Salazar Attacks 'Kings of the World' With Oil & Gas Leasing Changes

(MoneyWatch)  The highly anticipated proposed rules for how the government issues oil and gas leases on federal lands were released by Interior Department Secretary Ken Salazar earlier Wednesday. And as predicted, there will be more review on proposed drilling sites, including site visits and more opportunity for public comment before leases are awarded to oil and gas companies. A lot more review. Perhaps, most notably, the traditional approach of the oil and gas industry pinpointing potential drilling areas will shift a bit.

Under the old process, an area was nominated -- typically by the oil and gas industry -- and submitted to the Bureau of Land Management state offices and then reviewed by field offices. Once a resource management plan for that area was reviewed and approved, the land was cut into parcels for auction. Check out this side-by-side comparison of the old and the proposed leasing reform policy.

Here's the lowdown on the new proposed policy:

• creation of a master leasing plan, which will analyze mostly unleased and undeveloped areas where intensive new oil and gas extraction is anticipated;
• Interior Dept. will establish an Energy Reform Team to do what the name implies: identify and implement management reform;
• field offices will now conduct "more comprehensive" reviews of each proposed lease, including on-the-ground reconnaissance of parcels;
• field offices will prepare environmental review and the public will be invited to comment;
• BLM will take the environmental and public reviews and identify mitigation measures to protect the environment

There's little argument the review process will be slower than before. The question is whether this new approach will speed up the nomination-to-drill time by avoiding delays created by protests and litigation?

Salazar thinks so. The Bush Administration's approach created a need for reform, he said in a telephone press conference with reporters Wednesday. He said the oil and gas industry -- which he dubbed the kings of the world -- essentially controlled the process, picking and choosing with little to no oversight.

"Their view by and large, was that leasing should happen almost anywhere, at whatever cost. The previous administration offered vast amounts of Western lands for oil and gas development, the majority of which has not yet been developed."

Salazar then emphasized this point with reporters on the call:

Of the 43.6 million acres of federal land that has been leased for oil and gas development, only 12 million acres are currently production," Salazar said. "Many of the areas offered for leasing since 2001were highly controversial including areas in municipal watersheds, areas that involved important wildlife habitat, land with wilderness characteristics and lands that were close to national parks."

"In 1998, a little over 1 percent of BLM's oil and gas leases were protested. Ten years later, in 2008, 40 percent of BLM's oil and gas leases were protested. Core battles over oil and gas leases are now costing billions of dollars in litigation and they tying up resources."

American Petroleum Institute President Jack Gerard is far from convinced. In comments released after Salazar's afternoon press conference in New York, Gerard said the leasing rules will make it more difficult to produce domestic oil and gas and, in turn, make the U.S. more dependant on foreign resources.

"Since Secretary Salazar has taken his position, revenues from federal onshore oil and gas leasing in the five states that make up the Inter-Mountain West have plummeted over 80 percent, and the amount of total acreage leased by the government has shrunk to the level on record," Gerard said.