http://www.nola.com/business/index.ssf/2010/04/eastern_gulf_of_mexico_is_cons.html
New Orleans Times-Picayune  By Kimberly Quillen, The Times-Picayune
April 18, 2010, 6:20AM 
Of the new territories that President Barack Obama proposes opening to offshore drilling, the eastern Gulf of Mexico is the best understood and promises to be the most fertile, the director of the Minerals Management Service said in New Orleans this week. It’s also a territory that, if opened up to energy exploration, could make an indelible mark on the south Louisiana economy.
“We know more about it than the other frontier (areas),” said Liz Birnbaum, who was in the area for a meeting of offshore inspectors hosted by the MMS, the federal agency charged with overseeing energy exploration. “The eastern Gulf is certainly the most reliable.”

Obama proposed late last month opening up territories along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling. The proposal, which drew criticism from environmental groups, aims to reduce dependence on foreign oil and curry political support for a climate change bill.

For years, offshore oil and gas development has taken place in the central and western areas of the Gulf of Mexico. But energy development in the eastern part of the Gulf has been off limits because of long-standing opposition from Florida, where politicians and environmentalists have worried about the impact of offshore development.

Obama’s proposal would limit drilling in the eastern Gulf to projects taking place at least 125 miles off the coast of Florida and would be allowed only if Congress agrees to drop a moratorium that now blocks drilling in that area until 2022.

Even with the 125-mile limit, the proposal would open up two-thirds of the oil and gas resources in the eastern Gulf, where an estimated 3 billion barrels of undiscovered oil and as much as 12 trillion cubic feet of undiscovered natural gas lay, according to the MMS.

But since the eastern Gulf has long been off limits to energy exploration, it remains unclear exactly how energy-rich the area is.

“Much of the information (we have) is based on work done before the moratorium that was closer to shore,” said Eric Smith, associate director of the Tulane Energy Institute. “We simply didn’t have the same tools (then) that we do now.”

Still, exploratory wells and seismic data on the eastern Gulf is more recent than data collected on the other new territories the Obama proposal would open up.

Because of the 125-mile limit, exploration in the eastern Gulf would take place primarily in deeper waters.

And south Louisiana is positioned to emerge as a base for serving eastern Gulf energy projects, a role it already serves for the central and western Gulf. Many of the supply vessels that support offshore platforms operate out of Port Fourchon, a sea port located on the southern tip of Lafourche Parish.

“It’s quite likely that (service for eastern Gulf projects) will come out of here,” said Birnbaum, noting that south Louisiana already has the infrastructure for bring oil and gas mined from the Gulf onshore.

“It would stand to reason that most of it would come out of Louisiana and Texas. That’s where the major service companies are located,” said Larry Wall, spokesman for the Louisiana Mid-Continent Oil & Gas Association, a group that represents the state’s energy industry. “It’s a crack in the door, but it’s definitely too soon to estimate any sort of financial impact.”
Smith said Mobile, Ala., also has offshore service capabilities that could serve the eastern Gulf.

Opening up of the eastern Gulf to energy exploration, assuming the moratorium is indeed lifted, could also renew interest in drilling in the Gulf as a whole, which has been perceived by some in recent years as an aging reservoir with its best days behind it.
“The idea that the Gulf of Mexico is tapped out is not consistent with our understanding,” Birnbaum said. “It’s a mature area. Some platforms have been abandoned. But as we move farther out, the companies are finding even more resources. The eastern Gulf is going to be another area for them to look at.”

 Kimberly Quillen can be reached at kquillen@timespicayune.com or 504.826.3416.

Special thanks to Richard Charter