Ocean Oil Lease Hearing Renews Debate

In the face of plummeting oil prices and widespread retrenchment in the oil industry, the federal government opened hearings in California Tuesday on Interior Secretary Donald P. Hodel’s proposed five-year offshore oil and gas development plan.

The oil industry called for lower minimum bids for such leases while representatives of local governments from Santa Barbara to San Diego assailed the plan’s environmental impact statement for failing to consider the effects of offshore development on air and water quality, fishing and tourism and the impact on local government services.

The hearings by the Interior Department’s Minerals Management Service were held in Los Angeles and San Francisco, marking the latest phase in a multistep process intended to put the plan into effect by January of 1987.

42 Sales Planned

Hodel’s proposal is a master plan for 42 oil and gas lease sales off U.S. coasts between 1987 and 1991. Separate hearings and studies are required eventually for each of the proposed sales of leases.

But the hearings come at a time when falling international oil prices have forced oil companies to lay off thousands of workers and severely cut back their exploration budgets, prompting speculation that oil company interest in such leases may be waning.

“We are overwhelmed with bad news,” Unocal spokesman J. J. Wasicek told the hearing in Los Angeles. John E. Petricko of Texaco proposed reducing the government’s $150-an-acre minimum bid to $25 to $50 an acre. He later told a reporter that Texaco’s proposal reflects the company’s preference to allow market conditions, rather than “arbitrary” government decisions, to determine the value of offshore tracts.

Pressing Ahead

Despite market conditions, the Interior Department has opted to press ahead with its five-year plan, declaring that a world awash in low-cost oil merely masks longer-term price hikes as resources become scarce and U.S. dependence on foreign oil increases.

“We’re in a short-term benefit and a long-term problem,” William E. Grant, regional director of the Minerals Management Service, said in an interview.

“How do you proceed with this (plan) under the financial and economic difficulties we face and provide for future energy supplies? It’s a real dilemma,” Grant said.

Urge Exemption for Bay

Many local officials urged that Santa Monica Bay be put off limits to oil and gas drilling.

Among those who criticized Hodel’s plan were the San Diego Assn. of Governments, which represents all 16 local governments in San Diego County; Santa Barbara County, and the cities of Los Angeles, Santa Monica, Redondo Beach, Laguna Beach and Newport Beach.

The only local government official to support the plan was Jim Monahan, deputy mayor of Ventura. Offshore oil development, he said, “is a vital part of our community income.”