Monday, May 16, 2011
The Washington Post
by Steven Mufson
Nine months after the end of the nation's worst oil spill, President Obama is ordering the Interior Department to expand drilling in the Gulf of Mexico, hold annual lease sales in Alaska's National Petroleum Reserve and speed up geological research of exploration prospects off the south and mid-Atlantic coasts.
The moves, announced in the president's Saturday radio address, are not so much a reversal as a return to the policy stance Obama adopted in March 2010, shortly before the Deepwater Horizon drilling rig exploded in flames and BP's Macondo well began gushing millions of barrels of oil into the Gulf of Mexico.
In his four-minute address, Obama touched on the hardship caused by $4-a-gallon gasoline, but made no mention of last year's spill, an environmental disaster that temporarily derailed new wells and set off political sparring over drilling permits that Republicans and oil executives say have been needlessly delayed.
Instead, the president said he would increase access to the Alaskan reserve, an area four times the size of New Jersey. He said that he was also ordering Interior to hold a Gulf of Mexico lease sale this year and two in 2012, thus completing the department's five-year plan for the area. And he said that seismic work off the Atlantic coast would map out new areas for future lease sales.
The only indirect reference to the spill was when Obama said that companies needed to "meet higher safety standards when it comes to exploration and drilling."
Obama said he would also extend oil company leases in the Gulf of Mexico and Alaska where work was delayed by the drilling moratorium he imposed last year. The Bureau of Ocean Energy Management, Regulation and Enforcement has issued 14 deep-water drilling permits since the moratorium.
Last year, the gulf oil spill seemed certain to doom efforts to open up new lands or coastlines for drilling, but congressional Republicans and oil industry executives have taken advantage of high gasoline prices to charge that Obama isn't doing enough to increase domestic supply. Just last week, the Republican-controlled House passed three bills that would compel the government to sell leases for exploration in new coastal and onshore areas, while limiting the ability of drilling foes to mount legal challenges on environmental grounds.
The president's actions could help defuse the drilling and oil supply issue, though Obama acknowledged that "there are no quick fixes to the problem" of expensive gasoline, which Washington Post-ABC News polls indicate is a liability for the president.
Obama's address drew praise from Republicans, criticism from Democrats, and more complaints from the American Petroleum Institute.
"I've been strongly critical of this administration's policies on domestic production, but today I want to give credit to the president," said Sen. Lisa Murkowski (R-Alaska).
By contrast, Sen. Robert Menendez (D-N.J.) said that opening the East and West Coasts to drilling would, according to government estimates, only lower gas prices by 3 cents a gallon by 2030.
"That's not about relief now, that's not really even about consequential relief in the future, and it puts at risk significant coastal economies like New Jersey has - its commercial fishermen, recreational fishermen, and tourism industry," he said.
Menendez is an author of a Senate bill that would curtail oil industry tax benefits amounting to $21 billion over 10 years. Obama gave that measure a plug in his address.
"The American people shouldn't be subsidizing oil companies at a time when they're making near-record profits," Obama said. He said Congress should "end these oil company giveaways once and for all."
"This announcement is carefully timed ahead of the oil tax vote in the Senate next week to counter the charge that the administration is against new domestic supply," said Paul Bledsoe, a senior adviser at the Bipartisan Policy Center who worked on energy issues in the Clinton administration. "In the face of consumer complaints about high prices, the White House is determined to occupy the populist position on both oil company tax breaks and oil production at the same time."
The president has also set a goal of reducing oil imports by 30 percent by the next decade.
A senior administration official said the Obama administration was not reacting to the House measures, but that it had been "on track" to complete its Gulf of Mexico drilling plans "regardless of legislation." Another senior official said the administration believed it could move ahead in Alaska in "attractive areas" for drilling while remaining "consistent with environmental values."
Still, the announcement of new lease sales in Alaska's National Petroleum Reserve provoked concern among environmental groups.
The 23-million acre reserve is located west of the big but declining Prudhoe Bay oil field on the North Slope of Alaska. Set aside by President Warren G. Harding as a strategic naval petroleum reserve in 1923, it was renamed and transferred to Interior in 1976.
It was opened up to some limited drilling in 1980 as a result of a provision inserted into an appropriations bill by the late Sen. Ted Stevens (R-Alaska). A later provision diverted half the royalties to the state of Alaska, even though the reserve is federal land. Six lease sales were held between 1999 and 2010.
Environmental groups say that the reserve provides critical habitat for the peregrine falcon, two caribou herds, moose, rough-legged hawks, gray wolves and other wildlife.
On Oct. 1, 30 environmental and conservation groups submitted a letter urging a "balanced development and strong protection of the extraordinary biological resources in the Reserve."
A senior administration official said that some areas, such as Teshekpuk Lake, would not be open to drilling.
Obama also said he would expedite other Alaska permits. That could help Shell Oil, which has poured $2.2 billion into buying leases and $1.5 billion into preparations for drilling in Alaska, while fending off legal challenges by environmental groups.
In a recent interview, Shell president Marvin Odum said, "Certainly my view is that when the government puts leases out there for sale, it's a statement that they're ready to go." But, he added, Shell has been waiting five years for one air permit for drilling in the remote Chukchi Sea.
"To wait five years before drilling is a pretty frustrating process," he said.
Obama administration officials also said that they would scrutinize existing leases, asserting that half of leased areas onshore and 70 percent of those offshore were "inactive," despite oil industry complaints about limited lease sales.
Oil companies have argued that the administration is counting areas where companies are still making preparations to explore.
Obama said he would seek to "create new incentives" that a senior administration official said could include lower royalty rates for early development.
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