Request for Comments on the Draft Proposed 5-Year Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 1997-2002

DEPARTMENT OF THE INTERIOR

Minerals Management Service

Request for Comments on the Draft Proposed 5-Year Outer

Continental Shelf (OCS) Oil and Gas Leasing Program for 1997-2002

SUMMARY: Comments are requested on the Draft Proposed 5-year OCS Oil

and Gas Leasing Program for 1997-2002. This is the first proposal for a

new program to succeed the current program that expires in July 1997.

Section 18 of the OCS Lands Act (43 USC 1344) specifies a multi-

step process of consultation and analysis that must be completed before

the Secretary of the Interior may approve a new 5-year program. The

required steps following this notice include the development of a

proposed program, a proposed final program, and Secretarial approval.

Pursuant to the National Environmental Policy Act, the Minerals

Management Service (MMS) also will prepare an Environmental Impact

Statement (EIS) for the new 5-year program.

DATES: Please submit comments and information to MMS on or before

October 10, 1995.

ADDRESSES: Respondents should mail comments and information to: 5-Year

Program project Director, Minerals Management Service (MS-4430), Room

1324, 381 Elden Street, Herndon, Virginia 22070. The MMS will accept

hand deliveries at 1849 C Street, NW, Room 4230, Washington, DC.

Envelopes or packages should be marked ``Comments on the Draft proposed

5-Year OCS Oil and Gas Leasing Program for 1997-2002.'' When submitting

any privileged or proprietary information to be treated as

confidential, respondents should mark the envelope, ``Contains

Confidential Information.''

FOR FURTHER INFORMATION CONTACT:

Carol Hartgen, 5-Year Program Project Director, or Tim Redding, Program

Decision Document Project Manager, at (703) 787-1216. To order copies

of the new Draft Proposed Program decision document and maps or

documents describing the current 5-year program for 1992-1997,

telephone (703) 787-1216.

SUPPLEMENTARY INFORMATION: The MMS requests comments from States, local

governments, Native groups, tribes, the oil and gas industry, Federal

Agencies, environmental and other interest organizations, and all other

interested parties to assist in the preparation of a 5-year OCS oil and

gas leasing program for 1997-2002 and applicable EIS.

Background

Management of the Nation's offshore oil and gas resources is

governed by the OCS Lands Act, which specifies the conditions under

which the Secretary of the Interior grants rights to explore for,

develop, and produce those resources. The Secretary has assigned the

responsibility for implementing the requirements of the OCS Lands Act

to the MMS.

Section 18 of the Act requires the Secretary to prepare an oil and

gas leasing program that indicates a 5-year schedule of lease sales

that he determines will best meet the Nation's energy needs. Section 18

requires that the 5-year program be prepared in a manner consistent

with four main principles: (1) Consideration of economic, social, and

environmental values and the potential impact on marine, coastal, and

human environments; (2) consideration of diverse environmental,

geographical, and equitable regional factors; (3) a proper balance

among potential for environmental damage, discovery of oil and gas, and

adverse impact on the coastal zone; and (4) assurance of receiving fair

market value. There is no set equation for the weight to be accorded

each principle and factor. It is within the Secretary's discretion

after taking these matters into consideration to determine how best to

proceed.

In addition to the requirements of section 18, the following policy

objectives endorsed by the President and the Secretary have been

considered in developing the Draft Proposed Program: consensus-based

decisionmaking, science-based decisionmaking, and the use of natural

gas as an environmentally preferred fuel.

On November 16, 1994, the MMS published a Federal Register Notice

requesting comments on the preparation of a new 5-year program for

1997-2002. Over 2300 comments were received from affected State and

local governments, Alaska Native organizations and communities, federal

agencies, environmental and other interest organizations, the oil and

gas industry, and the general public. Those comments have been

considered in developing the Draft Proposed Program.

Moving From Conflict to Consensus

Preparation of the 5-year Draft proposed Program for 1997-2002

recognizes the need not only to incorporate and consider analyses that

were updated from the 1992-1997 program but also to engage in dialogue

with the parties that would be most affected by the program. In its

1993 report, Moving beyond Conflict to Consensus, the Subcommittee on

OCS Legislation of the OCS Policy Committee, an independent body that

advises the Secretary of the Interior, recommended that the Secretary,

where local constituents were willing, use regional task forces

representing OCS program stakeholders to focus on reaching consensus on

OCS lease sales. The OCS Policy Committee also recognized that

``overall, the prevailing controversies and the measures used to deal

with them have seriously diminished the effectiveness of the federal

OCS oil and gas program in helping to meet the Nation's energy needs.''

This program embraces the advice provided by the OCS Policy Committee

and reflects the beginning of a long-term movement from conflict to

consensus in the OCS program.

The OCS Policy Committee established an Alaska Regional

Stakeholders Task Force consisting of diverse Alaskan constituencies

which was a first attempt to reach consensus on recommending to the

Secretary the appropriate planning areas to be

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proposed for evaluation in an OCS 5-year program. The OCS Policy

Committee approved the continued existence of the task force to advise

the Secretary throughout the remainder of the 5-year program.

The Draft Proposed Program provides for environmentally responsible

oil and gas leasing in selected prospective areas of the OCS where it

appears there is sufficient industry interest, where the laws and

policies of adjacent States and localities are not a significant

impediment to OCS program activity, and where there is agreement among

interested and affected parties that further evaluation of leasing is

reasonable. The program provides a framework for resolving concerns

relating to new leasing and development of existing leases on a basis

supported by sound science. In addition, to help assure that the new

program and future leasing decisions are based on good science, the

Director of the MMS has asked the OCS Policy and Scientific Committees

to form a subcommittee to provide an independent review and evaluation

of specific information needs for areas where controversy has led to

executive and/or legislative restrictions on leasing.

National Energy Needs

Analysis in the Proposed Final Program for 1992-1997 (April 1992)

showed the economic dangers associated with the Nation's dependence on

imported petroleum and how OCS production had helped reduce the need

for even greater volumes of imported petroleum.

The growing need for imported petroleum remains a serious concern.

In its December 1994 report to the President, The Effect of Imports of

Crude Oil and Refined Petroleum Products on the National Security, the

Department of Commerce concluded that petroleum imports threaten to

impair U.S. national security.

Increasing imports will make the Nation more vulnerable to supply

disruptions and increase the Nation's balance of payments deficit.

Environmentally responsible development of OCS oil and gas resources

will have to play a role in any effort to slow or reverse the increase

in imported energy.

The decisions on the new 5-year program will have a long-term

effect on the contribution of OCS resources to meeting the Nation's

energy needs and improving its trade balance. Most production resulting

from lease sales held under the new 5-year program is likely to begin

over the first decade of the next century and continue for another 25

years.

Maps 1 and 2 contain the areas proposed for leasing consideration

in the new program. Table A is a summary of the proposed schedule of

lease sales for the new program. Individual planning area maps are

included in the Draft Proposed Program decision document.

Table A.--Proposed Lease Sale Schedule

----------------------------------------------------------------------------------------------------------------

Region and planning area Year Proposed activity

----------------------------------------------------------------------------------------------------------------

Alaska:

Beaufort Sea........................... 1998......... Small sale, focusing on nearshore blocks in center

of program area (Map 1).

2000......... Sale in program area (Map 1).

Cook Inlet/Shelikof Strait............. 1999......... Sale in program area (Map 1).

Gulf of Alaska......................... 2001......... Sale in program area (Map 1).

Chukchi Sea/Hope Basin................. 2002......... Combined sale in program area (Map 1).

Gulf of Mexico:

Western Gulf of Mexico................. Annual....... Sale in program area (Map 2).

Central Gulf of Mexico................. Annual....... Sale in program area (Map 2).

Eastern Gulf of Mexico................. 2001......... Sale in program area (Map 2) (offshore Alabama, 100

miles off Florida).

----------------------------------------------------------------------------------------------------------------

Draft Proposed Program Decision

Alaska Region

The Draft Proposed Program for 1997-2002 includes lease offerings

in 5 of the 15 Alaska OCS planning areas--Beaufort Sea, Cook Inlet/

Shelikof Strait, Gulf of Alaska, Chukchi Sea, and Hope Basin. The lease

offerings do not encompass the entire planning areas, rather they are

focused on specific areas within the planning areas. These planning

areas were recommended for further evaluation by the Alaska Regional

Stakeholders Task Force, established by the OSC Policy Committee in

November 1994 to make recommendations on the Alaska component of this

5-year program. The Task Force consists of representatives of Federal

and State agencies, local governments and community organizations,

Native/subsistence and development communities, oil and gas and

commercial fishing industries, and environmental interests. Task Force

members met in Alaska as a group and conducted meetings in selected

communities before preparing a report to the Secretary recommending

areas to be considered in the new 5-year program.

The Draft Proposed Program for 1997-2002 proposes no leasing for

the remaining 10 Alaska OCS planning areas. St. George Basin has

relatively low net social value and low industry interest, and

consensus among interested parties including the Alaska Regional

Stakeholders Task Force was that this area should be excluded from the

new program. Norton Basin, Navarin Basin, St. Matthew-Hall, North

Aleutian Basin, Aleutian Basin, Bowers Basin, Aleutian Arc, Shumagin,

and Kodiak were excluded from the current 5-year program based on low

net social value, low industry interest, and other section 18

considerations. No new information supports including these areas for

leasing consideration in the new program, and the Alaska Regional

Stakeholders Task Force did not recommend that they be evaluated

further.

Gulf of Mexico

Annual area wide sales for the Central and Western Gulf of Mexico

Planning Areas are proposed to continue to provide industry and others

with the flexibility and the reliable schedule so important to long-

term planning. The proposed Eastern Gulf of Mexico lease sale would

cover blocks offshore Alabama and in the deep-water areas along the

boundary of the Central Gulf of Mexico Planning Area. It recognizes the

high potential for the development of natural gas in the areas of

current development offshore Alabama and the potential for deepwater

development along the Central Gulf of Mexico and Eastern Gulf of Mexico

Planning Areas' boundary line. It is also consistent with Florida's

continued opposition to activity within 100 miles of its coast and

Alabama's desire to share in the benefits

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of new OCS leasing and development. The MMS will concentrate its

efforts on resolving disputes relating to those existing leases in the

Eastern Gulf of Mexico offshore Florida rather than exacerbate an

already contentious situation with additional leasing.

Pacific Region

There are no proposed lease sales offshore the west coast. There

are outstanding scientific information needs that have not been

fulfilled.

The MMS will continue working with interested and affected parties

to resolve issues concerning existing leases in the Southern California

Planning Area. In previous comments and in response to the November

1994 Federal Register Notice soliciting comments on the development of

a new 5-year program, the State of California has opposed any leasing

off its coast. Local government policies and ordinances have reflected

this opposition as well. The MMS Pacific Regional Office and officials

from Santa Barbara, Ventura, and San Luis Obispo counties in Southern

California and several State agencies have formed a Tri-County Forum to

address issues related to exploration and development on existing

leases. Because of the cooperative nature of this forum to date in

resolving oil and gas issues, two of the local counties indicated they

would not oppose limited leasing off their coasts provided that several

conditions such as impact assistance and an enhanced local role in OCS

leasing decisions were met. However, there are still several issues to

resolve for the future development of significant oil reserves under

existing leases. Rather than propose additional acreage for leasing

consideration, the MMS will continue working with interested and

affected parties on issues concerning the existing leases.

Atlantic Region

There are no proposed lease sales. The MMS will continue working

with interested and affected parties to resolve issues concerning

existing leases in the Mid- and South Atlantic Planning Areas. In

keeping with the Administration's goal of encouraging the use of

natural gas, the MMS examined gas-prone areas off the coast of North

Carolina and another off the coast of New Jersey. The areas offshore

North Carolina are currently leased and are subject to litigation

relating to application of the Coastal Zone Management Act and the

Outer Banks Protection Act. No new leasing is proposed in these areas

at this time, but the MMS will continue to pursue resolving disputes

related to the existing leases outside of litigation. The area offshore

New Jersey has been leased in the past. A significant natural gas

discovery was made in the 1970's. Given the recent dormancy in this

area, rather than proposing leasing during the 5-year program, the MMS

will begin preliminary discussions with constituents in the area.

No leasing is proposed in the North Atlantic and Straits of Florida

Planning Areas. No new information supports including these areas for

leasing in the new program.

Configuration of Planning Areas

The Draft Proposed Program decision moves the boundary between the

Beaufort Sea and Chukchi Sea Planning Areas to more accurately conform

those areas with the bodies of water after which they were named. In

addition, Official Protraction Diagrams were created and planning area

boundaries revised to be consistent with the current projection of the

U.S. Exclusive Economic Zone as depicted on official maps prepared by

the National Oceanic and Atmospheric Administration. Whole and partial

Official Protraction Diagrams have been added to the Beaufort Sea;

Aleutian Arc; Washington-Oregon; Northern, Central, and Southern

California; and South Atlantic Planning Areas; none of the additions

would be considered for leasing. The Official Protraction Diagrams

beyond the OCS and Exclusive Economic Zone in the Gulf of Alaska have

been deleted.

Assurance of Fair Market Value

The basic minimum bid level would be set at $25 per acre, subject

to sale-by-sale reconsideration, and the current two-phased bid

adequacy process is retained. As announced in the Call for Comment

published in the Federal Register on April 20, 1995, both of these

measures are under separate review to ensure that fair market value is

obtained through the MMS's leasing policies. Relevant comments received

in response to that Notice will be considered in developing the fair

market value provisions of the new 5-year program. The existing

measures will be maintained until the separate review is complete. The

results of the analysis will be addressed in formulating the proposed

program.

Information Requested

We request all interested and affected parties to comment on the

size, timing, and location of leasing and the procedures for assuring

fair market value that are proposed in the Draft Proposed Program for

1997-2002. Information provided by commenters should relate to the

principles and factors of section 18, and suggestions for revising the

Draft Proposed Program should include rationale corresponding to those

considerations and to the policy objectives identified by the MMS, as

discussed in the background presented above. Respondents who submitted

information in response to the April 20, 1995, Call for Comment

discussed above may wish to reference that information, as appropriate,

rather than repeating it in their comments on the Draft Proposed

Program. We also invite comments and suggestions on how to proceed with

the section 18 analysis for the next draft of the new program, the

Proposed Program.

As the scoping process continues for the programmatic EIS that will

be prepared, we again request comments on significant environmental

issues attendant to OCS leasing and development and on alternative

options for size, timing, and location of sales that should be

evaluated.

Respondents who wish to provide illustrated information pertaining

to the size and location of lease sales can obtain larger OCS block-

specific maps by calling (703) 787-1216.

Section 18(g) authorizes confidential treatment of privileged or

proprietary information that is submitted. In order to protect the

confidentiality of such information respondents should include it as an

attachment to other comments submitted and mark it appropriately. On

request the MMS will treat such information as confidential from the

time of its receipt until 5 years after approval of the new leasing

program, subject to the standards of the Freedom of Information Act.

The MMS will not treat as confidential any aggregate summaries of such

information, the names of respondents, and comments not containing such

information.

Next Steps in the Process

The Proposed Program and draft EIS are scheduled to be issued in

January 1996 followed by a 90-day comment period. The Proposed Final

Program and final EIS are scheduled to be issued in August 1996. The

Secretary may approve the new 5-year program 60 days later.

Dated: August 7, 1995.

Cynthia Quarterman,

Director, Minerals Management Service.

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