OVERNIGHT ENERGY: Interior Secretary heads for hot seat

State of Play: Pressure to expand U.S. oil drilling, fueled by Libyan unrest and surging oil prices, is about to fall squarely — and publicly — on the shoulders of Interior Secretary Ken Salazar.

He will appear on Capitol Hill next week for the first time since the unrest in North Africa and the Middle East began, sending oil prices to their highest levels in more than two years.

Salazar will testify next Thursday before the House Natural Resources Committee, headed by Rep. Doc Hastings (R-Wash.), who has emerged as a chief critic of Interior Department drilling policies.

{mosads}Salazar will be ostensibly testifying about Interior’s fiscal year 2012 budget plan. But the session will give Hastings and other critics a chance to confront Salazar about the lack of new deepwater drilling permits — and the slowdown in shallow-water projects — since the BP oil spill.

Hastings and other critics — who also want more areas made available for leasing – in recent days have pointed to the Libyan turmoil to make their case.

Salazar will appear before the Senate Energy and Natural Resources Committee on Wednesday, where he’ll face similar questions, including likely inquiries from Sen. Lisa Murkowski (R-Alaska) on permitting for projects off Alaska’s coast that she called vital to her state’s economic future Thursday.

Salazar, for his part, told reporters in Washington Thursday that deepwater issues remain a focus, noting he was en route to Houston for meetings with companies that are developing enhanced systems to contain runaway wells — a capability that Interior is making a prerequisite for resuming deepwater permitting.

The CEO of one of the companies — Helix Energy Solutions Group — said the company is working with a wide swath of companies involved in Gulf of Mexico oil-and-gas development.

“They [Interior] have asked for a briefing on the capabilities and readiness of some of the key Helix technology that was deployed to cap the Macando well this summer,” said CEO Owen Kratz in a statement Thursday that also confirmed the planned Friday meeting with Salazar.

He added:

“Obviously, we are all ready, willing and able to get back to work in the Gulf. As one of the leading well-intervention companies in the world, Helix stands ready to do all we can to make sure a workable and effective containment system is made widely available. We look forward to briefing the Secretary on the capabilities of the system and the speed with which it can be deployed in the event it is needed.”

But environmental groups have begun seeking to counter the growing chorus of GOP lawmakers who say the Libyan crisis and high prices makes the case for faster permitting and wider development.

Environment America’s Alex Wall, in a statement Thursday, said “the real solution to our oil crisis is to move America away from oil through a set of transportation policies that will make our vehicles more efficient, invest in new technologies like electric vehicles, and provide Americans with clean alternatives like public transportation.”

NEWS BITES:

Obama says U.S. will ‘ride out’ oil price spikes

President Obama, echoing previous comments by senior administration officials, said Thursday that the U.S. will be able to overcome oil price volatility stemming from the unrest in Libya.

“We actually think that we’ll be able to ride out the Libya situation and it will stabilize,” Obama said, according to Reuters.

The story notes that “Geithner said the world had plenty of reserves that could be deployed in the event of a sustained disruption to supply.”

“We have substantial capacity across the major economies in the strategic reserves,” he said, according to Reuters.

The turmoil in Libya sent oil prices soaring above $100 a barrel this week. But oil prices fell below $100 a barrel by day’s end.

Oil industry touts Shell study in push for Arctic drilling

A major oil industry group on Thursday used a study on the economic effects of drilling in Arctic waters commissioned by Shell to call for development in the region. The study claims that oil and gas development in the Beaufort and Chukchi Seas would generate $193 billion in federal, state and local revenues during the next 50 years.

“Given the current political turmoil in the Middle East and increased demand from a slowly growing economy, it is more essential now than ever before that we develop Alaska’s OCS to increase domestic production,” Richard Ranger, a senior policy adviser at the American Petroleum Institute, said in a statement, citing the study.

The study comes as Shell, lacking key air permits from EPA and Interior Department permission, scrapped plans to drill in the region this year.

Oil spill commission releases more working papers

The national oil spill commission released three new staff working papers Thursday touching on scientific research at the Department of Interior, civil and criminal penalties from an oil spill and how to structure a mechanism for long-term Gulf restoration.

You can read the working papers here.

IN CASE YOU MISSED IT…

E2 reported Thursday that House Republicans are raising the prospect of taking action in Congress on the Environmental Protection Agency’s air pollution rules for industrial boilers. We also reported that a Commerce Department inspector general report cleared government scientists of misconduct in the “Climategate” controversy.

Later, we reported that Interior Secretary Ken Salazar is pushing back against criticism of the department’s “wild lands” policy. We also told you that House Democrats are calling for hearings on climate science and for Obama to consider tapping into the country’s Strategic Petroleum Reserve.

Then we reported that Salazar is going to Texas to review oil industry efforts to develop enhanced systems to contain runaway wells.

At the end of the day, we told you that Sen. David Vitter (R-La.) said Kenneth Feinberg’s compensation contract with BP represents a conflict of interest. And we reported that Sen. Lisa Murkowski (R-Alaska) said boosting Alaska oil production is her top priority.

Please send tips and comments to Ben Geman, ben.geman@digital-staging.thehill.com, and Andrew Restuccia,  arestuccia@digital-staging.thehill.com.

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