UpdateObama drill plan earns petroleum praise, biofuels criticism

31 March 2010 18:33  [Source: ICIS news]

Obama backs drilling(adds updates throughout)

HOUSTON (ICIS news)--President Barack Obama on Wednesday announced plans to open up much of the US east coast to oil and natural gas drilling, a move that drew praise from the petroleum industry but criticism from biofuels makers.

“We appreciate the administration’s recognition of the importance of developing our nation’s oil and natural gas resources to create jobs, generate revenues and fuel our nation’s economy,” said American Petroleum Institute (API) CEO Jack Gerard.

“Exploring for and developing our nation’s offshore resources could help generate more than a trillion dollars in revenues and create thousands of jobs to add to the already 9.2m jobs supported by today’s oil and natural gas industry,” he added.

Under Obama’s plan, the US Interior Department will soon conduct seismic surveys off the coastline from Delaware to central Florida to find how to best “determine the quantity and location and potential oil and gas resources to support energy planning”, a White House statement said.

The plan reverses a 20-year ban on drilling off the Virginia coastline, while also opening up oil and gas exploration areas in the eastern Gulf of Mexico and off the northern coast of Alaska.

“This is not a decision that I’ve made lightly,” Obama said.

“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’re going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.”

However, Obama did reject previously approved drilling sites off the southwest coast of Alaska, while maintaining bans on oil and gas activity from New Jersey northward and on the entire Pacific coast.

“As we move forward, we hope that consideration can be given to other resource-rich regions, such as the Destin Dome area of the eastern Gulf and areas off the Pacific Coast and Alaska,” Gerard said.

The API also noted that the permitting processes needed to be handled “in an expeditious way”.

Obama’s proposal was intended to lower dependence on oil imports, produce revenue from offshore leases and potentially gather Republican support for the administration’s upcoming energy and climate change legislation, press reports said.

However, in attempting to gather crossover support, Wednesday’s proposal may frustrate groups that were previously his political allies.

“Relying on 20th century energy sources to address 21st century challenges will not solve the problem,” Renewable Fuels Association (RFA) president Bob Dinneen said.

“Oil and other fossil fuels are finite resources,” he added. “While we cannot ignore their contributions, neither can we ignore the reality that reliance on them is simply unsustainable.”

The RFA noted that ethanol production was already contributing to US energy security, with more than 10.6bn gal used in 2009 serving to reduce oil imports by 364m barrels. That production helped support nearly 400,000 American jobs, Dinneen added.

“Renewable fuels, such as ethanol produced from a variety of feedstocks, hold great promise to reduce our need for imported oil, address climate change concerns, and create enduring economic opportunity,” Dinneen said. “The continued expansion of ethanol production along with the commercialisation of new technologies will only improve on these benefits.”

The RFA said the Obama administration needed to take several concrete steps to ensure the future of the biofuels industry, including the allowance for up to 15% ethanol to be blended into gasoline, urging Congressional action to extend renewable fuel tax incentives, and improving loan guarantee programmes for cellulosic and next-generation biofuel technologies.

US environmental group Sierra Club also voiced its displeasure with the plan, arguing that potential oil spills could destroy a coastal tourism economy and jobs that depend on it.

"There's no reason to drill our coasts," said Sierra Club executive director Michael Brune. "We can achieve real energy independence and economic vitality by investing in clean energy like wind and solar and efficiency. This kind of power creates good, lasting American jobs and positions our nation to become a global leader in the new clean energy economy."

The Obama administration also said it would on Thursday sign a final rule establishing greenhouse gas (GHG) emissions limits and fuel economy standards for light-duty vehicles for model years 2012-2016, potentially saving 1.8bn barrels of oil over the life of the programme.

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