Oil and gas companies, closer than ever to drilling in an Alaskan wildlife refuge, want to explore another frontier: America’s coastlines.
The Atlantic and Pacific coasts and the eastern Gulf of Mexico are protected by a federal ban on new oil and natural gas extraction. But with rising worry about the country’s dependence on fuel imports and soaring prices, energy producers feel they now have a unique opportunity — and a more effective strategy — to relax or eliminate the restrictions.
“Part of the solution has to be opening more access,” whether it’s off the coast of California or the Carolinas, said Duane Radtke, head of the natural gas production unit at Dominion Resources Inc. of Richmond, Va.
Environmentalists say the industry has been emboldened to seek offshore drilling because of last month’s Senate vote to open the Arctic National Wildlife Refuge. They also worry that the public may mistakenly take the 24-year-old offshore ban for granted, if they even know it exists.
Momentum seen
Proponents of expanding offshore drilling rights do not expect big changes overnight, but they say the idea has recently gained momentum:
- The Bush administration indicated last month that it intends to give the industry access, starting in 2007, to a protected area off the Florida coast that is twice the size of the Arctic refuge and rich in natural gas.
- Sen. Lamar Alexander, R-Tenn., on Wednesday proposed legislation that would give governors the power to open some or all of their states’ offshore lands restricted by federal moratoria. The proposal comes as Congress seeks to pass a broad energy bill.
- Virginia’s general assembly passed a bill last month urging the state’s representatives in Congress to push for an exemption from the federal offshore-drilling ban.
Trade groups that represent energy-intensive industries are throwing significant weight behind the oil and gas producers’ campaign. They are lobbying legislators in individual states, where they believe the future decision-making power on offshore drilling belongs.
“The approach to individual states signals a new and more serious effort to try and open up some of these areas,” said Lisa Speer, a New York-based senior policy analyst at the Natural Resources Defense Council. The group opposes any attempt to repeal or weaken the ban on offshore drilling out of concern for the impact on marine life.
“We have our work cut out for us to address these efforts,” Speer said. But she is confident that coastal communities and the tourism and fishing industries will put up a formidable fight once the industry’s plan becomes more widely known.
90 percent of coast off-limits
Roughly 90 percent of America’s coastal acreage is federally protected. Congress enacted the first moratorium on new offshore leases in 1981, expanding its reach on several occasions and renewing it every year since. There is a separate ban put in place by President George H.W. Bush in 1990 and extended by President Bill Clinton in 1998; it expires in 2012.
An estimated 16 billion barrels of oil and 78 trillion cubic feet of natural gas lie in offshore areas currently off-limits, according to government and industry statistics. That’s enough oil to meet total U.S. demand for more than two years and enough natural gas to supply the country for three and a half years.
Charles Davidson, chairman and chief executive of Noble Energy Inc., a Houston-based producer of oil and natural gas, said the industry is struggling to keep domestic production from declining any faster and that expanded offshore access will help, but not fix, the problem.
“Clearly, there are areas of the country where they don’t want to see oil and gas development offshore,” Davidson said. “It’s up to policy makers to look at what’s the appropriate balance.”
In the Bush administration, that balance appears to be shifting in favor of more offshore drilling.
Florida push
Interior Secretary Gale Norton sent a letter on March 16 to Sen. Mel Martinez, R-Fla., signaling her agency’s intention to sell oil and gas leases in 3 million acres off the Florida coast that are off-limits through 2006.
The acreage is not covered by the federal moratorium, which Norton said the administration would continue to support, but it was promised special protection by the Bush administration in 2001 after protests from environmentalists and the president’s brother, Gov. Jeb Bush.
Because of term limits, Gov. Bush will be out of office by the time the new lease sales would begin in 2007.
Mark Ferrulo, director of Florida’s Public Interest Research Group, fears the expansion is just a first step to end the moratorium in the eastern Gulf of Mexico, an area the industry is keen on in because much of the necessary infrastructure is already in place nearby.
“Once they get their toe in the door, they won’t be happy until they bust the door down,” said Ferrulo.
Virginians debate their coast
In Virginia, legislators passed a bill seeking help from its representatives in Congress to exempt the state from the federal moratorium.
“It’s a jobs issue,” said state Sen. Frank Wagner, R-Virginia Beach, who authored the bill out of concern for the impact of high natural gas prices on manufacturers and consumers. Wagner said he also does not like the fact that “ever since 9/11, a lot of our foreign policy has been driven by the need for foreign energy.”
Gov. Mark Warner, a Democrat, vetoed the bill last week, but on technical, not ideological, grounds, and said he would “keep an open mind” on the issue.
Aside from the oil and gas producers themselves, the most forceful advocates for removing restrictions on offshore drilling are a handful of trade groups that represent industries that consume large quantities of energy, particularly natural gas.
The groups are promoting draft legislation that would end the federal ban. In exchange, states would be given the authority to reject exploration within 100 miles of their coasts and those that allowed offshore drilling would receive a greater percentage of the revenues from federal lease sales.
“It would be a fair and open debate in each state on the merits of opening their coasts for exploration,” said Tom Moskitis, managing director of external affairs at the American Gas Association.
Radtke, the Dominion Resources executive, agreed. But he sympathized with opponents.
“If I owned land in Florida, I might have a different opinion myself,” he said.