Capitol Hill

Offshore energy development delayed

The controversy surrounding offshore drilling recently has subsided with the decline of oil and gas prices that has accompanied the global economic downturn. However, it's only a matter of time before energy prices skyrocket again as the economy eventually recovers and worldwide energy demand increases.

Current status

During fall of 2008, NRCA and the Coalition for Affordable American Energy successfully lobbied Congress to lift the federal moratorium on offshore drilling for oil and natural gas, which had been in place since 1982. NRCA and other supporters of ending the moratorium hope its removal will allow for the development of new domestic energy supplies that ultimately will help stabilize prices and reduce the U.S.' reliance on imported oil.

However, the Obama administration has delayed a proposal by the outgoing Bush administration to move forward with offshore oil and gas development, and it is unclear how the new administration will proceed on this critical issue.

Drawing the lines

Lifting the drilling moratorium paved the way for the Bush administration's January release of a proposed five-year plan to develop domestic offshore resources in the Outer Continental Shelf of the Atlantic and Pacific coasts, which is estimated to hold billions of untapped barrels of oil and trillions of cubic feet of natural gas. The Bush proposal authorized 31 exploration leases between 2010 and 2015 and provided an opportunity for public comment until March.

However, in February, Ken Salazar, Obama's new secretary of the interior, issued a directive extending the public comment period on the Bush proposal until September.

Salazar criticized the Bush proposal because it "opened up the possibility for oil and gas leasing along the entire Eastern seaboard" and did not include development of renewable energy sources. He further said the Department of the Interior is working on a long-term strategy for offshore energy production from renewable sources, including wind and solar power, as well as more limited drilling for oil and gas than envisioned in the Bush proposal. This will include preparation of a new inventory of conventional offshore energy resources; the existing inventory is about 30 years old.

The battle begins

Many congressional Democrats and leading environmental groups have praised Salazar's efforts.

In contrast, congressional Republicans and oil and gas industry representatives have indicated concern with Salazar's delay in moving forward with the development of offshore oil and gas resources but expressed hope that the Obama administration eventually will move forward.

It appears unlikely that Congress will attempt to reinstate the offshore drilling moratorium as a few Democrats had indicated they might try to do after expanding their majorities in the House and Senate.

At a recent hearing of the House Natural Resources Committee, Chairman Nick Rahall (D-W.V.) told environmental group representatives who testified in support of reinstating the ban: "The political reality may be that the moratorium as we knew it will not be re-imposed."

Environmental groups are urging Congress to restrict drilling in "sensitive ecological areas." Rahall has indicated his committee will hold more hearings this year to further explore policy options and possibly develop legislation to limit offshore drilling. Congressional Republicans indicate they will continue pushing for development of offshore oil and gas resources.

Moving forward

This debate's outcome could influence energy prices in the U.S. for years to come. NRCA will continue working in support of an energy policy that recognizes the need to develop conventional and renewable domestic resources to secure stable energy supplies that are vital to future sustainable economic growth.

Duane L. Musser is NRCA's vice president of government relations.


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