February 8, 2006

U.S. Proposes Drilling Off Virginia, Fla Coasts

By Tom Doggett

WASHINGTON (Reuters) - Bush administration officials on Wednesday proposed lifting a ban on oil and natural gas drilling off Virginia's coast and in an area off Florida where drilling is opposed by Gov. Jeb Bush, the president's brother.

The Interior Department hopes drilling in areas where it is currently banned will boost U.S. oil and natural gas supplies at a time of high energy prices and reliance on foreign suppliers. The United States is the world's biggest energy consumer and demand is expected to keep growing, especially from new power plants fueled by gas.

Energy companies say they could help meet growing demand if they get access to many offshore areas where drilling is not allowed. Environmentalists oppose more drilling, and urge more conservation and development of alternatives to oil and gas.

The Interior Department, in its draft drilling plan for 2007-2012, proposed exploration for oil and natural gas off the Virginia coast, where such activity is now banned.

The idea came in response to discussion in the Virginia legislature about the potential of developing energy resources off the state coast, said Johnnie Burton, director of the Interior's Minerals Management Service.

"However, no offshore development will occur off of Virginia unless the state's congressional delegation works to lift the moratorium," she said.

More than 85 percent of the waters around the lower 48 states currently are off limits to energy development, including all areas off Virginia. Burton said the administration "has indicated support" for Virginia's moratorium, but will give great weight to comments from adjacent coastal states.

Energy exploration is allowed off Texas, Louisiana, Mississippi, Alabama and parts of Alaska.

The Interior Department also proposed permitting drilling in a small area off the western coast of Florida. Energy exploration had been suspended there at the request of Gov. Jeb Bush and other state officials, who fear an oil spill could hurt the state's multibillion-dollar tourism industry.

Under Interior's proposal, the bottom part of the so-called Sale 181 area would be opened to drilling. But no drilling would be allowed within 100 miles of Florida's coast, including a skinny part of the disputed area known as the "stove pipe."

The department also proposed allowing energy exploration in an area in the North Aleutian Basin off the Alaskan coast.

Mike Linn, chairman of the Independent Petroleum Association of America, said Interior's proposal was a step in the right direction but contended the government needed to open even more areas to drilling.

"As consumer demand for oil and natural gas rises, the country must meet the supply challenges by securing reliable energy from America's own reserves," he said.

But Mike Gravitz, who oversees oceans issues at the U.S. Public Interest Research Group, said instead of drilling the Bush administration could reduce the need for more oil by significantly boosting vehicle fuel efficiency standards.

"We don't suspect (new drilling areas) will be the solution to the nation's energy problems," he said.

The drilling plan will be open for public comment for 60 days. It may be revised before being finalized in spring 2007.

Separately, the department raised its estimate of U.S. undiscovered offshore energy resources by 15 percent to 85.9 billion barrels of crude oil and 419.9 trillion cubic feet of natural gas.

The department's estimate of offshore resources, which is the first update since 2001, represents the amount of oil or gas that could be produced using existing or reasonably foreseeable technology.

Burton said that during last year's hurricanes there was no significant pollution from producing facilities.