Competing sides cite flaws with oil plan

07 03, 2012 by Houma Courier

Federal oil-and-gas issues traditionally divide industry supporters and environmental advocates, but President Barack Obama’s proposed five-year leasing plan for the Gulf of Mexico has both sides raising objections, though for different reasons.

The U.S. Interior Department submitted the plan to Congress for review late last week, recommending 12 lease sales for the Gulf’s Outer Continental Shelf through 2017. The interior secretary is expected to implement the plan in roughly two months, and the first sale could be conducted this fall.

The U.S. Bureau of Ocean Energy Management has already overseen two Gulf lease sales since the 2010 BP oil spill, including one in December in which 21 million acres were offered and another last month that attracted $1.7 billion in record high bids.

Regan Nelson, senior oceans advocate at the Natural Resources Defense Council, an environmental group, said the government is rushing back into exploration without learning the lessons of the BP disaster.

“The plan is too aggressive, too broad and too rushed,” Nelson said. “An array of critical safety and environmental issues must be addressed first before America puts more coastal areas at risk.”

Increased oil-and-gas drilling is not the best way to help meet the nation’s energy needs, he added, and the Obama should be supporting clean, renewable energy sources instead.

The five-year plan outlines lease seals for Gulf and Arctic waters only; the Atlantic and Pacific coasts remain closed to oil-and-gas activity.

U.S. Interior Secretary Ken Salazar calls it “targeted leasing,” meaning the government is offering leases that officials contend are “best suited for exploration” based on all available information and technology.

“When it comes to domestic production, the president has made clear he is committed to producing more oil and natural gas safely and responsibly,” Salazar said. “The numbers speak for themselves. Every year the president has been in office, domestic oil and gas production is up, imports of foreign oil are down, and currently the nation is producing more oil than any time in the last eight years.”

Don Briggs, president of the Louisiana Oil and Gas Association, countered that the administration’s overhaul of energy activity and complex permitting requirements are stifling investments. For example, Briggs said only 48 companies submitted bids during last month’s lease sale, compared to 77 companies in 2010.

“This 38 percent decline in companies bidding is clearly due to the uncertainty that companies feel from the federal government and their unfavorable energy policies,” he said.

U.S. Rep Steve Scalise, R-Metairie, said the five-year plan closes more areas of production than it opens.

He also said the administration ignored feedback from Gulf Coast states — requests to increase domestic production — when the plan was originally released in November.

This final version is essentially unchanged, and Scalise said it’s Obama’s way of “doubling down on his already failed agenda” of cutting foreign dependence on oil.

“Closing off 85 percent of the OCS to domestic energy exploration is like an early Christmas gift to OPEC nations,” said Scalise, whose district will include Terrebonne and Lafourche parishes this fall. “By saying no to exploration in the OCS, President Obama has also said no to thousands of American jobs and he also made our country more dependent on Middle Eastern oil.”

The Organization of the Petroleum Exporting Countries, or OPEC, is an group of oil-producing nations that includes, among others, Saudi Arabia and the United Arab Emirates.

For Republicans, who are pushing for enhanced drilling as this fall’s congressional and presidential elections approach, it’s part of a larger campaign theme, which makes the five-year plan highly political.

Still, there are Democratic critics as well, including U.S. Sen. Mary Landrieu of New Orleans, who argued that the plan “seemingly ignores the vast oil-and-gas resources available off the shores of the U.S.” and offers nothing new on the side of exploration and production.

“It is disappointing this administration is so shortsighted on the tremendous benefits this industry brings to the U.S.,” she said.

If there’s a silver lining, she said, it’s that the future leases included in the Eastern Gulf are areas opened under the Domenici-Landrieu Gulf of Mexico Energy Security Act.

That means the bonuses and rental rates from lease sales scheduled for 2014 and 2016 will be shared with the four Gulf producing states, including Louisiana, almost immediately. And once leases are producing, royalties also will be split among those states.

The Domenici-Landrieu Act secured a 37.5 percent share of offshore oil-and-gas revenue for Louisiana. The money must be used for flood protection and coastal restoration projects.

U.S. Sen. David Vitter, a Republican from Metairie, said Obama’s original leasing plan, which was withdrawn, initially called for more lease sales and the opening of nearly all of the Outer Continental Shelf.

For critics such as Vitter, the revised plan is better than nothing, though it signals rough waters ahead for those who want more production.

“Until we see a positive trend with lease sales and issuing drilling permits, no one should be remotely convinced that Washington’s off-course energy policy is on the right track,” Vitter said.

The plan is also a disappointment to those who want less drilling and stiffer safety regulations, said Jacqueline Savitz, vice president for North America at Oceana, an environmental advocacy group.

“Encouraging clean-energy investments would create jobs without risking people’s lives and livelihoods,” Savitz said. “Instead, this plan sets us up for another devastating oil spill, which endangers human lives, coastal economies and marine life.”