The Associated Press December 20, 2011, 12:09PM ET

Miss. moves toward offshore oil and gas leasing

Mississippi state officials published regulations Monday to lease state waters in the Gulf of Mexico for oil and gas drilling.

The regulations could set the stage for a rerun of the public wrangling over offshore exploration that has already roiled the state's Gulf Coast twice in the past 15 years.

Mississippi Development Authority spokesman Dan Turner said the move could clear the way for a lease sale sometime in 2012, after a public comment period that ends Jan. 20. State officials said they believe that state waters largely hold natural gas, cutting the threat of large oil spills. They said drilling could produce $250 million to $500 million in royalties for the state over time, almost of all which is legally directed to education.

Mississippi Sierra Club head Louie Miller lambasted the move, saying the outgoing governor is doing a favor for the oil industry.

"Haley Barbour is blowing a kiss to BP on his way out the door," Miller said. "Less than three weeks left in office and he wants to pull a fast one."

Miller said drilling would spoil the Gulf Islands National Seashore, including two islands designated as wilderness areas. He also said that any economic gains to the state would be outweighed by tourists driven away by drilling.

Turner said Barbour directed the development authority earlier this year to move forward with issuing the leasing rules, saying the governor wanted to conclude the effort before he left office. MDA Director Leland Speed met Monday with officials in the three coastal counties as "a courtesy," Turner said. He said the authority plans to hold a public hearing on the coast in January or February, and is likely to issue the rules sometime after. That could clear the way for the state to take bids on leases later in 2012.

In 2004, Barbour and other drilling supporters backed the transfer of leasing authority from the state's Department of Environmental Quality to the Mississippi Development Authority. The environmental agency seldom had issued permits, but it was unclear how much demand there was. As few as five wells have been drilled in Mississippi waters in the past 60 years, and none found significant oil or gas. However, interest perked up after a University of Mississippi study projected that large amounts of natural gas are offshore.

Turner said that because little if any oil is believed to be there, Mississippians have little reason to fear a Deepwater Horizon-style massive spill like the one in 2010.

"This is tried and true technology," Turner said. "Texas and Alabama and Louisiana have been using it for decades. This is just an apples-and-oranges comparison to BP."

Miller disputed that characterization though, and said he distrusted claims that no oil is present.

The 2004 legislation sparked public controversy on the coast, where environmentalists, casinos and tourism promoters banded together to oppose drilling. Opponents were unable to stop the bill, but lawmakers put in rules that left most of the Mississippi Sound off limits.

"Our regulations are much more restrictive than our neighboring states," Turner said. "We eliminated the Sound, the area between the beaches and the barrier islands."

But drilling would still be visible from the mainland beaches, Miller said, saying the islands are about 10 miles offshore and activity would need to be 12 miles away to disappear over the horizon.

"Absolutely, you'll be able to see it from Beach Boulevard," he said.

A study commissioned in 2004 by opponents stated that a loss of 5 percent of tourists would outweigh any economic gains from drilling. And Miller argued that tourism on Alabama's Dauphin Island has suffered because it is surrounded by rigs.

Miller also said that the Gulf Islands National Seashore's barrier islands should not be turned into an "economic sacrifice zone" by allowing rigs to set up within a mile off their tips and southern shores. A federal law authored at Barbour's request by U.S. Sen. Thad Cochran, R-Miss., allows drilling underneath them. At the time the measure was passed, some environmentalists said it was an example of decreasing protection for national parks.

The rules would also allow drilling in the western end of Mississippi Sound waters north of Petit Bois Island, stretching northward toward the Grand Bay National Estuarine Reserve. Large quantities of gas are suspected to be present there.

MDA rules govern leasing and seismic exploration, but don't govern how drilling must be performed, Turner said. Those are set by the state Oil and Gas Board and the Department of Environmental Quality, he said.


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