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U.S. to open up remaining Gulf oil leases

By the CNN Wire Staff
updated 2:05 PM EST, Thu January 26, 2012
STORY HIGHLIGHTS
  • NEW: President announces the sale in Las Vegas, touting natural gas-fueled vehicles
  • The Interior Department will put 38 million undersea acres up for sale in June
  • Conservationists raise alarms over new Gulf of Mexico drilling
  • The planned sale is the second since the Deepwater Horizon disaster

(CNN) -- The federal government Thursday announced plans to sell off oil and gas leases on 38 million acres of the Gulf of Mexico seafloor in a new domestic energy push by the Obama administration.

The leases could yield as much as 1 billion barrels of oil and 4 trillion cubic feet of natural gas, the Interior Department estimates. The scheduled sale in June will be the second since the Deepwater Horizon disaster of 2010 when nearly 5 million barrels of crude spewed into the Gulf.

President Barack Obama, who touted plans to develop more U.S. energy resources in his State of the Union address this week, announced the sale Thursday. Speaking at a UPS natural-gas refueling facility in Las Vegas, Obama said he wants to encourage the use of the cleaner-burning fuel as an alternative to gasoline or diesel.

"Think about an America where more cars and trucks are running on domestic natural gas than on foreign oil," he said. "Think about an America where our companies are leading the world in developing natural gas technology and creating a generation of new energy jobs, where our natural gas resources are helping make our manufacturers more competitive for decades. We can do this."

Obama is pushing for new support for renewable energy sources such as solar or wind power. The White House said Thursday that Washington will open up public lands to renewable electric projects aimed at producing enough power for 3 million homes.

The leases up for sale in June include the remaining, unclaimed areas off Louisiana, Mississippi and Alabama, ranging from as close as three miles from the coast to up to 230 miles offshore. The minimum bid for deepwater leases will be $100 per acre, according to the Interior Department.

The agency is working on plans for a dozen more lease sales through 2017, which it estimates will open up three-quarters of the recoverable oil and gas below the outer Continental Shelf -- reserves Obama pledged to open up in his Tuesday night speech.

Supporters say more energy exploration will bring more jobs for Americans still reeling from the steepest economic downturn in decades. But others remain wary of the risks illuminated when the drilling rig Deepwater Horizon blew up and sank in April 2010, killing 11 men aboard and uncorking an undersea gusher that took three months to cap.

"We've got oil continuing to wash up. We've got ongoing restoration needs down there that haven't been addressed yet," said Aaron Viles, a spokesman for the New Orleans-based Gulf Restoration Network.

Viles said that the depths at which drilling is planned are worrisome and that residents of coastal communities should have more input into the decisions.

The BP-owned well that blew up in 2010 was nearly a mile below the surface, at depths that made efforts to cap it extremely difficult. Future drillers have to have arrangements in place to deal with a deep-sea spill, but the new requirements may be a case of "fighting the last war," Viles said.

"These are complicated systems. They're going to fail in complicated ways," Viles told CNN.

The spill prompted the administration to cancel plans both it and the Bush administration had to open up areas off the East Coast and western Florida for drilling. Despite the halt, U.S. crude oil production has jumped 14% from 2008 to 2011, according to the U.S. Energy Information Administration. Natural gas production is up by about 10% over the same period.

Before Obama's Tuesday speech, the head of the American Petroleum Institute -- the industry's leading lobby -- said he hoped Obama would follow through with his promises to support more domestic development.

"The administration has an opportunity to turn energy policy in a direction that could provide huge benefits to our economy," American Petroleum Institute President Jack Gerard said. "And if the president is sincere in this, our industry will work very hard with him to make it happen."

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