2nd UPDATE:Obama Expanding Offshore Oil Drilling, Seeking Climate Bill
- (Updates with administration, lawmaker, industry comment and adds details throughout) By Ian Talley Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The Obama administration Wednesday unveiled a new offshore-drilling strategy that will consider oil and natural gas exploration off the Atlantic, eastern Gulf of Mexico and northern shores of Alaska. The Interior Department said the areas--some of which had been under a moratorium--could hold as much as 80% of the undiscovered recoverable oil and gas on the U.S. outer continental shelf. President Barack Obama said it was part of a broad energy strategy and called on Congress to pass comprehensive energy and climate legislation to curb greenhouse gases. By responding to a Republican rallying cry to "drill, baby, drill," the announcement gives the administration leverage to entice the GOP and moderate Democrats to support a bi-partisan energy and climate proposal being crafted by a trio of senators. "I know that we can come together to pass comprehensive energy and climate legislation," Obama said. The administration has committed to only four leases in the Gulf of Mexico through 2012. All other areas are subject to favorable environmental assessments or congressional approval. The White House could decide at a later date to offer only a small portion--or none at all--for development, giving it bargaining power in the climate debate. "The fact that we're scoping in the south Atlantic or in the mid-Atlantic doesn't necessarily mean that there will be development there; we're taking a look at it," said Interior Secretary Ken Salazar on a conference call after the announcement. The strategy received a tepid response from Republicans, many of whom said it wasn't enough. "Today's announcement is a step in the right direction, but a small one," Senate Minority Leader Mitch McConnell (R., Ky.) said. "The proof of the administration's announcement will be in the implementation." Senator James Inhofe, (R., Okla.), said, "Time will tell as to whether Obama is really ready to embrace offshore drilling or simply wanting to look like he is." The administration is restructuring an existing 2007-2012 program and drafting a new 2012-2017 schedule. The Minerals Management Service estimates the new areas to be considered may hold between 39 billion and 63 billion barrels of recoverable oil and 168 trillion to 294 trillion cubic feet of recoverable natural gas. The plan calls for four more lease sales in the Gulf Of Mexico by 2012, and later opening a large swath in the eastern Gulf of Mexico 125 miles off the coast of Florida, subject to congressional approval. Also by 2012, Interior plans to hold one lease sale off Virginia and another in the Cook Inlet in Alaska--where a previous auction was withdrawn for lack of interest. Those lease sales are "provided development can be done in an environmentally responsible manner and doesn't compromise critical military training in the Atlantic," the department said. The administration said it supports development of previously leased areas off the northern Alaskan slope, such as the Beaufort and Chukchi Seas, where Royal Dutch Shell Plc (RDSA, RDSA.LN) and ConocoPhillips (COP) have spent billions of dollars for exploration rights. But it canceled several lease sales originally planned for the northern slope under the previous administration's schedule for 2007-2012. Obama and Salazar said the administration plans to keep off-limits for now the North Atlantic, the Pacific and Bristol Bay in Alaska, an ecologically rich region off the North Aleutian shore. For the 2012-2017 program, the Interior Department said it will consider lease sales in the mid- and south Atlantic, and Beaufort and Chukchi Seas after conducting environmental scoping and public meetings. While industry welcomed the move, it drew the ire of environmentalists. Anna Aurilio, head of the D.C. office of Environment America, said she was outraged. "It makes no sense to threaten the East Coast of America with spills and other drilling disasters," she said. Jack Gerard, president of the American Petroleum Institute, called it a "positive development," but urged expeditious permitting and access to closed areas. One issue the administration didn't address that many Republicans say is essential is state revenue sharing. Some states are less likely to support exploration off their shores unless the federal government shares income from the leases. -By Ian Talley, Dow Jones Newswires; (202) 862 9285; ian.talley@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=qf7GmPAK99PAKJGELe28Wg%3D%3D. You can use this link on the day this article is published and the following day.
