Washington (Platts)--19Mar2009

There is no "war on the oil and gas industry" by the Obama
administration, Interior Secretary Ken Salazar told the American Petroleum
Institute's board Thursday, saying instead he needs the industry's help in "an
honest accounting" of US natural resources under the Outer Continental Shelf.

Salazar, citing the expense of gathering seismic data for offshore
resources, asked for more assistance from the petroleum industry in gathering
an inventory of available resources in the OCS.

"Our data about oil and gas resources is either out of date or doesn't
exist," he said in remarks at the trade group's Washington headquarters,
according to a transcript released by the Interior Department. "In the
Atlantic, our limited seismic data is two or three decades old. This is a
challenge we need your help to address."

Estimates of what the OCS holds ranges from 18 billion barrels of
technically recoverable crude oil, according to the Energy Information
Administration, to as much as 86 billion barrels, according to the Minerals
Management Service. The same gap is present for natural gas, with estimates
ranging from 77 trillion cubic feet of natural gas, according to
EIA, or as much as 420 Tcf, according to MMS figures.

Salazar also said the Obama administration may be "changing how things
have been done before," especially in regards to royalty payments and taxes.

"We are going to take another look at royalty rates," Salazar said. "It
means that tax breaks that are no longer needed, and which the American people
can't afford, will disappear...but this is not, as some have suggested, a war
on the oil and (natural) gas industry."

Salazar defended his decision last month to cancel the sale of 77 leases
near national parks in Utah, saying the Department of Interior will hold 40
onshore federal oil and gas lease sales, even though the sales were crafted by
the previous Bush administration.

Salazar added that he supports research and development on oil shale,
"but that a 5% royalty rate for commercial production is simply too low."
Salazar said he would also free up significant portions of the OCS as
well as federal lands onshore for solar, wind and wave energy projects.

"We appreciate having had the opportunity to be with the secretary today
and hear his views on energy development," said Karen Matusic, an API
spokeswoman, who said the mood of the meeting was friendly. "He recognizes the
important role of oil and natural gas in meeting the nation's economic and
energy goals, and we look forward to working with him."

--Daniel Goldstein, daniel_goldstein@platts.com