Washington (Platts)--28May2009

Some US House of Representatives Democrats have asked Interior Secretary
Ken Salazar to void oil and natural gas leases that the US Department of the
Interior issued in the Chukchi Sea and cancel pending lease sales in the sea,
in light of a recent federal court decision challenging the agency's plans for
those auctions during the Bush administration.

Representative Maurice Hinchey, a New York Democrat, and 19 other
Democrat lawmakers on Wednesday released a letter to Salazar urging him to use
that court decision and two others as an opportunity to slow down and reassess
oil and gas development plans for not only the Chukchi Sea but also the Bering
and Beaufort seas off Alaska.

The letter suggests that Salazar may be acting soon on offshore Alaska
issues, saying "over the next several days you will have to make a set of
important decisions regarding oil and gas activities" involving the three
seas.

"We respectfully suggest that you take full advantage of the opportunity
which has been provided to break from the Bush administration's rush to commit
these sensitive, rapidly changing regions to oil and gas development and to
demonstrate to the American people that the new administration at the
Department of the Interior is indeed doing business differently," they said.

Hinchey spokesman Jeff Lieberson said Thursday the lawmaker's staff had
heard that the Obama administration "may come out with a position" on offshore
Alaska issues "in the next few days."

But Interior spokesman Frank Quimby indicated Thursday that the
department would not be making any such announcements soon. "We're waiting for
some clarification from the court before we proceed," Quimby said, referring
to a motion that the US Department of Justice filed with the US Court of
Appeals for the District of Columbia Circuit earlier this month.

In that motion, filed on Interior's behalf, DOJ asked the court to
clarify an April 17 ruling that vacated Interior's entire oil and gas leasing
plan for 2007 to 2012 because of what the court said was insufficient
scientific and environmental analysis by the department in planning for
development in the Alaska seas.

Four lease sales have already been completed under the five-year
plan -- one in the Chukchi Sea and three in the Gulf of Mexico -- leading to
the issuance of more than 2,300 leases and the payment of about $10 billion in
bonus bids to the government, according to DOJ's filing.

Lease Sale 193 in the Chukchi Sea in February 2008--offering 5,354 blocks
covering 30 million acres--brought in a record $2.66 billion. The Chukchi
holds an estimated 15 billion barrels of recoverable oil and 77 Tcf of natural
gas, according to the Minerals Management Service.

The lawmakers asked Salazar to "accept" the circuit court's decision "as
it applies" to the Alaska seas, "thus eliminating pending lease sales and
voiding existing leases sold under Lease Sale 193 in the Chukchi Sea."

"We recommend that you include a full analysis of the Beaufort Sea,
Chukchi Sea and Bering Sea in your efforts on the new five-year plan before
making any decisions about this area going forward," they said.

The lawmaker also urged Salazar to have Interior prepare an environmental
impact statement on a Shell drilling plan for the Beaufort Sea. "In 2007, your
predecessor fast-tracked approval of a three-year play by Shell to drill in
the same area, failing to conduct an adequate analysis of the potential
impacts of the drilling, and the 9th Circuit Court of Appeals later enjoined
the plan," they said.

Hinchey and several of the letter's co-signers are members of the House
Natural Resources Committee, which oversees Interior. Hinchey also was a
critic of Interior leasing and royalty programs during the Bush
administration.

--Bill Loveless, bill_loveless@platts.com