Pitfalls in Interior's New Accelerated Offshore Leasing Program Require Attention

GAO was requested to review the Department of Interior's proposed 5-year offshore oil and gas leasing and development program. In addition to accelerating leasing, the new proposal calls for changes reducing the time for environment analyses and allowing for larger acreage offerings in lease sales. The evaluation focused on the following: (1) differences between the proposed and current programs; (2) processes by which Interior developed the new program and the influence of non-Interior agencies and other affected groups in the process; (3) Interior's capabilities to handle the accelerated program; (4) capability of industry to lease and diligently explore additional offshore land in a timely manner; (5) potential impacts of the program in terms of the amount of land to be leased, the economy and the environment, receipt of fair market value for leased lands, small company participation, and competition in lease sales; (6) legal implications of the program; and (7) soundness and workability of the program.

GAO found that Interior's 5-year estimates of appropriations and staffing show the proposed program costing $40 million less and being accomplished with about 948 fewer staff years than the June 1980 program. Redesign of the program was done within Interior with little or no input from other Federal agencies and only minor consideration input from the public sector. GAO believes that it is important for Interior to have the ability to administer the new program in an efficient and timely manner and be able to deliver leases free of litigation for which permits for exploration and development can be obtained without problems. Industry appears fully capable of increasing its offshore activities and is currently making plans to do so. Interior's recent action in extending lease terms from 5 to 10 years in difficult areas could also increase the amount of land leased. GAO concluded that Interior's program represents a new initiative to determine the hydrocarbon potential of the offshore. Such an assessment is sorely needed inasmuch as the oil and gas potential of the offshore is an unknown in the equation for solving the Nation's future energy needs. However, Interior's planning for the program in terms of: (1) detailing how the program is to be implemented in practice; (2) assessing the potential impacts of the program; and (3) evaluating its capabilities to accommodate the program, needs constant attention. Congress also needs to be satisfied that Interior has thought through and taken appropriate steps to successfully accomplish the program as planned.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John W. Sprague Team: General Accounting Office: Energy and Minerals Division Phone: (202) 512-7783