Sheila McNulty Industry wants more from Obama on offshore drilling

The oil and gas industry has decided to meet the Obama administration halfway on its efforts to open up some areas of offshore drilling that had been closed to the industry. While they want far more than has been offered, so far, they also know they have to tread carefully given the world’s move against carbon intensive fossil fuels.

The reality is that, despite how dependent the world is on oil and gas, it does not like being so. And the move to find new energy sources is not going to let up. Indeed, even today, the  Department of Energy announced new measures to support the search for replacement transport fuels. The Department’s Lawrence Berkeley National Laboratory will build an advanced biofuels process development facility aimed at speeding the commercialisation of advanced biofuels by allowing researchers and the private sector to test and integrate innovative technologies. The facility – funded with nearly $18 million from the Recovery Act – will be a gathering place for researchers to test innovations.  This facility will be the only one of its kind available for public use.

So when President Obama and Secretary of the Interior Ken Salazar announced the administration was opening up new areas off the coasts of Virginia and offshore Florida to drilling on Wednesday, it was no surprise the president acknowledged the difficulty of the decision. In his own words:

As we transition to cleaner energy sources, we’ve still got to make some tough decisions about opening new offshore areas for oil and gas development in ways that protect communities and protect coastlines. This is not a decision that I’ve made lightly.  It’s one that Ken and I — as well as Carol Browner, my energy advisor, and others in my administration — looked at closely for more than a year.  But the bottom line is this:  Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.

The president explained:

So the answer is not drilling everywhere all the time.  But the answer is not, also, for us to ignore the fact that we are going to need vital energy sources to maintain our economic growth and our security.  Ultimately, we need to move beyond the tired debates of the left and the right, between business leaders and environmentalists, between those who would claim drilling is a cure all and those who would claim it has no place.  Because this issue is just too important to allow our progress to languish while we fight the same old battles over and over again. For decades we’ve talked about how our dependence on foreign oil threatens our economy — yet our will to act rises and falls with the price of a barrel of oil.  When gas gets expensive at the pump, suddenly everybody is an energy expert.  And when it goes back down, everybody is back to their old habits.

He got a positive response from the industry, which has been very fearful of less – not more -access. For example, Lamar McKay, Chairman and President, BP America, said:

We are encouraged by the announcement made today.  It’s a constructive step.  We believe the industry has a strong track record of performance in the Gulf of Mexico and are confident that development can be done elsewhere in the same safe and environmentally sensitive manner while creating needed jobs.

Royal Dutch Shell, which is a big player in Alaska, was pleased it would get to continue developing projects already underway in that region, even as the administration reviews whether to grant new ones. Marvin Odum,  upstream Americas director for Shell Energy Resources Company, said the company could now “demonstrate how we do this without disturbing the environment”.

What this means for climate regulation remains to be seen. But the industry is hoping for more controls over energy use, and less over production.

Related links:

Obama to admit Atlantic oil exploration (FT)
Offshore drilling plans could be risky for climate bill (FT Energy Source)
The obstacles for a climate bill: the 10 anti-drilling senators and more (FT Energy Source)