In yet another dramatic reversal of Obama-era energy policy, President Donald Trump proposes opening up nearly all the nation’s offshore waters to exploration and production of oil and natural gas.
On January 4, Interior Secretary Ryan Zinke announced plans to make more than 90 percent of the Outer Continental Shelf (OCS) acreage, which is estimated to contain 98 percent of the federal offshore area’s undiscovered, technically recoverable oil and gas resources, available for oil and gas exploration and development.
The proposal includes 47 potential lease sales in 25 of the 26 “planning areas”: 19 sales off the coast of Alaska, seven in the Pacific Region, 12 in the Gulf of Mexico, and nine in the Atlantic Region. Overseen by the Department of the Interior’s (DOI) Bureau of Offshore Energy Management, it is by far the largest-ever proposed auction of leases for U.S. offshore waters.
Just days after the announcement, on January 9, Zinke stated the administration was withdrawing Florida’s portions of the Gulf and Atlantic OCS from exploration and production. This occurred after a meeting between Zinke and Florida Gov. Rick Scott, who objected to the proposed expansion of drilling off Florida’s coast.
The Outer Continental Shelf Lands Act (OCSLA) requires the Secretary of Interior (SOI) to prepare a five-year schedule of potential oil and gas lease sales, leaving it to the SOI to determine the size, timing, and location of proposed leasing activity as determined best to meet national energy needs while addressing a range of economic, environmental, and social considerations.
Reverses Obama Ban
DOI’s plan would span the years 2019 to 2024 and would lift a ban on drilling in the area imposed by the President Barack Obama under OCSLA.
In December 2016, just a few weeks before he left office, Obama withdrew hundreds of millions of acres, or about 94 percent of all U.S. OCS, from consideration for offshore drilling.
Opening up the OCS for drilling is the latest step in Trump’s quest for American energy dominance.
Last March, Trump issued an executive order instructing all federal agencies to review every existing regulation, order, guidance document, policy, and other agency action that might burden domestic energy production. The executive order was specifically directed at promoting oil, gas, coal, and nuclear power.
Last summer, Trump set a goal of U.S. “global energy dominance,” saying vast U.S. reserves of coal, oil, and natural gas could reshape global energy markets. The recently enacted tax reform law includes a provision opening up a section of Alaska’s Arctic National Wildlife Refuge for oil drilling. Combined with the administration’s moves to reduce the regulatory burdens on the fossil-fuel industry, notably by rescinding Obama’s Clean Power Plan, these steps indicate the White House is serious about reversing course on energy policy.
‘Dominance Without Sacrificing Safety’
In another action expected to spur offshore energy development further, the Trump administration is expected to roll back some regulations imposed in the aftermath of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, The Wall Street Journal reported on December 26. DOI’s Bureau of Safety and Environmental Enforcement (BSEE), which oversees offshore oil and gas drilling, estimates the proposed changes could save the industry more than $900 million over the next ten years.
Among other things, the proposed rule would loosen requirements that drilling companies stream real-time data on oil-production operations for ongoing review by regulators.
The Trump administration would leave in place the current standard for how much pressure drillers must maintain atop a well to prevent a blowout like the one that happened on the Deepwater Horizon platform.
“[The rule] moves us forward toward our goal of meeting the administration’s goal of achieving energy dominance without sacrificing safety,” BSEE director Scott Angelle said in a press statement. “By reducing the regulatory burdens on industry, we are encouraging increased domestic oil and gas production while maintaining a high bar for safety and environmental sustainability.”
Waking an Energy ‘Behemoth’
Tim Benson, a policy analyst with The Heartland Institute, which publishes Environment & Climate News, says Trump’s actions show a long-term commitment to increasing U.S. energy output.
“While we’re not likely to see the fruits of this important decision for a number of years, this is just one more example of the commitment of the Trump administration to maintain U.S. energy dominance,” Benson said.
Jordan McGillis, a policy analyst at the Institute for Energy Research, says Trump’s energy policy actions could have profound positive effects.
“An awoken American energy sector has the potential to become a global behemoth, impacting markets worldwide,” said McGillis. “We’ve seen important stirrings over the past decade, particularly on private and state land, but increased access to federal lands and offshore areas could be monumental.”
Gary Stone, vice president of engineering at Five States Energy and a policy advisor to The Heartland Institute, says the federal government should have expanded offshore drilling years ago.
“The expansion of offshore drilling opportunities is a long-overdue step to ensure the future stability of U.S. oil and gas reserves and supply,” Stone said. “The exploitation of offshore reserves takes time. From concept to leasing to seismic analysis to exploratory drilling to development to production and sales will take anywhere from four to ten years per field.
“Producers can now begin the long-term planning and action necessary to find and develop these reserves,” said Stone. “This is especially critical to offset the rapid initial declines and uncertain long-term production from shale wells.”
Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.