Leasing off Louisiana put off

State persuades U.S. to evaluate possible damage to coast by drilling

The federal government has agreed to postpone a planned oil and gas lease sale scheduled for March to give regulators more time to assess the effects of drilling activity on Louisiana’s fragile coastline.

The Interior Department, as part of an out-of-court settlement with the state of Louisiana, has agreed to do a more rigorous environmental analysis ”” including evaluating the damage wrought by hurricanes Katrina and Rita ”” before leasing any new acreage in the central or western Gulf of Mexico to oil and natural gas producers.

“For the first time in the history of leasing in the Gulf of Mexico, you have a producing state that has gotten the federal government to cancel a lease sale and say, ‘No more federal leasing will be done in the Gulf until an adequate environmental assessment has been done,’ ” said Sidney Coffee, a senior adviser to Louisiana Gov. Kathleen Blanco.

Blocks from the central Gulf that would have been made available in March will now be offered as part of a supersized central Gulf lease sale, probably in September.

The Interior Department’s Minerals Management Service also plans to auction off tracts in the western Gulf in August.

Louisiana filed suit against the service in July, arguing the government had not adequately evaluated the environmental ramifications of offshore oil and gas drilling activity.

Particularly worried about the loss of coastal wetlands, which act as a buffer against hurricanes, Louisiana officials point to a U.S. Geological Survey study, which estimated the two hurricanes had transformed 217 square miles of marshland into open water.

Louisiana asked the court to block a lease sale this past August covering acreage in the western Gulf.

U.S. District Court Judge Kurt Engelhardt allowed that sale to proceed, and the federal government collected $340 million in high bids from 62 companies. The Interior Department estimated these properties could yield up to 252 million barrels of oil and 1.4 trillion cubic feet of natural gas.

But Engelhardt also set a court date of Nov. 13 in the case. And he warned that state officials had a “substantial likelihood of success” for at least some of their claims.

“Resolving this dispute by agreement rather than litigation benefits our nation’s energy security,” Steve Allred, Interior’s assistant secretary for land and minerals management, said.

As part of the settlement, oil and gas companies wanting to explore on acreage won in that August lease sale will have to assess the environmental impact of their drilling plans and submit those reports to the state, Coffee said.

The American Petroleum Institute heralded the agreement Tuesday.

“This settlement means that the federal government will plan and hold lease sales in the Gulf of Mexico in 2007,” said Karen Matusic, a spokeswoman for the oil industry trade group.

“We … believe the industry, the federal government and the state of Louisiana can effectively work together to ensure that vital oil and gas resources in the Gulf are made available to meet our country’s energy needs in an environmentally responsible manner,” Matusic said.

The federal government plans to hold 11 lease sales for acreage in the Gulf of Mexico between 2007 and 2012.