IAGC Association of Geophysical : Obama expected to allow drilling in Atlantic

President Obama is expected to allow drilling in the Atlantic Ocean for the first time in three decades in a draft plan that could be released as early as next week.

The five-year plan would run from 2017 through 2022 and would begin after Obama leaves office. That has the oil and gas industry fighting to get every parcel it can into the draft, knowing it could be stripped from the final version as Obama prepares to leave the White House. Environmental groups, meanwhile, say the timing gives them an edge with the president, who has increasingly come to view climate change as a legacy issue.

"At the end of the day this administration is very, very focused on fighting climate change," said Athan Manuel, director of lands protection with the Sierra Club. "The legacy stuff tilts this in our favor."

Groups monitoring the plan said the president is likely to permit exploration and drilling off the coast of Virginia and possibly the shorelines of North Carolina, South Carolina and Georgia. The Alaskan Arctic also will be in play, but the Interior Department's Bureau of Ocean Energy Management is reportedly seeking a change in how it offers leases to prospective drillers that industry officials say could deter interest. The Eastern Gulf of Mexico, which has been off limits since 2006, is expected to remain so.

"At this point we're all assuming it will be slightly larger than the existing footprint, but it won't be expansive," Christopher Guith, senior vice president for policy at the U.S. Chamber of Commerce's Institute for 21st Century Energy, told the Washington Examiner.

Connie Gillette, a spokeswoman with the Bureau of Ocean Energy Management, told the Examiner that the draft plan wouldn't be released this week, but wouldn't say when it was coming. She noted the agency had previously said it was due early this year.

While environmental groups are hopeful Obama will block offshore drilling, other signs point to him allowing it even if he doesn't have to face the political ramifications while remaining in office.

The administration already has spent time and resources figuring out how to approach drilling in the Arctic. In 2013, the Department of the Interior conducted a study on a series of Royal Dutch Shell mishaps in Alaska's Chukchi Sea, which led to the development of an interagency framework for supporting drilling in the Arctic. The Bureau of Ocean Energy Management has initiated a rule-making for drilling there, signaling the administration plans to allow production.

Still, it's possible Interior could set such a high bar with its drilling rules that energy companies wouldn't want to drill in the Arctic, Manuel said.

Arctic lease holders such as Statoil and ConocoPhillips have signaled they were halting work there following Shell's miscues. Curtis Smith, a Shell spokesman, said the company has "made no formal decision, but are undertaking activities to preserve the option of a 2015 season" in the Arctic.

Brian Straessle, a spokesman for the American Petroleum Institute, added that the ocean management agency is considering changing the bid process for leasing space that could deter interest by requiring companies to "nominate" areas where they want to drill. That, Straessle said, would force companies to do expensive exploratory work and signal interest to competitors that could then outbid them.

"You'd be taking more potential energy production off the table, and it's a disincentive to conduct their own seismic testing and exploratory drilling," Straessle said.

The Atlantic outer continental shelf may draw the most interest. The ocean management agency estimates the area holds undiscovered, technically recoverable oil and natural gas of 4.72 billion barrels and 37.51 trillion cubic feet, respectively.

The administration took the first steps toward allowing drilling there in July, when federal officials authorized seismic surveys to test for oil and gas deposits from Delaware to Florida over the objections of environmental groups. Oil and gas groups said approving the practice was a precursor to drilling, though the anticipated 18-month process for securing the right to perform those tests is "long" and "cumbersome," said Ken Wells, president of the International Association of Geophysical Contractors.

Virginia was included in a draft for Obama's first five-year drilling plan, but the White House stripped it from the proposal after the 2010 BP Deepwater Horizon disaster. That incident killed 11 workers and spewed roughly 3 million barrels of oil into the Gulf of Mexico.

In the intervening years, support for drilling off the coasts of Mid- and South-Atlantic states has grown among Democrats and Republicans alike. Democratic Virginia Gov. Terry McAuliffe, a one-time offshore opponent, now wants exploration off his state's coast, as do the state's Democratic Sens. Tim Kaine and Mark Warner. They see it as a potential economic boon - a 2013 study commissioned by API and the National Offshore Industry Association said cumulative state government revenues between 2017 and 2035 from offshore drilling for North Carolina, South Carolina, Georgia and Virginia would hit $10.3 billion.

But opponents contend there's no guarantee coastal communities would receive those revenues. They contend states are banking on changes to a federal revenue-sharing scheme that evenly distributes offshore drilling royalties among all states at the expense of the tourism and fishing industries.

"There's a lot of talking points that have no basis in reality," said Claire Douglass, climate and energy director with conservation group Oceana. "What is certain is when we drill, we spill. Every ocean we've drilled in, we've spilled in."