President Obama opens new areas to offshore drilling

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Obama lifts ban on offshore drilling

Reversing a ban on oil drilling off most U.S. shores, President Obama announced an expansive new policy that could put oil and natural gas platforms in waters along the Atlantic coastline, the Gulf of Mexico and part of Alaska.

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Joshua S. Freed, who directs the Clean Energy Initiative at the centrist think tank Third Way, said such horse-trading is essential for the passage of a compromise bill now being drafted by Sens. John F. Kerry (D-Mass.), Lindsey O. Graham (R-S.C.) and Joseph I. Lieberman (I-Conn.).

"The administration realizes, and the proponents of Kerry-Graham-Lieberman realize, they're going to have to do different and specific things for each of the 15 or so senators that remain on the fence," Freed said.

One senior Obama adviser who spoke on the condition of anonymity said it was "very, very encouraging" to hear the response on Capitol Hill to the drilling announcement. But the aide added: "We're not negotiating with people on legislation. We're letting the senators drive that process."

Many oil executives cheered the prospect of new drilling, especially in the Gulf of Mexico, where the industry is already well acquainted with the petroleum geology. The news gave a boost to companies that provide offshore drilling rigs. On a day when the stock market declined overall, shares of Diamond Offshore rose 3.98 percent, Transocean was up 3.86 percent, and Rowan increased 3.45 percent.

While the administration canceled four lease auctions that had been planned under the Bush administration, it affirmed $2 billion in Alaskan offshore leases that were sold in 2008 to Shell, ConocoPhillips, ENI and Statoil and that have been the subject of litigation.

Staff writer Steven Mufson and polling director Jon Cohen contributed to this report.