Remarks as Prepared for Delivery
For the Honorable Dirk Kempthorne,
Secretary of the Interior
Opening Remarks Five Year Program Teleconference
July 30, 2008
Thank you for joining me on the call today.
Americans continue to struggle with high gas prices and it is apparent we need to do more to develop domestic sources of energy.
So, in light of President Bush’s removal of the executive ban on oil and gas leasing operations on the Outer Continental Shelf, I am directing the Minerals Management Service to begin preparation of a new 5-year off-shore oil and gas lease program that could include energy development throughout the OCS.
When our current five-year program for Outer Continental Shelf oil and gas leasing was launched in July 2007, oil was selling for $64 a barrel. Today a barrel of oil costs more than $120, almost double the price of just one year ago.
Clearly, today’s escalating energy prices and the widening gap between U.S. energy consumption and supply have changed the fundamental assumptions on which many of our decisions were based. Areas that were considered too expensive to develop a year ago are no longer necessarily out of reach based on improvements to technology and safety.
The American people and the President want action and this initiative can accelerate an offshore exploration and development program that can increase production from additional domestic energy resources.
The Outer Continental Shelf already provides 27 percent of U.S. domestic oil production and 15 percent of domestic natural gas production -- most of that from the Gulf of Mexico. The areas under congressional ban, which may be included in this new program, contain an additional 18 billion barrels of oil and 76 trillion cubic feet of natural gas in yet-to-be-discovered fields.
And those numbers are considered conservative estimates because little exploration has been conducted in most of those areas for a quarter century because of the ban. Interior’s estimates are based on available data. Estimates tend to increase dramatically as technology improves and exploration activities occur.
This initiative could provide a significant advantage for the incoming administration, offering options it would not otherwise have had until at least 2010. Today’s action would provide a 2-year head start for the next administration on developing a new five-year program.
And, just as importantly, we are continuing to demonstrate our commitment to domestic energy production - which should calm the market and continue to lower the price of oil.
It is the job of the energy experts at the Minerals Management Service to plan for and develop energy resources on the OCS in a safe and environmentally-sensitive manner. They accomplish that through an extensive planning process known as the OCS Oil and Gas Leasing Program, routinely referred to as the “Five-Year Program.”
The development of a 5-year program - which specifies the size, timing, and location of the areas to be considered for Federal offshore leasing during a five year period - requires a number of procedural steps be followed. The creation of this new plan will also follow that process.
As a first step, on Friday the MMS will publish in the Federal Register a Call for Information for the development of that new 5-year program. They will request information from all parties - the public, industry and organizations alike - on what areas should be considered for lease under this new plan.
We will ask for input from America’s governors.
The President believes coastal states should have a voice in how Outer Continental Shelf resources are developed off their shores while ensuring those environments are protected and that Congress should provide a way for the federal government and states to participate in revenue sharing on new leases.
We will begin that collaborative process here.
MMS has an extensive program to protect the environment and manage safe production.
They will proceed in a manner that is responsive to the public’s concerns and respects the diverse needs of the communities where exploration or development may occur.
Above all, safety and environmental protection are paramount, and this department will keep both factors at the forefront as we evaluate areas under consideration in this new 5-year program.
I believe today’s action is a responsible initiative given the need for changes in energy policy that the President has asked for. Allowing expanded offshore leasing will contribute significantly to our future energy supply.
I’d be happy to take your questions now.