Natural Gas Expansion in USA

Los Angeles Times
By Cynthia Dizikes
November 13, 2008
Reporting from Washington -- The federal government announced Wednesday that it would be taking the first major step to expand offshore oil drilling after a long-standing ban on new energy exploration off much of the U.S. coast expired last month.

Officials with the U.S. Minerals Management Service, which oversees oil and gas development in federal waters, said that starting today it would begin the process that could lead to leases at a potential site at least 50 miles off the coast of Virginia, an area that has not had offshore drilling.

Although the move involves only one coastal area, it represents the first turn of the crank in a much larger offshore drilling campaign that rose to a fury this summer amid a tumultuous election season and soaring gas prices -- and now stands to increase energy exploration in federal waters around the country, including off the coasts of California, Alaska and Florida.

"We've had some discussion, but now we're getting serious about it," said Randall Luthi, director of the Minerals Management Service. "This is actually an important step in our nation's energy security picture."

It could, however, be only a temporary step.

Democratic lawmakers and President-elect Barack Obama have said they would consider offshore drilling as a compromise in a comprehensive energy policy and as a way to wean the U.S. off foreign oil.

But whatever the new administration and Congress decide is likely to be more restrictive than current rules under the lapsed ban, which technically allow oil companies to drill as close as three miles offshore with federal approval.

"The issue of offshore drilling will be addressed by the next president and the next Congress," said Drew Hammill, spokesman for House Speaker Nancy Pelosi (D-San Francisco), who recently supported letting states decide whether to permit energy exploration 50 miles to 100 miles off their coasts.

Since 1981, a congressional moratorium on new offshore drilling has prevented the Interior Department from establishing leases in virtually all coastal waters outside of the western Gulf of Mexico and some areas of Alaska. The ban was enacted after a massive oil spill devastated the Santa Barbara coast in 1969.

Last month, however, the Democratic-controlled Congress allowed the moratorium to lapse amid pressure from the White House, Republican lawmakers and even members of the Democratic caucus who had come under attack for not doing more to bolster domestic energy supplies with gas prices topping $4 a gallon over the summer.

The process in Virginia will begin with a 45-day public comment period starting today and ending Dec. 29. The Interior Department does not expect to start leasing the area until at least 2011, after an environmental impact analysis is performed.

Virginia Gov. Tim Kaine, a Democrat, and the Legislature have supported offshore gas exploration.

According to rough estimates, the Interior Department believes there could be 130 million barrels of oil and 1.14 trillion cubic feet of natural gas in the area they expect to begin leasing off Virginia's coast.

In total, the Interior Department has estimated that there could be 18 billion barrels of oil and 77 trillion cubic feet of natural gas beneath 574 million acres of federal coastal waters that were off-limits before the ban lapsed.

But environmental groups and some Democrats have argued that the resulting gasoline could be years away and would do little or nothing to substantially reduce prices any time soon.

The Department of Energy has estimated that crude oil and gas production and prices would not be substantially effected until 2030.

"It is not going to make a meaningful difference in terms of gas at the pump," said Daniel Hinerfeld, spokesman for the Natural Resources Defense Council. "It is just a distraction from our need to cut off our dependence on oil."

In addition to Virginia, the Interior Department has announced a new five-year plan that could lead to opening formerly prohibited waters off California and Florida -- two states that have shown greater opposition than Virginia to new drilling.

The Minerals Management Service expects to come out with a list of specific locations by the beginning of next year. The move has been seen by some as a last attempt by the Bush administration to expand drilling before Obama becomes president in January.

"President Bush's 11th-hour effort to open sensitive coastal areas to new offshore drilling is nothing more than a desperate attempt to give one more parting gift to his friends in the oil and gas industry," Rep. Lois Capps (D-Santa Barbara) said after the announcement.

Dizikes is a Times staff writer.