Union Tribune

June 20, 2002 

Offshore drilling negotiable, officials say
Oil lease buyout among possibilities


By DANA WILKIE 
COPLEY NEWS SERVICE 

WASHINGTON Bush administration officials yesterday said
they're willing to negotiate with California on offshore oil drilling
and they wouldn't rule out requests from Gov. Gray Davis to
buy back undeveloped Central Coast oil leases to protect them
from drilling.

The Interior Department offered last autumn to buy at least 13
leases in exchange for drilling on others, but was rejected a
fact Davis officials didn't reveal when they recently claimed Bush
was unwilling to honor the governor's plea.

"If the state of California is determined not to have any new
offshore drilling . . . the Bush administration would be pleased to
enter into discussions about a permanent solution for the federal
leases," Interior Secretary Gale Norton wrote in a letter
yesterday to GOP gubernatorial candidate Bill Simon, who
conveyed the administration's willingness to negotiate after
meeting with White House and Interior Department officials.

"I got the impression from them that everything is on the table,"
said Simon, who earlier this month declared his opposition to
offshore oil drilling. "A buyout would clearly be on the table."

Davis, a Democrat, and Simon the wealthy businessman who
has the president's backing in his campaign to unseat Davis
have both called on Bush to buy back from oil companies 36
offshore tracts where the companies want to drill. The oil
companies have sued the federal government because they've
been prevented from drilling.

Bush recently did something similar in Florida: He agreed to pay
three oil companies $115 million for nine leases off the Florida
coast believed to contain a natural gas field. The agreement
settled a lawsuit three companies brought against the federal
government over permission to begin exploration. 

Some observers believe Bush's move was designed to help his
brother, Florida Gov. Jeb Bush, who is up for re-election, and to
secure votes in a state the president narrowly won in 2000.

When Davis recently asked Bush to do for California what he did
for Florida, Norton wrote Davis a letter saying her department
was open to negotiations. At the same time, she outlined several
differences between the situations in Florida and California.
Some observers read her letter as a refusal to consider Davis'
request.

However, yesterday a spokeswoman for the department's
Minerals Management Service which manages the 36 leases off
Santa Barbara and Ventura counties said Norton never meant
to rule out the "buyback" option.

"I don't think anything is out of the question," said the
spokeswoman, Dian Lawhon. "We have never said that we
refused to buy back the leases."

The department offered in October to buy back 20 leases to
prevent drilling if California would allow exploration on 16
leases using long-distance drilling techniques that run
pipelines several miles from shore, said Norton spokesman Mark
Pfeifle.

In a letter to the Interior Department in November, Davis' legal
affairs secretary Barry Goode said, "California is not interested in
engaging in negotiations over such a proposal."

"The governor rejected our initial request to find a resolution,
but we are willing to sit down and negotiate," said Pfeifle, who
didn't rule out buying back all 36 leases.

Goode yesterday said the Interior Department offered to buy
back only 13 leases, and to develop 23. Goode said he told the
Bush administration this would be "contrary to the principles
that Gov. Davis has stood for."

Lawhon cautioned that it may be too soon to determine whether
oil companies are willing to settle their lawsuit by selling back
their California leases to the Interior Department. The
companies filed their lawsuit in January.