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Republicans Urge Salazar Not to Delay '181 South' Lease Sale

A coalition of 15 House Republicans led by Rep. Doc Hastings of Washington sent a letter to Interior Secretary Ken Salazar Thursday urging him to move forward with a planned lease sale in "one of America's best untapped" offshore regions -- 181 South in the Central Gulf of Mexico -- later this month.

"I and a number of my colleagues are sending [a letter] to Secretary Salazar stressing the importance of moving forward with this critical lease sale," said Hastings, the ranking Republican on the House Natural Resources Committee, during an energy and minerals resources subcommittee hearing on federal onshore and offshore resources.

"The secretary's recent actions...revoking leases in Utah, reinstating the moratoria on the OCS [Outer Continental Shelf] by delaying the five-year plan and stopping the oil shale research in its tracks in the Mountain West...[show] a clear trend against oil and gas development," Hastings said.

"So my colleagues and I are concerned that should the department act to delay the Central Gulf oil and gas Lease Sale 208, it will further establish a dangerous trend of blocking new American-made energy and the creation of new American jobs."

The Central Gulf sale, which is scheduled for March 18, is the largest annual oil and gas lease sale held by the United States. For the first time since 1988, the sale will offer the "181 South" area consisting of more than 4.2 million acres as mandated by the Gulf of Mexico Energy Security Act of 2006. Interior's Minerals Management Service estimates that the sale could result in production of about 0.8 to 1.3 billion bbl of oil and 3.3-5.4 Tcf of natural gas.

"Failure to move forward with the lease sale at this critical juncture may threaten not just future leasing in this area of the Gulf, but our entire OCS program...If these companies no longer trust that the government will hold the lease sales that it announces, many will not longer bid or they will reduce their bids, resulting in lower government receipts and less energy produced," the House lawmakers said.

In addition to Hastings, other Republicans signing the letter were Reps. Doug Lamborn of Colorado, Rob Bishop of Utah, Louie Gohmert of Texas, John Fleming of Louisiana, Jeff Flake of Arizona, Don Young of Alaska, Paul Broun of Georgia, Cathy McMorris Rodgers of Washington, Mike Coffman of Colorado, Bill Cassidy of Louisiana, Jason Chaffetz of Utah, Elton Gallegly of California, Cynthia Lummis of Wyoming and John J. Duncan Jr. of Tennessee. All are members of the House Natural Resources Committee, and most represent energy-producing states.

Hastings further blasted the cap-and-trade tax plan proposed in President Obama's budget, which he said amounted to a $646 billion cost being imposed on energy and the economy. "The federal government is going to purposely increase energy prices."

Dr. Howard K. Gruenspecht, acting administration of the Energy Information Administration (EIA), told the House subcommittee that the "OCS is expected to remain a substantial contributor to domestic crude oil and natural gas supply" over the next several decades.

By 2030, he said offshore crude oil production in the Lower 48 region is expected to double to 2.7 million b/d, while total offshore natural gas production in the Lower 48 region is projected to rise by nearly two-thirds to 4.9 Tcf. Oil output in the OCS was 1.3 million b/d in 2007, and gas production was estimated at 2.8 Tcf down from 5.1 Tcf in 1997, Gruenspecht said. He expects offshore output to begin rising in the near-term as new projects begin operations.

If either Congress or the president should restore the moratorium in the federal OCS, he said oil production in the OCS would be 560,000 bbl/d less than what the EIA has projected for 2030, and the projected offshore gas output would drop 800 Bcf but onshore production would increase 230 Bcf in 2030.

The EIA estimated that the unproduced, technically recoverable gas reserves in the OCS are approximately 456 Tcf, of which 76 Tcf lies in areas that had been covered by the moratorium.

The agency expects domestic production on federal lands to increase over the next couple of decades. In 2007, 32% of U.S. oil produced came from federal lands, while 29% of gas production was on federal lands, Gruenspecht said. The total amount of U.S. oil and gas produced on federal lands is expected to grow to 47% and 36%, respectively, by 2030.

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