Two OCS Areas May Be Offered For Oil & Gas Leases

Jan 9: Interior Secretary Dirk Kempthorne announced that President George Bush has modified the leasing status of two areas in the Outer Continental Shelf (OCS) in response to Congressional action and the requests of state leaders. In addition, Kempthorne announced that he has increased the royalty rate for most new offshore deepwater federal oil and gas leases to 16.7 percent (1/6th). Kempthorne said, “Together, these actions will enhance America’s energy security by improving opportunities for domestic energy production, and will also increase the revenues that the federal government collects from oil and gas companies on behalf of American taxpayers.”

The areas were withdrawn from consideration for leasing through 2012 by President Bill Clinton in 1998. By modifying that Presidential withdrawal to remove these two areas, President Bush’s action allows the Secretary of the Interior the option of offering these areas during the Minerals Management Service’s next five-year OCS oil and gas leasing program (2007-2012). Kempthorne said, “Both OCS areas -- one in the North Aleutian Basin of Alaska (known as Bristol Bay) and the other in the Central Gulf of Mexico (referred to as the 181 South Area) – would receive thorough environmental reviews. There will be significant opportunities for study and public comment before any oil and gas development could take place in these areas.”

Saying it will increase opportunities for domestic energy production to meet escalating demand, the U.S. Chamber of Commerce applauded the U.S. Department of Interior for modifying the leasing status of two areas on the Outer Continental Shelf (OCS), Bristol Bay, Alaska and an area in the Central Gulf of Mexico. Bruce Josten, U.S. Chamber executive vice president for Government Affairs said, "Allowing the development of new oil and gas production in the Outer Continental Shelf is an important step in meeting the energy needs of a growing nation. This decision, along with recent legislation allowing additional exploration in a portion of the Gulf of Mexico, underscores the growing realization among policymakers that increasing domestic production is an important component of breaking our dependence on foreign oil."

American Chemistry Council (ACC) President & CEO Jack Gerard issued statement saying, “We applaud the President’s action making more of America’s own energy supplies eligible for leasing to meet our nation’s needs. It represents another decisive step toward a more rational natural gas policy, addressing the supply-demand imbalance by adding more than 11 million acres to the deep sea federal waters eligible for exploration. Today’s announcement along with the historic Gulf of Mexico Energy Security Act – signed into law last month – signal growing national recognition that affordable, reliable access to natural gas is critical in our economy and to progress on priorities such as jobs, competitiveness, energy security and the development of alternative and cleaner energies, many of which rely on natural gas.” The National Association of Manufacturers (NAM) also issued a statement of support for the action (See link below).

Bristol Bay, called America's "Fish Basket," supports a billion dollar fishery, valuable sport hunting and fishing industry, Native Alaskan cultural and subsistence values, and marine wildlife populations. Environmental groups like the World Wildlife Fund have said, "We strongly urge President Bush to leave Bristol Bay alone Oil and gas drilling would jeopardize the nation's most important fishery, hundreds of communities reliant on fishing and a treasure trove of wildlife." [See WIMS 12/4/06].

The 181 South Area was included in the 2007-2012 OCS Oil and Gas Proposed Program. In December 2006, Congress passed and President Bush signed the Gulf of Mexico Energy Security Act, which requires leasing in that area [See WIMS 12/11/06]. On December 4, then Speaker of the House-designate Nancy Pelosi (D-CA) issued a statement saying, “The Exxon Valdez oil spill in 1989 showed the world the devastation and destruction that oil spills could have on Alaska’s fragile waters... The American people paid $95 million to buy back leases from oil companies to ensure that Bristol Bay would be forever protected from devastating oil spills... Allowing oil drilling to go forward in Bristol Bay puts our precious environment at risk. Allowing new oil company leasing of these lands is an insult to all taxpayers who have helped protect them."

Bill Eichbaum, managing director and vice-president of the marine portfolio at World Wildlife Fund (WWF), issued a statement saying, "I am very disappointed with the president's action today. Bristol Bay should be off the table for drilling. WWF will now work with Congress to override the president's action and re-instate the Congressional moratorium on oil and gas development in Bristol Bay which was allowed to expire in 2004. Why risk ruining a billion dollar fishery, a valuable sport hunting and fishing industry, a critical resource for Native Alaskans and one of the most important places for marine wildlife populations in the Bering Sea?"

Access an Interior Department release (click here). Access a fact sheet (click here). Access the Bush Memo to Kempthorne (click here). Access a map of the Bristol Bay area (click here). Access a map of the Gulf/181 South area (click here). Access a release from the U.S. Chamber (click here). Access the ACC release (click here). Access the NAM statement (click here). Access a release from Representative Pelosi (click here). Access a release from WWF (click here). [*Energy, *Water, *Wildlife]