Thursday, April 1, 2010

President Obama’s new offshore drilling plan opens up some new areas for oil and gas exploration but also cancels some Alaska lease sales planned for the next two years, putting billions of barrels of oil out of reach for now.

The long-awaited plan, announced Wednesday, expands drilling opportunities off the coast of the southern Atlantic seaboard, in the Gulf of Mexico and some parts of Alaska, but halts other future sales in Alaska’s Chukchi and Beaufort seas that drilling advocates say could account for far more oil than the new areas the president proposes to open up.

The announcement, which Mr. Obama made at Andrews Air Force Base alongside Interior Department Secretary Ken Salazar, pleased only a small swath of Democrats. It left most Republicans angry at what the president put out of bounds, and left environmental groups and liberal Democrats furious at what is being allowed.

The White House portrayed the move as a follow-through on one of Mr. Obama’s campaign promises.

“This is not a decision that I’ve made lightly,” said the president, who, along with Mr. Salazar, mulled the drilling policy 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,” he said.

Gas prices are approaching $3 a gallon, up $1 since Mr. Obama took office, but analysts said the moves are unlikely to have an immediate effect at the pump, and the long-term consequences are unclear.

Congressional Republicans said Mr. Obama is actually putting more energy out of bounds, at least in the near term, than he’s proposing to open up. They said Mr. Obama’s announcement approving some drilling will only confuse voters.

“The ironic reality is that the administration’s new policy actually closes more offshore drilling sites than it opens,” said Rep. Trent Franks, Arizona Republican. “Had the administration done nothing, a lease plan was already set to take effect that would have opened vast expanses of the Outer Continental Shelf, drastically increasing our nation’s ability to tap into our domestic energy supply.”

Mr. Salazar acknowledged that the new plan cancels five potential lease sales that had been scheduled to go forward in the next two years, saying there are “unanswered questions” about the environmental impact of drilling in the Chukchi and Beaufort seas in Alaska.

“It was my view that we needed to cancel the leases under the old Bush plan and move forward with the kind of scientific gathering that will give us the answers to some key questions,” he said.

He said they left the door open for more science to consider drilling in those areas in the future.

The Institute for Energy Research, an industry-backed think tank, said the areas with canceled leases could hold up to 77 billion barrels of oil, or more than three times the country’s total proven reserves.

But a spokeswoman for the Interior Department said in terms of economically recoverable oil - oil that is worth the price per barrel to pursue - those Alaskan areas are equivalent to about 3 billion barrels that are economically recoverable in the proposed new areas of the eastern Gulf of Mexico, and three times the recoverable natural gas in the Gulf area compared with the Alaska regions.

A $2.6 billion Alaska lease sale that already has been completed will be allowed to proceed, the Interior Department said.

That will continue to face lawsuits from the environmental community, which is concerned that the environmental studies were not completed properly.

“There’s a way to do this right,” said Michael LeVine, Pacific senior counsel for the advocacy group Oceana. “We believe that the American people want energy and a healthy environment. If we put in place science, and response and rescue, we can have both.”

In Virginia, perhaps one of the first states to benefit from the news, Gov. Robert F. McDonnell, a Republican, praised Mr. Obama’s decision, saying it will “mean thousands of new jobs, hundreds of millions in new state revenue and tens of billions of dollars in economic impact” for the state.

He also urged Congress to pass legislation ensuring Virginia would receive a share of the royalties, as do Gulf Coast states, and Sens. Jim Webb and Mark Warner, Virginia Democrats, said they’ll push for a revenue-sharing formula.

By promoting some drilling, the move could aid an effort by Sens. John Kerry, Massachusetts Democrat, Joe Lieberman, Connecticut independent, and Lindsey Graham, South Carolina Republican, who are trying to craft a bill that promotes clean energy production and nuclear energy as ways of tackling climate change. The House has passed a bill that takes a “cap-and-trade” approach to carbon emissions.

“The question for Kerry, Graham and Lieberman is, ‘Can you get to 60?’ and the president’s speech today seems to have made it easier for some members of the Senate to move towards ‘yes,’ ” said Sean Gibbons, a spokesman for the Third Way, a progressive think tank.

Since taking office, Mr. Obama has consistently touted clean energy technologies and incentives for consumers who retrofit their homes to be more efficient. He has shown a willingness to compromise on the issue, announcing earlier this year that the government would guarantee loans to break ground on two new nuclear reactors.

“They are walking, chewing gum, juggling chain saws and doing an Irish square dance at the same time,” Mr. Gibbons said of the administration’s approach to energy policy.

But Mr. Obama’s nods to Republican-backed energy sources have yet to reap bipartisan rewards. Republicans pointed out that his nuclear loan guarantees mean little in light of his administration’s opposition to a nuclear waste repository in Nevada. Likewise, some in the GOP shrugged off his drilling announcement as nothing more than lip service. House Republican Conference Chairman Mike Pence described it as a political “smoke screen.”

“It will almost certainly delay any new offshore exploration until at least 2012 and include only a fraction of the offshore resources that the previous administration included in its plan,” the Indiana Republican said. “Unfortunately, this is yet another feeble attempt to gain votes for the president’s national energy tax bill that is languishing in the Senate.”

While Mr. Obama’s drilling news didn’t draw quite as sharp reactions from environmentalists in his own party, many Democrats made their hesitation clear. Rep. Edward J. Markey, Massachusetts Democrat, said he plans to reintroduce “use it or lose it” legislation that would impose new taxes on oil companies with leases that are not being used.

“Before oil companies drill off thousands of miles of pristine coastline, they should first use the thousands of drilling leases they already own,” said Mr. Markey, who heads the House Select Committee on Energy Independence and Global Warming.

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