INSIGHT: Top Democrats open to drilling - maybe

20 November 2008 16:41  [Source: ICIS news]

Renewed access to US offshore energy still in doubtBy Joe Kamalick


WASHINGTON (ICIS news)--Top Democrat leaders in the US Senate and House indicated this week that they will support renewed access to oil and gas resources in offshore areas on the nation’s east and west coasts - but there may be crippling caveats and conditions.


Senator Jeff Bingaman (Democrat-New Mexico), chairman of the powerful Senate Committee on Energy and Natural Resources, said his plans for broad-based energy and climate legislation in the next Congress “must assure an adequate supply of conventional energy resources”.


He said US policymakers must ensure access to domestic onshore and offshore oil and gas resources even as they move the nation toward greater reliance on renewable fuels.


He called for a comprehensive inventory of US energy reserves in outer continental shelf (OCS) regions off the country’s east and west coasts, previously closed to energy development by a 27-year-old congressional drilling ban that expired on 1 October.


Bingaman’s support for development of US offshore energy reserves addresses a major concern of the country’s petrochemicals industry and their customers, who have long argued for greater access to what may be major oil and gas deposits off the US Atlantic and Pacific coasts.


The US chemicals sector is heavily dependent on natural gas as a feedstock and energy fuel and has seen gas prices increase four-fold since 1999 while Congress maintained the drilling ban along the country’s Atlantic and Pacific coasts.


In his first major policy speech since the Democrats expanded their majority control in both the US Senate and House of Representatives in the 4 November elections, Bingaman said that offshore development “in an environmentally responsible way” must be part of energy and climate control legislation the next Congress is certain to consider in 2009.


Citing the election of Democrat Barack Obama as president, Bingaman said that “we now have a real opportunity to deal with energy issues in the 111th Congress, and President-elect Obama has made a strong commitment to solve these energy issues”.


Bingaman said an energy bill that he plans to craft when the new 111th Congress convenes in January must include the deployment of clean energy technologies, greater energy efficiencies in the industrial, transportation and housing sectors and more federal funding for energy innovation research.


He said that there also must be more transparency in energy trading “and a balance between energy and environmental issues, especially in terms of global warming”.


Part of that balance, he said, must include “adequate supplies of conventional energy resources”.


“Our pursuit of clean energy technology and greater energy efficiency does not mean that we can ignore existing energy resources,” Bingaman said.


“As we transition to renewable energy, we have to ensure that we have provided onshore and offshore energy development in an environmentally responsible way,” he added.


“Perhaps the right next step would be to undertake a serious and expeditious inventory of the energy resources on the outer continental shelf,” Bingaman said.  Such an inventory was authorised by Congress in a 2005 energy bill but was never given federal funding.


“Major energy development projects require a steady strategy and steady investments over the long term, so they need to be based on a stable political consensus that isn’t reversed every few years,” he said.


“That means that our energy decision making on the outer continental shelf, as well as onshore, needs to be based on the best data we can collect on both the energy and environmental characteristics of potential areas for production.”


“Getting that data on a priority basis will greatly increase the chances that we will make energy supply choices that will be sustainable economically, environmentally and politically,” he added.


No seismic surveys of energy resources off the US east and west coasts have been conducted since the 1970s, well before modern three-dimensional technology was available.


But even if Bingaman’s call for a prompt and thorough survey of OCS energy resources is brought to fruition, that doesn’t necessarily mean that those measured oil and gas reserves will be accessed. As Bingaman noted, environmental and political concerns will weigh heavily in federal offshore development policy.


Those sorts of caveats were reflected as well in comments this week by the second-highest Democrat in the US House of Representatives, Majority Leader Steny Hoyer of Maryland.


Hoyer said the next US Congress will not seek to restore an offshore drilling ban but will impose some limits on energy development in the OCS.


Even as the offshore ban was allowed to lapse - amid protest from many in the House who wanted to maintain the ban for environmental reasons - there was talk that the moratorium would be restored when the new 111th Congress convenes next year.


Hoyer said that will not happen, but he indicated that the expanded Democrat majority in Congress will seek to put restrictions on offshore energy development.


“There is an effort under way to look at further ways to delineate areas that will be open to drilling,” he said.


“There is no intent that we should return to the same position as of 30 September,” he said, referring to the last in-force day of the moratorium, “but there will be a discussion on what parameters there should be on when and where drilling can be pursued.”


“We’re looking at parameters, no at restoring the moratorium,” Hoyer said.


A Democrat-sponsored offshore energy bill passed in the House earlier this year sought to bar development of energy resources within the first 50 miles of the 200-mile wide US outer continental shelf region. 


It also would have barred drilling in the second 50 miles unless coastal state legislatures gave approval. That bill, which failed to advance in the Senate, was seen by industry officials as a thinly disguised effort to re-impose a drilling ban.


Hoyer said the 111th Congress also would focus on increasing US alternative and renewable energy resources and technology.


In answering a question, he said it would not be possible to make the US independent of foreign oil within ten or 15 years, “but we can substantially reduce our dependence on petroleum-based products until one day oil will disappear”.


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By: Joe Kamalick
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