NGI The Weekly Gas Market Report / NGI All News Access

Interior Starts Process to Open OCS to Auctions, Drilling

August 4, 2008
/ Print
| Share More
/ Text Size+

Saying he was responding to the recent leap in gas prices and President Bush's lifting of the executive ban on oil and gas leasing operations on the Outer Continental Shelf (OCS), Secretary of the Interior Dirk Kempthorne Wednesday afternoon said he was directing the Minerals Management Service (MMS) to begin preparations of a new five-year offshore oil and gas lease program that could include energy development throughout the OCS.

The multi-year process was set to start on Friday, when the MMS published a call for information for the development of the new five-year program in the Federal Register, Kempthorne said.

"When our current five-year program for Outer Continental Shelf oil and gas leasing was launched in July 2007, oil was selling for $64 a barrel," Kempthorne said. "Today a barrel of oil costs more than $120, almost double the price a year ago. Clearly, today's escalating energy prices and the widening gap between U.S. energy consumption and supply have changed the fundamental assumptions on which many of our decisions were based.

"Areas that were considered too expensive to develop a year ago are no longer necessarily out of reach based on improvements to technology and safety. The American people and the president want action and this initiative can accelerate an offshore exploration and development program that can increase production from additional domestic energy resources."

The announcement came little more than two weeks after Bush issued an executive order removing the executive ban on oil and natural gas drilling in much of the OCS (see NGI, July 21).

The president's action and the process Kempthorne has begun will not allow leasing on restricted areas of the OCS to proceed -- the Democratic-controlled Congress also must lift its 27-year-old ban to clear the way for exploration and production off the East and West Coasts and in the eastern Gulf of Mexico. Along with repealing the congressional OCS ban, Bush urged Congress to pass legislation to facilitate responsible offshore exploration. This legislation must allow states to have a say in what happens off their shores, as well as allow states and the federal government to share leasing revenues. He also called for Congress to take action to tap into the "extraordinary potential" of oil shale, open up oil-rich land in Alaska and expand domestic refining capacity.

The existing congressional moratorium prohibits exploration or production for oil and natural gas in approximately 85% of the OCS acreage. MMS estimates that the off-limits area may contain 76.5 Tcf of natural gas and 17.8 billion bbl of crude oil.

"The time for action is now. This is a difficult period for millions of American families. Every extra dollar they have to spend because of high gas prices is one less dollar they can use to put food on the table, or to pay the rent, or meet their mortgages. The American people are rightly frustrated by the failure of Democratic leaders in Congress to enact common-sense solutions, like the development of the oil resources on the Outer Continental Shelf," Bush said in Washington, DC, on Wednesday. "There are now just a couple of days left before Congress leaves for its August recess. Legislation to open up this offshore exploration is pending in both the House and the Senate -- all Democratic leaders have to do is allow a vote. They should not leave Washington without doing so."

If Congress were to lift its moratorium, the new plan could give the next administration a two-year head start on developing a new five-year program, and lease sales of OCS property could begin as soon as 2011, Kempthorne said.

Democrats and Republicans in both houses last week were deadlocked over amendments to anti-energy speculation legislation, with Republicans ratcheting up the pressure for Congress to lift the ban on oil and natural gas drilling in the much of the OCS (see related story). But the Democratic leadership, particularly in the House, refused to schedule a vote on OCS access legislation, despite repeated calls by President Bush to do so before the recess.

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus