Video: Bush urges Congress lift ban on offshore oil and gas drilling

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WASHINGTON, D.C. - With gasoline topping $4 a gallon, President Bush urged Congress on Wednesday to lift its long-standing ban on offshore oil and gas drilling, saying the United States needs to increase its energy production. Democrats quickly rejected the idea.

"There is no excuse for delay," the president said in a statement in the Rose Garden. With the presidential election just months away, Bush made a pointed attack on Democrats, accusing them of obstructing his energy proposals and blaming them for high gasoline costs. His proposal echoed a call by Republican presidential candidate John McCain to open the Continental Shelf for exploration

AP

The Discoverer Deep Seas drillship sits on station off the coast of Louisiana as Chevron drills for oil in the Gulf of Mexico.

"Families across the country are looking to Washington for a response," Bush said.

Congressional Democrats were quick to reject the push for lifting the drilling moratorium, saying oil companies already have 68 million acres offshore waters under lease that are not being developed.

House Speaker Nancy Pelosi called Bush's proposals "another page from (an)... energy policy that was literally written by the oil industry - give away more public resources."

Sen. Barack Obama, the Democrats' presumptive presidential nominee, rejected lifting the drilling moratorium that has been supported by a succession of presidents for nearly two decades.

"This is not something that's going to give consumers short-term relief and it is not a long-term solution to our problems with fossil fuels generally and oil in particular," said Obama. Senate Majority Leader Harry Reid, lumping Bush with McCain, accused them of staging a "cynical campaign ploy" that won't help lower energy prices.

"Despite what President Bush, John McCain and their friends in the oil industry claim, we cannot drill our way out of this problem," Reid said. "The math is simple: America has just three percent of the world's oil reserves, but Americans use a quarter of its oil."

White House spokesman Tony Fratto retorted: "Anyone out there saying that something can be done overnight, or in a matter of months, to deal with high gasoline prices is trying to fool people. There is no tool in the toolbox out there that will lower gas prices overnight, or in weeks, or probably not even in months."

Bush said offshore drilling could yield up to 18 billion barrels of oil over time, although it would take years for production to start. Bush also said offshore drilling would take pressure off prices over time.

There are two prohibitions on offshore drilling, one imposed by Congress and another by executive order signed by Bush's father in 1990. Bush's brother, Jeb, fiercely opposed offshore drilling when he was governor of Florida. What the president now proposes would rescind his father's decision - but the president took the position that Congress has to act first and then he would follow behind.

Asked why Bush doesn't act first and lift the ban, Keith Hennessey, the director of the president's economic council, said: "He thinks that probably the most productive way to work with this Congress is to try to do it in tandem."

Before Bush spoke, the House Appropriations Committee postponed a vote it had scheduled for Wednesday on legislation doing the opposite of what the president asked - extending Congress' ban on offshore drilling. Lawmakers said they wanted to focus on a disaster relief bill for the battered Midwest.

Bush also proposed opening the Arctic National Wildlife Refuge for drilling, lifting restrictions on oil shale leasing in the Green River Basin of Colorado, Utah and Wyoming and easing the regulatory process to expand oil refining capacity.

With Americans deeply pessimistic about the economy, Bush tried to put on the onus on Congress. He acknowledged that his new proposals would take years to have a full effect, hardly the type of news that will help drivers at the gas stations now. The White House says no quick fix exists.

Still, Bush said Congress was obstructing progress - and directly contributing to consumers' pain at the pump.

"I know the Democratic leaders have opposed some of these policies in the past," Bush said. "Now that their opposition has helped drive gas prices to record levels, I ask them to reconsider their positions."

Bush said that if congressional leaders head home for their July 4 recess without taking action, they will need to explain why "$4 a gallon gasoline is not enough incentive for them to act. And Americans will rightly ask how high gas prices have to rise before the Democratic-controlled Congress will do something about it."

Bush said restrictions on offshore drilling have become "outdated and counterproductive."

In a nod to the environmental arguments against drilling, Bush said technology has come a long way. These days, he said, oil exploration off the coastline can be done in a way that "is out of sight, protects coral reefs and habitats, and protects against oil spills."

Congressional Democrats, joined by some GOP lawmakers from coastal states, have opposed lifting the prohibition that has barred energy companies from waters along both the East and West coasts and in the eastern Gulf of Mexico for 27 years.

On Monday, McCain made lifting the federal ban on offshore oil and gas development a key part of his energy plan. McCain said states should be allowed to pursue energy exploration in waters near their coasts and get some of the royalty revenue.

Obama retorted that the Arizona senator had flip-flopped on that issue.

Schwarzenegger opposes offshore oil drilling

SACRAMENTO - Gov. Arnold Schwarzenegger disagrees with calls by President Bush and Republican presidential candidate John McCain to lift a ban on new oil drilling in coastal waters.

Schwarzenegger spokesman Aaron McLear says the Republican governor still supports McCain's presidential bid despite their disagreement over offshore oil drilling. A federal moratorium has been in place for 27 years.

California Sen. Dianne Feinstein, a Democrat, said lifting the moratorium is an unnecessary risk that could allow unreliable oil rigs to be as close as three miles to California's beaches.

Analysis: Greater access could mean more oil-industry strain

HOUSTON - Lifting the federal ban on offshore and other types of oil and natural gas drilling would likely place greater strains on an industry already struggling with shortages of equipment and workers.

Because of record oil prices, exploration and production companies are trying to find new sources of hydrocarbons at a frenetic pace, pushing the supply of rigs, engineers and other personnel and equipment to the limit.

Opening new areas in the Gulf of Mexico, Alaska and elsewhere to exploration and production, as President Bush proposed Wednesday, would only exacerbate those challenges, analysts say.

"Unless we have some sort of severe recession and demand drops considerably, equipment vendors, service vendors and engineers and construction laborers are likely to remain in very short supply," said Candida Scott, a senior director of cost and technology at Cambridge Energy Research Associates, the Massachusetts-based consultancy.

However, Scott and others note, even if the long-standing ban were lifted immediately, it could be a couple of years and maybe longer before any marked activity would take place.

Companies first would have to secure leases and other permits. After that, Scott said, they'd begin their searches, analyzing potential reservoirs, drilling appraisal wells and conducting other field work - all of which requires boats and seismic equipment, geologists and engineers.

In a report late last year, CERA predicted global production of oil and natural gas will be hampered in the coming years because of a shortage of engineers and other project managers.

By 2010, the organization said, companies trying to produce hydrocarbons can expect to find between 10 percent and 15 percent fewer engineers than they need.

Some oil companies and their contractors and subcontractors are considering partnering on projects and profit-sharing arrangements as a way to secure adequate engineering resources, CERA has said.

The supply of drilling rigs also is extremely tight. ODS-Petrodata, which tracks the rig market, says every semisubmersible rig and drillship currently available in North America is in use.

"Others are under construction, but they're already under contract," said Tom Kellock, who heads ODS-Petrodata's consulting and research arm.

In some cases, oil companies would have to prioritize projects. If an outfit were able to gain access to a field that looked to have long-term potential, it might shift resources from an older, maturing field, said Scott Mitchell, an analyst with research and consulting firm Wood Mackenzie.

"That's the great thing about these new areas," Mitchell said. "They're undrilled, so potentially there will be some pretty large prospects there."