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Murkowski Knocks 'Use It Or Lose It' Lease Proposal

Sen. Lisa Murkowski, the outspoken Republican from Alaska, called on Congress to "recognize 'use it or lose it' [legislation] for what it is -- it is an attempt to extract more money from the companies, not to extract more energy from the ground."

Speaking from the Senate floor Tuesday, she said "until we see some evidence that companies are refusing to develop their leases, I have to call it like I see it. 'Use it or lose it' is a ploy [by some lawmakers] to claim that we support increased domestic production, without doing anything to ensure that domestic production is the actual result of our federal energy policies."

In March Reps. Edward Markey (D-MA) and Rush Holt (D-NJ) introduced legislation to establish an escalating fee on the "tens of millions of acres of public lands" that oil and natural gas producers have under lease but which are not producing (see Daily GPI, March 4). And as part of its fiscal year 2012 budget, the Bureau of Land Management has proposed a $4/acre fee to encourage the industry to develop leases in a timely manner (see Daily GPI, Feb. 15).

The Obama administration proposed such a fee last year, and Markey has been unsuccessful in his attempts to push the so-called "use it or lose it" legislation through Congress in past years (see Daily GPI, April 1, 2010; Jan. 19, 2007).

Interior Secretary Ken Salazar "could not assure me that the so-called 'use it or lose it' fee would not apply to the millions of acres of leased land in Alaska, both onshore and offshore, where the federal government has sold leases but is not allowing drilling activity," Murkowski said. She noted that Shell Oil spent more than $4 billion to buy federal acreage in Alaska's Outer Continental Shelf about seven years ago, but since that time it "has done nothing but slog through an incredibly long and incredibly arduous permitting process."

So "can anyone honestly suggest we ought to punish Shell or any company that is going through this for the federal government's failure to allow even exploratory drilling to proceed?" she asked.

According to a report issued by the Interior Department last Tuesday, more than two-thirds of the offshore oil and natural gas leases in the Gulf of Mexico and more than half of the onshore leases on federal lands remain idle (see Daily GPI, March 30). The department included in its definition of definition of idle the leases where seismic work and other development activities are occurring. Murkowski and the oil and gas industry, as well as some Interior sources, took issue with the definition.

"The findings of the Interior Department's report, I believe, defy common sense...the definition of 'inactive' purposely excludes many important development activities, and there is no acknowledgment that oftentimes it is the government itself that is causing the delays in drilling," she said.

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