U.S. President Barack Obama will today announce proposals to allow oil and natural-gas drilling off U.S. coastlines in the Atlantic Ocean and Gulf of Mexico when he delivers a speech on energy security.
Obama will propose allowing exploration off the coast of Virginia and, if a Congressional moratorium is lifted, in the Gulf of Mexico 125 miles (201 kilometers) off the coast of Florida, according to an administration official speaking on the condition of anonymity.
The new policies are designed to reduce the nation’s dependence on foreign oil and create jobs while taking environmental risks into account, the official said.
“It’s absolutely a big change in policy because these areas have been closed for years,” said Stuart Traver, principal adviser at consultant Gaffney, Cline & Associates Ltd. in Singapore. “While it’s interesting, we’re really talking probably years before we see an impact in terms of new production.”
Obama is providing his most detailed comments to date on coastal drilling, a topic that has long divided lawmakers and now threatens to derail efforts to reach a compromise on climate-change legislation. Democratic senators such as Bill Nelson of Florida have said they won’t support a bill providing for unlimited exploration, while U.S. oil companies press to increase domestic exploration.
Oil prices have swung from less than $20 a barrel in 2001 to a record $147.27 a barrel in July 2008 as investors bet demand growth would outstrip new findings. Crude traded at $82.35 a barrel on the New York Mercantile Exchange at 3:02 p.m. Singapore time.
Ban Expired
“Our member companies are very interested in access and want to see areas opened up,” said Randall Luthi, president of the National Ocean Industries Association. The Washington-based trade group represents companies in the offshore energy industry, such as Irving, Texas-based Exxon Mobil Corp.
A federal ban on drilling off the East and West Coasts and in parts of Alaska expired in 2008. Virginia Governor Bob McDonnell, a Republican, supports offshore drilling off his state and this month signed legislation on how to distribute royalty revenue from energy production.
Under Obama’s proposal the Department of the Interior will allow drilling 50 miles off the coast of Virginia and open up the rest of the outer continental shelf in the south- and mid- Atlantic to oil exploration, the official said.
In Alaska, Obama is proposing to cancel leasing in Bristol Bay, and cancel sales in the Chukchi and Beaufort seas to allow for further scientific study, the official said. A sale in Cook Inlet will proceed.
Along with the announcement on offshore drilling, Obama will announce a final rule on increased fuel efficiency standards for cars and the purchase by the federal government of 5,000 hybrid cars and trucks.
(from Bloomberg)