MMS Proposes 20 Lease Sales in OCS Between '02-'07

In a draft proposal released Friday, the Minerals Management Service (MMS) said it wants to hold 20 oil and natural gas lease sales in the federal Outer Continental Shelf between 2002 and 2007. The "Draft Proposed Outer Continental Shelf Oil & Gas Leasing Program" will be officially published in today's Federal Register, but an advance look suggests sales in the Gulf of Mexico's Western, Central and parts of the Eastern planning areas, as well as Alaska's Beaufort Sea, Norton Basin, Cook Inlet/Shelikof Strait and the Chukchi Sea/Hope Basin.

Notably, the draft proposal does not include any areas currently under moratoria or presidential withdrawal.

"We are proposing to hold 20 offshore lease sales during the next five years in an effort to help this country meet its energy demands of the future," said MMS' Tom Kitsos, the acting director. "Even with increased conservation efforts, we are confronted with a national energy problem where our dependence on foreign oil will continue as well as increased reliance on natural gas -- an environmentally preferable fuel primarily produced domestically."

In the next 20 years, U.S. oil consumption is expected to rise 33%, while natural gas use will grow more than 50%, and electricity demand will rise 45%, said Kitsos. "As we prepare for the 2002-2007 leasing program, we will work in conjunction with our constituents to develop a program that is environmentally responsible and offers a judicious approach toward advancing an important part of our national strategy for energy dependence."

Under law, the MMS prepared the five-year program to succeed the current one ending June 30, 2002. The draft program is only the second step of the planning process. After considering what it said were more than 10,000 comments from businesses, regulatory officials and environmental groups, MMS developed the new draft.

The MMS received comments and suggestions from nine major energy companies and several industry groups before issuing the draft proposal last week. Among those companies offering suggestions for the leasing program, which will cover parts of the Gulf of Mexico and Alaska, were Exxon Mobil Corp., Devon Energy Corp., Chevron, Phillips Alaska, BP Amoco Vastar, Shell Corp., Texaco Corp., Anadarko Petroleum Corp. and Chevron USA Production Co.

Gary L. McGee, vice president of government relations for Oklahoma City-based Devon, said that his company wanted MMS to consider at a "minimum, two lease sales per year, one for all leases in the Central Gulf of Mexico Planning Area, and one for all leases in the Western Gulf of Mexico Planning Area." Devon also is pushing for two other sales in the Eastern Gulf, and "not just the lands included in proposed Sale 181," the area of so much recent controversy.

Exxon Mobil's Carlos A. Dengo, area manager for the United States and Mexico, told the MMS in a letter that it should "consider offering larger blocks in frontier areas with the goal of making high risk exploration acreage in the United States available on a size-competitive basis with acreage position offered in most other countries." Similar to other comments, Dengo said MMS's program should "minimize interference with the free market system, be reliable, predictable and offer quality acreage on an area-wide basis, while promoting the use of new play/geologic ideas and technology."

The MMS solicited input last December from all stakeholders as part of its process to prepare the new OCS leasing program. The OCS Lands Act requires the Interior Department to prepare and maintain a five-year program, and this one will succeed one that runs from 1997 through June 30, 2002. The next leasing program will be the sixth prepared under the Act, which was enacted in 1978, and will establish the size, timing and location of OCS leasing.

By year, the proposed areas for lease sales are as follows: 2002 in the Western Gulf of Mexico; 2003 in the Central Gulf of Mexico, Beaufort Sea, Western Gulf of Mexico, Norton Basin and Eastern Gulf of Mexico; 2004 in the Central Gulf of Mexico, Cook Inlet/Shelikof Strait, Western Gulf of Mexico and Chukchi Sea/Hope Basin; 2005 in the Central Gulf of Mexico, Beaufort Sea, Western Gulf of Mexico and Eastern Gulf of Mexico; 2006 in the Central Gulf of Mexico, Cook Inlet/Shelikof Strait and Western Gulf of Mexico; and 2007 in the Central Gulf of Mexico, Beaufort Sea and Chukchi Sea/Hope Basin.

MMS will conduct a 90-day waiting period with the draft's release, and will issue the final program in January 2002. Following a 60-day waiting period, the five-year program is expected to be approved in March 2002. To comment on the proposal published in the Federal Register, send an e-mail to MMS5-year.document@mms.gov, or send comments to 5-Year Program Manager, MMS (MS-4430), 381 Elden St., Herndon, VA 22070. To learn more about the proposal, visit the web site at www.mms.gov.

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