Washington (Platts)--10Jan2008

The US Minerals Management Service said Thursday it will go forward with
its plan to regulate alternative energy development on the Outer Continental
Shelf.

In its record of decision published Thursday in the Federal Register, MMS
said it would follow the preferred alternative presented in its November final
programmatic environmental impact statement, which allows MMS to create
regulations governing leases, easements and rights-of-way for alternative
energy projects on the OCS.

"The programmatic environmental impact statement is a crucial step in
understanding the [effects] of a new and unprecedented industry in the [US]
and provides an excellent starting point for future, more detailed regional
and project-specific analyses," said MMS Director Randall Luthi.

The rules that will be written based on the EIS will cover production
activities, as well as "transportation, or transmission, of energy from
sources other than oil and gas," which include wind, solar, wave and ocean
current energy, MMS' announcement said. Hydrogen production also would
fall under the rules.

Under the record of decision, MMS also will develop a program for leases,
easements and rights-of-ways on old OCS structures converted for alternative
energy activities.

Until final rules are released, MMS will authorize projects on a
case-by-case basis. Draft rules are expected in April, when the final EIS was
released, and final regulations are expected to be written by the end of 2008,
Luthi said.

Alternative energy is a new jurisdiction for MMS, which is a part of the
Department of the Interior and traditionally has been responsible for oil,
natural gas and mineral resources onshore and on the OCS.

The Energy Policy Act of 2005, however, called on Interior to oversee
alternative energy development on the OCS.

Beginning in November, MMS established a program for experimental
alternative energy projects, which would measure alternative energy resources
and development potential on the OCS.

So far two suggested projects -- including the Cape Wind Energy Project
in Massachusetts' Nantucket Sound -- would fall under the MMS alternative
energy OCS leasing. Cape Wind has faced fierce opposition from local community
groups and US Senator Edward Kennedy, a Massachusetts Democrat.

--Derek Sands; derek_sands@platts.com