Industry blasts White House retreat on offshore drilling

Oil and gas industry leaders and their allies in Congress are blasting the Obama administration’s decision to retreat from its plan to expand offshore drilling along the Atlantic Coast and in the eastern Gulf of Mexico as foolish and unnecessary.

Rep. Doc Hastings, R-Wash., who is expected to head the House Natural Resources Committee next year, said the White House was “taking the wrong approach in responding to the BP spill” by essentially giving up on new offshore drilling.

“This plan to lock-up vast portions of America’s offshore energy resources is short-sighted and will lead to long-term job impacts, economic harm and increased reliance on foreign energy from dangerous and hostile countries,” Hastings said in a statement. “The Deepwater Horizon spill was a terrible tragedy, but this is a great country and we shouldn’t allow this single event to disrupt our long-term need for an all-of-the-above energy plan that includes the responsible development of our nation’s oil and gas resources.”

Jack Gerard, president of the American Petroleum Institute, said the decision was part of a “disturbing trend” away from domestic energy production and the action bucks administration officials’ repeated verbal assurances that oil and gas is essential. “We keep hearing the comments about we’re committed to oil and gas development, but that conflicts with everything . . . we see,” Gerard said. “Everything we hear is a bit at odds with what they’re doing.”

Gerard said President Barack Obama’s March 31 decision to take the first steps toward expanding offshore drilling put the U.S. on the right path, but “this decision effectively is a very significant reversal on this direction moving ahead.”

“In our view, this now shuts the door on new development and effectively ensures that the tens of thousands of jobs that could have been created will now not be created,” Gerard added.

Sen. John Barrasso, R-Wyo., said the administration was foolishly locking up offshore oil and gas resources “to score political points.”

And Rep. Ted Poe, R-Texas, said the White House was exploiting the Deepwater Horizon disaster “to further a far-left political agenda.”

Rep. Kevin Brady, R-Texas, said the administration was flip-flopping on energy policy. “It’s time for the White House to stop determining energy policy by holding a finger up to gauge the political winds,” Brady said. “We need more American-made energy from all sources produced by American energy workers. Why doesn’t the President get this?”

Karen Harbert, the president of the U.S. Chamber of Commerce’s Institute for 21st Century Energy, said the administration’s move is “a major step backward for the security of America’s energy future.”

Harbert said the White House was effectively choosing “to keep most of America’s abundant oil and natural gas resources under lock and key.” And, she said, “the administration is sending a message to America’s oil and gas industry:  Take your capital, technology and jobs somewhere else.”

Bruce Vincent, the CEO of Houston-based Swift Energy Co., and chairman of the Independent Petroleum Association of America, called the announcement “misguided” and stressed that it comes on the heels of a slowdown in issuing offshore drilling permits and confusion about what operators must do to satisfy federal regulators and get drilling projects approved.

“More uncertainty, less access to American oil and natural gas, and even more bureaucratic red-tape is not a commonsense energy plan,” Vincent said. “It is, however, an attack on the American economy and our nation’s energy security.”

Randall Luthi, president of the National Ocean Industries Association, said he was especially disappointed that the administration was blocking new drilling in federal waters off the coast of Virginia, where one lease sale had already been planned before the oil spill. After all, he said, that planned leasing was supported by both U.S. senators from Virginia, the state’s governor and a majority of its congressional delegation.

“Energy exploration and production offshore Virginia alone . . . would create thousands of new, well-paying jobs and generate millions of dollars in revenue,” Luthi said.

Today’s decision is a mixed one for Shell Oil Co., which has been hoping to drill an exploratory well in the Beaufort Sea near Alaska next year and is still waiting on federal regulators to give their okay. Administration officials said they would be reviewing Shell’s application and promised to make a decision about the plan soon, but even an approval might not come in time for the company to move equipment to the region and start drilling next summer.

Marvin Odum, the CEO of Shell Oil Co., said the administration’s decision “signals an important direction for companies like Shell to eventually return offshore crews to work providing jobs, adding important revenues, and supporting the economy.” But, he added:

“While the decision to advance Shell’s application for a Beaufort Sea drilling permit is a positive one, it is important to address the outstanding issues regarding the timely approval of permits both in Alaska and the Gulf of Mexico. Shell has a proven record of superior offshore operations in both areas, and we will continue to work with the Administration as we move forward.”

In a statement, Chevron decried the move as a “step in the wrong direction” that would limit U.S. energy production, impede the creation of new jobs tied to offshore drilling and would mean less royalty revenue for the federal government.

Rep. Gene Green, D-Texas, said he continued to be concerned about a shallow-water permitting slowdown. While the permitting delays fall short of a “de facto moratorium” — the label critics have given it — Green said the slowdown is a major problem for the oil and gas industry and the people it employs along the Gulf Coast.

Green said federal regulators have a responsibility to give clarity to energy companies applying to drill new wells, so they know how to comply with new rules and can be certain “that if they jump through all these hoops they’ll actually get their permit.”

Although the government lifted its moratorium on deep-water drilling in October, it has not yet approved any wells that would have been blocked by the ban. The administration has signed off on 19 new shallow-water wells since it imposed new requirements in June, but that lags behind historic approval rates.

Read about the reaction of offshore drilling foes here.

You can also read highlights of the administration’s new offshore drilling plans here.