Business | Oil & Gas
Drilling ban goes but US oil will not reach consumers soon
The 27-year-old US moratorium on offshore drilling expired on Tuesday, but consumers should not expect oil exploration in newly opened areas any time soon.
- Reuters
- Published: 00:07 October 2, 2008
Washington: The 27-year-old US moratorium on offshore drilling expired on Tuesday, but consumers should not expect oil exploration in newly opened areas any time soon.
The Interior Department, which oversees the leasing of areas for oil and gas development, is not expected to begin selling leases in areas where drilling is currently restricted until 2010.
In addition, oil companies will have to take time to analyse current data to determine what places they may be interested in investing.
"It's not a case where effective October 1, companies will be off the coast of South Carolina," said Richard Ranger, a policy analyst for the American Petroleum Institute.
Government energy officials say it would take five to 10 years before any oil supplies produced from opening restricted offshore areas would be available in the market.
It is estimated federal lands off the US coasts could produce 18 billion barrels of oil and 76 trillion cubic feet of natural gas. With the advanced technology now available to the oil industry, though, Ranger said it is possible the areas could produce much more.
Significant victory
The end of the ban on drilling along the US coastline marks a significant victory for Republican lawmakers, who fervently championed offshore drilling this election year. With gas prices soaring above $4 (Dh14.7) a gallon and public opinion on his side, "drill here, drill now" became Republican presidential candidate John McCain's rallying cry.
"Whether they know it or not, millions of Americans tonight will find themselves one step closer to getting their hands on massive reserves of home-grown energy - energy to which every American has a rightful claim," House Republican Whip Roy Blunt said in a statement.
Blunt warned, however, that expansion of drilling could be hampered by bur-eaucracy and legal challenges.
Oil companies are also mindful that after November elections, lawmakers could reinstate the ban or place restrictions on dril-ling. Ranger said this uncertainty should be cleared up in the first weeks of the new Congress.
Democrats reluctantly dropped the prohibition on offshore drilling from a temporary spending bill passed over the weekend, after they were unable to reach an agreement with Republicans on how much offshore area to open to exploration. "By lifting this moratorium, the president has made it very clear that for him, the interests of Big Oil outweigh all others," said Representative Ed Markey, chairman of the House Select Committee on Energy Independence and Global Warming.
"The upcoming elections will now determine whether or not our nation's beaches and coastlines will be protected from the environmental threat posed by oil and gas development," he added. With voter sentiment shifting in favour of drilling, House of Representative Democratic leaders supported legislation opening some areas as a part of larger energy package.
The White House and Republicans largely rejected the House Bill as too limited in scope.
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