Big Drilling Issues Await Salazar

Daily News Article   —   Posted on December 17, 2008

(by Ian Talley, WallStreetJournal.com) – WASHINGTON — Sen. Ken Salazar, President-elect Barack Obama’s choice to run the Interior Department, is a Colorado Democrat who has opposed Bush administration efforts to open more Western land for oil-shale exploration, but worked with Republicans to broker a deal to allow more offshore oil exploration.

Mr. Salazar has been an outspoken advocate of renewable-energy sources, as have Mr. Obama’s pick for energy secretary, Steven Chu, and his choice to be the top White House environmental adviser, Carol Browner. But as head of the Interior Department, Mr. Salazar will be both custodian and gatekeeper for the extensive fossil-fuel resources on public lands.

Mr. Obama is expected Wednesday to announce his nomination of Mr. Salazar as interior secretary and former Iowa Gov. Tom Vilsack as agriculture secretary.

Among Mr. Salazar’s mandates at Interior will be restoring confidence in the department’s management of mineral resources following a series of scandals at Interior’s Minerals Management Service. In one example, officials at the agency, which collects billions of dollars for federal coffers in royalty and lease revenue, were accused by the inspector general this year of improper conduct in relations with oil-industry executives.

One of the hottest issues Mr. Salazar would face would be a decision on where and when the government should allow oil and gas exploration, particularly on the Outer Continental Shelf where experts say billions of barrels of oil and trillions of cubic feet of natural gas lie untapped.

Despite falling oil prices, the Obama administration will have to readdress the drilling issue in the new year. Under pressure from voters whose budgets were hit hard by $4-a-gallon gasoline, Congress allowed a federal moratorium on offshore drilling to expire, paving the way for a new lease schedule unless lawmakers and the administration reinstate the ban.

Mr. Salazar has opposed expanded oil-shale leases, arguing that such activity could threaten the region’s scarce water supplies, and has voted for a federal renewable-energy mandate that would require utilities to provide a growing percentage of the power from sources such as wind and solar. Besides large natural-gas resources, Colorado and the Rocky Mountain states are home to what many scientists believe is some of the best wind-energy potential in the nation.

But he was also one of a group of 16 lawmakers who earlier this year tried to broker an agreement on offshore drilling in exchange for billions of dollars in new spending on low-carbon technologies. Mr. Salazar also made a deal with Sen. Mary Landrieu (D., La.), who publicly credited him with helping to win Gulf of Mexico drilling access in exchange for opposition of oil-shale development.

The Colorado senator has also been in favor of trying to force oil companies such as Chevron Corp., ConocoPhillips and Royal Dutch Shell PLC to renegotiate Gulf of Mexico leases signed in 1998-99 that omitted royalty-price thresholds that government auditors say have cost the U.S. billions in uncollected revenue.

Meanwhile, Mr. Salazar’s confirmation would open up his Senate seat. Already Democrats are flooding Colorado Gov. Bill Ritter with advice on how to fill it.

Among the candidates most prominently mentioned: Mr. Salazar’s brother, John, a U.S. representative from rural Colorado; John Hickenlooper, the popular mayor of Denver; and U.S. Rep. Ed Perlmutter, who represents the fast-growing Denver suburbs, a rich trove of votes. Another possibility: Federico Peña, the former Denver mayor who served as both energy and transportation secretary in the Clinton administration. Mr. Peña re-emerged this year to vigorously campaign on behalf of Mr. Obama’s presidential bid.

-Stephen Power and Stephanie Simon contributed to this article.

Write to Ian Talley at ian.talley@dowjones.com.

Copyright 2008 Dow Jones & Company, Inc.  All Rights Reserved.  Reprinted here for educational purposes only.  Visit the website at wsj.com.