Nine producers have notified the federal government that they're tired of waiting and would like their money back. They've paid more than $1.2 billion in cash bonus payments and about $8 million in rental payments for 40 outer continental shelf (OCS) leases in the Santa Maria Basin and Santa Barbara Channel off southern California's coast, and essentially have nothing to show for it. So they have delivered their message in a lawsuit with the U.S. Court of Claims. The plaintiffs are Aera Energy LLC, the California joint venture of ExxonMobil Corp. and Shell Oil Co.; privately held Santa Barbara-based producers Ogle Petroleum Inc., Olac Resources LLC and Poseidon Petroleum LLC; Houston-based Noble Affiliates Inc. and Nuevo Energy Co.; TotalFinaElf; and Denver-based Delta Petroleum Corp. and Amber Resources Co. The blocks were issued between 1968 and 1984, for five-year terms following six OCS lease sales. They include provisions for suspensions so they won't expire due to unforeseen circumstances. The initial suspensions came at the original lessees' requests. But they also spent "hundreds of millions of dollars, conducting seismic, exploratory and other operations on the leases," the lawsuit says. The lessees also drilled more than 40 exploratory wells that have located "reserves of oil in the hundreds of millions of barrels," it adds. The Minerals Management Service (MMS) suspended the leases in October 1992 after Congress amended the Coastal Zone Management Act in 1990 to give coastal states a greater voice in federal OCS activity. The MMS intended to take three years to study California offshore energy resources, but spent seven years instead. The Santa Barbara, San Luis Obispo and Ventura county governments weren't satisfied with the results. When the MMS suspended the leases again in November 1999, it included several milestones for the lessees to satisfy to show that exploration was proceeding. California sued the Interior Department secretary at about the same time, contending that the MMS granted the new suspensions without checking first to see if they were consistent with the state's coastal zone management program. A federal district court ruled for the state in June 2001. Meanwhile, the lessees had spent more money trying to reach the MMS milestones to no avail. In the most dramatic instance, Aera and Noble Affiliates' Samedan Oil had to notify a contractor en route to their leases from Houston to turn back. The lessees' complaint cites a U.S. Supreme Court decision that the U.S. "commits a material breach of OCS leases if it attempts to 'deviate significantly' from the 'procedures and standards' in effect when the leases were entered, or fails to carry out its own obligations relating to those leases in a 'timely and fair' manner." That case involved leases offshore Cape Hatteras, North Carolina, that had been awarded to Mobil and others. MMS eventually bought those blocks back, and probably will settle this complaint in a similar manner. -Nick Snow

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