Obama’s move on drilling unlikely to appease industry, Republicans

President Obama’s move to announce the first new offshore oil and gas lease sale in the Atlantic Ocean in more than two decades comes even as the administration rolls back access in offshore Alaska. The give and take to the oil and gas industry appears part of a balancing act as the Obama administration is attempting to win Republican support for a climate bill even as it assures environmentalists of its determination to protect US coasts.

But is it going to be enough? One longtime industry observer put it this way: the administration is giving Republicans the doughnut hole, not the doughnut. Some of the most prospective areas are closer in along the Florida coast, and those will remain off limits. And offshore Alaska has been a place the industry has been counting on to grow supplies, with the assertion they can protect the environment while growing production.

Drilling has been banned in much of the US offshore areas outside the Gulf of Mexico for fears spills or other accidents could do environmental damage and sully the view from shore. So the president’s move now to launch a lease sale 50 miles off the coast of Virginia and 125 miles off the coast of Florida is a step forward, in the eyes of the industry. But the industry had been hoping for a few more steps.

The rolling back of access in offshore Alaska, meanwhile, will be a blow to companies who have spent years and millions of dollars preparing to drill and produce there. Some of the companies operating in Alaska include Royal Dutch Shell, BP and ConocoPhillips. The administration is expected to propose rolling back access in Bristol Bay, the Chukchi and Beaufort seas for more research to be done.

For environmentalists, this is good news. From Marilyn Heiman, US Arctic Program director for The Pew Environment Group:

The Administration should be commended for proceeding cautiously in the Arctic Ocean. New leasing should not occur until improved oil spill response capacity is in place and we know better how to protect this sensitive region.There is no proven way to clean up an oil spill in broken ice, extreme Arctic conditions, and darkness that is present for many months out of the year. In addition the Chukchi Sea is very remote. Spill response equipment for a catastrophic spill would have to come from at least 400 miles away.

And from Cindy Shogan, executive director of the Alaska Wilderness League:

This morning’s news about offshore drilling on Alaska’s Arctic coast indicates that the Obama administration intends to make sound decisions based on science about if, when, where and how any future development occurs. We are confident that the plan to be released today will commit to robust scientific study that will show that the most important ecological areas in the Chukchi and Beaufort Seas should be off limits to industrial development.

Providing insight into what the industry is thinking is Robin West, chairman of PFC Energy, the consultancy, who gave the announcement mixed reviews:

It’s healthy that they’re examining opportunities in offshore oil for prospective areas. Is this a bold step? No. Clearly, some of the most prospective areas in the Eastern Gulf of Mexico off the coast of Florida and in Alaska are being kept off limits. But they are going ahead with some prospective areas in Alaska and large tracks of the Atlantic Coast will be inventoried. A rational energy policy should encourage economic and environmentally safe production and discourage consumption. This is a start.

The key is how much this is this going to help the Obama Administration in the eyes of Republicans from whom it must get support to pass a significant climate bill? Here is a hint in a statement just released from House Republican Leader John Boehner:

The Obama Administration continues to defy the will of the American people who strongly supported the bipartisan decision of Congress in 2008 to lift the moratorium on offshore drilling not just off the East Coast and in the Gulf of Mexico, but off the Pacific Coast and Alaskan shores as well. Opening up areas off the Virginia coast to offshore production is a positive step, but keeping the Pacific Coast and Alaska, as well as the most promising resources off the Gulf of Mexico, under lock and key makes no sense at a time when gasoline prices are rising and Americans are asking ‘Where are the jobs?’

It does not seem clear that this is going to do the trick. Of course, there other considerations for the administration’s energy efforts – particularly in terms of passing a climate bill.

Related links:

Offshore drilling plans could be a risky play for climate bill (FT Energy Source)
Obama’s oil drilling plan draws critics from both sides (NY Times)

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