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, Nancy_Covey@platts.com. A recording of the Randall Luthi session is available via podcast at http://www.energypodium.platts.com .
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