President Bush handed the incoming Obama administration a political conundrum Friday as the U.S. Minerals Management Service (MMS) issued a draft five-year plan to allow oil and natural gas leasing in long-banned areas offshore. Obama, who previously voiced support for “responsible drilling” now has to decide whether to allow the draft plan to move forward, or explain how reinstating a decades-old moratorium would help the United States gain its independence from foreign energy supplies.

Congress last year allowed a federal moratorium on certain offshore drilling areas to expire (see Daily GPI, Sept. 30, 2008). When the moratorium lapsed, leasing then became permissible as close as three miles off of the Atlantic and Pacific coasts and most of the eastern Gulf of Mexico (GOM). The ban to protect Florida’s western coast remains in place until 2022.

MMS on Friday responded with a draft five-year oil and gas lease sale proposal for 2010-2015 to auction offshore drilling acreage in areas previously banned. The draft provides for 31 Outer Continental Shelf (OCS) lease sales in all or portions of 12 of the 26 federal planning areas. New areas proposed under the plan would include four areas offshore Alaska, two off the Pacific Coast, three areas in the Gulf of Mexico (GOM) and three in Atlantic waters.

“MMS has been working tirelessly to facilitate the responsible development of our domestic energy resources and expand our nation’s energy portfolio,” said MMS Director Randall Luthi. MMS has presented options for the next administration. The final decisions regarding the next steps are theirs.”

The draft proposed OCS oil and gas leasing program and a notice of intent (NOI) to prepare an environmental impact statement (EIS) for the program are to be published in the Federal Register Wednesday (Jan. 21) to begin a 60-day public comment period.

“We’re basically giving the next administration a two-year head start,” Luthi said. “This is a multi-step, multi-year process with a full environmental review and several opportunities for input from the states, other government agencies and interested parties, and the general public.”

By MMS estimates, the OCS contains around 420 Tcf of natural gas and 86 billion bbl of oil in yet-to-be-discovered fields. However, MMS acknowledged that the estimates may be conservative because exploration has been limited in most of the areas for more than two decades because of the federal restrictions.

In response to the lifting of the executive ban, industry already is submitting requests to MMS to conduct geological and geophysical studies, such as seismic surveys, in the Atlantic planning areas, MMS said. However, before a decision is made on the requests, MMS has to conduct environmental reviews required under the National Environmental Policy Act.

“In order to move forward with expanded exploration and development responsibly, we need current data,” Luthi said. “That is why we are also announcing [Friday] our intent to prepare a programmatic EIS to evaluate potential environmental effects of multiple geological and geophysical studies in the Atlantic OCS planning areas.”

The draft offshore leasing proposal and the NOI to evaluate the Atlantic OCS planning areas were two of three “significant milestones” issued by MMS Friday. The agency also issued an NOI for the final environmental impact statement (FEIS) for the Cape Wind Energy project offshore Massachusetts. The FEIS for the controversial Cape Wind Energy Project, a proposed 130-turbine wind farm, was filed with the U.S. Environmental Protection Agency earlier this month and was to be published Friday in the Federal Register.

Luthi also highlighted $3.8 million in fiscal year 2008 funding for environmental research related to offshore alternative energy development. MMS in November submitted the final rule for the OCS Alternative Energy Program to the Office of Management and Budget for review and approval (see Daily GPI, Dec. 10, 2008).

“While we anxiously await the publication of the final rule governing the OCS Alternative Energy Program, we are moving forward with important environmental work to ensure we have the best available scientific data upon which to base our decisions,” Luthi said. “As with the development of traditional sources of energy such as oil and gas, we must use a balanced approach to developing alternative energy resources, weighing the nation’s demand for energy with our responsibility to protect and preserve the environment.”

The American Gas Association (AGA) lauded the OCS plan, noting that it would open more federal offshore areas to energy exploration and potentially mitigate “energy woes” felt by those struggling with high utility bills. Because of the “current energy situation in the U.S., it is critical that the government allow access to domestic supplies in the OCS,” said AGA.

With natural gas demand projected to increase by more than 40% by 2025, supplies must be increased in order for AGA members to deliver gas to their nearly 70 million customers at a fair and reasonable cost, said AGA’s Rick Shelby, executive vice president of public affairs. “And by producing energy from federal lands, the U.S. will reduce its dependence on foreign sources of energy.”

The president of the National Ocean Industries Association (NOIA) also applauded MMS for the draft leasing program. NOIA’s Tom Fry said the action “marks the latest step in a multi-year effort to plan for safe development of our domestic offshore energy resources…The energy resources on the OCS are vital to the nation’s economic prosperity, and safety records show that they can be produced in an environmentally responsible manner.”

Information on the MMS draft proposal and the notices are available at

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