New Offshore Oil Drilling Must Have Safeguards, Obama Says

President Barack Obama said no new offshore drilling leases will be issued until a “thorough review” of the BP Plc oil-well spill in the Gulf of Mexico determines whether more safety systems are needed.

Obama, who plans to travel to the Gulf Coast tomorrow morning, directed Interior Secretary Ken Salazar to report in 30 days on whether more steps are needed to prevent another leak like the one that began with an April 20 explosion and fire on a drilling rig off the Louisiana coast.

“We’re going to make sure that any leases going forward have those safeguards,” Obama said at the White House yesterday.

The administration also stepped up pressure on BP, with Homeland Security Secretary Janet Napolitano calling for the company, which is responsible under law for the response and the cost, to deploy more resources to fight the spill.

Secretary of the Interior Ken Salazar said the accident will have “huge ramifications” for offshore energy exploration around the world.

Oil has been gushing from the damaged well at a rate of 5,000 barrels a day and it may rival the 1989 Exxon Valdez incident as the worst-ever U.S. oil spill. The leak has complicated Obama’s plans to allow more oil and gas exploration in the Gulf of Mexico and off portions of the East Coast as some Democratic lawmakers call for the administration to reverse course.

Photographer: Chip Chipman/Bloomberg

Platform Irene, an offshore oil and natural gas drilling rig operated by Plains Exploration & Production Co., stands in the Point Pedernales field of the Santa Maria Basin off the coast of California Feb. 25, 2010. Close

Platform Irene, an offshore oil and natural gas drilling rig operated by Plains... Read More

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Photographer: Chip Chipman/Bloomberg

Platform Irene, an offshore oil and natural gas drilling rig operated by Plains Exploration & Production Co., stands in the Point Pedernales field of the Santa Maria Basin off the coast of California Feb. 25, 2010.

Domestic Production

“I continue to believe that the domestic oil production is an important part” of U.S. energy policy, Obama said. “But I’ve always said it must be done responsibly, for the safety of our workers and our environment.”

Existing drilling operations won’t be affected by Obama’s order for the review, and there are no pending lease sales during the period, White House press secretary Robert Gibbs said. Obama’s plan for expanding offshore energy exploration wouldn’t begin issuing leases until 2012.

“There is nothing that comes online in the next 30 days, so nothing is immediately impacted by the president’s announcement,” Gibbs said.

While BP will bear the cost of capping the leak and cleaning up the oil, Obama said the federal government is “fully prepared to meet our responsibilities to any and all affected communities.”

The president plans to get a first-hand look at the containment and cleanup operations tomorrow, said White House spokesman Bill Burton.

The Air Force and Navy are bringing equipment to help contain the oil as it approaches land.

In Louisiana

Salazar, Napolitano, Environmental Protection Agency Administrator Lisa Jackson and Carol Browner, Obama’s adviser for energy and climate change were in the region yesterday to review operations. Attorney General Eric Holder is sending a team of attorneys to coordinate with the local U.S. attorney to monitor the situation.

The government has set up five staging areas to protect shorelines, Obama said. Louisiana has closed some coastal areas to shrimping because of the slick. The spill also may threaten shipping. More than half of the grain inspected for export from the U.S., the world’s largest grower of corn and soybeans, is shipped from the mouth of the Mississippi River, according to the Port of New Orleans.

“The local economies and livelihoods of the people of the Gulf Coast, as well as the ecology of the region, are at stake,” Obama said.

Gulf Drilling

The well is in a portion of the gulf, off Louisiana, Mississippi and Alabama, that produces an estimated 1.7 million barrels of oil a day. That is about 30 percent of domestic production, according to Interior Department figures.

Salazar said the administration asked BP to reach out to the global oil and gas industry to find a solution for stemming the leak and cleaning up the oil.

“We have a lot to lose here in America, in terms of an energy resource and in terms of environmental values that we very much cherish,” he said yesterday at a news conference in Robert, Louisiana. “The oil and gas industry has a tremendous amount to lose in terms of their global economic value here.”

Napolitano said BP’s efforts so far haven’t been enough.

“After several unsuccessful attempts to secure the source of the leak, it is time for BP to supplement their current mobilization,” Napolitano said at the news conference.

Senator Bill Nelson, a Florida Democrat, has asked Obama to indefinitely suspend plans to expand offshore drilling and New Jersey’s two senators, Democrats Frank Lautenberg and Robert Menendez, called on the president to reverse course.

“We urge you to go further and reverse your decision on proposed new offshore oil and gas drilling for the outer continental shelf,” Lautenberg and Menendez wrote in a letter to Obama that was endorsed by Democratic Representatives Frank Pallone and Rush Holt.

“The spill potentially makes more difficult the opening of any new areas,” said Michael Glick, senior energy analyst at Height Analytics, a Washington-based investment advisory firm.

To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net; Hans Nichols in Washington at Hnichols2@bloomberg.net;

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