Big Oil Again Pushes Congress To Open Offshore Acreage
February 25 2009 - 6:48PM
Dow Jones News
Big Oil once again pushed U.S. lawmakers to open up the Outer
Continental Shelf to oil and gas development, arguing Wednesday
that resource estimates could be multiplied if the federal
government would expand offshore drilling access.
Although a moratorium on offshore drilling expired last year in
the face of political pressure fueled by high energy prices,
Democratic leaders in Congress and President Barack Obama's
administration are prioritizing alternative, low-carbon energy and
have indicated they'll restore bans in many areas.
In the past month, Interior Secretary Ken Salazar has stalled
development of a five-year drilling plan by six months and said he
would draft a new program that would close controversial and
sensitive areas, but possibly allow development in areas previously
closed by the ban. On Wednesday, Salazar also canceled an oil-shale
lease sale solicited under the previous administration. State
governors, including Virginia's Timothy Kaine, have also been
pushing for Interior to halt future offshore leases sales.
Like Salazar, House Natural Resources Committee Chairman Nick
Rahall, D-W.Va., says that besides reintroducing bans on some areas
of the OCS, he wants to reform the government's royalty program,
including repealing some royalty-relief programs, such as those
designed to encourage deepwater development.
Oil industry officials warned Rahall's committee Wednesday that
the Democrat's strategy of delaying new access is shortsighted and
that the government needs every available resource to meet demand
growth - including expanded oil and natural gas drilling -
especially as the country tries to build a clean energy
economy.
"Those who would say we can attain energy security without oil
and natural gas are as incorrect as those who would say that we can
drill our way out of our current energy challenges," said former
Energy Department official Karen Harbert, now head of the U.S.
Chamber of Commerce's Institute for 21st Century Energy.
Devon Energy Corp. (DVN) Chief Executive Larry Nichols says his
company estimates around 55 trillion cubic feet of natural gas and
14.3 billion barrels of crude lie untapped off the Atlantic and
Pacific coasts, and the unexplored eastern coast of the Gulf of
Mexico holds an estimated 21.5 trillion cubic feet of natural gas
and 3.7 billion barrels of crude.
"There might be more, there might be less, but we can't know
unless we evaluate and explore," said BP America President (BP)
Lamar McKay.
Gary Luquette, president of Chevron Corp.'s (CVX) North America
unit, pointed out that current resource estimates for the Gulf of
Mexico had multiplied eight times from original calculations as
firms explored and surveyed the area with new technology. For
example, a 5 billion-barrel field discovered several years ago in a
geological strata previously thought to be unproducible changed the
way geologists predict recoverable resources in the Gulf of
Mexico.
Marvin Odum, president of Royal Dutch Shell's (RDSA) U.S.
operations, said he hoped Democrats aren't using delaying tactics.
"I'm looking for some of those positive indications that it's not
just...an endless cycle, but you never actually get to
development," he told reporters on the sidelines of the committee
hearing.
"I hope these are real steps toward opening some new areas for
energy supply," he said.
-By Ian Talley, Dow Jones Newswires; 202-862-9285;
ian.talley@dowjones.com