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

    WASHINGTON, Sept. 17 /CNW/ -- 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, A
recording of the Randall Luthi session is available via podcast at
    About Platts:
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