US House panel to probe MMS lease transactions: Chairman

Washington (Platts)--8Jun2006

The chairman of a House subcommittee investigating offshore oil and
natural gas leases issued by the Minerals Management Service said the panel
is looking into the possibility of "criminal activities" by government
personnel responsible for the transactions.

Representative Darrell Issa, Republican-California, told Platts that the
potential scenarios his staff is considering include potential bribery of
staff by industry representatives seeking unrestricted suspension of royalties
on oil and gas production.

MMS has acknowledged that it inadvertently left out of 1998 and 1999
offshore leases provisions that would have waived royalties only as long as
oil and gas prices remained below a specified level. The omission could cost
the government $10 billion in lost royalty proceeds.

Issa was speaking following a hearing on the 2006 hurricane season by his
Energy and Resources Subcommittee. He cautioned that the investigation was
ongoing and weighing a range of circumstances, including that the oversight
could have been an honest mistake.

He said the panel will hold additional hearings on the leases, possibly
including one with industry representatives.

"We haven't found anything internally to indicate that this is anything
other than a grievous mistake in processing the leases," an MMS spokesman said
Thursday. "MMS has, however, asked the Office of the Inspector General to look
into how this happened. We have been cooperating fully with all congressional
inquiries and will continue to do so."

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