BUSH ORDERS CANCELLATION OF EIGHT CONTROVERSIAL OFFSHORE LEASE SALES

President Bush last week canceled eight contested offshore lease sales, preventing any drilling in those areas until after 2000.

Due to state opposition, lawsuits, and congressional spending moratoriums, there was little prospect of holding those sales as scheduled.

The administration's action limits oil companies to exploration in the Gulf of Mexico, off Alaska, in the mid- and South Atlantic, and in a small area off southern California during this decade.

It also clears the way for the Minerals Management Service to propose a new 5 year offshore leasing plan (1992-97) "in a few months," which will feature fewer sales, some offering limited acreage.

Bush's decision went beyond the recommendations of a task force that had studied three controversial lease sales for him (OGJ, June 4, p. 28).

OFFSHORE ORDER

The president:

Canceled all pending lease sales off California. More oceanographic and socioeconomic studies, requiring 3-4 years, will be made in the sale areas.
That killed Sale 91, which was to have offered northern California tracts in February 1989; most of Sale 95, offering southern California tracts last September; Sale 119, offering Central California tracts in November; Sale 128 offering northern California tracts in 1992, and Sale 138, offering southern California tracts in 1992.
Barred MMS from offering any Sale 95 tracts south of the Santa Barbara Channel. But 87 "high resource potential tracts" in the Sale 95 area near fields in the Santa Maria basin and Santa Barbara Channel may be offered after 1995 if oceanographic and socioeconomic studies are favorable. Those tracts cover less than 1 % of the California offshore.
Approved a National Oceanic and Atmospheric Administration proposal to create a 2,200 sq mile marine sanctuary in the Monterey Bay area of the Sale 119 planning area, permanently blocking exploration and development on that acreage.
Canceled until after 2000 a Gulf of Mexico sale southwest of southern Florida. Designated Sale 116 Part 11, it was split from a sale held in November 1988. The president ordered additional oceanographic, ecological, and socioeconomic studies, requiring 5-6 years, before another sale is scheduled.
Ordered MMS to begin procedures to cancel 73 leases oil companies hold in the southern Florida sale area and begin discussions with Florida on a joint federal-state repurchase of the leases costing $100-200 million.
Canceled two North Atlantic offshore sales that could have resulted in exploration in the Georges Bank fishing area. Sale 96 originally was scheduled for February 1989, and Sale 134 was planned for February 1992. Bush ordered MMS not to schedule a North Atlantic sale in the next 5 year plan, nor before 2000.
MMS will conduct studies to determine the resource potential of the North Atlantic area and assess the environmental, scientific, and technical considerations of development in the area. MMS will consult with the governors of states whose residents would be affected by development of oil and gas in the North Atlantic.
Canceled Washington-Oregon Sale 132 scheduled for April 1992. Environmental studies requiring 5-7 years will push back leasing until after 2000.

NEW GUIDELINES

Bush also decided air quality controls for oil and gas development off California should be substantially the same as those applied onshore.

And immediate steps should be taken to improve the ability of industry and the federal government to respond to offshore oil spills, regardless of their source. The steps should include moving tanker routes farther from sensitive areas near the Florida Keys and the Everglades, Bush said.

He also said MMS should revise the Outer Continental Shelf leasing program to provide the necessary balance between development of energy resources and protection of the environment.

The program should be targeted more carefully toward areas with "truly promising resource potential," buttressed by enough information to ensure that oil and gas development proceeds in an environmentally sound manner, sensitive to the concerns and needs of local areas affected by offshore development.

Bush ordered MMS to improve the information needed to make decisions on OCS development by conducting studies of ways to alleviate the risks of spills from platforms and of technologies such as subsea completions.

He said MMS should target sale areas in future OCS 5 year sale plans to give highest priority to areas with high resource potential and low environmental risk.

"This will result in offering much smaller, more carefully selected blocks of tracts," Bush said.

Bush asked MMS to prepare a legislative initiative that will share federal OCS revenues with coastal communities and give them a larger voice in decision making.

ELABORATION

Bush said, "Although I have taken these strong steps to protect our environment, I continue to believe there are significant offshore areas where we can and must go forward with resource development.

"While I believe a leaner OCS program will ultimately be more effective, Americans must recognize that the OCS program is a vital source of fuel for our growing economy. "

Interior Sec. Manuel Lujan said the administration's decisions should facilitate cooperation with congressmen in shaping the future of OCS drilling.

"I think they'll be satisfied with this," he said.

"My hope is that now we can move beyond temporary, stop gap measures like moratoriums and instead develop a more positive, productive, cooperative approach on this very difficult issue."

Lujan said buying back the Florida leases, which can be done under the law, could cost $100-200 million if operators are fully reimbursed for bonuses, interest, and their expenses on the leases so far.

He said the state of Florida should contribute most of the cost because it strongly opposes development.

REACTIONS

The National Ocean Industries Association voiced "extreme disappointment" with the president's decision.

"By delaying leasing and drilling for such an extended period of time, the president has abdicated his responsibility to provide safe and dependable energy supplies for the American people," NOIA said.

"Instead, the president sidestepped a tough political decision, leaving it to future presidents, who will be burdened with the consequences of today's decision.

"Ironically, in his effort to protect the environment, the president's decision will increase the risk of oil spills. With less offshore drilling, oil imports will increase, as will the risk of oil tanker accidents."

NOIA said Bush ignored the offshore drilling industry's "excellent safety record" and the fact that tankers cause most oil spills.

The American Petroleum Institute said the president's actions will lead to decreased U.S. production, more imports, more dependence on the Organization of Petroleum Exporting Countries, more tanker traffic, and exports of U.S. jobs and investments.

"These are areas the Interior Department believes contain billions of barrels of oil and trillions of cubic feet of gas that could be produced economically and safety for the benefit of all Americans. Locking up these energy-rich lands at a time when our dependency on foreign energy is escalating is a serious mistake."

The Sierra Club complained that Bush's decisions do not go far enough and pointed out he can insure there is no drilling only for the 21/3 years that remain in his term.

Sierra said the administration not only should ban off shore drilling, but also should focus on the larger picture-curbing our appetite for fossil fuels, which not only threatens our shores with tragic oil spills but also pollutes our skies and contributes to the impending global warming crisis."

ARCO said Bush recognized that most Americans are not prepared at this time to develop certain environmentally sensitive offshore areas.

"ARCO supports the president under these circumstances. The challenge facing all of us is to find ways to lessen our nation's growing dependence on foreign oil through conservation and by more vigorous development of our domestic energy resources."