Obama Expands Gulf Drilling

11 08, 2011 by Washington

WASHINGTON — The Obama administration cautiously offered up more areas in the Gulf of Mexico and off Alaska's coast to oil and gas drilling Tuesday but didn't go far enough to satisfy Republicans pushing to greatly expand drilling as a way to create jobs and wean the country off foreign oil.

Interior Secretary Ken Salazar unveiled a proposal to hold 15 lease sales for areas in the Gulf of Mexico, including two in the eastern Gulf, and three off Alaska's coast in the time frame from 2012 to 2017. The sales off Alaska, where native groups and environmentalists have objected to drilling, would be the first since 2008. They would be held late in the five-year time frame to allow for scientific evaluations in the Chukchi and Beaufort Seas, which Interior officials called a "frontier" for drilling. And they would be targeted to avoid areas with cultural and environmental sensitivities, officials said.

In the western and central Gulf, by contrast, the proposal puts all unleased acreage up for sale. There, drilling is more commonplace, infrastructure is well developed, and spill response plans have improved since the Gulf oil spill disaster in 2010.

The drilling plans are the latest iteration of President Barack Obama's strategy for energy production, which has continually shifted to account for political realities, high gasoline prices and environmental disasters such as last year's Gulf oil spill. Weeks before that disaster, the White House had talked of expanding offshore drilling off Alaska, in the Atlantic and throughout the eastern Gulf, in part to help move stalled climate-change legislation through Congress. It pulled back late last year after the blowout of BP's Macondo well caused the largest offshore oil spill in U.S. history.

In May, with Republicans in Congress passing bills to speed up and expand offshore drilling and with the public outraged over high gasoline prices, Obama directed his administration to extend existing leases and to hold more frequent sales in the federal petroleum reserve in Alaska to boost oil production.

Tuesday's proposal goes slightly further by putting parts of the Cook Inlet, Chukchi and Beaufort seas back up for sale. President George W. Bush had opened up those areas for drilling in 2008, as part of a proposal that included drilling off the West and East coasts, and in the eastern Gulf.

Obama scrapped drilling off Virginia in early 2010, barred drilling in Alaska's Bristol Bay and never considered drilling off the Pacific coast, where opposition is widespread.

Besides the Gulf and the Alaska leases, the proposal includes a sliver in the eastern Gulf about 150 miles off the Florida coast. The rest of the eastern Gulf is off limits due to a congressional moratorium.

The plan drew mixed reviews Tuesday from the leaders of two Louisiana oil and gas industry organizations.

"The good news is there is a (five year) plan. The bad news is it's not any different," Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, said.

The plan is very important because, once it's approved, only areas included in the plan can be leased for oil and gas exploration for five years, John said

"It's a little disappointing because it doesn't open up any new areas that we've been talking about for years," he said. "No other land will be available for leasing outside this plan."

Both John and Don Briggs, president of the Louisiana Oil and Gas Association, said the plan leaves untapped domestic energy resources in Alaska and east and west coasts.

"We have some great concerns that the new plan will actually cut off access to necessary resources and set us back as a nation in our pursuit for energy security," Briggs said.

The result may be continued high energy prices for U.S. consumers, he said.

The Obama administration plan is not final, and John, a former congressman, said he expects to see some in congress lobbying for changes to the five-year plan to open up additional areas for exploration and drilling. For instance, Virginia's governor and other leaders asked that their offshore lands be included in the plan for potential exploration and drilling, but the state was omitted from the plan, he said.

Environmentalists expressed dismay at the decision to proceed with drilling in the Arctic.

The announcement came on a day when a near-record storm was expected to pound the western Alaska coast. The focus was in the Bering Sea, but the National Weather Service said winds of 65 to 70 mph with gusts to 90 mph also were expected along the Chukchi Sea coast.

"How do you drill a relief well? How do you put a containment system in place in those conditions? It is a very challenging situation up there to say the least," said Marilyn Heiman, the Arctic Program Director for the Pew Environment Group.

William H. Meadow, the president of The Wilderness Society, said in a statement the lease sale plan "continues to take America down the road of putting big oil first, threatening our few remaining pristine areas with drilling and spilling."

"It is too soon for the administration to say that they will have the necessary science, the proven spill-response techniques, and the needed response capacity and onshore infrastructure by the time of their proposed Arctic Ocean lease sales," he said.

The American Petroleum Institute, an oil industry trade group, was also not pleased. Erik Milito, head of the group's production section, called it "a missed opportunity" to address rising energy demand, jobs and the deficit. Royalties from energy production on public lands are one of the largest sources of income to the federal government.

The plan falls well short of proposals passed in the House and touted by Republicans running for president, who want to vastly expand drilling. They have accused the president of stifling American energy.

Still, from 2008 to 2010, oil production offshore increased from 446 million barrels to 600 million barrels.

"No new drilling or new lease sales will occur during President Obama's term in office," predicted Washington Republican Rep. Doc Hastings, chairman of the House Natural Resources Committee. Hastings sponsored three measures that passed the House earlier this year to speed up drilling approvals and open up areas along the East and West coast, Alaska and eastern Gulf to production.

"The Obama administration's draft plan places some of the most promising energy resources in the world off-limits," said Hastings.

Lawmakers from Alaska, who have pushed to tap its energy resources, hailed the plan as a positive step Tuesday.

But Sen. Lisa Murkowski, the top Republican on the Senate energy panel, and other Alaskan lawmakers, said the permitting process would ultimately determine the success of the lease sales.

Shell Oil Co. paid the federal government $2.1 billion for petroleum leases in the Chukchi Sea off Alaska's northwest shore in 2008, the last time federal waters in Alaska were auctioned off. But nearly four years later, the oil giant has yet to drill an exploratory well because of lawsuits brought by environmental groups and delays in its air pollution permit.

The company hopes to start drilling in 2012.