US energy sector plans to challenge Obama's new offshore ban

06 December 2010 18:58  [Source: ICIS news]

WASHINGTON (ICIS)--The US energy industry on Monday said it will pursue every legislative, regulatory and courtroom option available to overturn last week’s decision from the administration of President Barack Obama to ban most offshore drilling for up to seven years.

“We will pursue all our options, legal, regulatory and legislative, to overturn that decision,” said Jack Gerard, president of the American Petroleum Institute (API).

“The decision last week by the Interior Department essentially shuts down until the next decade energy development in offshore areas of the Atlantic and Pacific coasts and in the eastern Gulf of Mexico,” Gerard told a press conference.

“That decision is taking this country in the wrong direction and imperilling our energy future,” he added.

The Obama administration sparked outrage on Wednesday last week in announcing that it would not issue new oil and gas exploration leases in any US offshore areas other than those already under development in the Gulf of Mexico and along a limited part of Alaska’s coast - and none in those regions until 2012 at the earliest.

Citing the BP Deepwater Horizon rig explosion in April this year and the subsequent spill of some 5m bbl of oil into the Gulf, Interior Department Secretary Ken Salazar said the administration was rescinding plans announced in March to open more of the US outer continental shelf (OCS) regions to oil and gas drilling.

The Interior Department decision drew widespread condemnation from across the US industrial and business sectors. 

Among others, chemical industry officials slammed the drilling ban, charging that it would throw the US recovery into reverse.  The US chemicals sector is heavily dependent on natural gas as a feedstock and energy fuel.

Gerard said the Interior Department decision was “deeply troubling for America’s energy and economic future”.

Although Salazar said that lease sales for US areas of the central and western Gulf of Mexico might be held as soon as late next year, Gerard charged that the more extensive environmental impact studies now required by the department would likely mean that no lease sales would take place in Gulf waters at all in 2011.

“This will be the first time since 1965 that no lease sales will be held anywhere in the Gulf,” Gerard said.

Gerard said that the institute and its member companies would continue to work with the Interior Department to try to understand the leasing ban, “but we also think that congressional oversight and action are needed” to reverse the department’s decision.

“There has been a bipartisan adverse reaction on Capitol Hill to the department’s decision,” Gerard said, “and we encourage Congress to look very closely at this decision in the interest of the public and the American people.”

“This decision is inconsistent with the will of the American people,” Gerard said, citing last month’s national elections that gave Republicans majority control of the House of Representatives and a new Rasmussen poll showing that most Americans think the new offshore ban will raise US fuel and other energy costs.

Gerard charged that the Obama administration’s decision to broadly restrict US offshore oil and gas development “has more to do with politics than safety”.

“The Interior Department decision was driven more by political concerns than energy reality,” he added.

“Some in this country want to move us away from oil and gas,” he said, referring to what he termed political and alternative energy policy considerations behind the department’s decision.

“But it is irresponsible for the administration to dial out the number one energy source that fuels our economy, oil and natural gas, to pursue a political wish list,” he said.

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