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Federal favor falls on Chevron

In a few weeks, Chevron will start exploratory drilling off Florida's Panhandle, a foray that is raising questions about President Clinton's resolve to protect coastal water from oil and gas development.

The Chevron well 28 miles off Pensacola has been loudly opposed by state officials and environmental groups that fear it will be the first of a string of oil industry attempts to drill in the eastern Gulf of Mexico and perhaps later off the Carolina coast.

Both areas for years have been touted by the industry as prime sources of natural gas, but a combination of congressional drilling bans and strong local opposition has prevented development.

But now the Clinton administration has lost no time making it known it likes natural gas. The fuel regularly is touted by Energy Secretary Hazel O'Leary as preferable for the environment. And White House chief of staff Mack McLarty is only one of a number of former gas industry executives who are now top administration policymakers.

"We're developing policies that encourage natural gas production," Tom Fry, director of the Interior Department's Minerals Management Service, conceded in an interview. He said he was confident the Chevron test well can proceed without environmental problems.

A former executive of a Texas natural gas transmission company, Fry assured an industry luncheon group recently that the administration would "look long and hard" at developing offshore natural gas reserves, including sites outside the traditional central and western Gulf of Mexico where most of the drilling now occurs.

The industry believes that as much as 3-trillion cubic feet of natural gas may be in the Destin Dome region of the eastern gulf where Chevron is exploring. That would be a fairly substantial find, industry experts said.

A federal moratorium prevents any further leases from being sold in the eastern gulf and off the Carolina coast in the mid-Atlantic region, another area believed by industry to have large amounts of natural gas.

But there are more than 100 offshore leases already held by companies in the Florida Panhandle area and others off the Carolinas and in both areas the industry is eager to begin exploration if they could get the proper government clearance.

Of 14 exploratory wells drilled off the Florida Panhandle since 1981, only two _ both by Chevron _ have produced significant discoveries of gas. Chevron is waiting on the results of the third well before deciding whether to try to develop the area.

Depending on what Chevron finds, Mobil Corp. is eager to push ahead off the Florida Panhandle as well. Its request to begin exploratory drilling is being reviewed by the federal government after the state of Florida protested that Mobil's wells would violate the state's coastal management plans.

Chevron is moving drilling equipment to its site off Pensacola and expects to begin drilling within a few weeks, company spokesman Bobby Boone said.

"It's a cat out of the bag," says Estus Whitfield, environmental adviser to Gov. Lawton Chiles, of the Chevron lease. "But we just don't want a bunch of more cats jumping out of that same bag."

Chiles in a letter to Interior Secretary Bruce Babbitt called for additional scientific studies to examine the ecological and economic impacts of development _ including the impact on tourism _ before any more wells are allowed to be drilled.

Eight environmental groups have asked the Interior Department to delay the Chevron drilling until the studies requested by Florida can be finished.