Interior Secretary Kirk Kempthorne Friday approved the Minerals Management Service’s (MMS) five-year program (2007-2012) that calls for lease sales to be held in the eastern Gulf of Mexico, Alaska’s Bristol Bay area and offshore Virginia. The offshore leasing program has been the target of criticism by energy industry and consumer groups, who say it is far short of what is needed to meet increasing natural gas demand.

The program, which became effective July 1, schedules 21 lease sales over the five-year period — 12 of which are scheduled for the Gulf of Mexico, eight offshore Alaska (including Bristol Bay) and, at the request of the Commonwealth of Virginia, one in the Mid-Atlantic Planning Area, about 50 miles off the coast of southern Virginia. The lease sales could produce 10 billion barrels of oil and 45 Tcf of natural gas over 40 years, generating approximately $170 million in net benefits for the federal government, according to Kempthorne.

The program calls for 8.3 million acres in the Lease Sale 181 area in the eastern Gulf and in a tract south of Lease Sale 181 (181 South) to be made available for oil and gas leasing in the upcoming five years. The areas are believed to contain 2.8 Tcf of natural gas and a potential 637 million barrels of oil. President Bush signed a bill into law in December to open these areas to drilling (see Daily GPI, Dec. 21, 2006). MMS has scheduled a Central Gulf sale this year that involves a portion of the Lease Sale 181 area, and one lease sale in the eastern Gulf in 2008.

Interior has scheduled eight sales in Alaska — two in the Beaufort Sea, three in the Chukchi Sea, up to two in Cook Inlet and one in the North Aleutian Basin (Bristol Bay area) — in an area of about 5.6 million acres that was previously offered during Lease Sale 92 in 1985. There currently are no existing leases in the North Aleutian Basin, the agency said.

Bush in January lifted the presidential bans on drilling in the Bristol Bay area in the North Aleutian Basin of Alaska and 181 South area in the central Gulf, removing the last remaining obstacles to offering producers leases in the areas under the 2007-2012 leasing program (see Daily GPI, Jan. 10). The North Aleutian Basin Planning Area is gas-prone, with estimated technically recoverable, undiscovered natural gas resources of up to 23.38 Tcf, according to MMS.

The offshore Virginia lease sale is scheduled for late 2011. Drilling off the West and East coasts currently is prohibited by presidential and congressional bans. So the sale would take place only if the presidential prohibition is lifted and the congressional moratorium is discontinued in the Mid-Atlantic Planning Area, Kempthorne said.

The planning area excludes a 50-mile coastal buffer from leasing consideration as requested by Virginia, as well as a wedge-shaped no-obstruction zone to avoid conflicts with navigation activities in and out of the Chesapeake Bay.

The Virginia General Assembly has twice passed legislation supporting natural gas drilling off the state’s coast (see Daily GPI, Feb. 25, 2005). Last year, Virginia Gov. Timothy Kaine and state lawmakers agreed on a bill that would bar drilling within 50 miles of the state’s coastline.

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