INSIGHT: New Interior chief faces a tough balancing act

07 February 2013 16:34  [Source: ICIS news]

By Joe Kamalick

New Interior Dept chief will struggle with western developmentWASHINGTON (ICIS)--President Barack Obama this week chose an environmentalist and petroleum engineer to head the Interior Department, saying that Sally Jewell knows “there’s no contradiction between being good stewards of the land and our economic progress”.

With one foot in the environmental world and the other well-worn in the oil and gas business, Jewell will have to try to meet the interests – and avoid the barbs – of both camps in what Obama conceded “is not always an easy balancing act”.

The UK native has been president of famed outfitter Recreational Equipment, Inc, (REI) since 2005 and has served in other executive and board positions with the company since 1996.

Jewell moved with her physician father and family to the US in 1959 when she was a toddler. The family settled in Seattle, Washington.

She received a mechanical engineering degree from the University of Washington and worked for Mobil Oil for three years.

But prospects for a long career in the oil business, at least in the field, soon dimmed. 

As she told a Seattle business journal early last year: “Oil and gas aren’t found in the most pleasant places in the world and, being a woman, there were things I had to put up with that would be considered illegal now, and it just became tiresome.”

After leaving Mobil, she hired on with Rainer Bank in Seattle and spent the next 19 years in the commercial banking sector as an oil and natural gas expert.

While in the finance industry and later with REI, Jewell expanded her environmental interests. She was a founding board member of the Mountains to Sound Greenway Trust, dedicated to preserving the long-term environmental health and economic vitality of the Interstate 90 corridor from Washington’s Puget Sound on the Pacific Coast to the Cascade Mountains that form the state’s central spine.

She also holds the Rachel Carson Award for environmental conservation from the Audubon Society. According to her REI biography, she is active in mountaineering, hiking, skiing, sailing and other outdoor sports.

But her initial hands-on work in the oil business and later long years in oil and gas banking and finance also give Jewell an inside-industry perspective that not all cabinet secretaries enjoy.

It is that experience that has energy industry officials hoping for a change in what at times has been a contentious and often heated relationship over the last four years with outgoing Interior Secretary Ken Salazar and the Obama administration overall.

“We look forward to learning how Sally Jewell’s business background and experience in the oil and natural gas industry will shape her approach to the game-changing prospects before us in energy development,” said Jack Gerard, president of the American Petroleum Institute (API).

Among other things, the Interior Department oversees oil and natural gas drilling on federal onshore lands and offshore continental shelf regions. 

“President Obama campaigned on implementing a true ‘all of the above’ energy plan for America,” Gerard noted, adding that the occasion of a new Interior Department secretary presents an “opportunity that could create millions of new jobs here at home and generate hundreds of billions of dollars to the federal government at a time we need it most”.

As have many other energy sector leaders, Gerard said that the administration’s “all of the above” energy policy has been lacking in some respects over the last four years.

“Eighty-three percent of the land and offshore areas controlled by the federal government are still off-limits to oil and natural gas development,” Gerard said, suggesting that “Increasing access to America’s vast energy resources should be a top priority for the next Interior secretary.”

Refining and petrochemical officials have accused the Obama administration of being outright hostile to fossil energy resources and of conducting a “war” against conventional oil, gas and coal industries.

The Institute for Energy Research (IER), an oil and gas industry think tank, cites Interior Department data in saying that leasing on federal onshore lands has fallen by more than 40% under the Obama administration, and offshore federal permitting has fallen by 62%. The higher offshore decline includes the general drilling ban that followed the 2010 BP Deepwater Horizon oil rig blast and leak disaster.

Although US oil and natural gas production have increased dramatically over the last several years – including the highest one-year advance in oil output ever in 2012 – those gains are attributed to exploration and development operations on state and private lands.

Tim Wigley, president of the Western Energy Alliance (WEA), said Jewell’s move to the Interior Department was a welcome development.

“Her experience as a petroleum engineer and business leader will bring a unique perspective to an office that is key to our nation’s energy portfolio,” he said.

WEA represents some 400 companies engaged in natural gas exploration and development in western states.

During the four years of Obama’s first term, his administration and Salazar’s policy moves came under broad criticism from the energy sector. Obama and Salazar were accused of advancing alternative energy projects, such as wind farms and solar arrays, while suppressing oil and gas development on federal lands.

Reflecting that criticism, Wigley said: “We hope to see a better balance of productive development on … public lands that enhances the wealth of America and creates jobs while protecting the environment.”

Jim Noe, director of the Shallow Water Energy Security Coalition, said his offshore development group was “encouraged by the selection of Sally Jewell as nominee for secretary of the Interior Department”.

He said Jewell is “a woman with experience in the energy industry as a petroleum engineer and who, as a CEO, knows what it means to run a business and answer to stakeholders”.

Citing broad predictions of possible US energy independence within a decade, Noe said that “If we are to reach that goal, it is imperative that we make more efficient use of our natural resources”.

“Ms Jewell’s resume suggests that she may be well-suited to improving the efficiency of our nation’s energy regulatory regime while ensuring the continued practice of safe and environmentally conscious energy production,” he added.

Jewell’s confirmation by the US Senate does not appear to be in great doubt, although her approval by that chamber cannot be assumed.

Senator Lisa Murkowski (Republican-Alaska) said that she was curious “about the qualifications Ms Jewell has that make her a suitable candidate to run such an important agency”.

Murkowski, who has had frequent conflicts with the department and Salazar over energy policy in her home state and elsewhere in the US, said she wants to learn how Jewell “plans to restore balance to the Interior Department”.

By: Joe Kamalick
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