After years of low oil prices and reduced offshore activity, the Trump administration has given the oil industry a boost, offering proposals for a massive drilling plan and a rollback of Obama-era regulations. While the Interior Dept. says the moves are needed to make the U.S. not just energy-independent but energy-dominant, opposition by states and environmentalists could delay development by years.
On Jan. 4, Interior Secretary Ryan Zinke proposed to make more than 98% of outer continental shelf (OCS) acreage available for exploration and development. The five-year plan for 2019-24 replaces former President Obama’s 2017-22 plan that made off-limits 94% of the OCS. The Obama administration originally proposed opening the Atlantic Coast and the Arctic to leasing, but those areas were removed after local protests, says Sierra Weaver, the Southern Environmental Law Center’s senior attorney for its coast-and-wetlands program. “Our coast fought so hard in 2015 and succeeded because of coastal voices,” she says. “Our voices may not be heard this time.”
Last fall, North Carolina and Virginia, which had not opposed leasing under Obama, asked to be excluded in the new plan along with most other Atlantic states. “Most coastal governors were astounded when Zinke went so far outside the process to exclude Florida through a tweet,” Weaver says. Zinke met briefly with Florida Gov. Rick Scott (R) on Jan. 9 and said Florida would not be included in the plan. The state had not asked to be excluded last fall, when others did.
“For the states that were engaged in the process, including presenting reasons why they should be excluded, Zinke’s action on Florida seems arbitrary,” Weaver says, noting that there is a very specific legal process to follow. South Carolina and Georgia now also are expected to request to be excluded.
A bipartisan group of New England senators has introduced legislation that would bar offshore drilling there.
Not all areas are appropriate for offshore drilling, Zinke said, adding, “And we will take that into consideration in the coming weeks. The important thing is [that] we strike the right balance to protect our coasts and people while still powering America and achieving American energy dominance,” he said in a statement.
Turning Point
U.S. production in the Gulf of Mexico has struggled since 2014, but this year might be a turning point as operators set a new standard for operational efficiency, says William Turner, a research analyst with Wood Mackenzie. “[It] will be a forward-looking year for the sector as it lays the foundation for longer-term resurgence in 2019 and beyond,” he said in a report issued on Jan. 4. Increased investment in exploration and development is needed to maintain the current pace of production, he said, noting, “In the coming year, policy will play a key role in positioning the sector for a comeback in 2019.”
The Outer Continental Shelf Lands Acts requires the Interior Dept. to prepare and maintain a schedule of proposed oil and gas lease sales in federal waters that would best meet national energy needs for five years.
Offshore leasing plans are often broad at the beginning; however, after comments from stakeholders, areas are tossed out, says Randall Luthi, president of the National Ocean Industries Association (NOIA), which represents offshore energy producers and marine engineering and construction companies. “By the end, there may be some new areas,” he says.
Zinke’s decision to exclude Florida is disturbing to NOIA, says Luthi. “It’s a bit premature,” he says. The easiest way to expand offshore drilling is to move into the eastern part of the Gulf of Mexico, which has been off-limits. The Gulf, which has been producing offshore oil since the late 1930s, has the advantage of existing infrastructure, says Luthi. “The Atlantic has no infrastructure,” he says.
As the administration proposes to open more areas to drilling, it also has proposed to roll back Obama-era regulations implemented after the 2010 Deepwater Horizon accident, which killed 11 people and spilled 215 million gallons of oil into the Gulf. The regulations required third-party inspections and tightened restrictions on blowout preventer systems. The administration says eliminating the rules would stimulate growth in the industry.
“Everybody’s goal is to have no environmental accidents,” says Luthi, but he supports the rollbacks as a chance to reconsider and discuss the rules.
Mike LeVine, senior Arctic fellow of Ocean Conservancy, said the Deepwater Horizon accident made evident serious deficiencies. “[The regulations] were intended to balance costs and benefits, so there is no reason to roll them back,” he added. He fears that more regulatory rollbacks are coming. The agency on Jan. 12 said it is reconsidering the regulations for Alaska drilling. Congress also gave the industry a boost by failing to reauthorize the Oil Spill Liability Trust Fund, a 9¢-per-barrel tax used to cleanup oil spills and restore damaged areas, which expired Dec. 31. “It’s a perfect storm of increasing drilling, reducing safety and the end of cleanup funding. We are unlearning lessons we learned in the past,” says LeVine.
