By April 28, 2017 0 Comments Read More →

Trump executive order expands offshore drilling

Trump executive order

The Trump executive order signed on Friday could reverse offshore drilling bans put in place by former President Obama.  

Trump executive order could lead to reversal of drilling bans in US Gulf, Atlantic, Pacific, Arctic oceans

A newly signed Trump executive order could extend offshore oil and gas drilling to areas that were previously deemed off limits.  The move is an effort to increase domestic production, however, industry demand for acreage is close to the lowest its been in years.

US President Trump’s latest executive order signed on Friday could result in a reversal of bans instituted by former President Barack Obama on drilling in the US Gulf of Mexico, the Atlantic, Pacific and Arctic oceans.

“We’re opening it up … Today we’re unleashing American energy and clearing the way for thousands and thousands of high-paying American energy jobs,” Trump said.

During the 2016 election campaign, then-candidate Donald Trump campaigned on a promise to do away with environmental protections created by Obama that Trump said were creating roadblocks for energy development and did not provide any benefits.

According to a report by Reuters, the America-First Offshore Energy Strategy directs the US Department of Interior to review and replace the Obama administration’s most recent five-year oil and gas development plan for the outer continental shelf.  The area includes federal waters off all US coasts.

While industry cheered Trump’s rhetoric during the campaign, the executive order comes at a time when low oil prices and emphasis on US shale production have resulted in the lowest demand for offshore leases since 2012.

“The Trump administration’s hasty move today towards expanding offshore oil drilling … defies market realities and is as reckless as it is unnecessary,” David Jenkins, president of Conservatives for Responsible Stewardship told Reuters.

He added “Why on earth would someone choose to push drilling in the riskiest and most expensive places on the planet when the current oil glut will make such ventures unprofitable for the foreseeable future?”

Between 2012 and 2017, the amount of money spent by oil companies in the central Gulf of Mexico’s annual lease sale fell by over 75 per cent, according to US government data.  As well, dollars bid per acre and the percentage of acreage receiving bids both fell by over 50 per cent.

Figures were similar in the western Gulf of Mexico which was the only other zone that companies bid on for leases during the same period, according to the US Bureau of Ocean Energy Management.

American Petroleum Institute President Jack Gerard was pleased with the Trump executive order.  “We are pleased to see this administration prioritising responsible U.S. energy development and recognising the benefits it will bring to American consumers and businesses,” he told Reuters.

Jill McLeod, a partner at the law firm Dorsey & Whitney said the Trump executive order was a positive signal to the oil industry, but was not likely to spur a surge in exploration in the near future, given the oil market and costs of development.

“The lifting of the ban does not necessarily make drilling in the Arctic a compelling proposition,” she said.

Enacting Trump’s order will take more than just the president’s signature.  A new five-year drilling plan is required and Commerce Secretary Wilbur Ross must review the previous presidents’ designations of marine national monuments and sanctuaries.

As well, environmental groups including Oceana and Center for Biological Diversity promised to fight the order in court.  Democratic senators said the America-First Offshore Energy Strategy order could negatively impact fishing and tourism industries.

 

Prior to leaving office, former President Obama banned new oil and gas drilling in federal waters in the Atlantic and Arctic oceans. The ban protects 115 million acres of waters off Alaska and 3.8 million acres in the Atlantic from New England to the Chesapeake Bay.

Earlier in the week, Trump signed another executive order which will trigger the review of federally managed land to determine if they were properly designated as national monuments by former presidents.

The order could make the federal areas available for development.

 

 

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