Pointing to the slower pace of leasing for oil and natural gas in the first year of the Obama administration, an official with an independent producer association said Interior Secretary Ken Salazar’s tirade against oil and gas associations Tuesday was unjustified.

Salazar hammered the associations for uttering “untruths” about the department’s onshore and offshore leasing programs. His remarks came during a teleconference with reporters announcing that Interior plans to hold 38 quarterly oil and natural gas lease sales for onshore public lands in 2010 (see Daily GPI, Nov. 25). He said the associations were acting like an “arm of a political party” during an election year by “repeatedly” launching attacks against the department.

The industry claims its criticisms are based on the facts. “We have been concerned about the pace of leasing since the cancellation” in February of the 77 Utah leases issued during a late 2008 auction, “which Salazar said was a midnight decision” of the Bush administration that was rushed through without a proper environmental review, which “wasn’t true,” said Dan Naatz, vice president of federal resources for the Independent Petroleum Association of America (IPAA). “I think it was indicative of the strategy that they were going to move forward with out of the box…It was pretty blatant,” he told NGI (see Daily GPI, Feb. 5).

Naatz said he thought Salazar’s attack on oil and gas associations was prompted by the results of a recent position paper by the Independent Petroleum Association of Mountain States (IPAMS), which found that the Obama administration in its first year issued 1,934 fewer leases and leased 1,146,949 fewer acres in the Intermountain West than during the first year of the Clinton administration. Salazar contends that the leasing program has been “robust” in the first year of the Obama administration.

“The facts speak for themselves,” Naatz said. “I think they [the Obama administration] will make it more difficult and costly to drill” on federal lands in the Intermountain West,” which will take a toll on independents.

Salazar said 26 million acres of leased public land and 28 million acres of leased ocean currently are idle. However, producers are not sitting on their leases, as some in the administration and on Capitol Hill contend to justify arguments that no new lands should be opened for oil and gas development, countered Naatz. “That’s a “tired argument,” he said. After having paid “huge amounts” to lease land and on rental rates, “companies are out there working their leases.”

To avoid a repeat of the Utah auction debacle, “we believe that industry deserves greater certainty when they go into [a] lease auction. They should never be given the false promise of a lease parcel next to a national park,” Salazar said. “The reason that there is uncertainty [now] is because of the fact in [the] prior administration there were shortcuts taken,” such as leasing parcels next to national parks.

IPAMS said it believes both producers and Interior need to be held accountable to the public. “We are all accountable to the American public to ensure that responsible development occurs. As such, we don’t believe it’s unreasonable to ask the Department of Interior to explain the rationale for its decisions and express concern when trends are not headed in the right direction.

“The management of federal energy resources has profound implication for the cost of energy, job creation, revenue growth and economic activity. We were very encouraged to hear that Secretary Salazar believes ‘it is important for the oil and gas industry to have certainty.’ We look forward to meeting with Department of Interior to explore ideas about how America can more responsibly develop its federal energy resources,” IPAMS said.

The American Petroleum Institute (API), which represents major producers, echoed the sentiment. “While we appreciate the already anticipated lease sale announcement for 2010, the oil and natural gas industry, which supports 9.2 million American jobs, believes more can be done to expand the economy and create new jobs,” said API President Jack Gerard.

“We want to be part of the solution and a constructive partner in a comprehensive energy policy that could create over a hundred thousand new jobs and we are ready to meet with Secretary Salazar to help advance our shared objectives,” he noted.

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