New OSHA Administrator Talks Tough; BP Accident Imperils Offshore Gas Expansion

June 2010 Vol. 65 No. 6

BP Accident Imperils Offshore Gas Expansion, At Least Temporarily
Despite the different and superior safety profile for offshore natural gas exploration, the BP deepwater oil spill may well dissuade Congress from approving the addition by the Obama administration of gas-rich areas in the eastern Gulf of Mexico, the Virginia Coast and near the Cook Inlet in Alaska to the Mineral Management Service’s 2007-2012 leasing plan. Bucking environmentalists who are generally part of the Democratic coalition, the Obama administration announced on the last day of March it would open those previously closed areas to energy exploration.

Many in the Capital had forgotten that the Senate Energy and Natural Resource Committee had actually taken a step toward burying the moratorium on the eastern Gulf when in July 2009 it passed an omnibus energy bill (S. 1462) called the American Clean Energy Leadership Act of 2009. It allows leasing in the eastern Gulf 45 miles beyond the Florida shore. But that bill has gone nowhere.

The latest effort to drop the eastern Gulf moratorium was expected to come in the form of an amendment to a Senate Climate Change bill being readied by a group of bi-partisan senators led by Sen. John Kerry (D-MA), Joseph Lieberman (Ind.-CT) and Lindsey Graham (R-SC). Graham had recently gotten cold feet because of issues not related to the bill itself. But Lieberman and Kerry had been moving forward and were planning to endorse the Obama eastern Gulf opening in their bill. The BP accident has forced them to take a step back and think twice about the wording of any moratorium-ending amendment. Even so, the chances of the Senate passing a Climate Change bill, with or without a Gulf amendment, are considered relatively slim.

The eastern Gulf areas currently covered by the moratorium are natural-gas rich. According to U.S. Minerals Management Service (MMS) estimates, they could contain 42 trillion cubic feet of natural gas. Brian Petty, executive vice president of government affairs for the International Association of Drilling Contractors, explains that 25 percent of America's natural gas supply already comes from the Gulf.

Even if Congress did pass a Climate Change bill ending the eastern Gulf moratorium, the areas off the Florida coast Obama is willing to lease would not come into play for some time. The Department of Interior's updated 2007-2012 leasing plan contained all sorts of caveats.