Salazar, Offshore Oil Foes Find Little Room for Compromise



NEW YORK (Dow Jones Newswires), Apr. 13, 2009

The Obama administration is winning little new support for a compromise proposal to explore for oil and gas in federal waters without drilling.

Interior Secretary Ken Salazar floated the idea at a public meeting in Atlantic City last week, but was rebuffed by environmental groups, which oppose any new offshore exploration for fossil fuels. Salazar is holding forums in four cities to help determine how, or whether, to allow oil and gas development in coastal waters kept off-limits to the industry by a federal moratorium until recently. He will travel to Anchorage on Tuesday and San Francisco on Thursday.

"We need to know what the facts are, we have to make (decisions) based on the best knowledge we have," Salazar said, responding to a statement by Jacqueline Savitz, a senior director with Oceana, a marine conservation group. "Our information on the Atlantic is 25 years old...we haven't done any scientific assessment of what's out there."

Salazar was referring to seismic imagery, which uses sound waves to map geological formations beneath the seabed. Seismic testing is typically one of the first steps taken to assess an area's potential for oil and gas reserves.

The moratorium, covering federal waters off the Atlantic and Pacific coasts, as well as parts of the Gulf of Mexico and offshore Alaska, was allowed to expire last year. Oil prices were close to a record high at the time, increasing pressure to find new sources of energy. Although prices have since fallen sharply, President Barack Obama has not dismissed the Bush administration's push for increased offshore drilling, even as he rolls back some of his predecessor's other industry-friendly energy initiatives.

The negative response from environmentalists to the seismic trial balloon indicates that the Obama administration will have difficulty convincing erstwhile allies to support even the most tentative steps that might lead to new offshore oil and gas development. Environmental groups view seismic testing as a threat to marine mammals that use sound to navigate. They also fear that seismic tests will bolster the industry's case for further development if the images point to large oil and gas deposits.

"If it doesn't make sense to drill for oil for economic reasons or environmental or climate reasons...it doesn't make sense to spend more money on seismic testing," Savitz said in an interview.

A decision on seismic testing wouldn't come until after a public comment period ends in September, said Frank Quimby, an Interior Department spokesman. He portrayed Salazar's remarks on the need for seismic testing as purely hypothetical.

"(Salazar) is just putting it out there, he's not saying 'therefore we have to'" conduct tests, Quimby said.

Outdated Data

The U.S. Minerals Management Service is using 25-year-old data in some locations and blind estimates in other areas, to estimate the resources available offshore.

Based on that limited information, the MMS believes that about 45 billion barrels of oil and 208.85 trillion cubic feet of gas could be recovered from waters that were off limits. That's roughly equal to the resources thought to be available in the portions of the Gulf of Mexico already open to exploration, which currently meets about 7% of the nation's oil demand.

"We need new data, we have much better technology now," said Andy Radford, a senior policy advisor with the American Petroleum Institute, an energy industry group that is lobbying for expanded offshore development. "We've found much more oil (in the Gulf) than was thought to have been out there in the first place."

The MMS estimates that a complete government-funded survey of just one of the 26 subdivisions that cover federal waters would cost up to $175 million and take between six and 10 years. Selective, industry-funded testing of the most promising areas would require considerably less time and money, Radford said.

Environmental groups oppose either route, claiming that a single round of tests would only lead to further seismic activity.

"It's never just one survey," said Michael Jasny, a senior policy analyst with the National Resources Defense Council.

Seismic tests, which usually involve firing an air gun underwater to create sound waves, have been found to disrupt feeding and mating habits for whales and other marine mammals up to 3,000 miles away, Jasny said. Conservationists also point to recent whale beachings in areas where seismic testing was known to be underway.

Experimental seismic techniques that muffle high-frequency sound used by whales but not to map oil reserves could eventually provide ground for compromise, Jasny said.

"This is a problem for which there may be some technological solutions," Jasny said.  

Copyright (c) 2009 Dow Jones & Company, Inc.



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