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Challenging politicians in Washington and the American people to "move beyond the tired debates of the left and right, the business leaders and the environmentalists," President Obama announced this morning that his administration is proposing to make more than 167 million acres of OCS lands off the Atlantic and Gulf coasts and in the Arctic available for oil and natural gas leases. This proposal begins the process for oil and natural gas E&P leases on the East Coast, from Delaware to the central coast of Florida, a feat which Republicans were unable to accomplish during the 8 years of the Bush Administration. Offshore areas from New Jersey to Maine would remain off-limits. According to the New York Times, the Administration hopes the offshore leasing plan will reduce dependence on oil imports, generate revenue from the sale and production of offshore leases, and boost support in Congress for comprehensive energy and climate legislation.  As the President noted in his remarks today, "This announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies on homegrown fuels and clean energy. ... Failure to recognize this reality would be a mistake."
 
In response to this morning's announcement, Sen. Ben Cardin (D-MD), noting the environmental risks associated with offshore E&P activities, told CNN that "there are areas that are acceptable for drilling, but I think this is too high of a risk for Maryland." Senator Cardin was one of the senators who signed a letter to Senate colleagues expressing concern over the effects of increased offshore energy activities on coastal tourism and fishing economies.
 
Reacting to the President's announcement, Randall Luthi, president of the National Ocean Industries Association (NOIA) called the Obama Administration's plan, "a good start to secure reliable and increased access to areas of the OCS where vital energy resources may lie."  Luthi went on to note that NOIA is "delighted that the Administration agrees with the State leadership in Virginia that the lease sale off that coast should go forward under the current plan."

Yesterday the Rhode Island Public Utilities Commission (“PUC”) voted unanimously to reject a Power Purchase Agreement (“PPA”) between National Grid and Deepwater Wind for the sale of electricity from Deepwater’s proposed 28.8 MW offshore wind project near Block Island.  The PUC found the PPA’s proposed sale of wind power at a price of 24.4¢/kWh (approximately twice the price National Grid currently pays for electricity from other sources) was not “commercially reasonable.”  This decision came despite strong bipartisan support for the project from Democratic RI legislators and Republican Governor Donald Carcieri.  The Providence Journal reports that Governor Carcieri was shocked, calling it "an extraordinarily short-sighted and narrow-minded decision."  Following yesterday’s decision by the PUC, Deepwater’s CEO stated  that Deepwater “is now forced to reevaluate our plans for Rhode Island.” The Block Island offshore wind project was one of two proposed offshore wind projects Deepwater had planned for Rhode Island.

Representative Bob Goodlatte (R-VA) and six other Virginia congressmen jointly introduced H.R. 4942, the Virginia Access to Energy Act, last week.  If enacted, the legislation would require U.S. Secretary of the Interior Ken Salazar to conduct OCS Lease Sale 220 no more than one year after Virginia’s governor requests that the sale be conducted.  The bill also would prohibit oil and natural gas leases within 50 miles of Virginia’s coastal zone as well as any that conflict with military operations.  The funds raised by the lease sale and royalties would be divided equally between the U.S. Government and Virginia, with the federal government’s share going towards national debt reduction and an Alternative Energy Trust Fund.

Eighty-Eight House Republicans last week sent a letter to Interior Secretary Ken Salazar, voicing displeasure with the Secretary's recent decision to discard the 2010-2015 OCS lease plan and instead implement the next Five-Year Plan starting in 2012.  The House Republicans are characterizing this two year delay in issuing a new plan the "Obama Moratorium," and assert that it directly conflicts with American public opinion, which favors offshore drilling.  
 
Meanwhile, a number of Senate Democrats from coastal and Great Lakes states earlier this week delivered a letter to Sens. John Kerry (D-MA), Lindsay Graham (R-SC) and Joe Lieberman (I-CT), arguing that pending climate change legislation should not be accompanied by measures that would grant "unfettered access" of the OCS to oil and gas interests.  Citing environmental concerns over oil spills and  potential turf conflicts between E&P operations and the Department of Defense's training zones, the letter goes on to argue against a proposal that revenues from the new OCS leases be shared with the impacted coastal states, and that any opening up of the OCS for drilling should be accompanied by a reform of the leasing process.

Port Dolphin Energy and the Manatee Port Authority agreed to a $30 million contract where Port Dolphin will lease approximately 35 acres of Port Manatee's property and obtain a right of way for a pipeline associated with the planned LNG deepwater port. Under the terms of the agreement, as reported by the Bradenton Herald, Port Dolphin will pay the port authority $425,000 as a down payment within five days of concluding the contract, $375,000 more by September 30, 2010, and another $1.2 million when final permits are issued for the project. If Port Dolphin exercises its option to construct the LNG deepwater port and pipeline, the port authority will receive $30 million over the life of the contract.

A group of opponents of the Cape Wind project have filed a notice of violations with U.S. Secretary of the Interior Ken Salazar, stating that MMS and the Fish and Wildlife Services violated the Endangered Species Act and the Outer Continental Shelf Lands Act during their review of the project. The specific allegations involve concerns that the proposed offshore wind energy project would result in approximately 100 birds killed during the first 25 years of operation of Cape Wind. The Boston Herald provides further information.

Separately, BNA [subscription required] reports Secretary Salazar told the U.S. House Appropriations Subcommittee on Interior and Environment that he will decide whether or not to approve the Cape Wind project towards the end of April. Secretary Salazar noted that he expected to receive the findings of an advisory board appointed to study the project by April 15, 2010.

Senators John Kerry (D-MA), Lindsey Graham (R-SC) and Joe Lieberman (I-CT) have reportedly drafted a provision in the yet-to-be-released climate and energy bill that proposes giving a share of the revenues from offshore oil and gas production to coastal states that agree to allow these activities in their waters. If the bill is passed, coastal states would receive one quarter of the revenue; ten percent would go to the Land and Water Conservation Fund; and the federal government would allocate the remaining 65 percent to deficit reduction. See E&E Daily [subscription required] for more details.

Yesterday Gov. Bob McDonnell (R-VA) released a statement praising the oil and natural gas lease sale recently concluded  by MMS  for offshore lands in the Gulf of Mexico. In an interview with the Associated Press (via the Hampton Roads Pilot) today, Gov. McDonnell suggested that in light of such successful sales, the planned lease sale off the Virginia coast should be expanded. Gov. McDonnell noted that the oil and gas lease sale acreage is artificially constrained due to the shape of Virginia’s coastline. According to the article, Sen. Mark Warner (D-VA) also  previously has supported expanding the lease area.

On March 17, 2010, MMS held Central Gulf of Mexico Oil and Gas Lease Sale 213. According to MMS, 77 companies submitted nearly 650 bids on 468 tracts covering nearly 2.4 million acres offshore Louisiana, Mississippi, and Alabama, including significant acreage in deep waters. The total of the high bids submitted was $949,265,959, the highest single bid was $52,560,000, and the sum of all the bids received was approximately $1.3 billion. MMS Gulf of Mexico regional director, Lars Herbst, commented that "[t]he bidding activity at today's sale speaks to the future of deepwater Gulf in providing vital energy production for the nation."

Several Senators voiced concerns about the amount of time it may take to secure regulatory approval for offshore energy development at a Senate Appropriations Subcommittee hearing on the FY2011 budget request for the Department of the Interior on March 9.  Senator Collins was among them, expressing particular concern that MMS may require several environmental impact statements to obtain a lease on federal offshore lands.  Secretary of the Interior Ken Salazar tried to allay fears and explained that a group within the Department of the Interior has been assigned the task of developing a streamlined permitting process.  Salazar added that  "it's absolutely unacceptable that any government process like this should take three to nine years."  A webcast of the hearing is available here.

The California Legislative Analyst's Office (LAO), a non-partisan fiscal policy advisory team to state officials, argues in a new report that the California legislature should approve oil and gas drilling in the state's offshore lands.  The proposal, known as Tranquillon Ridge, would permit drilling in state waters via a production platform located in federal water off the Santa Barbara coast.  LAO's report suggests that production royalties from Tranquillon Ridge would help the state close its current budget gap.

Yesterday Gov. Bob McDonnell (R-VA) signed two pieces of legislation dealing with offshore energy programs.  The legislation would permit exploration for oil and natural gas in certain areas at least 50 miles off the Virginia coast and would direct any royalties from energy production to the state's transportation budget and a renewable energy research consortium.  The Associated Press offers further coverage.

This week DOE released its Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research and Development Program 2010 Annual Plan.  In its ultra-deepwater component, the plan focuses on developing E&P technologies for use in water 15,000 feet deep or more through the DeepStar Consortium.

The Department of Energy (DOE) announced yesterday that it intends to issue a Funding Opportunity Announcement (FOA) to facilitate the development of marine and hydrokinetic technology.  The "Marine and Hydrokinetic Technology Readiness Advancement Initiative" will competitively award funds to develop technologies that generate renewable electricity from waves, currents, tides, rivers, and the ocean's thermal energy.  DOE anticipates the FOA will be posted no later than March 31, 2010.

The Department of Energy (DOE) published notice yesterday that Reedsport OPT Wave Park, LLC has filed a hydroelectric application for the Reesdsport OPT Wave Park Project.  The application proposes construction of ten wave-powered generating units to be anchored about 2.5 miles off the coast of Douglas County, Oregon, spanning about a quarter of a square mile.  The buoys will be linked to a single Underwater Substation Pod, which will be connected to the Douglas Electric Cooperative transmission line.  The application is available for public comment, and DOE is preparing to commence the next steps of review.

The House Democratic Caucus on March 9 announced Rep. Jim Moran (D-VA) as the new chairman of the Interior Appropriations Subcommittee, which has jurisdiction over EPA and Interior, among other federal agencies.  In this role, Rep. Moran will oversee the fiscal 2011 Interior and Environmental bill.

The U.S. Minerals Management Service (MMS) announced in today’s Federal Register that its Environmental Assessment (EA) for the Cape Wind project is now available.  The announcement also states that the EA includes a draft Finding of No New Significant Impact of information MMS received following its issuance of the Final Environmental Impact Statement earlier this year.

Sen. Lisa Murkowski (R-AK), ranking member of the Energy and Natural Resources Committee, has prepared a discussion draft of a bill that would extend drilling in the eastern Gulf of Mexico, authorize drilling in the Arctic National Wildlife Refuge, establish royalty revenue sharing with coastal states that permit offshore drilling, and streamline offshore environmental review and permitting procedures.  Sen. Murkowski believes that the expansion of domestic drilling should accompany any new climate legislation Congress considers.

Sen. Tom Carper (D-DE), along with Sens. Olympia Snowe (R-ME), Sherrod Brown (D-OH), and Susan Collins (R-ME), introduced a bill yesterday to provide financial incentives for the investment, development and production of offshore wind.  Among other things, the Carper-Snowe-Brown-Collins offshore wind bill would extend the production tax credit (PTC) for offshore wind farms until 2020.  The sponsoring Senators are also working on additional legislation to support and expand offshore wind initiatives. 
 
In other wind power related news on Capitol Hill, Sen. Chuck Schumer (D-NY) and others introduced a bill which would require all projects funded by stimulus package dollars to rely solely on American-built products.  The Senators also sent a letter to Treasury Secretary Tim Geithner pushing for a moratorium on all stimulus payouts for clean energy projects until Congress considers the bill.  Under the current stimulus law, the "Buy American" provision - which requires that a project rely primarily on American-built products - applies only to "public works."  The Schumer bill would extend the Buy American requirement to all renewable energy projects, including every wind farm that is being or proposed to be built with stimulus assistance.  Denise Bode, the CEO of the American Wind Energy Association (AWEA) issued a sharply-worded response to the bill, arguing that it would "torpedo one of the most successful job creation efforts" of the stimulus, in part because American manufacturers do not yet have the capacity to produce 100% of the required wind turbine components. 

Today, Matt Rogers, a senior advisor to Energy Secretary Steven Chu, testified before the Senate Energy and Natural Resources Committee and strongly challenged Senator Schumer's characterization of DOE's use of stimulus dollars. He expressed the view that the senators' proposed legislation would actually eliminate American jobs.  He challenged the study underlying the proposed legislation as "misleading" and "factually false" because it only focused on the overseas headquarters of companies and failed to specifically account for actual job creation in the United States.

During testimony before the Senate Energy and Natural Resources Committee, Interior Secretary Ken Salazar said that he hopes to release the revised 2007-2012 5-Year OCS Plan, as ordered by the D.C. Circuit Court of Appeals, later this month, as well as the next 5-Year Plan, which would run from 2012-1017. 
 
The Houston Chronicle provides further coverage.

Florida State Senator Mike Haridopolos (R) introduced SB 2622 late last week, a bill that would charge energy companies $1 million to explore for oil and gas in state waters off the northwestern coast of Florida.  Several state senators objected to the legislation and suggested that offshore E&P in this area could affect U.S. military training operations.  According to the News Herald (Panama City, FL), this bill is identical to one proposed last year.

The Boston Herald reports that U.S. Secretary of the Interior Ken Salazar has determined that Cape Wind and two Massachusetts Indian tribes opposed to the project have failed to reach a compromise.  Secretary Salazar has referred the project to the Advisory Council on Historic Preservation, which will now begin 45-day comment period on the Cape Wind project.