By JENNIFER A. DLOUHY, Houston Chronicle 

Washington, Dec 2, 2010 -

The Obama administration on Wednesday reversed its plans to expand offshore drilling along the Atlantic coast and in the eastern Gulf of Mexico in a retreat prompted by last summer's oil spill.

Interior Secretary Ken Salazar said the new approach will allow federal regulators to continue beefing up offshore drilling safety requirements in the wake of the Deepwater Horizon disaster.

The spill revealed that "we need to proceed with caution and focus on creating a more stringent regulatory regime," Salazar said. "The most appropriate course of action is to focus on areas with existing leases and not expand to new areas."

The move rescinds President Barack Obama's high-profile March 31 announcement that he would consider allowing drilling 125 miles off the Florida Gulf Coast and would launch studies that could pave the way for exploration off the middle and southern U.S. Atlantic coast.

Less than three weeks later, BP's Macondo well blew out. The disaster destroyed the Deepwater Horizon drilling rig, killed 11 workers, triggered the nation's worst oil spill and changed the national debate over offshore oil and gas production.

On Wednesday, Salazar said the administration will not allow drilling in federal waters near Florida's west coast or along the Atlantic seaboard for the next seven years, as part of a blueprint that will govern leasing on the outer continental shelf from July 1, 2012, through June 30, 2017.

Drilling advocates upset

The administration's plans for two auctions to sell drilling leases in the Gulf of Mexico - including one scheduled for next March - will be delayed until late 2011 or early 2012 to allow time for the government to conduct a new environmental assessment of the region.

Drilling advocates in Congress and the oil and gas industry blasted the administration's decisions.

Rep. Ted Poe, R-Humble, said the White House was exploiting the Deepwater Horizon disaster "to further a far-left political agenda."

Jack Gerard, president of the American Petroleum Institute, an industry group, said the decision was part of a trend to limit domestic energy production, including a deep-water drilling moratorium that was lifted in October and a slowdown in the government's permitting of new wells on existing offshore leases.

Although the moratorium has expired, regulators haven't approved any new wells that would have been blocked by it. And although the administration has signed off on 19 new shallow-water wells since it imposed new requirements in June, that lags behind historic approval rates.

Gerard said the administration's actions conflict with its claim of being committed to oil and gas development.

"This now shuts the door on new development and effectively ensures that tens of thousands of jobs that could have been created will now not be created," he said.

Bruce Vincent, the president of Houston-based Swift Energy and chairman of the Independent Petroleum Association of America, said the administration's moves "will keep even more taxpayer-owned energy resources further out of reach and under Washington's lock-and-key."

Some studies to continue

Although environmentalists generally applauded the move, some said the White House had not gone far enough because the administration refused to rule out future drilling in Arctic waters near Alaska.

"Until we know how to protect this region from the risk of a blowout and how to clean up oil spills in Arctic waters, these areas, too, need to be off-limits to drilling," said Peter Lehner, executive director of the Natural Resources Defense Council.

The government said it will continue studying an application by Shell Oil, the U.S. arm of Royal Dutch Shell, to drill an exploratory well in the Beaufort Sea next summer, and will consider additional lease sales in the waters near Alaska after further environmental studies and public meetings.

Shell Oil CEO Marvin Odum said the administration's decision "signals an important direction for companies like Shell to eventually return offshore crews to work providing jobs, adding important revenues, and supporting the economy."

But Odum said the administration still must address delays in approving permits to drill in the Gulf of Mexico.

U.S. Rep. Gene Green, D-Houston, agreed, saying "our immediate concern is, and should continue to be, getting the western Gulf of Mexico back to oil and gas production at pre-oil spill levels."

'Prudent path'

Rep. Ed Markey, D-Mass., said the White House was heeding lessons from the Deepwater Horizon disaster and putting the U.S. on a "prudent path."

"We can't put thousands of miles of coastline at risk for another spill when the oil companies are still not prepared to respond, and all for oil that would make an economically insignificant impact a decade or more from now," Markey said.

Administration officials noted that the White House had not guaranteed any drilling in federal waters along the East Coast as part of its March announcement - just seismic studies that could pave the way for future exploration. And because a 2006 law bars drilling off Florida's Gulf Coast until 2022, it would have been up to Congress - not the administration - to first lift that ban before the government could sell leases for that area.

Salazar stressed the government will continue planning for seismic studies to update decades-old geologic data off the Atlantic Coast and emphasized that even with the decision to wall off some areas, there still are 29 million acres in the Gulf of Mexico that could be developed.