war of words last Wednesday over the impact of the Obama administration's policies on the development of onshore and offshore oil and natural gas.

"Mr. Gerard needs to check his facts before making statements that are so far off the mark. Oil and gas production [in 2009] on federal lands and waters is up -- not down -- from 2008, and under Secretary [Ken] Salazar's leadership the department has offered more than 56 million additional acres for development," said Interior spokeswoman Kendra Barkoff.

"Mr. Gerard stands by his facts. Interior doesn't rebut one -- and can't. The bottom line is that Interior is not moving forward with leasing to provide for America's energy future...Interior's attack on the veracity of Mr. Gerard's comments is pure dissimulation [half truth]. It fails to address Mr. Gerard's point that leased acreage plunged in 2009 and concedes that lease revenues collapsed by more than 90% during the first year of this Interior Department," API countered.

The API-Interior exchange followed a teleconference briefing last Wednesday in which Gerard said the total amount of acreage leased in federal onshore and offshore areas "has shrunk to the lowest level on record." Interior responded that federal onshore and offshore oil production grew 14% to 544.3 million bbl in 2009 from 476.6 million bbl in the prior year, and natural gas production on federal lands grew to 6.6 Tcf last year from 4.95 Tcf in 2008.

Interior acknowledged that it collected less than $1 billion in revenues last year -- $136 million from 35 onshore oil and gas sales, and $801 million from two Gulf of Mexico lease sales.

"That's compared to $10 billion just one year before [in 2008]. So that's a 90% reduction in the revenue that comes to federal, state and local coffers," Gerard said.

Interior defended itself by saying that the $10 billion generated in 2008 by oil and gas lease sales "[was] an anomaly and [was] largely due to high prices on world markets."

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