Obama floats proposal for drilling in the US Atlantic
Drilling rigs and support vessels could be operating off the US Atlantic coast for the first time ever after US President Barack Obama unveiled plans to open up new offshore areas for oil and gas exploration.
As part of a broader energy package, Mr Obama"s administration would open areas off Virginia, Alaska and Florida in 2012-2017 to drilling rigs and seismic survey ships for new hydrocarbon exploration.
Mr Obama"s plan is similar to one that his predecessor George Bush proposed, but the new president will not allow drilling off California or off the northeast states. He has also postponed plans by the Minerals Management Service to have four lease sales in areas off Alaska until after 2011.
The proposals will need to be passed by both US political parties in Congress and in the Senate before exploration areas can be licensed by the US Department of the Interior"s MMS, but analysts are already predicting greater demand for drilling rigs and support vessels.
Leasing in those new offshore areas is also dependent on public approval and on whether it can be proven that drilling will not harm the environment.
?We expect this development to play a bigger role on sentiment in the near-term, but we view it also as a positive for the longer term. Most of the drilling is expected to take place at least several years from now, post-new geological and seismic testing,? Dahlman Rose analyst Omar Nokta said.
?Offshore drilling equities were buoyed by President Obama"s plan to open more US offshore for drilling, led mainly by jack-up rig owners Rowan and Ensco,? he added.
Even if politicians prevent drilling off the Atlantic coast, the MMS will most likely be able to open up more areas of the hydrocarbon rich eastern Gulf of Mexico to drilling.
Mr Nokta said the eastern Gulf ?represents the area with the highest potential, with some reserve estimates at over 3bn barrels of oil and over 15trn cu ft of natural gas?.
The National Ocean Industries Association, which represents companies working off the US coasts, supported Mr Obama"s plans, but called for a more rapid approach to opening up the seas to seismic survey ships.
?We are anxious to see the Department of the Interior begin the multiple steps leading to implementation of the final plan in July 2012,? NOIA president Randall Luthi said.
?We hope that the release of this plan, which is largely a scoping document, truly represents an actual commitment to actual sales in new areas.?
Mr Luthi was less pleased to see the postponement of the four Alaskan offshore lease sales and Mr Obama"s drive to keep areas offshore California off limits to drillers.