• This is the sixth 5-Year program since passage of the OCS Lands Act Amendments of 1978 and is a routine part of the process of providing energy from offshore public lands to the American people.

• The draft proposed program is based on consideration of only the areas of the OCS that have not been withdrawn from leasing through June 30, 2012. I also want to make it clear that what we are proposing today represents the outer limits of what will be included in the final program—the program can only get smaller, not larger.

• The program proposes for lease sales those available areas that have the highest resource values and highest industry interest while recognizing environmental concerns and heeding the recommendations of affected states and local governments based on their relevant laws, goals, and policies. In addition, the program also recognizes the tremendous technological capabilities and the resulting record of safe and environmentally sound operations that the oil and gas industry has demonstrated offshore.

• The draft proposed program would make available for the Nation as much as 22 billion barrels of oil and 59 trillion cubic feet of natural gas. Let me note that this is the first opportunity that we have had to use our 2000 OCS National Resource Assessment estimates in a program process so some of the numbers you may be used to hearing have been updated.

• Let me take you on a tour of the Program by geographic area. [Except where otherwise noted, all resource estimates we are giving are in the "economically recoverable" category.]

• These two areas have the highest resource potential and industry interest and the draft proposed program recognizes this by continuing the long-running policy of scheduling annual lease sales to which the industry has become accustomed.

• The resources available in this world class petroleum province are estimated at almost 3 to over 4.5 billion barrels of oil and 16 to 24 trillion cubic feet of gas for the Western Gulf and 4 to 7 billion barrels of oil and 21 to 32 trillion cubic feet of gas for the Central Gulf.

• This program area reflects the Secretary’s recent decision in the proposed Notice of Sale for Sale 181 to exclude areas in the original Sale 181 area to address concerns expressed by the State of Florida and to minimize potential conflicts with military operations.

• We analyzed the area of the Eastern Gulf that was proposed for Sale 181 in the 5-Year program for 1997-2002, which is the only portion of the planning area not withdrawn under Section 12 of the OCS Lands Act and has high resource potential and industry interest.

• After considering the comments of interested and affected parties, we decided to include in the draft proposed program lease sales scheduled in 2003 and 2005 for only the portion of the area that is in deeper water directly off Alabama and adjacent to the Central Gulf Planning Area.

• The resources in the area to be offered are estimated at 100 to 300 million barrels of oil and 500 billion to a little more than 1 trillion cubic feet of gas.

BEFORE I DETAIL OUR PLANS FOR THE ALASKA OCS, LET ME REITERATE THAT NO LEASE SALES ARE PLANNED FOR AREAS OFFSHORE THE ATLANTIC OR PACIFIC OCS.

• On the Alaska OCS we are proposing several sales in the Beaufort Sea and Cook Inlet/Shelikof Strait Planning Areas, consistent with the interest expressed by companies, as well as the recommendations of the Governor of Alaska and the State’s administration of its oil and gas program.

• Three sales in the Beaufort are to be held in 2003, 2005, and 2007 with the area targeted for leasing the same that was developed by consensus during the preparation of the previous 5-year program. The sale area excludes the important whale feeding grounds to the east.

• The areas identified for lease consideration includes the most prospective part of the area adjacent to previous discoveries in both Federal and State waters which are also noted to have high industry interest and the most likely to be developed using current technology.

• The resources available in this area are estimated at about 2 to 3 billion barrels of oil.

• Two lease sales — one in 2004 and another in 2006 — are to be held in the Cook Inlet/Shelikof Strait area. It excludes the Shelikof Strait portion of the planning area as recommended by the Governor of Alaska.

• Substantial quantities of oil and natural gas are being produced on state lands and in State waters adjacent to the Cook Inlet OCS. The State’s current 5-year program schedules annual areawide sales in state waters of Cook Inlet. In addition, some of the State’s prospective oil and gas areas extend onto the federal OCS.

• Industry considers Cook Inlet, along with the Beaufort Sea, to be of the most immediate importance for hydrocarbon development on the OCS off Alaska. Another factor in deciding to include this area in the program is that a key issue facing south central Alaska is whether the region will have sufficient natural gas supplies in the future. The Cook Inlet OCS is an important option for these future gas supplies.

• The resources available in this area are estimated at 400 to 500 million barrels of oil and 600 to 900 billion cubic feet of gas.

• As in the previous two programs, the draft program proposes to offer a portion of the Chukchi Sea area in conjunction with the Hope Basin area in an effort to tap this area’s long-term potential for natural gas.

• The lack of infrastructure in these areas makes the resources uneconomic to produce at today’s prices. Not taking into account economics, the resource potential of the Chukchi is quite significant. The resources available in this area are estimated at 1 to 7 billion barrels of oil. The Chukchi Sea is estimated to contain another 61 trillion cubic feet in conventionally recoverable gas.

• Once a natural gas pipeline is built in Alaska, the picture changes. Taking into account our Nation’s long-term need for natural gas and domestic supplies of oil, we believe it is prudent to provide access to this promising area.

• Sales are scheduled in 2004 and 2007 for this combined program area that excludes areas of the Chukchi Sea that were excluded from previous programs and lease sales. Notably, the Chukchi Polynya and blocks in the vicinity of Barrow have been excluded as recommended by the Governor of Alaska to protect whale migration pathways.

• The Norton Basin area is included to provide an opportunity to explore and possibly develop natural gas resources for local use on the West Coast of Alaska. Many people do not realize that there are many remote areas in Alaska that lack access to affordable energy. The resources available in this area are estimated at 20 to 30 million barrels of oil and from 1 to a little less than 2 trillion cubic feet of gas.

• Areas of the Norton Basin would be offered as part of a new approach to OCS leasing that targets a few blocks by requesting nominations and comments and then moving forward only if environmentally acceptable blocks are identified.

• One sale is proposed in the 5-year period and it could be held as early as 2003.

• As mentioned before, the process leading up to approval of a new program will include preparation and of two more proposals and a draft and final Environmental Impact Statement for public review and input. Let me take a moment to outline the next few major milestones in the process.

• The 60-day comment period following issuance of the Draft Proposed Program ends on September 21, 2001. After that the remaining steps are:

1. Issuance of the Proposed Program and Draft EIS in late October, followed by a 90-day comment period.
2. Issuance of the Final EIS and Submission of the Proposed Final Program to the President and the Congress, in April 2002 followed by a 60-day waiting period.
3. The approval of the new Program by the Secretary in June 2002 to take effect on July 1, 2002.

• I would like to end my presentation by opening the floor for any questions you might have.