The Obama administration in May reversed course and said it would suspend plans for exploration drilling off the coasts of Virginia and Alaska and on 33 wells under way in the Gulf of Mexico.
In late March, the administration announced that it would open select offshore areas, including areas off the Virginia coast, to oil and gas exploration as part of an effort to woo lawmakers to support climate change legislation.
The Interior Department would have conducted the first offshore oil and gas lease sale in the Atlantic Ocean in more than two decades in November 2011. The sale would have covered about 3 million acres in a triangular area 50 miles off the Virginia coast.
Many Virginia lawmakers have pushed for accelerated exploration off the state's coast in recent years, but the proposed opening for offshore drilling riled environmentalists, who said it was too risky.
But on May 27, with the nation's worst oil spill continuing from a deep well in the Gulf of Mexico, President Barack Obama announced the suspension of the planned exploration.
The action pleased environmentalists. "The events in the Gulf clearly demonstrate the risks of offshore drilling," said Chesapeake Bay Foundation President William Baker. "Safeguards are never foolproof. And their effectiveness can be further mitigated by human error. The consequence of accidents can be devastating to the environment, the economy and the people of waterfront communities."
Virginia Gov. Bob McDonnell, who has said he wants to make his state the East Coast's energy capitol, said he didn't believe an outright cancellation was best because the sale was not due to take place for two years and drilling would likely have come years after that.
The action could still affect the Bay watershed, where environmentalists fear the rapid development of natural gas reserves threaten stream health and forest habitats.
Royal Dutch Shell PLC said May 28 that it would purchase East Resources Inc., a major owner of shale gas holdings in the northeast United States, for $4.7 billion from private investors.
Europe's largest oil company said it will pay cash for East Resources, a Pennsylvania company that owns more than 2,500 oil and natural gas wells in the United States. It also controls 1.25 million acres of land, mostly in the energy-rich Marcellus Shale region that runs from New York to southwest Virginia.
Shell CEO Peter Voser said the acquisition fit with plans to "grow and upgrade" its holdings of shale gas in North America.
With the potential for more restrictions on offshore drilling, a number of analysts were expecting a continued push from global energy companies into the U.S. oil shale industry.
Earlier this year, Japanese energy giant Mitsui & Co. said it would pay $1.4 billion for a stake in Anadarko Petroleum Corp.'s shale assets. India's Reliance Industries Ltd. also recently paid $1.7 billion for part of Atlas Energy's shale gas deposits.
Natural gas is expected to be in high demand in coming years as a cleaner burning fuel with lower carbon emissions than coal and other fossil fuels. The nation's shale deposits are estimated to contain at least a 100-year supply. Drillers have been especially interested in the Marcellus Shale region.