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U.S. Plans Lease Sales in Gulf of Mexico, Offshore Alaska

By Katarzyna Klimasinska
November 08, 2011 2:52 PM EST
Obama Resists Call for More Drilling to Create Jobs
Obama Resists Call for More Drilling to Create Jobs

President Barack Obama’s administration plans 15 offshore oil-lease sales from 2012 to 2017, keeping the Atlantic and Pacific seaboards off-limits for drilling.

The government will hold 12 lease sales in the Gulf of Mexico and 3 off of Alaska’s coast, the Interior Department said today in a statement announcing its proposed five-year oil and gas leasing program. The proposal calls for two sales, in 2014 and 2016, in areas of the eastern Gulf that aren’t under a congressional moratorium,

Obama has set a target of reducing U.S. oil imports by a third by 2025 through more domestic oil production and increased use of natural gas and renewable resources. Republican presidential candidates, such as Texas Governor Rick Perry, and industry groups led by the American Petroleum Institute have called for more extensive drilling.

“We don’t believe that we ought to open up every single place and look under every single rock for oil and gas production,” Interior Secretary Ken Salazar said at a press conference in Washington today. “We need to drill in the right places, with the right protection.”

The proposal is “a good first step,” Erik Milito, group director of upstream and industry operations for the Washington- based American Petroleum Institute, said in an e-mailed statement. “However, this is a missed opportunity to open additional areas that could have helped address rising energy demand, create American jobs and reduce the federal deficit.”

Exxon, Anadarko

The group, representing more than 350 companies including Exxon Mobil Corp. (XOM) and Anadarko Petroleum Corp. (APC), said the administration should consider more drilling, including in the eastern Gulf and off of Virginia.

The Atlantic coast lacks the facilities and equipment needed to support oil exploration and respond to a potential oil spill, the department said today.

Saying the North coast of Alaska is also undeveloped, the Interior Department proposed holding lease sales in the Beaufort and Chukchi seas in 2015 and 2016 to allow more time for environmental research and spill-response development.

Environmental groups including the Wilderness Society and Ocean Conservancy, both based in Washington, said there is no technology to clean up oil in icy waters of the Arctic.

‘Call a Timeout’

“Rather than putting the cart before the horse, they need to call a timeout on Arctic Ocean leasing and do the needed research and testing of spill-response technology first,” Wilderness Society President William H. Meadows said in an e- mail today. 

The U.S. hasn’t offered new acreage in the Gulf since BP Plc (BP/)’s offshore oil spill in April 2010, the largest in U.S. waters. The next lease sale in the Gulf is scheduled for December.

BP said it’s the largest holder of deepwater leases in the Gulf, which produces about 1.6 million barrels of oil a day, more than 25 percent of U.S. output.

Royal Dutch Shell Plc (RDSA), which has invested about $4 billion in leases off Alaska in the Chukchi and Beaufort seas bought in 2005 and 2008, has yet to drill a well there because of lawsuits from environmental groups and native communities, which oppose further leasing in the area.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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