Gulf Leases Start*

U.S. to Offer New Oil Leases in Gulf of Mexico

By Chris Baltimore

Reuters

Monday, July 2, 2001; 3:04 PM

The Bush administration will lease 1.47 million acres of the eastern Gulf of Mexico to oil companies, but in a nod to Florida Gov. Jeb Bush no drilling will be allowed near that state's shoreline, the Interior Department said Monday.

The department fashioned a compromise to settle a dispute that had pitted President Bush against his younger brother, who is concerned about protecting his state's pristine beaches and tourism industry.

The president, a former Texas oilman, has long been on record as favoring drilling throughout the Gulf of Mexico to find new sources of energy for the nation.

"The president has heard the voices of (the) people of Florida," White House spokesman Ari Fleischer told reporters. "He has done just what he said he'd do, which is work with the governors of all the states of the Gulf of Mexico and come out with a plan that is environmentally sensitive and balanced."

Fleischer said he did not know if the president had spoken with his brother about the matter.

Gov. Bush is up for re-election next year in a state that ties much of its economic prosperity to tourism and beach activities. One of his opponents may be Democrat Janet Reno, who served as attorney general in the Clinton administration.

The acreage available in the planned lease sale excludes anything within roughly 100 to 300 miles of Florida's coastline, Interior Secretary Gale Norton said.

"You'll be able to stand on any beach in the state of Florida, and from it you will see no development offshore," Norton told reporters at a news conference to announce the leasing plan.

The government said it cut in half the acreage of the eastern Gulf of Mexico to be leased, the first sale for the region since 1988. The new area contains an estimated 185 million barrels of crude oil and 1.25 trillion cubic feet of natural gas.

"This compromise allows the economic development that Louisiana would like to see. It allows the energy development that is necessary for the entire country and it responds to the concerns of the state of Florida," Norton said.

Details of the lease sale will be released in October, with actual bidding taking place in December.

Bonus bids in the offshore sale are "conservatively" estimated to generate $136 million and could be much higher, Norton said.

"As we proceed with this proposed lease sale, we remain committed to ensuring that all activities are done in the most environmentally responsible manner possible," Norton said.

Last week, the House of Representatives voted 247-164 to block drilling in Florida's offshore Gulf waters through next April in an amendment attached to the Interior Department's annual spending bill.

The Senate has yet to act on the measure.

Norton said the House vote "was not binding on us" and did not affect the department's action.

The Interior Department also said it would soon release a proposed offshore leasing plan for 2002 through 2007. That plan will include the ban on drilling near Florida's coastline, Norton said.

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