CNBC Interview - Transcript

Interview

MR. KUDLOW: All right, drill, drill, drill! President Bush says go off shore, and he also said go for shale. So let's welcome the man in charge, Interior Secretary Dirk Kempthorne.

Secretary Kempthorne, thank you very much for coming back on. Let me ask you, is a question people want to know, it's sort of a process question, but we want to know where this is going to go. The federal moratorium from Congress on offshore drilling. There's a state role. There's something to do with the three-mile limit. And then there's a federal role that goes out a couple of hundred miles. Could you briefly walk us through that and explain to us what that's all about?

SEC. KEMPTHORNE: Certainly. Larry, for most states that are on the coast, three miles out from their shoreline is the jurisdiction of the state. Beyond the three miles to the 200 mile, which is the international recognized line, is the federal government's prerogative.

MR. KUDLOW: So in effect, you get like naysayers, New Jersey Governor John Corzine, California Governor Schwarzenegger, they're only in play up to three miles. So if you get this thing overturned in Congress, this moratorium, then these deep-water drillers can go out and save the day, can they not?

SEC. KEMPTHORNE: They can, Larry, but I'd put this caveat, and that is that the president certainly wants to have the input of the states and of the governors. He being a former governor, he fully understands state's rights. But the reality is that 25 miles and 50 miles with directional drilling, we can drill in any direction for up to eight to 10 miles.

I would also add that in the current five-year plan which I authorized last year, I have included the state of Virginia. They're at 50 miles. And I believe the key is, and I think this is true for all states, we need to ensure that they have revenue sharing. And then the states are going to see that they have a new revenue source by deriving that oil and gas. It helps the entire United States, but also it helps the individual states.

MR. KUDLOW: Now, another subject related to this. President Bush in his speech today, he had really a breathtaking paragraph in here. He said that we can't extract the oil shale where there may be 800 billion-equivalent barrels of oil because last year's congressional budget forbid it, so we have to overturn that to go for shale. Now, a lot of people on this show have been talking about the importance of shale. I didn't know this was in the budget. And can you get this overturned in the next budget?

SEC. KEMPTHORNE: Well, we would hope so. And I think that's why the president included that because the American public needs to realize that that prohibition has been made. The Department of Interior cannot proceed with the final rules and regulations with regard to oil shale as long as that moratorium is in place by Congress.

MR. KUDLOW: This is the Green River Basin, Colorado, Utah, Wyoming. There's also stuff north of there, isn't there, the so- called Bakken Shale Basin. I mean, we're just overloaded with shale. We could blow Saudi Arabia out of the water if we went there. I mean, in some sense, what is it? There's about 90 billion barrels worth offshore in the Outer Continental Shelf. The shale thing, that's the big enchilada.

SEC. KEMPTHORNE: It's very exciting, Larry. We have currently six research and development projects, pilot projects that are out there to perfect the technique that will be necessary so that from that oil shale we do get the product that we're after. But when you consider all of the resources that we have off of our coast and in the interior of the United States, for us to be calling on suppliers around the world to increase their production when we have the capability here the technology we can do it environmentally sensitively, it's time for the United States to get going.

MR. KUDLOW: All right. Interior Secretary Dirk Kempthorne, thank you very much, sir. We appreciate it.

SEC. KEMPTHORNE: Thank you, Larry.

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