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Feds to buy back Florida energy rights

WASHINGTON (CNN) -- The federal government will buy back the rights to drill for natural gas and oil in the eastern Gulf of Mexico, off the Florida Coast, the Bush administration announced Wednesday.

In a related move, it said the National Parks Service will buy privately held mineral rights under three Florida wildlife refuges.

"It just did not seem right that 25 miles off that coast that there would be the possibility of drilling," Florida Gov. Jeb Bush told reporters after attending the brief White House event. "Today that possibility no longer exists."

Under the deal, the Interior Department will pay $115 million to Chevron, Conoco, and Murphy Oil to buy out nine leases in the Destin Dome, a large natural gas field offshore from Pensacola, Florida. In addition, two other leases will be retained by Murphy Oil "for accounting purposes" but will automatically be transferred to the state of Florida after 20 years, said David Struhs, secretary of the Florida Department of Environmental Protection. Those sites will remain dormant, he said.

The Interior Department also will exchange $120 million in cash or bidding credits on future Outer Continental Shelf sales for mineral rights held by Collier Resources under 765,000 acres of the Everglades. The areas are in the Big Cypress National Preserve, the Florida Panther National Wildlife Refuge and the Ten Thousand Islands National Wildlife Refuge.

In a written statement, President Bush called the deals "important steps in preserving some of our nation's most beautiful natural treasures."

Gov. Bush also praised the agreements as "historic," particularly the one stopping drilling off Pensacola.

Interior Secretary Gale Norton, who also attended the announcement, told reporters, "Our approach has been to have a balanced energy policy, and today's decision indicates that balance. ... This does allow us to prevent the most immediate, most in-shore area of potential oil and gas development."

Tyler Dann, senior oil analyst for Banc of America Securities, said the price being paid for the leases may seem low, but "something is better than nothing."

"Destin Dome is considered to be a considerable natural gas field ... but if the area isn't going to be developed by the state or federal government, then it's worth zero to the oil companies," Dann said. "This is a case in which something is definitely better than nothing."

The deal does not require formal legislation or any Congressional approval, Norton said.

Polls show roughly 75 percent of Floridians oppose offshore drilling.

Quizzed about whether the announcement would help his re-election bid, Gov. Bush responded, "I hope so. But more importantly it is good public policy. And when there's a convergence of good politics and good public policy, I don't think we should be ashamed about it."

The White House had decided against television coverage of the president's Oval Office meeting with his brother, Norton and Florida state officials, who afterward spoke with reporters outside.

--Correspondent Kathleen Koch at the White House contributed to this report




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