Industry, greens air concerns over Obama leasing plan

Source: Phil Taylor and Daniel Bush, E&E reporters • Posted: Wednesday, January 28, 2015

Oil and gas officials and environmentalists panned the Obama administration’s move today to open Atlantic and Arctic waters to potential new drilling, a proposal that will leave a lasting mark on the president’s energy and environmental legacy.

The Interior Department bid to allow a potential 2021 lease sale in waters from Virginia to Georgia and additional sales in the oil-rich but often perilous waters of the Chukchi and Beaufort seas was blasted by Republicans as too timid and by Democrats as environmentally reckless.

If there’s a political middle ground to crafting Interior’s 2017-22 offshore leasing blueprint, today’s reactions suggest it will not be easy to locate.

The plan, which won’t be finalized until 2017, would make available nearly 80 percent of undiscovered, recoverable oil and gas resources in the outer continental shelf, according to Interior.

The leasing proposal — if finalized — would be one of President Obama’s boldest moves to expand drilling opportunities on the federal estate at a time when Republicans are attacking him for shutting down oil and gas.

“The Obama administration has shown since its inception to be relatively bullish for onshore and offshore development on federal lands,” said Paul Bledsoe, a senior fellow at the German Marshall Fund and former Interior Department official during the Clinton administration. “They recognize oil and gas is going to be a major part of our economy, as the president has recognized, for decades to come.”

But oil and gas officials offered tepid praise at best, noting that the Bureau of Ocean Energy Management’s draft proposed program already cuts out areas of the eastern Gulf of Mexico that are under a congressional drilling moratorium as well as the northern Atlantic and entire Pacific.

A potential Atlantic lease already contains a 50-mile buffer to avoid conflicts with the Defense Department and other ocean uses, and Obama also signed a memorandum today withdrawing nearly 10 million acres of Arctic waters to preserve wildlife habitat and hunting opportunities for Alaska Natives.

The American Petroleum Institute today said the plan reflects “a disappointing lack of commitment” to the United States being a global leader on energy.

“The administration is compromising our ability to compete globally by restricting so much of the nation’s oil and natural gas resources,” said Erik Milito, API’s director of upstream and industry operations. “The draft offshore leasing program proposed today completely ignores areas where oil and natural gas development could create more than half a million new American jobs and generate hundreds of billions of dollars for the government.”

Industry groups viewed today’s decision in the context of Obama’s decision last weekend to proposed wilderness designations in the Arctic National Wildlife Refuge’s oil-rich coastal plain and pending new regulations restricting methane emissions and hydraulic fracturing.

National Ocean Industries Association President Randall Luthi said the new plan is a “step in the right direction” but contains “unnecessary and counterproductive limits that may jeopardize America’s long-term energy security.” He noted the association’s concerns over the proposed reduction in lease sales and buffers in the Atlantic.

Luthi said restrictions on Alaska leasing were not grounded in science. He called the exclusion of the eastern Gulf a major lost opportunity given the presence of nearby drilling and production infrastructure.

Environmental groups blasted the administration’s plan to open the Atlantic and continue selling leases in the Arctic, though some praised its withdrawals of ecologically rich areas.

“We applaud the Obama administration’s prudence in limiting risky offshore drilling in the Arctic Ocean,” said Andrew Hartsig, director of the Ocean Conservancy’s Arctic program. “Today’s executive order will provide permanent protection for parts of the Chukchi and Beaufort seas that are vital to local wildlife and communities, including critical walrus habitat at the Hanna Shoal.”

At the same time, the conservancy along with the Wilderness Society, the Center for Biological Diversity, Greenpeace, Friends of the Earth and Pacific Environment issued a joint statement saying future leasing in the Arctic is wrong.

They noted that Arctic waters lack critical infrastructure to respond to a spill and that Royal Dutch Shell PLC failed remarkably in its 2012 drilling season, which was marked by perilous weather.

The Southern Environmental Law Center, which operates in Virginia, Tennessee, North and South Carolina, Georgia and Alabama, said drilling off the Atlantic Coast would “threaten the economic livelihood of the coastal communities that rely on healthy waters and clean beaches to support local tourism and fishing industries.”

The mid- and south Atlantic waters combined hold 3 percent of the nation’s offshore oil and 6 percent of its gas, SELC said. Industry officials say those estimates are three decades out of date and do not reflect actual resource potential.

Natural Resources Defense Council Executive Director Peter Lehner said the Obama plan “takes us in exactly the wrong direction” and would “lock in large amounts of future carbon pollution.”

“It would expose the Eastern Seaboard, much of the Atlantic and most of the Arctic to the hazards of offshore drilling,” he said. “It ignores the lessons of the disastrous BP blowout, the growing dangers of climate change and the promise of a clean energy future.”

Athan Manuel, director of lands protection at Sierra Club, lauded Obama for closing portions of the Arctic waters to drilling but said opening new areas of the Atlantic “is incompatible with a healthy future for America’s coastlines.”

Lawmaker reactions

Key Republicans found Obama’s plan lacking.

“This administration is determined to shut down oil and gas production in Alaska’s federal areas, and this offshore plan is yet another example of their short-sighted thinking,” said Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska). “The president’s indefinite withdrawal of broad areas of the Beaufort and Chukchi seas is the same unilateral approach this administration is taking in placing restrictions on the vast energy resources in ANWR and the NPR-A.”

House Natural Resources Chairman Rob Bishop (R-Utah) said the administration had “dashed America’s offshore energy hopes once again.”

“Someday this administration will move the goal of energy independence forward,” he said. “Unfortunately, this is not that day — again. In fact, we’ve taken a step backward. What they have proposed is the lowest number of lease sales in the history of the OCS program.”

Senate Democrats from states along the East Coast responded angrily to the Obama administration’s proposal, arguing that offshore drilling in the Atlantic could cause costly oil spills like the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

“If drilling is allowed off the East Coast of the United States, it puts our beaches, our fishermen and our environment in the cross hairs of” potential future oil spills, Massachusetts Sen. Ed Markey told reporters at a news conference this afternoon.

“We saw what happened with the BP spill,” Markey added. “My state’s tourism and fishing industries can’t afford that kind of tragedy.”

New Jersey Sen. Robert Menendez said the plan represented a giveaway to oil companies and warned that it could jeopardize coastal communities up and down the Southeastern seaboard.

New Jersey’s tourism industry generates $38 billion a year in revenue and directly supports more than 300,000 jobs, much of them in beach towns that could be hard hit in the event of an offshore oil spill, Menendez said.

If the plan is approved, “all of the risk is put on our shore communities, and all of the revenue goes to Big Oil,” Menendez said. “Oil companies don’t need another handout.”

Markey and Menendez appeared alongside Maryland Sen. Ben Cardin and New Jersey Sen. Cory Booker, who argued that the United States should transition toward alternative energy sources instead of rewarding fossil fuel producers.

“We seem to be doubling down on a fossil fuel strategy,” Booker said. “This, to me, is unacceptable.”

For all their anger, opponents of the plan have a limited range of options to block the leasing program from moving forward. Markey said Democrats would consider introducing legislation or attaching a rider to an appropriations bill that would block funding for the proposal.

But it’s unclear whether either option would work, given that the leasing program does not require congressional authorization.

However, at least one Democrat, Virginia Gov. Terry McAuliffe, praised the Interior plan.

“Today’s announcement by the U.S. Department of the Interior is a positive step toward responsible offshore energy development that will create jobs and economic activity, while helping our commonwealth diversify its energy resource,” he said. “If we proceed in a smart and safe way, we can unlock gas, oil and wind assets offshore while protecting our environment and Virginia’s close relationship with the Department of Defense and other key stakeholders.”

And Virginia’s Democratic Sens. Mark Warner and Tim Kaine in a joint statement called the Interior plan “a significant step in a multi-year process that should result in the safe, responsible development of energy resources off the Virginia and mid-Atlantic coasts.”

“This draft leasing plan from the Interior Department includes appropriate environmental reviews and opportunities for public hearings before any lease sales would occur,” they said. “It does not, however, allow Virginia or other Atlantic coastal states to share in any of the revenue from energy resources developed offshore. We will continue to push for legislation to allow Virginia to have the same revenue-sharing system currently a