President-elect Barack Obama has picked Nobel Prize-winning physicist Steven Chu, who runs the Lawrence Berkeley National Laboratory at the University of California, to be secretary of the Department of Energy (DOE) in his administration, and has selected experienced regulators to oversee three other offices dealing with energy, environmental and climate-change issues, Washington sources said. No formal announcement had been issued Thursday morning.

Obama has chosen Carol Browner, administrator of the Environmental Protection Agency (EPA) for eight years in the Clinton administration, for a new White House post overseeing energy, environmental and climate policy, the sources said (see Daily GPI, Dec. 11). Browner, who was closely involved in the Obama campaign, is a principal at The Albright Group LLC, which is headed by former Secretary of State Madeleine K. Albright.

Obama also is reported to have selected Lisa P. Jackson, currently chief of staff to New Jersey Gov. Jon S. Corzine and former commissioner of the state’s Department of Environmental Protection, as EPA administrator. And Nancy Sutley, deputy mayor for energy and development in Los Angeles, has been chosen to head the White House Council on Environmental Quality (CEQ), insiders said. She previously served as former California Gov. Gray Davis’ energy advisor during the state’s rolling blackouts of 2000-2001, and was special assistant to then-EPA Administrator Browner.

By creating the White House post, “it seems the president-elect wants to keep pretty direct control over energy and environmental policy in the White House,” said Martin Edwards, vice president of legislative affairs for the Interstate Natural Gas Association of America (INGAA). He believes Brown is “going to have more control” over environmental policy than Jackson will at the EPA.

“We see an unmistakable trend: environmental stewardship will drive energy policy in the next administration, and the energy department will be the engine of research science. Obama’s pick for Interior secretary remains outstanding, but we expect that his choice will complete the green trend and signal stricter Endangered Species Act enforcement, longer environmental reviews for extractive industries and tighter regulation of oil and gas drilling and coal mining,” said Friedman Billings Ramsey Research.

“This accompanies a leftward power shift on [Capitol] Hill, most visible in Rep. Henry Waxman’s (D-CA) besting incumbent Chairman John Dingell (D-MI) for the House Energy and Commerce Committee gavel” (see Daily GPI, Nov. 21).

Thomas J. Pyle, president of the Institute for Energy Research, expressed some concern about the appointment of Sutley to the CEQ. “Advocates of responsibly developing America’s abundant homegrown energy reserves had hoped the new president would use the CEQ appointment to send a signal to the country and the world that securing our nation’s energy future will be a top priority of his administration. The apparent selection of Ms. Sutley for this important post does not appear to meet this mandate, though we remain hopeful that her tenure during this critical time will prove to be a successful one.”

No one from the oil and natural gas industry has ever been named DOE secretary. The only electricity executive who was appointed energy secretary was Hazel O’Leary, former vice president of Northern States Power Co. She headed up the DOE between 1993-1997.

The focus of the DOE is nuclear weapons, rather than crude oil, natural gas and electricity. “About 70% of its budget is nuclear related…It has a huge role in building nuclear bombs” and storing them, INGAA’s Edwards said. Energy is a “side show.”

Although “we don’t have a history with Chu, we look forward to working with him,” said Lee Fuller, vice president of government affairs for the Independent Petroleum Association of America.

He noted that the DOE provides producers, particularly independent producers, two benefits. It plays a “very active role” in its research and development of technologies to enhance oil and gas production, and it provides a “voice for energy development” when federal agencies are developing new regulations, Fuller said.

With respect to natural gas, Edwards acknowledged that the DOE has “played a significant role in the development of technology that facilitated the boom in unconventional gas production.” But “industry has kind of become a victim of its own success,” with new supply flooding the market and driving down gas prices, he said.

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