Obama administration puts new limits on oil and gas

06 January 2010 20:10  [Source: ICIS news]

WASHINGTON (ICIS news)--The Obama administration on Wednesday announced broad new restrictions for US onshore oil and gas drilling, and energy industry leaders charged that the new policies will make the nation more dependent on foreign sources.

In announcing the new restrictions, Interior Department Secretary Ken Salazar was sharply critical of the previous Bush administration and the energy industry.

“The previous administration’s approach to oil and gas leasing was well known,” Salazar said. “It was leasing should happen anywhere at any costs, often without rhyme or reason.”

“Under the prior administration, the oil and gas industry were king, and whatever they wanted was what happened,” he said, adding that “the Interior Department was the handmaiden of the oil and gas industry”.

“In the past, public lands were the candy store of the oil and gas industry, and they could take anything they wanted,” he said.

“We have brought an end to that,” Salazar said.

Salazar said the new policies “will bring order and balance to our onshore energy development”.

Under the new policies, he said, leasing of energy parcels will in large measure be limited to onshore areas already under development, and there will be a more detailed environmental review prior to the issuance of new oil and natural gas leases.

Salazar said the new approach to leasing will reduce the number of legal challenges by environmental groups and consequently will provide more certainty for investors.

Bob Abbey, director of the Bureau of Land Management within the Interior Department, joined Salazar in his teleconference with reporters and conceded that the new policies will slow down the department’s review of leases.

Abbey also said that some federal lands that ordinarily might be considered eligible for energy development may be withdrawn.

“We believe that through greater due diligence there may be other areas normally offered for lease that will require a second look now to take into consideration endangered species, archaeological resources and other considerations,” Abbey said.

The new policies, Salazar said, will provide greater input from the general public and local interests in evaluating public lands for environmental and wildlife concerns before they are even considered for energy leasing.

Energy industry officials, however, were quick to condemn the new leasing restrictions.

“In what has become increasingly familiar double-talk from this administration, Interior Secretary Salazar today again spoke of the importance of domestic oil and natural gas, while making it more difficult to produce American oil and gas,” said Jack Gerard, president of the American Petroleum Institute (API).

“Under the guise of offering certainty for investors, Interior Secretary Salazar has taken steps to further delay and limit American energy resources,” Gerard added.

“This troubling trend of hobbling companies’ ability to develop much-needed domestic energy supplies will not create certainty for investors,” Gerard said. “Instead, it will make America more dependent on foreign energy.”

Senator Lisa Murkowski of Alaska, the senior Republican on the Senate Energy Committee, also was critical of Salazar’s new policies.

“Interior Secretary Salazar claims that the changes announced today will provide certainty,” Murkowski said through her spokesman, “but the only certainty they provide is that more production will be driven overseas.”

“This is simply another step by the administration to decrease domestic oil and gas production and increase our dependency on foreign nations,” she said. “You don’t get more production by restricting development to depleted fields and increasing regulation.”

Murkowski was among 60 or more members of Congress who earlier complained to President Barack Obama about what they claim was a pattern of go-slow energy policies by the administration.

In answer to a reporter’s question about energy industry criticism of his policies, Salazar said that “I expect the shrill nature of industry criticism will come anyway”.

The Interior Department has control over use and development of federal onshore and offshore lands.

The US petrochemicals industry and downstream chemical manufacturers are heavily dependent on natural gas as a feedstock and energy fuel.

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