INSIGHT: Obama drills for climate votes with offshore policy

08 April 2010 17:00  [Source: ICIS news]

Critics say Obama OCS energy policy is bogusBy Joe Kamalick

WASHINGTON (ICIS news)--The new offshore energy policy announced by the White House is geared more to producing votes for climate legislation in the US Senate rather than oil and natural gas, and it is surely generating a lot of heat on both the left and right.

With much fanfare, on 31 March the White House and the Department of the Interior (DOI) announced a new offshore energy development programme that ultimately could allow leasing in federally owned outer continental shelf (OCS) regions off parts of the US Atlantic Coast, in US waters of the eastern Gulf of Mexico and in some areas along the Alaska coastline.

As part of the new policy, the Interior Department is issuing a revised offshore development plan for 2007-2012 and a second five-year programme for the 2012-2017 period.

In announcing the plan, Interior Secretary Ken Salazar said that the “strategy calls for developing new areas offshore, exploring frontier areas and protecting places that are too special to drill”.

“By providing order and certainty to offshore exploration and development and ensuring we are drilling in the right ways and the right places, we are opening a new chapter for balanced and responsible oil and gas development here at home,” Salazar said.

Reaction among US energy industry officials and manufacturers, such as petrochemicals producers, that are heavily dependent on oil and natural gas was positive if somewhat reserved.

The American Gas Association (AGA) said it was “encouraged by the administration’s plan to open new areas of the middle and south Atlantic and the Gulf of Mexico to energy exploration”, calling it a “positive step”.

The American Petroleum Institute (API) also called the White House and DOI announcement “a positive development”.

API President Jack Gerard said that the energy trade group “appreciates 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”.

But Gerard also noted that the Obama administration’s new offshore energy plan leaves many OCS regions off the table. “As we move forward,” Gerard added, “we hope that consideration can be given to other resource-rich regions”, including areas off the Pacific Coast and in Alaskan waters.

American Chemistry Council (ACC) President Cal Dooley also welcomed the Obama OCS plans.

“We welcome the addition of offshore oil and natural gas resources in the Interior Department’s new five-year oil and gas leasing plan,” Dooley said. However, he added, “more must be done, and we look forward to working with the administration and Congress to develop policies to expand and expedite domestic oil and natural gas development”.

Still, the words of welcome were not all rosy. The Independent Petroleum Association of America (IPAA), representing the companies that actually do most of the drilling, did welcome the White House OCS plan. 

But IPAA President Barry Russell seemed sceptical, noting that “even though the congressional and executive bans on offshore energy development were lifted in 2008, this administration and Congress have by all accounts prolonged [the bans] and made access to our nation’s job-creating offshore resources more difficult”.

Tom Duesterberg, president and chief executive offices of the Manufacturers Alliance, said he was heartened by President Barack Obama’s recognition “that fossil fuels must be part of our energy solution for the next 20 to 30 years, because we just can’t get to where we need to be in developing energy at reasonable prices without continuing to rely on fossil fuels”.

“So the president just admitting that in his rhetoric is a good thing,” Duesterberg said.

But Duesterberg also noted that the offshore plan laid out by the White House means that “essentially, we’re not going to get any benefit from these offshore areas in the near future, and the policy is taking off the table some areas where preliminary exploration was promising”.

For the gas-dependent US chemicals sector, Duesterberg said, “this policy does not put a lot of additional gas supply in near-term reach”.

Karen Harbert, president of the US Chamber of Commerce’s 21st Century Energy Institute, said that the new OCS programme “does create the potential for new areas of exploration on the outer continental shelf, but at this stage, that’s all it is - potential”.

“Much of what is promised is many years away, subject to more study and congressional action,” she said. “What is needed today is urgent action, not analysis.”

In addition, Harbert said, “the plan released still leaves billions of barrels of American oil and significant reserves of natural gas under lock and key, including some of the most productive areas of exploration”.

Congressman Doc Hastings of Washington, the ranking Republican on the House Natural Resources Committee, was more sharp.

“President Obama did not open new lands to offshore drilling,” he said. “All of these areas were already open for drilling once Congress and President Bush lifted the moratorium in 2008.”

“Instead, President Obama has announced what areas he would close to offshore drilling,” Hastings said.

“Under the president’s OCS plan, more than 360m acres are now under a new ‘Obama moratorium’ that blocks American energy production, representing nearly 60% of the OCS areas in the Lower 48 states,” he said.

And for those offshore areas that technically are open to energy development under the White House plan, Hastings contends that the proposal only allows for studies of possible drilling areas in the mid-Atlantic and eastern Gulf regions.

Indeed, an Interior Department document notes that the East Coast areas technically open to energy development are actually just to be studied.

In a question-and-answer overview, the department poses the query: “Does the administration’s announcement for the new five-year programme (2012-2017) mean the Mid-Atlantic, South Atlantic and Eastern Gulf of Mexico OCS planning areas will be open to oil and gas development?”

“Not necessarily,” the department replies. “Scoping in an area or inclusion in an environmental impact statement does not mean that an area will ultimately be made available for leasing.”

“Decisions as to whether to schedule lease sales in these areas ... will come later in the process of developing the new five-year programme and the pre-sale process,” the department says.

“The scoping process for the 2012-2017 programme will provide opportunities to hear from local communities who depend on tourism, tribes whose livelihoods depend on the sea, and scientists who can tell us where the risks of development are simply too great and which areas are just too sensitive to drill,” Salazar is quoted as saying in another department summary of the new policy.

Environmental groups generally were critical of the new Obama OCS policy. Greenpeace, for example, accused the president of kowtowing to the oil industry and putting the US on a course of increased dependence on fossil fuels.

But the Environmental Defense Fund (EDF) said the White House offshore energy policy was pure and simple a ploy to win Senate votes for a carbon-restricting climate bill later this year.

“The president has put forward his plans on offshore drilling after hearing from key senators that it is a necessary step to succeed in passing climate and energy legislation in the Senate,” said EDF climate campaign director Steve Cochran.

“We believe the president’s announcement demonstrates his continued commitment to work towards the bipartisan majority that will be necessary to pass climate legislation in the Senate,” he added.

The White House and senior environmental advisers to the president have reiterated Obama’s commitment to a cap-and-trade carbon restriction as part of any energy or climate bill that Democrats are expected to launch by the end of April.

By offering a limited and very long-term offshore development policy, the White House hopes to win enough votes in the Senate to pass a climate bill that includes cap-and-trade.

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By: Joe Kamalick
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