The administration’s Gulf leasing plan prompted an unlikely alliance.
By Jeremy Alford
July 26, 2012
While federal oil and gas issues traditionally divide industry supporters and environmental advocates, President Barack Obama’s five-year leasing plan for the Gulf of Mexico has both sides raising objections, albeit for differing reasons. The U.S. Interior Department submitted the plan to Congress for review in late June, recommending 12 lease sales for the Gulf’s Outer Continental Shelf through 2017.
The interior secretary is expected to implement the plan by the time August comes to a close, if not shortly after, and the first official sale could be conducted sometime this fall. The Bureau of Ocean Energy Management has already overseen two Gulf lease sales since the 2010 oil spill, including one in December in which 21 million acres were offered up and another in June that attracted $1.7 billion in record high bids.
Regan Nelson, senior oceans advocate at the Natural Resources Defense Council, an environmental watchdog group, says the government is rushing back into exploration without fully learning the lessons of the BP disaster. “The plan is too aggressive, too broad and too rushed,” Nelson says. “We believe an array of critical safety and environmental issues must be addressed first.” Nelson believes the Obama administration should be supporting clean, renewable energy sources instead.
The five-year plan outlines lease sales for the Gulf and Arctic waters only; the Atlantic and Pacific coasts remain shuttered to oil and gas activity. Secretary of the Interior Ken Salazar calls it “targeted leasing,” meaning the government is offering leases it feels are “best suited for exploration” based on all available information and technology. “When it comes to domestic production, the president has made clear he is committed to producing more oil and natural gas safely and responsibly,” Salazar says. “The numbers speak for themselves. Every year the president has been in office, domestic oil and gas production is up, imports of foreign oil are down, and currently the nation is producing more oil than any time in the last eight years.”
Don Briggs, president of the Louisiana Oil and Gas Association, counters that the administration’s overhaul of energy activity and complex permitting requirements is actually stifling investments. For example, Briggs says only 48 companies submitted bids during the June lease sale, compared to 77 companies in 2010.
U.S. Rep. Steve Scalise, R-Metairie, says the five-year plan closes off more areas of production than it opens. He also maintains the administration ignored feedback from Gulf Coast states — basically requests to increase domestic production — when the plan was originally released in November.
This final version of the plan is essentially unchanged from that earlier draft, and Scalise says it’s Obama’s way of “doubling down on his already failed agenda” of cutting foreign dependence on oil.
For Republicans, who are pushing for enhanced drilling during this ongoing election cycle, it’s part of a larger campaign theme, which makes the five-year plan highly political. In fact, U.S. House Republicans have been considering moving forward with an alternative leasing plan. But with the August recess, election season around the corner and a U.S. Senate that doesn’t always feel the same way, it’s uncertain how far the proposal could even go.
Senate Republicans, meanwhile, have introduced an alternative, too, crafted by Sens. David Vitter of Metairie and Jeff Sessions of Alabama. Their bill calls for lease sales and production in most of the OCS. It opens more areas in the Gulf for energy production and would permit production in areas of the Pacific and Atlantic Oceans as well as Alaska.
“The fall-off from the leasing and permitting actions of the Obama administration is very significant, and it’s projected to get even worse,” Vitter says. “Our bill is a common-sense approach that will increase the areas available to sell leases offshore, and of course will put a substantial amount of revenue back into the federal treasury.”
There are Democratic critics as well, like Sen. Mary Landrieu of New Orleans, who argues that the plan “seemingly ignores the vast oil and gas resources available off the shores of the U.S.” and offers nothing new on the side of exploration and production. “It is disappointing this administration is so shortsighted on the tremendous benefits this industry brings to the U.S.,” she says. If there’s a silver lining, she says it’s that the future leases included in the Eastern Gulf are areas opened under the Domenici-Landrieu Gulf of Mexico Energy Security Act, which secured a 37.5 percent share of offshore oil and gas revenues for Louisiana. That means that the bonuses and rental rates from the lease sales scheduled for 2014 and 2016 will be shared with the four Gulf producing states, including Louisiana, almost immediately, and once these leases are producing, the royalties received will also be split up among them. The money must be used for flood protection and coastal restoration projects.
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