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U.S. Seen Limiting Oil Drilling in Arctic, May Open Atlantic

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26 JAN 2015

(Bloomberg) — The U.S. Interior Department will lay a framework as soon as Tuesday for oil exploration in the nation’s coastal waters in a five-year plan that is expected to withdraw areas off Alaska while possibly adding parts of the Atlantic.

Republican Lisa Murkowski said the head of the offshore energy office told her the agency will place areas of the energy-rich U.S. Arctic off limits. Those areas had been previously deferred from new leasing. Current leases in the Arctic, such as those held by Royal Dutch Shell Plc, won’t be affected.

“Maybe they’ve changed their minds after listening to the outrage from us. We’ll see,” Murkowski, the chairman of the Senate Energy and Natural Resources Committee, told reporters Monday.

Jessica Kershaw, an Interior Department spokeswoman, didn’t respond to an e-mail asking about Murkowski’s comments.

The agency’s proposed plan will control leasing in the Outer Continental Shelf, such as the Gulf of Mexico and Arctic Ocean. The plan may open some areas in the Atlantic for the first time, especially off Virginia, North Carolina and South Carolina, where governors and many lawmakers support drilling.

“We have the sense that the Atlantic would be in there, and we’ll have to fight to get it out,” said Jacqueline Savitz, vice president of the environmental group Oceana. “If it’s in the plan, you can kiss your beaches goodbye.”

She said it’s not clear what parts of the Atlantic would be included.

Budget Gap

The administration of President Barack Obama provoked a furious backlash from Alaska’s political leaders after first pushing Congress to declare the disputed Arctic National Wildlife Refuge as a wilderness area, then disclosing plans to curtail future Arctic drilling.

Alaska’s leaders are struggling with a budget gap created by a plunge in state oil production and the price of oil. Governor Bill Walker said he is considering “aggressive options” against Interior’s proposal.

Walker said Interior won’t withdraw the leases held by Shell, which had mishaps in 2012 while trying to explore in the Beaufort and Chukchi seas. Both Shell and ConocoPhillips put their exploration plans in those seas on hold in 2014. They must decide soon whether to try again this year.

The announcement would come as a decline in global oil prices has drillers cutting back on production. West Texas Intermediate for March delivery fell 44 cents to close at $45.15 a barrel on the New York Mercantile Exchange. It was the lowest settlement since March 11, 2009.

Oil rigs have dropped by an unprecedented 258 in seven weeks, threatening to end the surge in domestic oil production that has turned the U.S. into the world’s largest fuel exporter.

Obama announced Dec. 16 he was blocking the leasing parts of Bristol Bay, Alaska, for oil and gas exploration and production.

To contact the reporters on this story: Mark Drajem in Washington at [email protected]; Jim Snyder in Washington at [email protected]

To contact the editors responsible for this story: Jon Morgan at [email protected] Steve Geimann



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