The Deepwater Horizon rig fire and subsequent spill in the Gulf of Mexico is a total game changer in off-shore drilling and perhaps our whole domestic energy procurement policy.

This horrible human and environmental tragedy, which has just begun to play itself out, will force Washington to shift its focus back to domestic natural gas and shale and away from the off-shore incentives was recently been pushed forward by Washington and embraced by the oil industry.

"Drill, baby, drill", was the mantra after President Obama announced recently that he was opening up the Atlantic to off-shore wells, a move which looked to appease oil interests while pushing for a cap-and-trade bill and signaling Washington's unwillingness to take on the environmental hurdles of Bitumen oil mining and shale natural gas plays in the Marcellus, Barnett and Antrim.

But the recent massive oil spill from the BP well has made that policy direction impossible. Immediately, the White House announced that it was halting any further off-shore licenses pending a 30-day review.

Indeed, it is the wrong-headed thinking of the public and the White House that off-shore drilling is in fact a more environmentally safe form of energy procurement, at least compared to the unsightly mining operations and water pollution that comes with shale and bitumen mining and injection technologies. The gulf disaster proves without a shadow of a doubt that even one mishap, one error can have ecological effects that can last for decades.

However, off-shore drilling in the Gulf represents a significant source of domestic oil. Approximately 24% of domestically acquired crude oil is sourced from off-shore rigs in the Gulf of Mexico, a source that won't and can't be choked off. Still, the chances for continued growth in off-shore drilling that the Obama announcement portended is now deader than dead. Even Arnold Schwarzenegger, the environmentally challenged Republican governor of California, is removing his go- ahead on Santa Barbara beach rig growth in light of this Gulf disaster.

And we're only at the beginning. As the slick spreads, there will be untold separate disasters in both environmental and human terms. Whether with obvious problems of fishing and shrimping and beach area recreation that will affect human livelihoods to the unfathomable destruction to shoreline and marsh biospheres, we will be awash not just in oil soaked shores, but also in media coverage of each separate disaster as it unfolds. The public will demand a change.

But since off-shore drilling cannot stop entirely without choking America, where will the change come from? I am hoping that this horrible spill will have at least one good outcome: It will force America and its representatives in Washington to rethink our entire energy plan going forward and particularly our reticence to take full advantage of our oil bitumen and natural gas shale resources.

New and enormous natural gas shale and oil sands reserves have become only recently accessible through injection technologies, but real environmental hurdles have so far slowed Washington's desire to provide the incentives that this new infrastructure will require.

There is a real water pollution issue with injection and the more common traditional environmental problems that full-scale mining operations that both of these sources of energy bring. Canada has proven how valuable oil bitumen can be in their energy plans; its Athabasca region now provides 1.2 million barrels of oil daily, or almost 50% of its total production of crude.

We have a smaller, but still very significant bitumen field stretching thorough Colorado and Utah, the Green River Formation, with a proven reserve of 200 billion barrels. So far, the department of the Interior, in control of licensing, has been slow to approve development of these lands.

I am hoping that this will change. The environmental fantasy that off-shore drilling is safer has just been proven wrong by this spill - it has only proven itself to be out of sight of most Americans.

If a change in attitude from the public and Washington towards oil and gas shale begins, I'd expect it to favorably affect the natural gas companies with strong assets in the Marcellus and Barnett regions, including

Chesapeake Energy

(CHK) - Get Report


Range Resources

(RRC) - Get Report


Cabot Oil & Gas

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Linn Energy



If the Interior Department begins to deliver licenses and incentives to further develop the Green River formation, the two American companies with the most experience in oil shale,





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, might have the best leg up.

At the time of publication, Dicker was not long any stocks mentioned.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 20 years' experience. He is a licensed commodities trade adviser. Dan's recognized energy market expertise includes active trading in crude oil, natural gas, unleaded gasoline and heating oil futures contracts; fundamental analysis including supply and demand statistics (DOE, EIA), CFTC trade reportage, volume and open interest; technical analysis including trend analysis, stochastics, Bollinger Bands, Elliot Wave theory, bar and tick charting and Japanese candlesticks; and trading expertise in outright, intermarket and intramarket spreads and cracks.

Dan also designed and supervised the introduction of the new Nymex PJM electricity futures contract, launched in April 2003, which cleared more than 600,000 contracts last year alone. Its launch has been the basis of Nymex's resurgence in the clearing of power market contracts over the last three years.

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts as an analyst of the oil markets on CNBC, Bloomberg US and UK and CNNfn. Dan is the author of many energy articles published in Nymex and other trade journals.

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.