US to increase OCS drilling

April 28, 2017

US President Donald Trump signed executive orders today (28 April) to increase domestic energy production in the Outer Continental Shelf (OCS) Planning area including the Chukchi Sea, Beaufort Sea, Cook Inlet, Mid-Atlantic, South Atlantic, and parts of the Gulf of Mexico; areas that President Obama banned towards the end of his reign.

The order aims to expand offshore oil and gas exploration and production in the OCS through a review of the five-year leasing program and reconsideration of certain regulations pertaining to offshore energy potential. 

"I am going to lift the restrictions on American energy, and allow this wealth to pour into our communities," says Trump.

The order also directs Secretary of the Interior Ryan Zinke to implement a streamlined permitting approach for privately funded seismic data collection to determine offshore energy resource potential.

"This order will cement our Nation’s position as a global energy leader and foster energy security for the benefit of the American people, while ensuring that any such activity is safe and environmentally responsible," says Zinke. "Now, I understand people may be concerned about any environmental impact that development may have, and that’s a valid concern that the President and I share. The truth is, we fully expect that during the review process we will find ways to improve our regulatory requirements that strengthen safety precautions. Good stewardship of our lands and waters and responsible offshore development are not mutually exclusive."

Image of Trump, from the White House Flickr.

In his order, Trump says that it shall be the policy of the US to encourage energy exploration and production, including on the Outer Continental Shelf, in order to maintain the nation's position as a global energy leader and foster energy security and resilience for the benefit of the American people, while ensuring that any such activity is safe and environmentally responsible.

Zinke will need to review areas closed off by the current five-year plan for sale of oil and gas leases in the OCS, without disrupting scheduled lease sales, which include, but are not limited to: the Western and Central Gulf of Mexico, the Chukchi Sea, the Beaufort Sea, the Cook Inlet and areas of the Mid and South Atlantic.

Zinke has been ordered to review four rules and regulations put in place last year that could reduce exploration and development in the OCS, which include: Notice to lessees and operators of federal oil and gas, and sulfur leases, and holders of pipeline right-of-way and right-of-use and easement grants in the OCS; Oil and gas and sulfur operations in the outer continental shelf-blowout preventer systems and well control; Air quality control, reporting, and compliance; and oil and gas and sulfur operations on the OCS—requirements for exploratory drilling on the Arctic OCS.

"It is better to produce energy here than be held hostage by foreign entities," Zinke told reporters on Thursday in a briefing about the executive order, called the America-First Offshore Energy Strategy, according to Reuters.

In 2008, federal leasing revenues for the OCS were nearly US$18 billion dollars. By contrast, in 2016, leasing revenues were approximately $2.8 billion. That’s a drop of more than $15 billion that would otherwise go to the Treasury or toward funding important conservation programs like the Land and Water Conservation Fund and the Historic Preservation Fund, says Trump.National Ocean Industries Association (NOIA) President Randall Luthi applauds the executive order, which he says signals a new day and a new attitude for American energy.

“The Energy Information Administration predicts that in the year 2040, traditional forms of energy, particularly fossil fuels, will provide almost 80% of our energy needs.  With the expected economic growth worldwide, we will need more energy than is currently being produced, and all forms of energy will be needed to meet the growing demand.  Offshore oil and natural gas have proven to be reliable and cost efficient sources of energy,” says Luthi. 

“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,” says Luthi.  “With a whopping 94% of our outer continental shelf currently locked away from oil and gas development, a thorough review of the regulatory framework governing our offshore energy resources is warranted and logical. NOIA hopes the review will prompt the Trump Administration to begin work on an expedited leasing program that actually increases offshore access and revives efforts to safely conduct modern seismic surveys in the Atlantic.”

“The 6% of the offshore that is open for exploration will provide about 20% of our nation’s oil next year and about 5% of our natural gas, and the more we produce at home, the less we need to import.  This home-grown production provides thousands of jobs and billions of dollars in revenue.  In addition, the structures used in energy development provide critical habitat for coral, fish and marine mammals.  Offshore energy, including oil, natural gas, and wind, can be a sustainable, reliable piece of a comprehensive US energy policy; a policy that is badly needed at this time,” says Luthi.

API President and CEO Jack Gerard also welcomes the Trump administration’s executive action to advance domestic energy production. 

“Developing our abundant offshore energy resources is a critical part of a robust, forward-looking energy policy that will secure our nation’s energy future and strengthen the US energy renaissance,” says Gerard.“We must particularly look to and embrace the future development of domestic sources of oil and natural gas in the Eastern Gulf of Mexico. 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, which could create thousands of jobs and provide billions of dollars in government revenue.”

The Arctic Energy Center also applauds the efforts to open Arctic waters.

“Though there’s no precedent to suggest a moratorium can’t be overturned, there is one for a President to lift 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,” says Oliver Williams, spokesperson for the Arctic Energy Center. “Industry interest in the Arctic has steadily begun to revive over the last six 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 2020’s and beyond.” 

"When President Trump took office, he promised to listen to the people and to return power to them, and today he and Secretary Zinke delivered for Alaskans,” says US Senator Lisa Murkowski. “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. Alaskans broadly support offshore development in the Arctic. And 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.”

“Last December, Alaskans were outraged when President Obama unilaterally placed nearly the entire Arctic Ocean off-limits to energy development,” says US Senator Dan Sullivan. “Today, President Trump undertook the first steps to right this wrong for Alaskans and for our country. Production is increasing in Alaska, and there are new oil finds throughout the state. Alaska is on the brink of leading our country into a new energy renaissance. With a White House working with Congress—and acting as a partner with Alaska—responsible production of our energy resources will strengthen our national security, provide good jobs for thousands of Alaskans, and help grow the economies of our state and our country.”  

“Today is an important moment for Alaska’s future,” says US Representative Don Young. “It represents a significant reversal of the previous administration’s failed domestic energy policy; one that focused on locking away our resources, limiting new opportunities and creating insurmountable roadblocks at every turn. Along with our united congressional delegation, I’ve fought back to ensure Alaska’s energy potential remains on the table. As a resources oriented state, this is critical. I commend President Trump for recognizing the importance of development in the Arctic OCS and look forward to building a regulatory climate that truly gives exploration a chance to succeed."

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