Who'd Obama please with his offshore oil drilling plan?

McClatchy NewspapersMarch 31, 2010 

WASHINGTON — President Barack Obama's announcement Wednesday that he'll lift bans on new drilling for oil and natural gas off much of the U.S. coastline drew criticism from environmentalists and halfhearted welcomes from Republicans, even as Obama called it only one part of a broad strategy to reduce foreign oil dependence and enact climate-change policy.

His administration will allow further study and new drilling to proceed from Delaware to Florida, starting with leases off the Virginia coast, as well as off the oil-rich eastern Gulf of Mexico. Some sensitive areas would be protected, including Alaska's fish-rich Bristol Bay, a decision that conservationists applauded, while other waters off north Alaska can be considered. No expanded drilling is being considered off the West Coast below Canada.

"This is not a decision that I've made lightly," Obama said at Maryland's Andrews Air Force Base, near the capital. He was staged beside the "Green Hornet," a Navy fighter jet designed to run on a fuel mix of half biomass. He also discussed administration policies to make automobiles more fuel efficient and to develop "clean coal" and alternative energy supplies.

Obama said his plan "is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy. And the only way this transition will succeed is if it strengthens our economy in the short term and long term. To fail to recognize this reality would be a mistake."

The policy's framework fits Obama's governing style: To accomplish a liberal goal, in this case climate change legislation, take a centrist stance that may appeal to enough Republicans to win some bipartisan support, or at least justify action without bipartisan support.

Sen. Lindsey Graham, R-S.C., part of a bipartisan team working on compromise climate-change legislation in Congress, said of Obama's remarks, "I intend to answer the call by working with my Republican and Democratic Senate colleagues to put our nation on a pathway to energy independence and a cleaner environment."

Conservationists warned of risks to beaches, seafood, polar bears, whales and other wildlife.

Frank Tursi of the North Carolina Coastal Federation called Obama's calculation to get a climate change bill that reduces greenhouse gases by supporting more development of domestic fossil fuel "a delicious irony. He's now allowing increased production of the very substance responsible for the emissions."

"I would say that this comprehensive approach is a lot less 'drill, baby, drill' and more 'drill where it's responsible, promote efficiency, invest in clean energy and create jobs of the future,' " White House Deputy Press Secretary Bill Burton said. "I know that doesn't fit on a T-shirt quite as well, but that's a lot more about what President Obama thinks is the right direction for this country."

Today, the U.S imports 53 percent of the oil it uses, most from sources other than the Mideast. Most natural gas used in the U.S. comes from North America.

Some Democrats in Congress disputed the notion that offshore fuel expansion could make a real dent in dependence on foreign oil. Sen. Ted Kaufman, D-Del., said, "It is a simple fact that the United States has only a tiny percentage of world oil reserves — 3 percent — while we consume 25 percent."

However, Pulitzer Prize-winning oil historian Daniel Yergin, the chairman of IHS Cambridge Energy Research Associates, said reality was more complicated.

Experts don't really know how much oil and gas is available off the Atlantic coast, he said, because the last estimates are decades old, when technology was less advanced.

Hurricane Katrina, meanwhile, showed in 2005 how resilient modern offshore infrastructure is, Yergin said. Environmentally conscious countries such as Norway drill offshore without calamity. He said U.S. fears about offshore production stemmed from the Santa Barbara, Calif., oil spill more than four decades ago. A lot has changed since then in terms of technology and capabilities.

"Look how much oil we produce from the Gulf of Mexico today. Look how much natural gas. Our economy depends on it. When was the last spill in the Gulf of Mexico?" Yergin said.

For U.S. oil and gas producers, the most attractive part of Obama's announcement concerned the eastern Gulf of Mexico, some 125 miles off Florida's western coastline, because of its proximity to existing infrastructure, said David Dismukes, the associate director of the Center for Energy Studies at Louisiana State University in Baton Rouge.

Industry estimates suggest there's at least 25 trillion cubic feet of natural gas in the eastern gulf, a little more than the 22 trillion cubic feet the U.S. consumes annually. There's also an estimated 4 billion barrels of recoverable oil, a bit less than a tenth of the 50 billion barrels thought to be available in the entire gulf, Dismukes said.

He said there were estimates of about 4 billion barrels of oil and 37 trillion cubic feet of natural gas off the Atlantic coast.

Last year, the U.S. consumed 18.69 million barrels per day of petroleum products refined from crude oil.

Senate Republican leader Mitch McConnell, R-Ky., called Obama's announcement "a step in the right direction" but said he'd wait to see whether the administration completed promised studies, approved permits, opened areas for production and stopped court delays. Many other Republicans and the U.S. Chamber of Commerce said Obama's decision didn't go far enough.

Obama had called for expanded offshore drilling during his presidential campaign, but he correctly anticipated that some environmental activists would strongly disagree with him.

"Is this President Obama's clean energy plan or Palin's 'drill, baby, drill' campaign?" Greenpeace Executive Director Phil Radford said in a statement, referring to former Alaska Gov. Sarah Palin's infamous chant as Arizona Republican U.S. Sen. John McCain's presidential running mate in 2008.

Defenders of Wildlife President Rodger Schlickeisen voiced concerns that even seismic testing could hurt fisheries and wildlife areas including the Chesapeake Bay and North Carolina's Outer Banks, and that whales and polar bears could be harmed.

Oil markets shrugged off the promise of future supply, settling up $1.39 to $83.76 a barrel on the New York Mercantile Exchange.

"Where are the Republicans out there talking about how crude is going to go down" when drilling is allowed, "because oil certainly isn't reacting to it today," said Michael Masters, a hedge fund manager who's testified repeatedly before Congress that big inflows of investment dollars are driving up oil prices, not supply shortages. "It's not a supply and demand issue. ... Crude is detached from the fundamentals."

(Renee Schoof, Erika Bolstad and Barbara Barrett contributed to this report.)

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