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New MMS Draft 5-Year Plan Includes GOM Leasing 100 Miles Off Florida Coast

The Interior Department's Minerals Management Service (MMS) last week released for comment a draft proposal for its five-year, 2007-2012 Outer Continental Shelf (OCS) leasing plan that would expand the boundaries of its Central Gulf of Mexico (GOM) Planning Area closer to Florida, including about two million more offshore acres in the Lease 181 sale area that include "a lot of natural gas." The plan also proposes exploring the potential for development off the coast of Virginia, in the North Aleutian Basin off the coast of Alaska and far offshore in the Gulf south of Lease Sale 181.

However, the American Gas Association, American Chemistry Council (ACC), National Association of Manufacturers and Industrial Energy Consumers of America association all called the plan insufficient, saying the MMS should instead open all the other areas offshore that currently are off limits to producers because of high gas prices.

"MMS had a chance to introduce a leasing plan to make enough natural gas supply available to meet future demand growth, but they didn't do it," the ACC said in a statement on Friday. "Our nation has abundant, proven natural gas supplies available in the Outer Continental Shelf. These supplies belong to America's citizens to meet their critical needs. Yet once again, they remain mostly off-limits in the MMS plan."

The draft leasing plan proposes realigning the boundaries of its Central GOM Planning Area to correspond with new federal OCS offshore administrative areas announced in early January, which have drawn loud complaints -- and countering legislation -- from Florida senators (see NGI, Jan. 30). Under the contemplated revision, the line between the central and eastern Gulf would be drawn 100 miles off the coast of Florida and there would be no leasing in the new Eastern Gulf area adjacent to Florida.

MMS Director Johnnie Burton defended the new administration boundary. "When somebody says, 'We don't want any drilling offshore Florida,' you tell me what is offshore Florida? Where does it stop? How far does it go? We needed to have some parameters. We do now." Drilling in the previously leased portion of Lease Sale 181 has provided new information about the potential for the expanded area, which MMS now estimates has a potential for 330 million barrels of oil and 3.4 Tcf of natural gas. "We're fairly comfortable with the resource estimates. There's a lot of natural gas," Burton said.

The two million acres proposed to be added to the Lease 181 sale are not under any moratoria and could be leased as early as August 2007, soon after MMS has its new Five-Year Plan in place. Burton said the proposed leasing would not interfere with military readiness or the military training area. Questioned during a briefing for reporters as to whether the MMS proposal was influenced by either of the two bills recently introduced in the Congress by opposing sides in the OCS leasing and drilling debate, Burton pointed out that the MMS plans have been under way for some time. She said the MMS proposal contains more acreage for leasing than proposed in one bill and less than is proposed in the other.

A bill proposed by New Mexico's Democratic and Republican senators last Tuesday would instruct the secretary of the Interior to develop an oil and gas leasing program for an expanded Lease Area 181 that can extend up to a line 100 miles off the Florida coast and west of the Military Mission Line. The 100-mile exclusion includes the area commonly known as "the Stovepipe." The bill also places special conditions on any leasing east of the Military Mission Line. Leasing in that area can only proceed with the permission of the Secretary of Defense and only after he has reviewed proposed lease conditions to make certain the lease does not interfere with military activities in the area. The Senate Energy & Natural Resources Committee will hold a hearing on the bill later this month.

"This bill does not in any way alter the moratorium law on the OCS. The areas cited in this bill are not under moratorium," co-sponsor Sen. Pete Domenici, D-NM, said. "This bill will not interfere with the viewscapes from the coast, the environment or the military activity in the area. Opening this area is our best opportunity to bring a lot of gas to market swiftly and make a real difference with supply and price."

The Domenici bill follows on legislation revealed earlier in the month by the two Florida senators that would permanently ban oil and gas drilling in waters ranging from 150 miles to 260 miles off the shores of the Sunshine State. The prohibition would stay in place even after the existing presidential and congressional moratoria against drilling in the eastern Gulf expire.

MMS also is proposing to include in the lease plan a deepwater area south of Lease Sale 181 which is about 6 million acres, or three times the added 181 area, and which is "a long way from any state." That area is currently under both congressional and presidential restrictions on leasing, but MMS considers it a good prospect because of its distance from land, and at the same time it is close to known resources.

Likewise the OCS area off Virginia and in the North Aleutian Basin are currently under leasing moratoria, but are proposed for inclusion in the plan in the event that Congress and the president lift their restrictions.

The plan is under development and comments will be reviewed by the MMS for "refinements." Burton said she expected extensive dialogue with all interested parties as well as environmental impact studies. The proposed program then will be released again for additional public input.

"This is the step in the process where we put out our initial ideas for study and public comment."

Questioned as to why MMS had backed off leasing the added area in Lease Sale 181 four years ago, she said "The balance has shifted some. We are now getting to the point where we need to look at other sources. With sharply higher energy prices buffeting both families and businesses, we want to be sure that we fully consider the environmentally sensitive development of the vast domestic oil and gas resources off our coasts.

"A very big part of what our nation has in resources is in the OCS." Estimates are there are "86 billion barrels of oil and 420 Tcf of natural gas that are technically recoverable, and at least half of that is in the Gulf of Mexico," Burton said.

"The idea of leasing federal waters off the coast of Virginia comes in response to discussion in the state's legislature about the potential of energy development off its coast," Burton said. "However, no offshore development will occur off of Virginia unless the state's congressional delegation works to lift the moratorium. MMS must have a leasing plan in place if Virginia seeks to end the moratorium and encourage offshore oil and gas development."

The previously undeveloped area in the North Aleutian Basin is also included in the proposed draft because the State of Alaska requested that the area undergo further analysis.

Current presidential withdrawals or congressional moratoria have placed more than 85% of the OCS around the Lower 48 states off limits to energy development, including all areas off Virginia. The administration has indicated support for the moratorium, but will give great weight to the comments from adjacent coastal states.

Overall, the draft program proposes a total of 21 OCS lease sales in seven of the 26 OCS planning areas, some of which are also included in the current five-year program for 2002-2007. The proposed acreage is greater than in the current plan.

Concurrently, and as directed by Congress, an inventory of oil and gas resources on the OCS has been conducted. MMS estimates of undiscovered resources are 85.9 billion barrels of oil and 419.9 Tcf of natural gas that are technically recoverable from all federal offshore areas. The estimate for both oil and gas increased about 15% compared to the 2001 report.

"The offshore energy industry has compiled an outstanding safety record that allows development of these resources without significant risk to the environment," Burton said, citing last year's hurricanes as evidence of the industry's ability to withstand even major hurricanes with no significant pollution from producing facilities.

"Two major hurricanes passed through the Gulf of Mexico last year without causing a single significant spill from Outer Continental Shelf wells," she said. "Overall, roughly 150 times more oil seeps into U.S waters from natural cracks in the seabed than is spilled from oil and gas activities on the Outer Continental Shelf."

The 2007-2012 OCS oil and gas leasing program will be the seventh prepared since Congress passed the OCS Lands Act in 1978. The current program runs through June 30, 2007.

The request for comments on the draft proposed program and notice of intent to prepare an associated environmental impact statement were submitted for publication in the Federal Register Feb. 8. The following is the schedule for preparing the 2007-2012 five-year program:

Comments regarding the draft proposed program are due 60 days after the notice appears in the Federal Register and may be submitted by mail to the address below or through MMS's Internet commenting system, OCS Connect, where it is possible to download the draft proposed program document, review five-year program maps and fact sheets and submit comments at http://www.mms.gov/5-year/2007-2012main.htm

A copy of the draft proposed program also can be obtained by calling (703) 787-1215 and comments also may be mailed to Renee Orr, 5-Year Program Manager, Minerals Management Service (MS-4010) Room 3120, 381 Elden Street, Herndon, VA 20170.

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