Feds outline plan for selling offshore drilling leases

05 09, 2012 by Fuel Fix

A leading House Republican today insisted the Obama administration was on track to blow a July 1 deadline to finish a plan for selling offshore drilling leases over the next five years.

If that happens, the lapsed deadline would be unprecedented and could jeopardize lease sales expected later this year, said Rep. Doc Hastings, R-Wash., the chairman of the House Natural Resources Committee that is studying the issue today.

“Due to the Obama administration’s delays, on July 1, 2012, the United States will have no plan to develop our offshore energy resources,” Hastings said. “This will be the first time the U.S. will not have a plan in place since that became a requirement in the 1970s.”

The existing five-year plan expires on June 30. Whenever the administration issues the new document, it will trigger a 60-day congressional review period required under federal law.

Hastings said that 60-day congressional review clock would mean that a new plan might not be considered formalized and final until the end of August, even if the administration puts the document out on June 30.

But federal officials have a different interpretation.

Tommy Beaudreau, the director of the Interior Department’s Bureau of Ocean Energy Management, insisted the plan would be issued by July 1.

“The program will be issued by the Interior Department before the expiration of the current plan before June 30 of this year,” Beaudreau said. “We will issue on or before June 30.”

Under the administration’s interpretation of federal law governing the OCS, that plan would be final when it is issued — even if Congress hasn’t yet spent 60 days looking at it.

Furthermore, Beaudreau said, the government isn’t planning any lease sales during that two-month window. “We’re not in jeopardy of postponing lease sales as a result of issuance of our plan,” Beaudreau told the Natural Resources Committee.

The federal government is on track to sell drilling leases in the central Gulf of Mexico on June 20 — the last auction under existing five-year plan. That sale will include roughly 7,250 unleased blocks covering nearly 38 million acres in the central Gulf of Mexico. That sale was delayed by required environmental reviews following the 2010 Gulf oil spill.

Obama’s Interior Department has proposed 15 lease sales from July 1, 2012 through June 30, 2017, including a dozen in the Gulf of Mexico. The administration envisions three other auctions of drilling leases in Arctic waters near Alaska, including one sale each for the Beaufort and Chukchi seas. But federal officials are not planning to sell drilling leases in the Atlantic and Pacific oceans.

Beaudreau said the administration’s approach reflected estimates about technically recoverable reserves along the nation’s coastlines, as well as the well-established drilling and production infrastructure in the Gulf of Mexico.

The Gulf’s “infrastructure is unparalleled and the oil and gas resource potential is best understood and known to be most prospective,” Beaudreau said. “The infrastructure supporting the oil and gas industry — to bring resources to market and to respond in the event of an emergency — is the most mature and well developed in the Gulf of Mexico.”

Beaudreau said oil companies view the central Gulf of Mexico as “a burgeoning frontier for oil and gas development.” The Gulf is the “crown jewel” for offshore drilling around the U.S., Beaudreau added.

But that’s only because it’s the only place the government is allowing companies to explore, said Rep. Tom McClintock, R-Cali.