Still reeling from the Bush administration’s decision last week to cut back on the eastern Gulf of Mexico acreage to be included in the upcoming Lease Sale 181, the National Ocean Industries Association (NOIA) says it’s now concerned that “even this vastly smaller Sale 181 region…is in grave danger of being placed off limits to development.”

The House last month adopted a rider to an Interior appropriations bill that would suspend all eastern Gulf lease sales — including 181 — until April 2002. The full Senate is expected to take up the spending bill later this week, and some Florida senators are considering offering amendments to block even the downsized Lease Sale 181 (See Daily GPI, July 5).

“The area remaining in Sale 181 is estimated to hold vital quantities of natural gas and oil that will be critical to maintaining a stable energy supply for Americans over the next decade. We ask that you and your administration work proactively to ensure that these tracts remain open for timely leasing and development,” wrote NOIA President Tom Fry in a July 6 letter to President Bush.

In a major concession to Florida, the Interior Department last week announced that it planned to limit drilling activity in the eastern Gulf to a 1.5 million-acre region, leaving producers only 256 blocks on which to bid during Lease Sale 181 that’s scheduled for December. The sale, which will be the first one in the eastern Gulf since 1988, originally had been sized at 5.9 million acres and covered 1,033 blocks (See Daily GPI, July 3).

Fry told Bush that NOIA was “greatly disappointed” by his administration’s decision to “drastically reduce” the offshore acreage to be made available to producers in Lease Sale 181.

The “administration’s decision to slash all of the shallow water, natural gas prone-tracts in the Sale 181 region will pose serious problems for our nation,” he warned. The National Petroleum Council “has forecasted a 33% increase in domestic natural gas demand over the next ten to 15 years,” but gas production in the maturer western Gulf — which historically has accounted for more than one-third of the U.S. gas supply — “has been declining in recent years,” he said. Canada has been making up the supply shortfall, “but its industry is having a difficult time in meeting its own domestic needs.”

In the future,”where will we get the natural gas that will be needed to fire our electrical generators, of which 90% are scheduled to be natural gas-fired? Where will we get the natural gas to heat our homes and improve our quality of life?” Fry asked Bush.

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