The Bush administration has put offshore oil and gas producers on hold again. The Interior Department won't publish its 5 year Outer Continental Shelf lease sale schedule until after Jan. 21 -after new coastal state governors have been inaugurated and briefed on the federal government's offshore leasing intentions.
Another delay won't hurt producers. Most of them expect Congress to block leasing outside the central and western Gulf of Mexico no matter what Interior schedules. But they'd like to know plans for the gulf.
Furthermore, producers have at least one reason to welcome the delay. The administration has been playing the OCS schedule against the Department of Energy's national energy strategy. Interior's reason for not publishing the OCS plan last spring was DOE's then-imminent release of a first energy strategy draft. It didn't say so last week, but Interior may have postponed its lease sale plan this time in part because of DOE's scheduled energy strategy report to President Bush.
ESSENTIAL CONNECTION
The temporizing links federal land management and energy policy. It's an essential connection. But making it, accidentally or otherwise, doesn't go far enough. Interior's courtesy toward new coastal state governors shows why.
On the Lower 48 West and East Coasts, state and local governments still rigidly oppose offshore oil and gas operations. In giant Point Arguello oil field off California, three platforms and related facilities worth $2.5 billion sat idle for 3 years while Chevron Corp., the operator, negotiated with coastal agencies over ways to transport production. Last month, Chevron decided to start flow through existing facilities at a maximum rate of 20,000 b/d-one fifth of the field's potential.
Across the country, North Carolina won't let Mobil Corp. drill on OCS tracts that it and partners leased for bonuses totaling nearly $300 million in 1981 and 1983. Mobil says the acreage contains a structure large enough to hold 5 tcf of natural gas. Like Chevron in California, Mobil has worked hard, spent millions, and made unprecedented operational promises to ease environmental fears. Nevertheless, the state last July ruled Mobil's wildcat "inconsistent" with coastal zone management plans.
It happens too often. Unfounded, local fears stymie energy work essential to national interests. Able unilaterally to block OCS leasing and operations on current leases, coastal governments have more to say about future U.S. energy supply than either DOE or Interior. In effect, they set federal energy policy.
NATIONAL INTERESTS
DOE and Interior recognize national interests. They want OCS energy projects to proceed. After Iraq invaded Kuwait last August, DOE intervened on behalf of Chevron in an effort to get Point Arguello production on stream. And Interior, through MMS, has tried to help Mobil in North Carolina.
But coastal states and agencies don't share the ambition. Sure, they'll negotiate. They'll negotiate as long as it takes to discourage industry managers and federal regulators. Chevron, Mobil, and their partners went out of their ways to answer official concerns and reduce risks of mishap in California and North Carolina. They got stiffed in return. Who wants OCS leases off those states now?
Industry should applaud linkage-however loose it may be-of federal leasing and energy policy. It should keep citing its environmental record on the OCS and point out the hypocrisies of oil and gas users intolerant of production activities. And it should call for policies that not only promote federal leasing but also-finally-get tough with balky states.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
