OIL AND GAS:

Obama's energy trust doesn't include expanded drilling

President Obama's proposed energy trust aimed at weaning the U.S. auto fleet from oil won't require expanded drilling, a White House aide said today.

That is likely to come as a relief for conservationists who have opposed drilling in the Arctic National Wildlife Refuge and along the Atlantic and Pacific coasts, but it will disappoint some lawmakers and energy groups that argue new access is needed to increase revenues.

Obama prominently featured the proposed Energy Security Trust in his hourlong State of the Union speech last night as he also pledged to take executive steps to curb global warming gases and speed drilling and renewable energy production on public lands.

"I propose we use some of our oil and gas revenues to fund an Energy Security Trust that will drive new research and technology to shift our cars and trucks off oil for good," Obama said. "If a nonpartisan coalition of CEOs and retired generals and admirals can get behind this idea, then so can we."

He was referring to the group Securing America's Future Energy (SAFE), which last December proposed such a trust be funded by revenues from drilling in frontier areas including the Atlantic, Pacific, ANWR and the eastern Gulf of Mexico.

But the White House said the trust would be funded by drilling that currently occurs on public lands and waters. The administration will propose that $200 million be set aside each year for the next decade to support the transition to electric- and natural gas-powered vehicles and homegrown biofuels.

The proposal assumes an increase in production on public lands. The White House in its fiscal 2014 budget plans to propose a 20 percent increase for the Bureau of Land Management's oil and gas program, which would support faster approvals of leasing and drilling on public lands in the West.

Obama's energy trust proposal drew support from key lawmakers, business and military officials, and at least one conservationist, even as some Republicans criticized it as another wasteful spending program.

But without new revenues from expanded drilling, it is unclear whether Congress would authorize a portion of oil and gas money that currently goes to the U.S. Treasury to be siphoned for research into new vehicle technologies and biofuels.

Such legislation may be a difficult sell as Congress tackles the nation's deficit woes.

"CBO is going to have a fit if you try to spend it twice," said Robert Dillon, spokesman for Sen. Lisa Murkowski (R-Alaska), the ranking member of the Senate Energy and Natural Resources Committee. "This is just more rhetoric unfortunately, and it's disappointing."

Murkowski this morning released a statement praising the president's trust proposal, noting that her energy blueprint earlier this month proposed a similar Advanced Energy Trust Fund, which would use new energy revenues to support renewable energy, energy efficiency, alternative fuels and advanced vehicles. But that proposal also assumes new drilling access is allowed in places including ANWR.

"New production on previously closed federal lands could provide a substantial source of new revenue to fund research on the most promising new energy technologies, while paying down the national debt," Murkowski said. "I intend to get to work on this as soon as possible."

And SAFE, in pitching the Energy Security Trust in a report last December, said money should come from drilling in frontier areas currently off limits, which it estimates could raise roughly $88 billion over the next 20 years from new leasing bids and royalties.

Such a proposal would be strongly opposed by environmentalists and many Democrats.

It would take an act of Congress to open the eastern Gulf or ANWR and a major shift in administrative policy to allow drilling in the Atlantic and Pacific, which the Interior Department has barred until at least 2017.

Interior last summer finalized a 2012-2017 offshore leasing plan that excludes sales in the Atlantic and Pacific, areas that Interior Secretary Ken Salazar has argued are ill-equipped to respond to potential spills and where some states have opposed drilling off their shores.

"There are no plans, as you know, to open up those areas, unless Obama gets a third term," said Dan Kish, senior vice president for policy at the industry-backed Institute for Energy Research. "Maybe the president is talking about revisiting his plan, but there has been no discussion of that."

One conservationist said he believes oil and gas revenues from current drilling is enough to fund research into green technologies and the conservation of public lands.

Oil, gas and coal from public lands and waters raised $12 billion in bonus bids, rents and royalties in 2012, according to Interior. About $6 billion went to the Treasury, said Alan Rowsome, who oversees conservation funding for the Wilderness Society.

"Like everyone else, we want to hear more about the details," Rowsome said.

Congress must also ensure the Land and Water Conservation Fund, which is supported through offshore drilling revenues, is funded at its maximum $900 million a year, Rowsome said.

It's unclear what effect diverting more money from oil and gas revenues would have on funding for LWCF, which is a top White house priority but which Congress rarely ever fully funds.

A report released yesterday by the White House says the Energy Security Trust carries broad bipartisan support and "will support research into a range of cost-effective technologies -- like advanced vehicles that run on electricity, homegrown biofuels, and vehicles that run on domestically-produced natural gas."

In a conference call this morning, officials from SAFE said they are hopeful the White House will also consider additional drilling on public lands and off shores.

"We believe there is a group of Democrats and Republicans that could introduce something like this," said SAFE President Robbie Diamond. "Somewhere in there, there is an agreement."

According to SAFE, such a trust fund should support "advanced combustion technologies, vehicle efficiency, electric drivetrains, onboard energy storage and localized efforts that focus on a comprehensive approach to vehicle deployment."

In his speech, Obama also promised to increase renewable energy production from public lands and proposed a permanent extension of the renewable energy production tax credit and steps to make buildings more energy efficient.