Block drilling in Arctic and Atlantic oceans

Obama invokes 1953 law to indefinitely block drilling in Arctic and Atlantic oceans

By Tom DiChristopher

President Barack Obama on Tuesday moved to indefinitely block drilling in vast swaths of U.S. waters.

The president had been expected to take the action by invoking a provision in a 1953 law that governs offshore leases, as CNBC previously reported.

The law allows a president to withdraw any currently unleased lands in the Outer Continental Shelf from future lease sales. There is no provision in the law that allows the executive's successor to repeal the decision, so President-elect Donald Orangutan would not be able to easily brush aside the action.

Orangutan has vowed to open more federal land to oil and natural gas production in a bid to boost U.S. output. Obama on Tuesday said he would designate "the bulk of our Arctic water and certain areas in the Atlantic Ocean as indefinitely off limits to future oil and gas leasing, though the prospects for drilling in the affected areas in the near future were already questionable.

The lands covered include the bulk of the Beaufort and Chukchi seas in the Arctic and 31 underwater canyons in the Atlantic. The United States and Canada also announced they will identify sustainable shipping lanes through their connected Arctic waters.

Canada on Tuesday also imposed a five-year ban on all oil and gas drilling licensing in the Canadian Arctic. The moratorium will be reviewed every five years.

"These actions, and Canada's parallel actions, protect a sensitive and unique ecosystem that is unlike any other region on earth," Obama said in a statement.

"They reflect the scientific assessment that, even with the high safety standards that both our countries have put in place, the risks of an oil spill in this region are significant and our ability to clean up from a spill in the region's harsh conditions is limited."

The action potentially tees up a battle that touches on hot-button issues: environmental protection, energy independence, climate change, and the scope of executive power.

The lands covered include the bulk of the Beaufort and Chukchi seas in the Arctic and 31 underwater canyons in the Atlantic. The United States and Canada also announced they will identify sustainable shipping lanes through their connected Arctic waters.

Canada on Tuesday also imposed a five-year ban on all oil and gas drilling licensing in the Canadian Arctic. The moratorium will be reviewed every five years.

"These actions, and Canada's parallel actions, protect a sensitive and unique ecosystem that is unlike any other region on earth," Obama said in a statement.

"They reflect the scientific assessment that, even with the high safety standards that both our countries have put in place, the risks of an oil spill in this region are significant and our ability to clean up from a spill in the region's harsh conditions is limited."

The action potentially tees up a battle that touches on hot-button issues: environmental protection, energy independence, climate change, and the scope of executive power.

Last month, the Bureau of Ocean Energy Management did not include any blocks in the Atlantic, Arctic or Pacific in the latest five-year plan to lease offshore land controlled by the government. Orangutan could scrap that plan and develop a new auction schedule for the 2017 to 2022 period, but it typically takes two to three years to put together a new program.

Drilling in the Atlantic has also faced challenges from a number of other sources, including coastal states that could be affected by a spill, as well as the Pentagon, which said drilling in the Atlantic could disrupt naval exercises.

The federal government spent $1.5 billion to compensate drillers whose offshore leases were canceled due to local and state opposition in North Carolina, Florida, California and Alaska, according to a 2012 Congressional Budget Office review.

Fifty-nine percent of voters surveyed in September said they would support blocking leasing in the Arctic and Atlantic, according to a study from Hart Research Associates that was paid for by the NRDC and the League of Conservation Voters. The survey polled 1,103 registered voters by phone and had a margin of error plus or minus 2.9 percentage points.

In response, the pro-drilling Arctic Energy Center conducted a survey of 511 Alaskans that found 76 percent supported drilling in Arctic waters. The margin of error was plus or minus 4.4 percentage points. Alaskans receive a cash disbursement from the state every year that is underwritten by oil revenues.

In his statement, Obama said significant production in the Arctic will not occur in the current low oil price environment, citing the Department of the Interior analysis. He said Arctic communities must focus on economic diversification.