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Two-thirds of oil and gas leases in Gulf of Mexico inactive

WASHINGTON — More than two-thirds of offshore leases in the Gulf of Mexico are sitting idle, neither producing oil and gas nor being actively explored by the companies who hold the leases, according to a Department of Interior report.

Those inactive swaths of the gulf could potentially hold more than 11 billion barrels of oil and 50 trillion cubic feet of natural gas, the department said in the report obtained by the Associated Press.

President Barack Obama ordered the report this month amid pressure to curb a spike in gasoline prices after instability in the oil-rich Middle East. The White House said Obama would outline his plans for America's energy security in a speech in Washington today.

The inefficiencies detailed in the Interior Department report also extend to onshore oil and gas leases on federal lands, with 45 percent of those leases deemed inactive. The department said it is exploring options to provide companies with additional incentives for more rapid development of oil and gas resources from existing and future leases.

"These are resources that belong to the American people, and they expect those supplies to be developed in a timely and responsible manner and with a fair return to taxpayers," Interior Secretary Ken Salazar said in the report.

Congressional Democrats already have introduced legislation on Capitol Hill that would impose an escalating fee on the oil and gas companies who hold leases they're not actively using.

The oil and gas industry promptly disputed the administration findings.

"The majority of these leases are always turned back because we can't find resource in commercial quantities," said Jack Gerard, the president and CEO of the American Petroleum Institute. "To suggest that we're sitting on our hands is a pure distraction."

Tuesday's report comes against the backdrop of rising gas prices as the busy summer travel season approaches. Republicans put the blame for the increased costs on Obama's policies, pointing to the slow pace of permitting for new offshore oil wells in the wake of last summer's massive gulf spill and an Obama-imposed moratorium on new deepwater exploration, though experts say more domestic production wouldn't immediately affect prices.

Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, said Tuesday that he would introduce three bills to increase offshore energy production, including one that would speed up the permitting process by setting a 30-day time line for the administration to approve or deny applications.

Republican leaders also hit hard on Obama's comments last week in Brazil when he said the United States wants to be a "major customer" for the huge oil reserves Brazil recently discovered off its coast.

.Fast facts

Charges explored in gulf oil spill

Manslaughter and perjury are among possible charges that Justice Department investigators are exploring in the early stages of their inquiry into the gulf oil spill, the Associated Press reported Tuesday, citing people familiar with the investigation. These people said the Justice Department is not ruling out the possibility of bringing manslaughter charges against companies or managers responsible for the explosion aboard the Deepwater Horizon drilling rig that killed 11 workers. The department also is examining congressional testimony by company executives, including former BP CEO Tony Hayward, to determine if their statements were untruthful, these people said.

Two-thirds of oil and gas leases in Gulf of Mexico inactive 03/29/11 [Last modified: Tuesday, March 29, 2011 10:46pm]
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