Deep-water oil drilling: why Obama is OK with angering left and right

Neither the oil industry nor environmentalists are pleased with President Obama's new deep-water oil drilling plan. But in an election year, that might be a safe position politically.

OK, baby – you can drill. Just be careful.

President Obama Thursday followed up on his State of the Union promise to expand deep-ocean oil drilling and exploration on the nation's outer continental shelf by unveiling a big oil lease sale in the Gulf of Mexico.

The move marks yet another step toward full-scale resumption of leasing following the abrupt halt that followed the 2010 Deepwater Horizon blowout that killed 11 men and spilled an estimated 4.9 million barrels (205 million gallons) of oil into the Gulf. But it satisfied neither the oil industry nor environmentalists. 

The June lease sale is not "new" at all, but one devised by the Bush administration and later put on hold, industry sources say. They call for the president to return to the offshore drilling plan he endorsed just months before the Gulf oil spill, which would open new waters off Virginia, North and South Carolina, and Florida to drilling.  

Environmentalists criticize the administration for reopening deep-water drilling even though the technical problems that led to the Gulf oil spill have not been fixed.  

But as gasoline prices creep upward this spring, the president's move could be intended to show independent voters he isn't under the thumb of environmentalists or the oil industry. Following his rejection of the Keystone XL pipeline project, Thursday's move could deflect election-year criticism that he is harming the nation's economy by not vigorously pursing oil development at home.

"As in 2010, administration actions continue to defend the president's left flank while demonstrating responsiveness to voters confronting high prices for transportation and heating fuels," writes Kevin Book, a senior energy analyst with ClearView Partners, LLC, a Washington-based energy market research firm, in a recent analysis. "But this year the White House is being much more careful."

The lease sale puts on the block 38 million acres across the central Gulf of Mexico, an energy-rich region estimated to hold 31 billion barrels of oil and 134 trillion cubic feet of natural gas. Much of it is in water up to 11,000 feet deep and 230 miles from shore.

It is the first element of the president's plan, announced in his State of the Union address, to open 75 percent of the oil and gas resources on nation's continental shelf to drilling. In all, a dozen lease sales will run from 2012 to 2017 in the Gulf of Mexico and off the Alaskan coast in the Chukchi and Beaufort seas and in Cook Inlet, the administration announced today.

"Right now, American oil production is the highest that it’s been in eight years," the president said at a UPS facility in Las Vegas where he was highlighting energy efficiency. "Last year, we relied less on foreign oil than in any of last 16 years. That hasn’t gotten a lot of attention, but that’s important. We’re moving in the right direction when it comes to oil and gas production."

Administration officials say the move is responsible because of tougher regulatory oversight and safety regulations, as well as the testing and deployment of new capping technology in the event of future deep-water blowouts. Moreover, the administration now conducts site-specific environmental assessments for every deep-water exploration and development plan, something not done previously, said Tommy Beaudreau, director of the federal Bureau of Ocean Energy Management Director at a meeting of oil and gas executives in Louisiana Wednesday.

But energy industry officials were disappointed that the president's plan does not allow drilling on the Atlantic seaboard or Florida's west coast – as the pre-Gulf oil spill plan did.

"Unfortunately, overall, there is nothing new here," said Erik Milito, an official with the American Petroleum Institute, the leading oil and gas industry group based in Washington, in a statement. "The administration's plans for offshore leasing will keep more than 85 percent of the offshore areas off limits." 

For their part, environmentalists say that equipment designed to prevent deep-water blowouts is fundamentally unchanged from what it was before the spill.

"Sadly, it is extremely counterintuitive to greenlight all of this high-risk drilling when, as recently as December, the National Academy of Engineering and the National Research Council together reported that we cannot rely on the current generation of blowout preventers to work," says Richard Charter, a senior fellow with the Ocean Foundation, a nonprofit ocean-protection group based in Washington.

The president's plan to expand leasing in Alaska left him cold, too. Mr. Charter says: "There's no equipment yet devised that can scoop up oil spilled in the middle of pack ice."