The Independent Petroleum Association of America (IPAA) and three other industry groups have expressed concern that the increase in construction of offshore liquefied natural gas (LNG) facilities may lead to a withdrawal of available offshore leases from future federal government sales, as well as impact existing oil and natural gas leases.
“We are increasingly concerned about the possibility that tracts may be withdrawn from future Gulf of Mexico lease sales, or that existing leases may be impaired at the request of some LNG import proponents,” wrote the IPAA, Domestic Petroleum Council, International Association of Drilling Contractors and International Association of Geophysical Contractors last month in a joint letter to Interior Secretary Gale Norton and Homeland Security Director Tom Ridge.
Interior’s Minerals Management Service (MMS) administers offshore oil and gas sales in federal waters, while the Department of Homeland Security administers the U.S. Coast Guard, which issues permits for offshore LNG facilities.
“As national associations representing those on the leading edge of geoscience evaluation, exploration, development and production to provide natural gas and oil from the Outer Continental Shelf of the Gulf of Mexico, we and our members understand the need for imported LNG to complement domestic supplies of natural gas. We also support building the infrastructure to provide needed imports,” the four industry groups said.
But “what we do not support and will actively oppose is any process that allows LNG proponents to receive lease tract sale withdrawals, stipulations or other restrictions without full disclosure of what is being requested, and an opportunity to comment [publicly] on such requests and have our comments fully considered in advance of decisions related to them,” they said.
Absent full disclosure and the ability to publicly comment, “our members may see millions of dollars of pre-lease sale seismic and other geoscience investment and evaluation wasted.” Moreover, “a single withdrawn tract could put billions of cubic feet of natural gas resources off limits — in areas not otherwise subject to statutory or administrative moratoria,” the groups wrote.
Citing MMS as the source, the IPAA reported two leases were withdrawn from a recent Gulf of Mexico lease sale to make room for an LNG terminal off the coast of Louisiana.
“We have some concern that this is going to be a continuing problem,” said Dan Naatz, IPAA’s director of federal resources. He noted that IPAA and the others have met already with MMS to discuss the issue, and are trying to set up a meeting with the Coast Guard. The groups want to make sure that offshore leases aren’t pulled from future sales without first being “fully considered and vetted.”
Neither Norton nor Ridge have responded to the letters yet, according to Naatz.
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