OIL AND GAS:

Interior fires back at API chief

The Interior Department is firing back at American Petroleum Institute President Jack Gerard, saying he made several "inaccurate statements" yesterday when charging the Obama administration with slowing development of oil and gas resources.

"Mr. Gerard needs to check his facts before making statements that are so far off the mark," said Interior spokeswoman Kendra Barkoff in a statement. "Oil and gas production on federal lands and waters is up -- not down -- from 2008, and under Secretary [Ken] Salazar's leadership the Department has offered more than 56 million additional acres for development."

She added, "Interior's agencies will continue to promote oil and gas development in the right ways, in the right places, and with a fair return for the American taxpayer, regardless of the political spears Mr. Gerard may throw on any given day."

In a conference call with reporters, Gerard sharply criticized Interior's actions that he said have led to a dramatic drop in the leasing of federal land and waters for oil and natural gas development. Since Salazar took office, Gerard said, acreage leased "has shrunk to the lowest level on record." He also said revenues from lease sales in 2009 were less than $1 billion, compared with $10 billion a year earlier (Greenwire, Jan. 26).

Interior disputed his claims, saying that last year the administration offered "more acres for lease than several years on record." In fiscal 2009, Interior said, the administration offered more than 8 million more acres for oil and gas development, onshore and offshore, than in fiscal 2006.

The department also said the acreage offered far exceeded the oil and gas industry's demand in 2009. For example, the Bureau of Land Management offered 3.8 million acres in fiscal 2009 for oil and gas production, but industry bid on 1.8 million acres.

Revenues from oil and gas lease sales in 2009 were in line with recent years, the department said. Since 2001, four years showed higher oil and gas bonus revenues, and four years showed lower revenues. The $10 billion in revenues generated in 2008 by oil and gas lease sales "is an anomaly and is largely due to high prices on world markets," it said.

But API defended Gerard's statements.

"API stands by our facts," spokeswoman Karen Matusic said. "Interior fails to address Jack Gerard's point that leased acreage plunged in 2009. It agrees that lease revenues collapsed by more than 90 percent in 2009, during the first year of its tenure. Oil production did go up in 2009 over 2008. However that had nothing to do with the administration's stance on leasing. This production increase was the result of investments made by companies on acreage it leased under previous administrations."

Matusic added, "The oil and natural gas industry is ready to work with the administration to increase development of U.S. oil and gas resources to create new jobs, generate more revenue for the government and increase our nation's energy security. We just need the opportunity to do so."

API also released a statement saying that Interior cannot rebut Gerard's facts and that the department is not moving forward with leasing. "Interior's attack on the veracity of Mr. Gerard's comments is pure dissimulation," it said.

The back-and-forth statements are the latest in a series of escalating rhetorical conflicts between Salazar and industry groups. Earlier this week, Salazar refused to back down from his recent comments critical of the oil and gas industry, including saying they were "kings of the world" under the Bush administration (E&ENews PM, Jan. 25).

And in November, after API and the Independent Petroleum Association of Mountain States stepped up criticism of the administration and said Interior is not promoting domestic energy development, Salazar accused them of telling "untruths" and playing politics (Greenwire, Nov. 24, 2009).

During the same conference call where he made the controversial statements yesterday, Gerard said he would welcome an opportunity to tone down rhetoric and improve communication with Interior.

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