Monday, December 22, 2008

Drill baby, drill: new developments

In one of his last efforts as President, President Bush has started the “drill baby drill” process that so many in the oil patch have hoped for.

Closing a public comment period on the proposed lease of 2.9 million acres of ocean offshore Virginia to oil and natural gas companies, the US Interior Department has set the ball in motion.
As gas prices climbed to $4 a gallon this summer, the idea of increased US drilling looked more and more popular. In recent months, President Bush lifted the presidential ban on offshore drilling set by his father, and later, a gridlocked Congress let a separate drilling-related suspension expire.

Now it seems as though the Bush camp is “testing the waters” in Virginia. The Minerals Management Service believes that while the area may be a drop in the bucket as far as oil, the natural gas reserves could prove extremely fruitful. However, the main draw might be the path of least resistance. Government opposition in Virginia may be less than elsewhere, say, California.

But wait. While the window of opportunity for the energy industry seems the biggest in decades, there are still obstacles.

The US Navy, NASA, and those that follow the migration patterns of the North Atlantic right whale have all expressed their respective concerns.

To many in the industry, the fact that President-elect Barack Obama has the power to stop the process in its tracks when he takes office in January is the most disconcerting.

There are, however, a few important things to remember.

Obama has selected Ken Salazar as the new interior secretary nominee. Salazar is part of a group of lawmakers known to favor Outer Continental Shelf drilling in exchange for more investment in low-carbon technology.

Secondly, when most feared the “sure thing” Windfall Profits Tax that was to accompany Obama’s presidency, he reassessed the situation - ultimately rejecting the idea.

And, perhaps most notably and most relatably, President-elect Obama agrees that “responsible” offshore exploration should be part of the total energy picture.

He’s proven he is listening to industry voices and ideas. Perhaps he will surprise you again.