GOP senators accuse Interior of playing favorites in offshore wind deal

Source: By Zack Colman, The Hill • Posted: Monday, November 12, 2012

Two GOP senators are accusing the Interior Department of playing favorites by offering Atlantic waters for wind farms but not oil and gas development.

At issue is a lease for developing commercial wind power in federal waters off the Delaware coast. The area in question is off limits to oil-and-gas drillers in President Obama’s five-year offshore drilling plan.

GOP Sens. David Vitter (La.) and Lamar Alexander (Tenn.) sent a letter Friday to Interior Secretary Ken Salazar asking him to evaluate the economics of the potential wind farm against a comparably sized oil-and-gas deal.

“The administration has a habit of picking energy-industry winners and losers, and we want an explanation. Secretary Salazar should at least be able to defend the economics of the lease sale for wind energy. For example, the federal government receives significant revenue from royalties for offshore oil and gas production in the form of rents, royalties, bonus bids and taxes. Can the same be said for this offshore wind project?” Vitter said in a Friday statement.

The administration has cited environmental reasons for the restriction on Atlantic and Pacific offshore drilling. It says its plan still permits exploration for 75 percent of identified reserves.

Obama revised his offshore drilling plan following the 2010 BP oil spill in the Gulf of Mexico. When Interior released the administration’s final leasing plan in June, it described the blueprint as “responsible” and “cautious.”

Republicans in both the House and the Senate have criticized Interior for its handling of offshore drilling in response to the 2010 spill. They say Interior acted too quickly by imposing a drilling freeze in the Gulf of Mexico, and complain that rules instituted since then are overly burdensome.

GOP lawmakers say Obama’s five-year offshore plan is too limited. They want to open the Atlantic and Pacific to drilling, saying drillers could unlock previously undiscovered reserves.

Vitter and Alexander said increasing offshore oil-and-gas leases would generate new revenue that could help pay down the deficit.

They said oil and gas firms would pay handsomely for the right to explore those areas, and noted they would owe federal royalties on anything they dredge up.

The senators wanted to compare that to what Interior offered NRG Bluewater Wind Delaware LLC for the wind lease sale.

“What is the effective royalty rate Interior has contracted with NRG Bluewater Wind Delaware LLC for this lease for the energy it produces? What is the anticipated revenue to be raised from this development over the next 10 years?” the senators wrote.

Though oil production on federal offshore and onshore lands dipped this year, Interior spokesman Blake Androff noted it increased 13 percent during Obama’s first three years in office compared with the last three years of the George W. Bush administration

“The administration is pursuing an aggressive all-of-the-above energy strategy to both grow America’s energy economy and continue to reduce our dependence on foreign oil. This includes not only investing in advanced technologies and renewable energy production, but also safe and responsible production of domestic oil and gas,” Androff said in a statement to The Hill.