Platts Energy Podium: New MMS Director Awaits Congress' Response on Gulf Leases

Platts Energy Podium: New MMS Director Awaits Congress' Response on Gulf Leases

September 18, 2007

    WASHINGTON, Sept. 18 /Xinhua-PRNewswire/ -- The U.S.
Department of the Interior will wait until next year to see
if Congress addresses flawed oil and natural gas leases in
the Gulf of Mexico or leaves it to government agencies to
do so, the new director of the Minerals Management Service
(MMS), Randall Luthi, said Monday at a Platts Energy Podium
roundtable in Washington. 

    "I want to see what Congress does and evaluate all
the possibilities," Luthi said. 

    Luthi did not rule out resuming negotiations with
companies whose leases lack customary provisions requiring
producers to pay royalties when oil and gas prices rise to
certain levels. The government has estimated that the
omissions ultimately could cost taxpayers $10 billion in
lost royalty revenue.

    "Certainly, I would like to resolve this issue
before I leave," said Luthi, whom the Senate confirmed
for the post in July. He noted that there are about 15
months left in the Bush administration, after which he is
likely to be replaced.

    Congress is considering a number of measures to force
companies to renegotiate their Gulf leases to include price
thresholds, including preventing those that refuse from
obtaining new leases. Six companies agreed to the changes
last year but more than 40 others, including majors
ChevronTexaco and ExxonMobil, have refused to do so, saying
their lease contracts with the government are legally
binding. 

    Luthi acknowledged the legal issue. "It's hard to
tell a company you have to renegotiate because we made a
mistake," he said. 

    Among other issues, Luthi said MMS is especially
optimistic about an October 3 oil and gas auction in the
central Gulf of Mexico because of the resource potential of
a number of tracts. "We suspect that it will be the
largest sale in a decade, in terms of money," he
said.

    As for offshore alternative energy projects, Luthi said
he wanted MMS to complete, as soon as possible,
environmental reviews for regulations for wind, wave, solar
and hydrogen activities on the Outer Continental Shelf, as
well as for the proposed Cape Wind Project, involving 130
turbines off Massachusetts. Both reviews have undergone
delays.

    Sponsored by Platts, a division of The McGraw-Hill
Companies, Platts Energy Podium provides an ongoing forum
for prominent newsmakers and the press to address important
energy and environmental issues. Credentialed members of the
media may receive complementary registration for Platts
Energy Podium events by contacting Nancy Covey at
202-942-8719, [e-mail]. A recording of the
Randall Luthi session is available via podcast at
http://www.energypodium.platts.com .

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