Obama halts deepwater oil drilling amid US soul-searching

By Chris Cermak May 28, 2010, 15:12 GMT

Washington - US President Barack Obama has taken a series of aggressive steps to limit drilling off coastlines as the US begins a period of deep soul-searching over the merits and risks of offshore drilling.

Obama on Thursday halted for at least six months exploratory oil drilling in deep waters off the Gulf of Mexico, the most significant long-term step yet in response to the massive oil spill off the southern US coastline.

The move comes as Obama works to stem political fallout from what has become the worst oil spill in US history. Obama will make his second trip to the region on Friday to survey the damage, as some opposition Republicans have dubbed the crisis 'Obama's Katrina.'

Offshore drilling had been a contentious issue even before the Deepwater Horizon rig exploded on April 20. Estimates of the ensuing oil spill have now exceeded the infamous 1989 Exxon Valdex tanker spill off Alaska, according to new figures from the government.

Obama insisted that oil would have to remain part of the US energy mix in the medium term, but he called on Congress to approve legislation to slowly wean the US off its dependence on oil and encourage the production of cleaner forms of energy.

'I've said before, that producing oil here in America is an essential part of our overall energy strategy, but all drilling must be safe,' Obama said.

'More than anything else, this economic and environmental tragedy ... underscores the urgent need for this nation to develop clean, renewable sources of energy.'

Obama directed 33 existing deepwater exploratory rigs in the Gulf to halt operations until better safety precautions could be put in place. Some of these rigs have already begun drilling, and it will take some time for them to safely stop their activities.

Obama also extended a moratorium on new permits for deepwater drilling, pending the findings of a commission investigating the causes of the April 20 Deepwater Horizon rig explosion.

In addition, Obama suspended permits for five exploratory wells at two locations off the coast of Alaska. He also cancelled a pending lease sale in the Atlantic off the coast of Virginia and others in the Gulf of Mexico.

Hundreds of deepwater rigs that are already producing oil, and shallow-water rigs operating less than 150 metres below sea level, are exempt from the moratorium, but all will face stiffer safety restrictions and oversight by government regulators.

The ecological disaster off the US Gulf Coast had demonstrated that 'for years, the oil and gas industry has leveraged such power that they have effectively been allowed to regulate themselves,' Obama said.

That lack of regulation led to the resignation Thursday of Elizabeth Birnbaum, head of the Minerals Management Service (MMS), the government regulator tasked with watching over the oil industry.

Obama has slammed the agency for having a 'scandalously close' relationship to the oil industry it was supposed to monitor. A report earlier this week found that MMS officials accepted lavish gifts and trips from oil companies in past years.

Thursday's moves were welcomed by environmental groups, many of which have been calling for a halt to offshore drilling since the explosion.

'Where there is offshore drilling, there are oil spills,' said Michael Brune, executive director of the Sierra Club, a US-based environmental group. 'The disaster we see in the Gulf is the worst of its kind. The risks of oil have never been clearer.'

The future of offshore drilling is unclear.

Interior Secretary Ken Salazar described Thursday's announcement as hitting 'pause,' not an abandonment. Certain is only that no new permits will be given until there is confidence that enough safety precautions had been taken.

But the latest round of introspection over offshore drilling could wind up torpedoing wider energy legislation that is one of Obama's top priorities.

A bill that would force companies to pay for climate-damaging pollution and offer incentives for alternative energy sources faces an uncertain future in the US Senate.

Less than one month before the April 20 explosion, Obama backed new drilling for oil and natural gas off parts of the US coastline in a concession to centre-right Republicans who have long supported increasing US oil production.

Obama needs the support of some conservative lawmakers for his wider climate policy. But the oil spill has thrown the prospects for new offshore drilling - and therefore a compromise on the climate bill - into disarray.

'I think we are still in a bit of a limbo,' Republican Senator Lisa Murkowski of Alaska said Tuesday.