Don’t Drill, Baby, Don’t

Oil and gas industry slams Obama administration’s offshore drilling plan

July 3, 2012

The Obama administration’s recently released five-year plan for offshore drilling leases has been met with sharp criticism from the oil and gas industry and Republicans, who say it continues a crippling moratorium on potential energy reserves on the West and East Coasts.

The administration’s 2012-2017 offshore lease plan, released June 28, expands available leasing areas for drilling slightly in the Gulf of Mexico and opens new areas in the Arctic Ocean, but also keeps both the West and East Coasts completely off-limits for offshore oil exploration.

Three of the fifteen lease auctions will be held in the Arctic seas—in Alaska’s Cook Inlet in 2016, in Chukchi Sea in 2016, and in the Beaufort Sea in 2017. The administration lauded its plan, saying the Arctic regions hold more than 75 percent of total undiscovered and recoverable oil.

However, Republicans and industry officials disagreed.

"It’s a very disappointing backtracking of the administration’s supposed ‘all of the above approach,’" said Jim Noe, the senior vice president, general counsel, and chief compliance officer of Hercules Offshore Inc., the largest shallow-water drilling company in the Gulf of Mexico. "It takes both coasts and leaves us the same areas we’ve been drilling in since the ’40s."

Rep. Doc Hastings (R., Wash.), the chairman of the House Natural Resources Committee, said the plan keeps 85 percent of America’s outer continental shelf off limits for energy production.

"The Obama Administration has neglected their duty to provide a roadmap for America’s offshore energy future by tossing aside a plan to expand production and failing to produce a plan of their own for three and a half years," Hastings said in a Thursday statement. "Today, the Obama Administration has announced a bleak future for American energy production by keeping 85 percent of America’s offshore areas under lock and key and refusing to open any new areas to drilling. This plan re-imposes the drilling moratoria lifted in 2008, hurts job creation, and keeps new areas of American energy production sidelined."

The Department of Interior disputed Hastings’ characterization of the plan.

"Although it’s hard to tell exactly how the Chairman calculated this 85 percent figure, it’s entirely misleading in that it focuses solely on acreage, while failing to account for what areas actually contain resources," an Interior spokesman said in a statement to the Free Beacon. "Our five-year plan, at the direction of the President, makes available 75 percent of undiscovered, technically recoverable resources on the U.S. Outer Continental Shelf. Rather than simply opening areas for the sake of achieving an imaginary acreage threshold, we have focused our leasing on areas where we—and industry—know the highest-resource acres actually exist, while providing a path forward through further study for additional areas to be made available in the future."

One particularly sore spot for Republicans and the oil and gas industry is Virginia. The Minerals Management Service, which oversees new leases for offshore drilling, began soliciting comments in April 2010 for new wells off the Virginia coast. But when the disastrous Gulf oil spill happened a month later, the administration indefinitely shelved plans for new offshore exploration.

Industry officials were crossing their fingers that the administration might pick up where it left off, but Virginia remains off-limits in the new five-year plan.

"We kind of hoped that, with [the Deepwater Horizon oil spill] behind us, we could start moving forward again," Noe said. "Instead, the president basically said we’re going to take a step backward. The industry is very disappointed."

In a Friday conference call, Interior Secretary Ken Salazar told reporters that exploration off the Virginia coast was complicated by outdated geological information and "significant conflicts" with the Department of Defense.

"There is so little information that we have on the Atlantic that one can't really make credible, honest decisions with respect to anything on the Atlantic," Salazar said. "Any information that has been on the Atlantic in terms of any seismic or geological information is now over 30 years old."

Salazar is under intense pressure from environmentalists, who say even the restrained increases in its new five-year plan are dangerous, and from Democratic congressmen and governors in coastal states, who have balked at the notion of opening their waters to offshore drilling.

But Virginia GOP members said there was no reason to keep the area off limits.

"The Obama administration has demonstrated that they will not allow the safe and responsible development of oil and gas energy resources off of Virginia’s coast," Virginia GOP Gov. Bob McDonnell said in a statement. "Offshore energy exploration and development would mean thousands of new jobs and millions in new revenue."

Lori LeBlanc, the executive director of the Gulf Economic Survival Team, said her organization has been pleased with the progress made since the gulf drilling moratorium was lifted, specifically in improving the regulatory process. Permit approvals for new wells in the Gulf are nearing pre-spill levels both in pace and number, the Department of Interior says, and the agency continues to open new areas for leasing.

However, LeBlanc said, leaving the coasts off-limits constitutes "a moratorium on much-needed federal revenue and energy that we could be generating."

"We’re pleased to see the administration recognizes value of the Gulf for the country," she said. "The Gulf has proven we can produce the energy to fuel this country, but at the same time, I would hope that they could do that in other parts of the country."

The White House did not return requests for comment.