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Thursday, April 1, 2010

Is the President's New Oil and Gas Drilling Plan a Death Knell for Offshore Renewable Energy? Think Again.

Yesterday, President Obama announced a plan to expand oil and gas drilling on the continental shelf. The plan was designed with close assistance from the Department of the Interior-- the same Department that oversees offshore renewable energy development and leasing. President Obama's plan authorizes drilling in areas of the Atlantic Seaboard, the Gulf of Mexico, and Alaska. No drilling is authorized for the west coast or for areas on the Atlantic seaboard north of Delaware. Certain carve-outs have also been implemented to preclude drilling off of Florida's Gulf Coast and part of its eastern shorelines.

Here are two maps from the DOI website showing where the new plan authorizes drilling:

It is not surprising that environmentalists have already roundly condemned Obama's new plan. See, e.g. Oceana, Southern Env't, and Greenpeace. Moreover, although President Obama said that what he wanted to emphasize is that "this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy", it is not at all clear that the plan will truly benefit the oil and gas industry or decrease reliance on foreign oil. See, e.g, NY Times 4/1/10.

So what gives? Two thoughts come to mind.

First, the timing of this announcement-- so soon after the health care bill passed-- is suspicious. Drafting legislation authorizing offshore drilling for oil and gas has long been a key piece of the Republican energy agenda. This new plan may be a bone to appease republican frustrations.

Second, and perhaps more intriguing, is how this new plan might affect the development of proposed offshore renewable projects. One of the most commonly made arguments against developing offshore windfarms has been that these developments will compromise the environment and/or stain an otherwise pristine seascape. Moreover, these arguments-- which one might assume would be coming from the liberal environmentalists--have often been propounded by otherwise conservative organizations whose real motivation has been to prevent allocations of state and federal funding to non-traditional energy projects.

However, those who have been arguing against offshore renewables on the basis of aesthetics or environmental concern will have a pretty hard time towing that line if they are in favor of the offshore drilling projects. Additionally, since at least some of the proposed offshore renewables projects (including proposed offshore windfarms in the coastal waters adjacent to Delaware, Maryland, Virginia and North Carolina) are in areas that have been opened up for oil and gas drilling, opposition parties will find that they will have no choice but to oppose both oil and gas AND the offshore wind facilities if they have any hope of appearing sincere.

Personally, I am not a fan of offshore drilling. I tend to agree with the NGO Oceana. I believe that the potential for damage arising from spills and other catastrophes far outweighs the benefit of obtaining access to what are relatively minor oil and gas resources. Nevertheless, I think Obama's new plan may actually help the offshore renewable industry move forward.

What do you think?

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