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US military warns against eastern Gulf leasing

2 May 2017, 8.41 pm GMT

US military warns against eastern Gulf leasing

Washington, 2 May (Argus) — The US Defense Department wants to prolong a drilling ban in the eastern part of the US Gulf of Mexico, an area the oil industry is lobbying President Donald Trump's administration to open for leasing.

The area is estimated to contain 3.6bn bl of technically recoverable oil and 11.5 Tcf of natural gas but is largely off-limits to drilling until 2022. Existing infrastructure like pipelines from development elsewhere in the Gulf makes the region particularly attractive to oil and gas producers, but military officials worry that drilling and production activity could impede use of the area for training and testing.

Trump opened the possibility of drilling in the region by signing a 28 April order directing the US Interior Department to consider making the Arctic and the Atlantic available for leasing. But the order does not specifically seek leasing in the eastern Gulf, and the Pentagon created additional hurdles last week by saying it supported extending the existing leasing moratorium beyond 2022.

"The Department of Defense cannot overstate the vital importance of maintaining this moratorium," acting under secretary of defense for personnel and readiness Anthony Kurta said in a 26 April letter to representative Matt Gaetz (R-Florida).

Oil industry groups say the eastern Gulf is critical to develop and the fastest way to boost production. "The eastern Gulf is the region that makes the most sense because it is close to existing infrastructure," American Petroleum Institute upstream director Erik Milito said yesterday.

The offshore industry has experience working alongside the military, Milito said. The US Congress enacted the existing moratorium in 2006, prohibiting leasing within 125 miles of Florida and giving the Defense Department power to limit leasing in the area for military reasons.

Democratic lawmakers support extending the leasing moratorium. US senator Ben Nelson (D-Florida) introduced a bill earlier this year that would prolong the moratorium until 2027. And Florida's tourism and fishing industries have fought nearby drilling because of concerns about the effects of an oil spill and increased industrialization of the coasts.

US interior secretary Ryan Zinke expects it will take two years to replace or revise an existing five-year offshore leasing plan. Zinke says the agency will take into consideration the views of nearby communities and other stakeholders before opening new areas for leasing.

The Defense Department did not respond for comment.

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