U.S. Interior Secretary Ken Salazar said on Monday that the department would later this week take its first step toward allowing for a new evaluation of the oil and gas resources off the Atlantic coast.

He said that the Interior Department would on Thursday initiate a 45-day public comment period on the environmental impacts of allowing seismic operations in the Atlantic. Six companies have applied to conduct seismic operations in the coastal waters and another three have indicated interest in doing so.

"We do not know a lot about the Atlantic," Salazar told the Platts Energy Podium. "That's because for 30 years there has been no geophysical information that's been developed in connection with the resources out in the Atlantic."

The Obama administration has been taking a careful approach to opening up U.S. coastal waters to more exploration since Congress allowed a drilling moratorium to expire in 2008. The Interior Department also has yet to release a leasing plan for the five-year period from 2007 through 2012 after a court threw out an earlier plan developed under the Bush administration.

Salazar said the leasing plan could be released soon, repeating projections he has been making for months. He added that the Interior Department hopes to combine a new five-year plan with an updated plan for the 2007-2012 period. Oil companies such as Royal Dutch Shell Plc (RDSA) have said that plans to begin exploring in Alaskan coastal waters under leases granted in 2008 cannot begin until the Obama administration finalizes the five-year blueprint.

Oil and gas companies landed in the Obama administration's crosshairs last year when the White House proposed taking away more than $30 billion in tax incentives from the industries. Congress never went along, but the industry fears that the Obama administration may try again with the fiscal 2011 budget proposal.

"The guiding principle here really ought to be that we need to get a fair return for the American taxpayer," Salazar said. He declined to provide details of the budget proposal, but compared the federal government's 12.5% royalty rate for onshore leases with royalties imposed by Texas, which he said range from 20% to 30%.

Salazar said that he hopes to have a "good, constructive" relationship with the oil and gas industry. "It doesn't mean the trade associations won't throw a lot of spears at my head."

Salazar said that he will head to Boston next week as part of efforts to resolve a dispute over the country's first offshore wind project. Some local residents object to the project, which is planned off the coast of Cape Cod, Mass. He said that the Cape Wind project was "important for this country" but won't determine the direction of offshore wind development in total.

Gas locked in underground rock known as shale is "a promising source of energy and it's something that we all are learning a lot more about," Salazar said. He said that "it would be wrong for us not to look at shale gas as part of our energy portfolio."

On mountaintop removal coal mining, the controversial practice of blasting off mountaintops to access the coal seams underneath, Salazar said that the Interior Department is still working on a rule to protect streams from the rock and dirt that is created under the process.

The Interior Department had asked an appeals court to send back a last-minute Bush administration rule that allowed companies to avoid setting up a buffer between valley streams and mining debris, citing numerous deficiencies. But a district judge rejected the motion, saying that throwing out the rule would "wrongfully permit" the federal government to bypass standard administrative procedures.

On the possibility of drilling for oil locked in shale, Salazar said that recently granted research and development leases would help answer important questions, including how much water and energy the process requires.

"The research and development needs to take place before we embark on it as a panacea for the nation's oil needs," he said.

-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; Siobhan.Hughes@dowjones.com
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