Offshore Drilling Ban Draws Fire
POLITICS OF OIL
ON the East Coast, North Carolina is demanding to be included in the sweeping moratorium on offshore oil exploration announced last week by President Bush. On the West Coast, the single stretch of United States waters still open to oil companies lies off Santa Barbara, Calif. That area has already been heavily explored, and local opposition has prevented oil that was found from being produced.
The moratorium has cast a shadow on the oil business.
``Our industry is in limbo,'' complains Carl Schmid, an executive of the National Ocean Industries Association, which represents more than 300 oil and oil service companies. ``There's very few areas left in the US to drill.''
In imposing the leasing restrictions, Bush had at least one eye on the governorships of Florida and California, influential posts in key states during next spring's reapportionment of the 435-seat US House of Representatives.
Mr. Schmid says the companies that gather seismic data will lose millions of dollars spent to gather data in the newly banned areas. In 10 years time the data will be obsolete or, if not, become public under the law governing the outer continental shelf.
In California, the impact on the offshore service industry will be minimal, says Terry Covington of the California Coastal Operators Group. The group represents major oil companies and 200 oil service and supply firms.
Most companies that were big enough pulled out over the last five years, while smaller ones closed or diversified, Ms. Covington says. ``They're scratching now for onshore work, what little there is offshore.''
North Carolina angry
The ban is proving controversial in other quarters.
``We were surprised and insulted'' at being neither included nor consulted before Bush's decision, says Kim Crawford, assistant director of North Carolina's outer continental shelf office.
She says the areas under the new ban - the North Atlantic, the Gulf of Mexico off southwest Florida, and the Pacific Coast - have more resource potential than North Carolina's waters. Under the criteria Bush used to draw up the ban, North Carolina should have been included, she says.
Federal waters off Alaska, the mid and south Atlantic, and central and western Gulf of Mexico, and some eastern Gulf waters were also unaffected by the ban.
The uproar in North Carolina threatens to derail efforts by Mobil Corporation to drill a well 30 miles offshore in deep water, for which right it and two partners paid $103.7 million in 1981. Mobil says it might find 5 trillion cubic feet of gas. Mobil immobilized?
Before Bush's announcement, the process of granting a permit to drill had been moving slowly - but it was moving. Mobil was hoping to get a permit in the fall and to drill next spring.
Now, North Carolina Gov. James Martin (R) has written to Bush, asking him to extend the ban to federal waters off the state's coast. Governor Martin had not sought a moratorium in the past.
Martin has also asked his state's congressional delegation to help. Rep. Walter Jones (D) of North Carolina was already working on ways to delay Mobil. He is seeking to attach a one-year moratorium to next year's appropriations bill, and he has introduced the Outer Banks Protection Act, which would have the same effect.
``Our area is as unique and deserves as much study,'' Crawford says. ``Why should we be the sole place [oil companies] look to drill?''
And in Santa Barbara, ``you can imagine the reaction wasn't wild'' at being the one West Coast area open to oil companies, Covington says.
But Covington doesn't foresee a rush to Santa Barbara. The drilling prospects are likely to be found in deep water. The higher cost of working there may not be affordable with oil prices weak.
On top of that is the local political climate, in which oil companies have spent hundreds of millions of dollars to develop a field, only to be blocked at the last minute. Point Arguello, a Chevron development, has been mechanically ready since 1987 and is still waiting to produce, Covington says. Of five projects that were to produce a combined 500,000 barrels per day of oil by 1992, only one is on schedule.
She adds that Californians want oil development to go away, yet the state is the world's third largest user of gasoline. And it gets no oil by interstate pipeline. The Bush ban on leasing will mean more tanker traffic.