- Apr 28, 2017
US President Donald Trump signed an executive order that reverses his predecessor’s Arctic offshore oil and gas leasing ban and directs Interior Sec. Ryan Zinke to allow responsible development of other US offshore areas’ energy resources. Oil and gas trade associations and other business groups immediately hailed the president’s Apr. 28 action. Environmental organizations and California, Oregon, and Washington’s Democratic governors promptly condemned it.
“This is a great day for American workers and families, and today we’re unleashing American energy and clearing the way for thousands and thousands of high-paying American energy jobs,” Trump said at the White House ceremony, which several industry association leaders attended. “Our country is blessed with incredible natural resources, including abundant offshore oil and natural gas reserves. But the federal government has kept 94% of these offshore areas closed for exploration and production.”
Trump said his order also directs Zinke to reconsider other Interior regulations “that slow job creation.” Trump said, “Finally, this order will enable better scientific study of our offshore resources and research that has blocked everything from happening for far too long. You notice it doesn't get blocked for other nations. It only gets blocked for our nation.”
Zinke reportedly said in a press briefing the previous night that the process will be long and complex, and could consume 2 years before new areas could be opened for leasing. But he added that federal offshore oil and gas revenue fell by $15 billion during the Obama administration, due in part to plunging prices but also from so much of the OCS being off-limits to producers.
Look first at eastern GOM
American Petroleum Institute Pres. Jack N. Gerard said, “We are pleased to see this administration prioritizing responsible US energy development and recognizing the benefits it will bring to American consumers and businesses.”
The US should particularly look at developing energy resources in the eastern Gulf of Mexico, Gerard said. “Exploration in this area is critical to our national security, and we continue to see our neighbors in Mexico and Cuba pursue these opportunities. The eastern gulf is in close proximity to existing production and infrastructure, and opening it would most quickly spur investment and economic activity.”
National Ocean Industries Association Pres. Randall B. Luthi said, “This executive order can be used to craft a long-term, consistent energy blueprint to provide jobs, state and federal revenue, and economic and energy security for America.”
Daniel T. Naatz, senior vice-president, government relations and political affairs at the Independent Petroleum Association of America, said, “In 2009, investment offshore by America’s independent producers accounted for $38 billion in economic benefits, more than 200,000 jobs, and $10 billion in federal and state revenue and royalty payments. These are the real, tangible benefits of safely developing our vast offshore resources. Today’s action by the new administration puts us one step closer to achieving these great benefits once again.”
Data for new 5-year plan
International Association of Geophysical Contractors Pres. Nikki Martin said in Houston: “The president has made a significant move in the right direction in correcting the failed energy policies of the previous administration. But the Trump administration still has much work to do to reverse the trend of the previous 8 years.”
Martin urged the Interior and Commerce departments to revoke the decision late in the Obama administration’s final term to deny permits offshore geophysical contracts had sought to shoot 3D seismic surveys on the Mid-Atlantic OCS. Martin also called for “commonsense protocols for timely decisions on permit applications.”
She said, “It is still of the utmost importance that we allow offshore seismic surveys to be conducted, without delay, in the Atlantic and other frontier areas, to allow for informed decisions as a new 5-year lease plan is developed. The resulting geophysical data would provide much-needed updated and environmentally safe assessments of the oil and natural gas reserves, enabling policymakers to make effective and strategic decisions whether to open areas for leasing.”
A spokesman for the industry-supported Arctic Energy Center said on Apr. 28 that while there may be no precedent to suggest that an OCS moratorium can’t be overturned, there is one for a president to overturn previous restrictions: George W. Bush’s decision to rescind a ban in the Atlantic and Gulf of Mexico in 2008.
“Given that the Obama administration clearly ignored that OCSLA’s primary intention is to ensure the outer continental shelf is ‘available for expeditious and orderly development,’ we believe that today’s executive order will stand up in court,” Oliver Williams said. “Industry interest in the Arctic has steadily begun to revive over the last 6 months. Today’s announcement will help catalyze further activity and is a crucial first step in ensuring that we can responsibly take advantage of the Arctic’s huge resource potential in the 2020s and beyond.”
Other business groups approved of Trump’s action. “America is fortunate to have vast offshore energy resources, which could fuel the global economy for decades,” observed Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy.
“Now, the Trump administration is stepping in to take immediate action that will bring back production in parts of the Arctic and Atlantic that were taken off limits, and also conduct a more comprehensive review of our offshore policies,” Harbert said.
Two National Association of Manufacturers members said Trump’s action will benefit their businesses. “For manufacturers like us, it will help us put more people to work making the castings, valves, pumps, and oil field equipment as well as welding and assembling the products needed to power new energy development and exploration in the OCS,” said Eric Myers, of Oil City Iron Works Inc. in Corsicana, Tex., and Ed Grand-Lienard, of Special Products & Manufacturing Inc. in Rockwell, Tex.
Anticipating Trump’s executive order, Democratic Govs. Jerry Brown of California, Kate Brown or Oregon, and Jay Inslee of Washington called it short-sighted in an Apr. 27 joint statement. “For good reason there has been no federal expansion of oil and gas drilling along our shared coastline for more than 30 years,” they said, citing impacts from spills and leaks at Santa Barbara in 1969, Port Angeles in 1985, Grays Harbor in 1988, and Coos Bay in 1999.
Alaska’s congressional delegation, however, attended the signing ceremony and issued a statement supporting the order soon after. “After the last administration spent eight years systematically closing off access to the Arctic, this executive order puts us back on track to explore and ultimately produce the prolific resources in that region,” said Sen. Lisa Murkowski (R), who chairs the Energy and Natural Resources Committee.
“Alaskans broadly support offshore development in the Arctic. I strongly believe that over time, today’s order will provide substantial benefits by putting our state on a better path to create jobs, generate new revenues, refill the Trans-Alaska Pipeline System, and strengthen our leadership in the Arctic,” Murkowski said. The delegation’s two other members—Sen. Dan Sullivan and Rep. Don Young—expressed similar sentiments.
In the days preceding Trump’s executive order, members of Congress introduced bills in anticipation of it. Louisiana’s two Republican US senators, Bill Cassidy and John N. Kennedy, and US Rep. David J. Brat (R-Va.) introduced bills on Apr. 26 to keep a US president from using the Outer Continental Shelf Lands Act and Antiquities Act to block offshore energy development and production (OGJ Online, Apr. 27, 2017).
Senate Democrats moved the following day as they introduced a bill to preserve the 2017-22 OCS 5-year program that the Obama administration developed, and wrote a letter to Trump urging him to protect that and other existing offshore protections (OGJ Online, Apr. 27, 2017). At a press conference about the bill, Sen. Robert Menendez (D-NJ), one of its cosponsors, said he plans to reintroduce legislation to permanently ban oil and gas activity along the federal OCS.
Contact Nick Snow at [email protected]
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