Feds Delay Plans for Va. Offshore Drilling

Deepwater Horizon Gulf of Mexico Oil Spill

WASHINGTON (Dow Jones)

The Obama administration, facing a vast oil spill in the Gulf of Mexico and calls to limit offshore drilling, on Thursday canceled meetings that were key to proceeding with new leases to drill off the coast of Virginia.

The Interior Department had planned three meetings in May to allow for public comment as part of the process for auctioning off leases to explore for oil and gas off Virginia. On Thursday, the Interior Department said it was "temporarily postponing public meetings on potential offshore activities" so a review of offshore drilling safety issues requested by President Barack Obama could be considered at the meetings.

A spokeswoman for Virginia Gov. Bob McDonnell, who had pushed the Obama administration to allow drilling off the state's coast, called the decision a "pause" that was a "prudent step" to ensure that the BP Plc (BP) oil accident in the Gulf of Mexico was "appropriately studied." She said that the move shouldn't change the Interior Department's plans for a 2012 auction of leases to drill in Virginia coastal waters. An Interior Department spokesman said that the effect on the 2012 sale "wasn't clear."

Environmentalists hailed the decision and urged the Obama administration to go further. The Natural Resources Defense Council called the decision "an indefinite suspension" of the Virginia offshore-drilling program and urged the Obama administration to halt Royal Dutch Shell's (RDSA) plans to begin exploring off the coast of Alaska this summer.

The Interior Department's decision came as oil began washing ashore. BP Plc is still working to plug leaks in a well under the Gulf of Mexico that is estimated to be spilling 5,000 barrels of oil a day. The leak started after an oil rig it was leasing, Deepwater Horizon, exploded and sank more than two weeks ago. BP plans to put a giant concrete-and-steel dome over the well to collect oil as the company works to shut down the leak.

Interior Secretary Ken Salazar last week formed a panel to review offshore-drilling safety issues after Obama asked for a report within 30 days on what, if any, additional precautions and technologies should be required. That puts the deadline for submitting the report at around the end of May. Interior's Minerals Management Service oversees offshore drilling.

Julie Rodriguez, an Interior spokeswoman, said that "additionally, the Minerals Management Service and its Gulf of Mexico staff have focused their attention on the Deepwater Horizon incident and would be unable to conduct the meetings until a later date."

Copyright (c) 2010 Dow Jones & Company, Inc.

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