Nov 17, 2004

Chemical industry seeks more offshore gas drilling

The American Chemistry Council (ACC), representing the largest U.S. industrial consumers of natural gas, today called on the Minerals Management Service to make more areas of the Outer Continental Shelf available to natural gas exploration and development.

Included in the areas that the ACC wants opened up for natural gas drilling is the controversial Planning Area 181, which is 100 miles equidistant from the Alabama-Florida coast

The Council said that historically high natural gas prices are destroying the competitiveness of U.S. chemical manufacturing.

"Natural gas prices have nearly tripled in recent years, sending our industry's gas bill up by $10 billion in two short years. Chemical manufacturing operations in other regions of the world have not had to absorb these kinds of cost increases. We have lost $50 billion in business to overseas manufacturers over the past five years. More than 90,000 good-paying American jobs have disappeared in that time," the Council said in a written statement filed with MMS.

ACC says that MMS will soon begin planning its next round of leases to offer to developers of natural gas operating in the Outer Continental Shelf. The next lease sale plan will govern how or whether MMS makes OCS properties available to development in the period 2007 to 2012.

"MMS has the ability and responsibility to put in motion new initiatives to address the crisis using the still untapped domestic resources subject to its stewardship," ACC said. "The offshore federal lands present the best opportunity for major increases in natural gas production."

In developing its plan to lease OCS lands, ACC said MMS should take the following actions:

1. Inventory and publish the natural gas potential of our offshore areas so the public and decision makers understand the opportunities we have for using our own resources to increase supply and help address the nation's energy challenges.

2. Prioritize the areas with the greatest natural gas potential and move them forward in the leasing program.

3. Put into action the process streamlining measures that have been examined and tested over the past four years that will consolidate environmental reviews and hold staff accountable for processing lease sales and permits for exploration and development in the least time consistent with appropriate stewardship of the environment.

4. Work with energy companies to identify and address impediments to exploring and
developing existing leases in natural gas fields.

5. Initiate a collaborative process with states to make the Coastal Zone Management Act consistency reviews move forward smoothly and in proper coordination with Federal reviews.

6. Revisit the leasing of Planning Area l8l. With its strong potential for significant and near term natural gas production, it should be at the top of the list for exploration and development.

7. Include areas currently under moratoria in reopening 5-year lease plans. The current areas subject to moratoria on exploration and production are not permanently excluded but are regularly revisited for determinations whether to continue those moratoria. With the country facing some of the highest prices and highest levels of energy imports in history, these unfortunate limitations on domestic resources should be reexamined.

Access to more gas is one of many steps ACC supports to restore balance to natural gas markets.

The Council also supports immediate and aggressive efforts to use natural gas more efficiently, and to diversify the nation's energy portfolio by making greater use of renewable energy, promising new advanced coal technology, and nuclear power.

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