Trump’s government proposes aggressive offshore drilling expansion

11 January 2018, Week 01, Issue 490

The government of US President Donald Trump has proposed an unexpectedly large expansion of offshore drilling in most federal waters, from California to Alaska. The plan is unprecedented in scope and means that drilling could occur off the Pacific and Atlantic coasts as well as in Arctic waters.

Public hearings are starting this week on the aggressive five-year plan, which has been met with objections from not only Democrats, but also some Republicans in certain states, as well as – predictably – from environmental groups.

Specifically, the US Department of the Interior (DoI) is proposing up to 47 auctions for leases for oil and gas drilling on most of the Outer Continental Shelf (OCS) for 2019-24, which would be the largest number of lease sales in US history. The plan does not include the North Aleutian planning area offshore Alaska – which had been put off-limits by former US President George W Bush – existing marine sanctuaries and Hawaii. The waters off the Florida coast are also not included.

“This is a start on looking at American energy dominance and looking at our offshore assets and beginning a dialogue of when, how, where and how fast those offshore assets should be, or could be, developed,” US Secretary of the Interior Ryan Zinke told reporters. “We are going to become the strongest energy superpower this world has ever known,” he added.

“We want to grow our nation’s offshore energy industry, instead of slowly surrendering it to foreign shores.”

The proposal, unveiled on January 4, includes drilling that is far beyond what Trump had suggested should be considered in April 2017. At that time, the president ordered the DoI to consider opening up drilling in Atlantic, Arctic and Gulf of Mexico waters – that is, not in the Pacific, where environmentalists have fought for decades to prevent oil and gas activity from taking place. 

In a swift reversal, Florida – which had initially been included in the proposal – was removed from consideration for new drilling on January 9 after strong objections from Florida Governor Rick Scott, a Republican.

“As a result of discussion with Governor Scott and his leadership, I am removing Florida from consideration for any new oil and gas platforms,” Zinke told reporters.

It is unclear how interested the oil and gas industry will be in Arctic waters – where drilling is particularly expensive and the season is short – or in the Pacific, where waters are deep and public and state opposition will be considerable.

However, Rystad Energy said last week that if all the proposed areas were opened up to drilling, this could potentially lead to up to 65 billion boe being unlocked. This estimate was made before Florida was removed from consideration, but the move to exclude the state has comparatively little impact on the number, according to Rystad.

“The resource potential in the basins in the direct proximity to Florida (Tampa Basin and South Florida Basin), together may hold around 1.0-1.5 billion boe, so excluding those will not change the overall picture dramatically,” a Rystad senior analyst, Sonia Mladá Passos, told NewsBase Intelligence (NBI).

“The US offshore sector held approximately 180 billion boe of original resources, oil and gas combined, before the first offshore production took place,” Passos said in a Rystad press release. “In the Gulf of Mexico, which is the world’s most mature offshore region, nearly 50% of these original resources have been translated into production since the 1960s. The remaining 50%, or 90 billion boe, are still to be discovered offshore US.”

US federal marine jurisdiction covers the OCS, generally starting more than 3 nautical miles (5.6 km) offshore, in the Atlantic, Pacific and Arctic oceans, as well as the Gulf. States have rights to the resources closer than 3 nautical miles to their shores. However, off Texas and the west coast of Florida, in the Gulf, state jurisdiction extends from the coastline to 9 nautical miles (16.7 km).

In the 2016 fiscal year, oil and gas leases on the OCS accounted for around 18% of domestic oil production and 4% of domestic gas output.

The last five-year plan under Trump’s predecessor, former President Barack Obama, did not open up lease sales the Atlantic, Pacific or Arctic. Indeed, under that plan, around 94% of the OCS was off-limits, the DoI said last week in a news release. Obama’s plan had only offered leases in the Central and Western Gulf and in Cook Inlet off southern Alaska.

Zinke did not say whether he would listen to objections from state governors other than Florida’s.

Finalising the plan could take over a year. During that process, areas can be retracted from consideration, but not added. The DoI’s principal deputy assistant secretary for land and minerals management, Kate McGregor, said that the department expected “a vigorous dialogue with states and local communities, as well as the congressional delegations”.

 

Edited by

Anna Kachkova

Editor

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