WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Obama Blocks Offshore Driling In Arctic, Atlantic Oceans

Potus Obama

In a move that will likely be overturned promptly by the administration of Donald Trump, president Obama on Tuesday formally blocked offshore oil and gas drilling in most of the Atlantic and Arctic Ocean, responding to a call from environmentalists who say the government needs to do more to prevent drilling in environmentally sensitive areas of U.S.-controlled oceans.

The president had been expected to take the action by invoking a provision in a 1953 law that governs Outer Continental Shelf offshore leases, and he did just that to block drilling in federal waters in the Arctic's Chukchi Sea and most of its Beaufort Sea. He also protected 21 underwater canyons in the Atlantic Ocean from drilling. Furthermore, Canada will block drilling in all of its Arctic Ocean acreage, a moratorium officials will review every five years, the White House said.

(Click to enlarge)

The provision, contained in the 1953 Outer Continental Shelf Lands Act, has been invoked in the past to set aside smaller portions of the Outer Continental Shelf, such as coral reefs or natural habitats. Presidents George H.W. Bush and Bill Clinton used the provision to block drilling in much of the Outer Continental Shelf, but for limited periods.

The Obama administration's action marks the broadest use of the statute ever because it would be far-reaching in terms of the lands it would protect and come without an expiration date. Provision 12(a) of the law states, "The President of the United States may, from time to time, withdraw from disposition any of the unleased lands of the outer Continental Shelf." Momentum to use the provision has been building this year according to CNBC. In May, a coalition of environmental groups circulated a fact sheet that highlighted the authority provided under 12(a).

Related: A New World Order Is Emerging In Natural Gas

Fifty-nine percent of voters surveyed in September said they would support blocking leasing in the Arctic and Atlantic, according to a study from Hart Research Associates that was paid for by the NRDC and the League of Conservation Voters. The survey polled 1,103 registered voters by phone and had a margin of error plus or minus 2.9 percentage points.

“These actions, and Canada’s parallel actions, protect a sensitive and unique ecosystem that is unlike any other region on Earth,” Obama said in a statement. “They reflect the scientific assessment that, even with the high safety standards that both our countries have put in place, the risks of an oil spill in this region are significant and our ability to clean up from a spill in the region’s harsh conditions is limited.”

In his statement, Obama said the oil market makes now an acceptable time to block off future drilling.

“It would take decades to fully develop the production infrastructure necessary for any large-scale oil and gas leasing production in the region – at a time when we need to continue to move decisively away from fossil fuels,” he said.

The announcement locks in a decision Obama made last month to block drilling in the Atlantic and Arctic Oceans during an offshore leasing plan that runs through 2022. As the Hill notes, it also cements Obama’s legacy as a president who has taken aggressive unilateral action against climate change and protected more land and water than any previous president.

Environmentalists supported Obama’s November leasing plan, but many said he needed to go further and block drilling in the Atlantic and Arctic Oceans once and for all.

And here lies the rub: after he takes office, Donald Trump will likely undo the 2017-2022 leasing plan, although it could be a lengthy process. But it’s unclear how Trump could undo Obama's Tuesday announcement: The White House said no previous president has tried to undo a drilling withdrawal under the 1953 law, and that there is no provision to do so.

Related: The End Of The Downturn? BP Steps Up Spending As Oil Prices Rise

Let's be clear: Trump will try, especially since the oil and gas industry is certain to push lawmakers to reverse Tuesday’s decision.

U.S. acreage in the Arctic is estimated to contain 27 billion barrels of oil and 132 trillion cubic feet of natural gas.

The industry has opposed government efforts to block drilling there, saying the U.S. will hurt the rural Alaskan economy if it prevents oil production, and also cede an economic advantage to other Arctic countries like Russia, which has more relaxed rules on drilling.

Tuesday’s announcement does leave 2.8 billion acres of the Beaufort Sea near Alaskan state waters open to leasing. The White House said that area is close enough to existing drilling infrastructure that “the president deemed it prudent to leave that area for further study and further consideration.”

There is no traditional drilling industry in federal waters in either the Arctic or Atlantic oceans, and many companies that own drilling leases in the Arctic have yielded them in the face of low oil prices globally.

Drilling in the Atlantic has also faced challenges from a number of other sources, including coastal states that could be affected by a spill, as well as the Pentagon, which said drilling in the Atlantic could disrupt naval exercises.

The federal government spent $1.5 billion to compensate drillers whose offshore leases were canceled due to local and state opposition in North Carolina, Florida, California and Alaska, according to a 2012 Congressional Budget Office review.

The Gulf of Mexico is the hotbed for the American offshore drilling industry, and Obama’s 2017-2022 leasing plan allows for more drilling there.

In his statement, Obama said significant production in the Arctic will not occur in the current low oil price environment, citing the Department of the Interior analysis. He said Arctic communities must focus on economic diversification.

By Zerohedge

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • I.M. Commenting on December 21 2016 said:
    "But it’s unclear how Trump could undo Obama's Tuesday announcement: The White House said no previous president has tried to undo a drilling withdrawal under the 1953 law, and that there is no provision to do so."


    Repeal the 1953 law.
  • jack ma on December 20 2016 said:
    Soros ordered puppet Obama to do this so there is no USA competition to Pertrobras in Brazil. Soros invested heavy in PetroBras and now China just did as well. Obama does exactly what is master tells him to do. Your team needs to do real research and report the real geopolitical issues here and what is really going on. Soros will get so rich on this investment. So will Obama and other elites that know the truth here. This has nothing to do with the environment and it's about money and making a fortune on Brazil. IMHO

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News