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 is set to start on Friday, when the MMS will publish 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 Daily GPI, July 15).
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.
While some congressional Democrats are joining Republicans in their rallying cry for more OCS production, this may not be enough to push pro-OCS legislation through Congress this year. Blocking OCS legislation in the House and Senate are House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (R-NV), respectively. Reid said this week that despite his efforts to extend an olive branch, Republicans rebuffed his offer to allow votes on four GOP-backed amendments to the anti-energy speculation bill, including a proposal to expand oil and natural gas drilling in the OCS (see Daily GPI, July 30). The four Republican amendments focused on new OCS drilling; the development of oil shale in western states; construction of new nuclear facilities; and a broader piece of legislation (S. 2958) that, among other things, would allow coastal states to petition the federal government for an exemption from the moratorium on offshore drilling, and open up the coastal plain of the Arctic National Wildlife Refuge to oil and gas leasing.
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