US sets oil drilling off Florida, Alaska, Virginia

Washington, May 1: The U.S. Interior Department on Monday proposed oil and natural gas drilling in federal waters off Florida, Alaska and Virginia, including nearly 50 million acres (20 million hectares) where drilling had previously been banned.

In its five-year plan that runs through 2012, the department proposed 21 separate lease sales, which could eventually produce 10 billion barrels of oil and 45 trillion cubic feet of natural gas -- enough eventually to match U.S. imports from the Middle East and supply every U.S. home for 10 years.

''This area contains vast energy resources,'' Interior Secretary Dirk Kempthorne said.

The plan includes a contentious area in the eastern Gulf of Mexico near the Alabama-Florida offshore border known as Lease Sale 181 and Bristol Bay in Alaska's North Aleutian Basin.

That would reverse Bristol Bay drilling bans established by Congress and President George H.W. Bush after the 1989 Exxon Valdez oil disaster in Alaska's Prince William Sound.

Also, the government proposed a lease sale for oil and gas drilling on 3 million acres of land more than 50 miles off Virginia's coast. A Virginia sale is unlikely before 2011 because Congress still must withdraw an existing moratorium, Kempthorne said.

The department's Minerals Management Service, which oversees offshore federal lands, must issue a drilling plan every five years that outlines where it expects drilling in the 1.7 billion acres of Outer Continental Shelf.

In all, the MMS proposed 21 lease sales in eight of the 26 OCS planning areas -- including six in the Central Gulf of Mexico, five in the Western Gulf, ''multiple'' sales in Alaska's Beaufort Sea and Chukchi Sea, up to two in Alaska's Cook Inlet and one in the North Aleutian Basin.

Environmental groups say oil drilling could mar Bristol Bay, which has the world's largest wild salmon run and teems with other wildlife like sea otters.

More drilling in the Gulf of Mexico comes after Congress voted last year to rescind a 25-year ban on drilling off Florida's coast and redistribute billions of dollars in federal royalties to four nearby Gulf Coast states.

That legislation diverts an estimated 0 billion in federal royalties to states from the federal treasury over 60 years.

Drilling royalties are the government's second-biggest revenue source after taxes.

The new Democratic-led Congress may try to recast existing leases the government signed with energy companies, including faulty offshore drilling leases issued in 1998 and 1999 that lost the U.S. Treasury about Washington, May 1: The U.S. Interior Department on Monday proposed oil and natural gas drilling in federal waters off Florida, Alaska and Virginia, including nearly 50 million acres (20 million hectares) where drilling had previously been banned.

In its five-year plan that runs through 2012, the department proposed 21 separate lease sales, which could eventually produce 10 billion barrels of oil and 45 trillion cubic feet of natural gas -- enough eventually to match U.S. imports from the Middle East and supply every U.S. home for 10 years.

''This area contains vast energy resources,'' Interior Secretary Dirk Kempthorne said.

The plan includes a contentious area in the eastern Gulf of Mexico near the Alabama-Florida offshore border known as Lease Sale 181 and Bristol Bay in Alaska's North Aleutian Basin.

That would reverse Bristol Bay drilling bans established by Congress and President George H.W. Bush after the 1989 Exxon Valdez oil disaster in Alaska's Prince William Sound.

Also, the government proposed a lease sale for oil and gas drilling on 3 million acres of land more than 50 miles off Virginia's coast. A Virginia sale is unlikely before 2011 because Congress still must withdraw an existing moratorium, Kempthorne said.

The department's Minerals Management Service, which oversees offshore federal lands, must issue a drilling plan every five years that outlines where it expects drilling in the 1.7 billion acres of Outer Continental Shelf.

In all, the MMS proposed 21 lease sales in eight of the 26 OCS planning areas -- including six in the Central Gulf of Mexico, five in the Western Gulf, ''multiple'' sales in Alaska's Beaufort Sea and Chukchi Sea, up to two in Alaska's Cook Inlet and one in the North Aleutian Basin.

Environmental groups say oil drilling could mar Bristol Bay, which has the world's largest wild salmon run and teems with other wildlife like sea otters.

More drilling in the Gulf of Mexico comes after Congress voted last year to rescind a 25-year ban on drilling off Florida's coast and redistribute billions of dollars in federal royalties to four nearby Gulf Coast states.

That legislation diverts an estimated $170 billion in federal royalties to states from the federal treasury over 60 years.

Drilling royalties are the government's second-biggest revenue source after taxes.

The new Democratic-led Congress may try to recast existing leases the government signed with energy companies, including faulty offshore drilling leases issued in 1998 and 1999 that lost the U.S. Treasury about $2 billion.

The MMS in January also raised royalty rates for most new federal deep water leases to 16.7 percent from 12.5 percent of the value of the oil and gas found, which could raise an additional $4.5 billion over 20 years.

Reuters billion.

The MMS in January also raised royalty rates for most new federal deep water leases to 16.7 percent from 12.5 percent of the value of the oil and gas found, which could raise an additional .5 billion over 20 years.

Reuters>