President Obama & Offshore Drilling – A “Nixon to China Moment?”
Last week, President Obama announced, with some fanfare, a plan to open certain offshore regions (Continental Shelf from Virginia to Florida, a small area in the Eastern GOM, about 100 miles from Florida) to oil/gas exploration, while “ordering further study on others (primarily recently leased and other prospective acreage offshore Alaska). This follows a similar order by President Bush in 2008, albeit with further restrictions, especially in Alaska. Hurdles remain to the ex-Alaska program, namely local/state approval (which would require some form of revenue sharing with the states), and the usual seismic and bid rounds. Actual drilling is unlikely before 2014. In Alaska, the revocation of existing leases would force repayment to the winners, including over $1 billion to Shell, and $500 million to ConocoPhillips (maybe not a bad thing!).