Obama to Reverse Course on Atlantic Oil Drilling

Obama to Reverse Course on Atlantic Oil DrillingObama to Reverse Course on Atlantic Oil Drilling

The Obama administration is set to reverse course on opening Atlantic waters to a new generation of oil and gas drilling, after a revolt by environmentalists and coastal communities that said the activity threatened marine life, fishing and tourism along the US East Coast.

The proposed offshore leasing program expected to be released on Tuesday walks back the administration’s initial plan to auction off drilling rights in as many as 104 million acres of the mid- and south-Atlantic in 2021, according to an Interior Department official who requested anonymity because the plan was not yet public, Bloomberg reported.

The decision to close the door to expansive Atlantic drilling responds to an outcry from coastal residents and opposition from the Pentagon, which concluded the activity could impede military training and naval exercises. The move also reflects current market dynamics, conflicts with other uses of the ocean and limited infrastructure in the region, according to the official.

The Obama administration’s about-face is a defeat for the governors of Georgia, South Carolina, North Carolina and Virginia, who had lobbied for nearby offshore drilling they say would create jobs and new economic activity. It also is a major blow to energy companies that had eyed the US Atlantic as a promising frontier, with the potential for oil discoveries and new development that could churn out crude for decades, supplementing eventual production declines on shore.

“Offshore drilling in the Atlantic is an exploration activity that hopefully leads to the discoveries that give us our energy security and put us on a road to energy independence,” said Erik Milito, the American Petroleum Institute’s director of upstream and industry operations.

“Canada, Cuba, Venezuela, South America, Europe, West Africa—they all do it, and we’re sitting back kind of witnessing it without exploring ourselves.”

Right now, oil companies with major offshore operations in the US, including BP Plc, Chevron Corp. and Royal Dutch Shell Plc, are largely confined to the Gulf of Mexico. And while it’s unclear how much oil and gas could be lurking along the US East Coast—government projections using decades-old geological surveys estimate 3.3 billion barrels of oil and 31.3 trillion cubic feet of natural gas—geologists say discoveries in other Atlantic waters around the world suggest even bigger potential.