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Drilling blocked in Gulf, Atlantic

The Obama administration has reversed a decision to allow oil and natural-gas drilling in the eastern Gulf of Mexico and off part of the Atlantic coast following the BP spill, Interior Secretary Ken Salazar said Wednesday.

The biggest U.S. offshore oil spill showed that "the most appropriate course of action is to focus on areas with existing leases and not expand to new areas," Salazar said on a conference call with reporters.

President Obama said in March he would consider drilling off the Atlantic coast from south of Delaware and in the eastern Gulf of Mexico 125 miles off the west coast of Florida. Less than a month after the announcement, BP's Macondo well blew out, killing 11 workers on a drilling rig and setting off the spill.

Wednesday's decision puts off drilling in the Atlantic and in the eastern Gulf at least through 2017.

"After Macondo, I don't think anybody believed that there was a real chance to have rigs off the coast of Florida, let alone the Atlantic," David Pursell, a managing director at Tudor Pickering Holt in Houston, said in a telephone interview.

Business and industry groups such as the American Petroleum Institute said the administration's decision will cost jobs and block economic growth.

"This decision shuts the door on new development off our nation's coasts and effectively ensures that new American jobs will not be realized," Jack Gerard, president of the Washington-based institute, said in a statement.

While abandoning plans for expanded drilling, the administration will move ahead with lease sales in the central and western Gulf of Mexico that had been scheduled for this year, Salazar said.

"We will do everything we can to proceed with the lease sale by the end of 2011 and into 2012," Salazar said.

In October, Royal Dutch Shell, Europe's biggest oil company, said it applied to drill an exploratory well next year off Alaska's coast in the Beaufort Sea. The Bureau of Ocean Energy Management, the Interior unit that oversees offshore drilling, is "processing their permit in the normal course," said Michael Bromwich, bureau director.

The region remains a "frontier" area that requires further study to ensure drilling can proceed safely, Salazar said Wednesday. "We will proceed with utmost caution," he said.

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