The Obama administration has rescinded a decision to allow offshore drilling in the gassy eastern Gulf of Mexico (GOM) and portions of the Atlantic and Pacific coasts because of the Deepwater Horizon tragedy, Interior Secretary Ken Salazar said Wednesday.

The area in the eastern GOM now under a congressional moratorium, as well as the Mid and South Atlantic planning areas, won't be considered for offshore development through 2017 under the revised policy. The western and central GOM, as well as Alaska's Cook Inlet and the Chukchi and Beaufort seas, "will continue to be considered for potential leasing before 2017," Salazar told reporters.

The Interior chief and Michael Bromwich, who heads Interior's Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM), explained the revamped Outer Continental Shelf (OCS) leasing policy, which reverses what had been one of Obama's signature initiatives (see Daily GPI, April 1).

"As a result of the Deepwater Horizon oil spill we learned a number of lessons, most importantly that we need to proceed with caution and focus on creating a more stringent regulatory regime," said Salazar, referring to the Macondo well explosion in the deepwater GOM on April 20, which killed 11 people and devastated the Gulf Coast region. "As that regime continues to be developed and implemented, we have revised our initial March leasing strategy to focus and expend our critical resources on areas with leases that are currently active.

"Our revised strategy lays out a careful, responsible path for meeting our nation's energy needs while protecting our oceans and coastal communities."

The modified plan, he said, is "consistent" with an executive order on National Ocean Policy and "also confirms many actions announced in March, including environmental analysis to determine whether seismic studies should be conducted in the Mid and South Atlantic, and rigorous scientific analysis of the Arctic to determine if future oil and gas development could be conducted safely."

Administration officials want to establish a "gold standard" for environmental protection for offshore drilling, said Salazar.

Planned lease sales scheduled for March and August in the western and central GOM have been pushed to late 2011 or early 2012 to allow BOEM to complete "environmental analyses that take into account effects of the Deepwater Horizon oil spill," he said. However, the analyses also are to determine if additional lease sales in these areas "should proceed" as part of the 2012-2017 leasing program.

"We will do everything we can to proceed with those lease sales by the end of 2011 and into 2012," said Salazar. As part of its efforts, the BOEM is in the process of completing an agreement with the National Oceanic and Atmospheric Administration to allow the agency to collaborate on the environmental analyses for OCS planning.

Offshore drilling in Alaska apparently is off the table for most drillers in the short term. Offshore drilling in Alaska "is under careful review and consideration" by Interior and BOEM through "scientific and environmental studies, public meetings and additional analysis of oil spill response capabilities in the Arctic," said Salazar.

BOEM plans to hold public meetings in Alaska "to gather public input and information" for the environmental analyses and to determine "whether and where" to schedule lease sales under the 2012-2017 program. The public meetings will cover the Beaufort, Chukchi and Cook Inlet planning areas.

Final decisions about Alaska leasing in the 2012-2017 program "will be informed by an ongoing U.S. Geological Survey (USGS) assessment of resources, risks and environmental sensitivities in Arctic areas," as well as input from other federal agencies, Salazar said.

"Though no further lease sales in the Chukchi and Beaufort seas will be held under the 2007-2012 program, BOEM will continue to honor existing leases in the Arctic," he noted.

Shell Offshore Inc. is the only company with an application to drill in the Arctic before the BOEM, and the agency is processing the request, Bromwich said. Shell proposes to drill one exploratory well in the Beaufort Sea next summer (see Daily GPI, Oct. 12).

"If Shell's proposed drilling operation is approved, BOEM would have safety personnel on site throughout the drilling operation to monitor the operation and hold them accountable for compliance with BOEM's drilling safety and environmental regulations," Bromwich said.

In the Mid and South Atlantic, Interior continues to move forward with an environmental impact statement (EIS) for "potential seismic studies" to support conventional and renewable energy planning, said Salazar. However, no oil and gas lease sales are to be scheduled in the Atlantic in the 2007-2012 program or in the 2012-2017 program.

"The most appropriate course of action is to focus on areas with existing leases and not to expand leasing at this time," Salazar told reporters. "There already are significant areas of the western and central Gulf of Mexico which are leased to companies but not being developed..." Development has begun "on less than one-third of the leases in the Gulf...29 million of 43 million acres are not in use...Those could be developed..."

The revised policy, said Bromwich, "brings clarity to a path forward as we continue to oversee activity on the Outer Continental Shelf...As you know, we continue to implement important regulatory initiatives...and the standards are fully consistent with continued offshore exploration. We will continue to emphasize science and a strong environmental analysis as we move forward."

Swift Energy Co. CEO Bruce Vincent, who also chairs the Independent Petroleum Association of America, called the administration's reversed policy "misguided."

"If there were any questions as to whether or not this administration is more interested in picking winners and losers in the energy market and waging an unbridled war on America's oil and natural gas producers than creating jobs and putting our nation on a path toward energy security, they were put to rest with today's misguided announcement that will keep even more taxpayer-owned energy resources further out of reach and under Washington's lock and key," said Vincent.

"It's both ironic and terribly unfortunate that just last week, Secretary Salazar said that 'we need to implement a smart permitting process that is efficient, thorough and unburdened by needless red tape,' as it relates to offshore wind development. There's simply no reason that the Obama administration can't take the same approach with the responsible development of American, job-creating oil and natural gas offshore.

"Our nation's oil and natural gas industry puts nearly 9.2 million Americans to work, while helping to ensure that consumers, families, seniors and small businesses -- who continue to struggle through one of the deepest and most drawn-out economic downturns in a generation -- have stable prices at the pump and affordable home-heating costs. More uncertainty, less access to American oil and natural gas, and even more bureaucratic red tape is not a common sense energy plan. It is, however, an attack on the American economy and our nation's energy security."

Karen Harbert, CEO of the U.S. Chamber of Commerce's Institute for 21st Century Energy, said the news was "a major step backward for the security of America's energy future."

By withdrawing new areas for oil and gas exploration, "the Obama administration is ensuring that we will continue to increase our dependence on foreign oil, which threatens our national security," said Harbert. "In addition, this decision will cost us many thousands of well-paying jobs that would have been created both directly and indirectly in regions that badly need them, making this a major lost opportunity for our economy...

"The administration is sending a message to America's oil and gas industry: take your capital, technology and jobs somewhere else."

American Chemical Council CEO Cal Dooley said the reversal "has essentially thrown that economic engine in reverse. "What's worse, the refusal to tap vast amounts of America's own energy supplies will hurt us today and decades into the future when new drilling would start to bear fruit."

However, the turnabout by the administration drew praise, including from Florida Democrat Bill Nelson.

"I'm glad the White House is listening to the people of Florida and has decided not to allow any new drilling in the eastern Gulf," said Nelson. "Unfortunately, Florida lawmakers could still allow drilling in waters the state controls some 10 miles out into the Gulf. I hope Florida's new governor and legislature will see through the oil industry's false promises about safety, jobs and revenues, and do what's needed to protect the state."

Florida Rep. Kathy Castor (D-Tampa) praised the announcement and said the White House "obviously learned lessons from the BP oil disaster. Our small businesses and hotel owners are still suffering from the devastation left behind by the BP blowout."

Congress in 2008 had allowed a federal moratorium on some offshore drilling areas to expire, and the former Minerals Management Service in January 2009 issued a draft five-year plan to allow oil and gas leasing in long-banned areas offshore (see Daily GPI, Jan. 20, 2009; Sept. 30, 2008).

The Obama administration published a notice of intent in March to prepare an EIS for the proposed 2012-2017 leasing plan. However, the long-awaited news preceded the Deepwater Horizon explosion. The tragedy was followed by a six-month drilling moratorium (lifted in October), as well as Interior's decision to postpone public scoping meetings for the EIS (see Daily GPI, July 6).

©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.