Interior Chief Had ‘Common Ground’ With Oil Industry

Photographer: Brendan Hoffman/Bloomberg

Ken Salazar, U.S. interior secretary. Close

Ken Salazar, U.S. interior secretary.

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Photographer: Brendan Hoffman/Bloomberg

Ken Salazar, U.S. interior secretary.

As oil spewed from the Macondo well in the Gulf of Mexico, Interior Secretary Ken Salazar pledged to keep a “boot on the neck” of BP Plc (BP/) to get it to plug the leak and clean the mess. Then he halted new deepwater drilling.

Environmental advocates cheered those actions. Over the next two years, Salazar took a more conciliatory approach with the energy industry, lifting the ban in the Gulf a few months later, agreeing to allow exploration in the Arctic and setting a plan for offshore production through 2017. By the time Salazar said yesterday that he will leave President Barack Obama’s cabinet, environmentalists were disappointed by those actions while the industry was heartened.

“Early on we had our differences in opinion, especially with regards to” opening up federal land to drilling, Jack Gerard, president of the American Petroleum Institute, said at the National Press Club yesterday when asked about Salazar. “Over time we found more common ground on those issues.”

Salazar said he is leaving in March and returning to Colorado, which he represented in the Senate. He took over the 70,000-employee department after Obama’s 2009 inauguration. Lisa Jackson, the administrator of the Environmental Protection Agency, announced her resignation in December and Energy Secretary Steven Chu also is leaving, according to two people familiar with the matter.

Obama will begin his second term next week with Defense Secretary Leon Panetta, Secretary of State Hillary Rodham Clinton, Treasury Secretary Timothy Geithner and Labor Secretary Hilda Solis gone or preparing to depart.

Possible Successors

David Hayes, a deputy at the Interior Department, has been mentioned in published reports as a potential Salazar successor, as have former New Mexico Senator Jeff Bingaman, a Democrat who retired from Congress this year, former Colorado Governor Bill Ritter and Byron Dorgan, a former Democratic senator from North Dakota.

The oil and gas industry has lingering complaints about the pace of U.S. approvals for drilling on federal lands or in federal waters, and oversight regulations Salazar championed.

Salazar revamped oversight of drilling, separating safety enforcement and leasing operations that were under the Minerals Management Service. The agency’s Inspector General in 2010 said the unit may have exploited ethics rules, leading to potential conflicts. A new offshore drilling plan released last year would allow 15 lease sales in Gulf and Arctic waters through 2017, while keeping the Atlantic and Pacific coasts off limits.

Shell’s Woes

“Producers, drillers and operators have eagerly awaited a full normalizing of the permitting process,” Hercules Offshore (HERO) Inc. Executive Vice President Jim Noe said in a statement. “While we are making great strides in that direction, more needs to be done.”

More recently, Salazar proposed tougher rules for hydraulic fracturing for natural gas and oil on government lands that are opposed by industry, and this month ordered a panel to review the exploration by Royal Dutch Shell Plc (RDSA) in the Arctic off Alaska’s coast, citing the company’s “mishaps” in initial forays last year.

“We have undertaken the most aggressive oil and gas safety and reform agenda in U.S. history,” Salazar said yesterday in a statement on his departure plans. “Today, drilling in the Gulf is surpassing levels seen before the spill and our nation is on a promising path to energy independence.”

Environmentalists said Interior’s eventual embrace of an “all of the above” energy development approach is misguided, given the threat of climate change and the missteps by BP and Shell.

‘Sad, Embarrassing’

“It’s sad and embarrassing that we went right back into offshore drilling after the disaster in the Gulf” of BP’s well, Jacqueline Savitz, deputy vice president of Oceana, a Washington-based group that advocates on behalf of oceans, said in an interview. “Rather than coming up with a plan to not do it, they went right back in.”

Savitz and other environmentalists praised Salazar for his efforts to boost renewable-energy projects. Under Salazar, the U.S. established 10 national wildlife refuges, seven national parks and authorized 34 alternative-energy projects on public land.

He authorized more than 10,000 megawatts of solar, wind and other renewable production on public lands, more than all previous administrations’ combined. He also helped clear the first offshore wind development, the Cape Wind Project in Massachusetts’ Nantucket Sound, which had been stalled by feuding and legal challenges.

“Secretary Salazar has worked to strike a balance between responsible use and vital protection of the natural resources we share,” Frances Beinecke, president of the Natural Resources Defense Council, said in a statement. “He’s laid a sound foundation for solar power on federal lands.”

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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