Obama Administration Does U-Turn on Atlantic Drilling

By Valerie Volcovici

WASHINGTON, March 15 (Reuters) – The Obama administration reversed course on Tuesday on a proposal to open the southeastern Atlantic coast to drilling as an oil price slump and strong opposition in coastal communities raised doubts about the plan.

Besides market and environmental concerns, the U.S. Interior Department said it also based its decision on conflicts with competing commercial and military ocean uses.

The decision, which is sure to reverberate in the presidential election campaign, reverses a January 2015 proposal for new leases in the Atlantic as part of the department’s five-year plan to set new boundaries for oil development in federal waters through 2022.

“We heard from many corners that now is not the time to offer oil and gas leasing off the Atlantic coast,” Interior Secretary Sally Jewell said.

“When you factor in conflicts with national defense, economic activities such as fishing and tourism, and opposition from many local communities, it simply doesn’t make sense to move forward with any lease sales in the coming five years.”

Hillary Clinton, the front-runner in the race for the Democratic Party’s nomination to run in the Nov. 8 presidential election, has moved to the left on environment under pressure from green groups. She tweeted: “Relieved Atlantic drilling is now off the table. Time to do the next right thing and protect the Arctic, too.”

Donald Trump, the businessman and former reality TV personality who is the Republican front-runner, has raised questions about whether more offshore drilling is necessary given the abundance of onshore shale production.

The proposal would have opened up drilling sites more than 50 miles off Virginia, North and South Carolina, and Georgia to oil drilling by 2021.

Coastal communities in these states protested the administration’s plan, fearing the possibility of an oil spill like the BP Horizon accident in 2010 on the U.S. Gulf Coast, and its effects on tourism and their economies.

“With this decision coastal communities have won a ‘David vs. Goliath’ fight against the richest companies on the planet, and that is a cause for tremendous optimism for the well-being of future generations,” said Jacqueline Savitz, environmental group Oceana’s vice president for U.S. oceans.

Virginia officials had welcomed the initial plan to allow offshore drilling, saying it would bring economic benefits. On Tuesday, Senator Tim Kaine, a Democrat from Virginia, said he was surprised that the Department of Defense had raised concerns about naval installations, one of which is off the state’s coast.

“The DOD has been relatively quiet during this public debate and has never shared their objections with me before,” he said.

OBJECTIONS

Major oil companies, including Exxon Mobil Corp, Shell and Chevron, had pushed for an open Atlantic.

Shell Oil Company spokeswoman Natalie Mazey said the decision was “short sighted” and would “jeopardize the abundance of affordable domestic energy the economy has become dependent on.”

The American Petroleum Institute said the decision goes against the will of voters, governors and members of Congress who support more development.

“The decision appeases extremists who seek to stop oil and natural gas production which would increase the cost of energy for American consumers and close the door for years to creating new jobs, new investments and boosting energy security,” said API President Jack Gerard.

The Interior Department also announced Tuesday that it would evaluate 13 other potential lease sales in other areas of the country – 10 in the Gulf of Mexico and three off the coast of Alaska.

“The proposal focuses potential lease sales in areas with the highest resource potential, greatest industry interest, and established infrastructure,” Jewell said.

The Interior Department said that in the Gulf, resource potential and industry interest are high and infrastructure already exists.

It proposes two annual lease sales that include the Western, Central, and part of the eastern Gulf of Mexico not subject to the current congressional moratorium.

It also includes a potential sale each in the Chukchi Sea, Beaufort Sea, and Cook Inlet planning areas in Alaska. The department would take comments on other options, including an alternative that includes no new leasing.

CONCERNS ABOUT ARCTIC

While green groups praised the decision to keep the Atlantic off limits for now, they raised concerns that the United States would keep the door open for drilling in the vulnerable U.S. Arctic.

“The administration must take Arctic leases out of the final five-year plan,” said Cindy Shogan, executive director of the Alaska Wilderness League. “No place has potentially more to lose due to climate change than the Arctic.”

The Interior Department will open the five-year proposal to a 90-day comment period. (Reporting by Valerie Volcovici, additional reporting by Timothy Gardner and Ernest Scheyder in Houston; editing by Cynthia Osterman and Grant McCool)

(c) Copyright Thomson Reuters 2016.

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