Energy Leasing Plan Disappoints Industry

The chemical industry says the Bush Administration's plan to open 2 million acres in the Gulf of Mexico to new energy development is "insufficient" because it would not boost natural gas supplies enough to bring price relief to the market and prevent the further loss of U.S. jobs.

The Minerals Management Service's (MMS) proposed 2007-12 leasing plan for the outer continental shelf, unveiled on Feb. 8, would open to oil and gas drilling a major piece of the so-called Lease Sale 181 area south of the Florida panhandle. The section contains an estimated 3.4 trillion cu ft of natural gas. The draft plan also calls for new studies of resource development off the coasts of Virginia and Alaska.

"The MMS proposal is an insufficient response to the nation's natural gas needs," the American Chemistry Council (ACC) said in a Feb. 10 statement. "Policymakers have continually failed to acknowledge and correct the acute demand-supply imbalance, driving prices up to levels that are causing massive industrial demand destruction.???

Senate Energy & Natural Resources Committee Chairman Pete V. Domenici (R-N.M.) has introduced legislation that would require MMS to lease 3.6 million acres in the Lease Sale 181 area, holding an estimated 4.8 trillion cu ft of gas, within one year. Florida Sens. Bill Nelson (D) and Mel Martinez (R) have offered a competing bill that would establish a permanent drilling ban in the eastern Gulf of Mexico that would put all but 740,000 acres of the 181 area out of reach.

"What was critically needed was a plan that encourages natural gas supply growth that can keep pace with demand growth. Instead, the plan will ensure that the nation continues to have an inadequate supply of gas, leading to even higher deficits, more manufacturing moving offshore, and the disappearance of more good-paying American jobs," ACC said.