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OPEC’s Next Big Crisis

OPEC is facing some major…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Oil And Gas Drilling Is Now Back Off Again In This Hot-Button Play

One of the biggest stories in offshore oil and gas recently has been a potential opening of the U.S. Atlantic to drilling. With lawmakers having proposed the first lease sale in decades here as part of an overall energy strategy for 2017 to 2022.

But yesterday officials did an abrupt about-face on Atlantic drilling.

U.S. Secretary of the Interior Sally Jewell confirmed at a press conference that the Obama administration will remove the Atlantic from areas offered for exploration over the next five years. With this area not being listed amongst regions planned for lease sales as part of the Outer Continental Shelf Oil and Gas Leasing Program 2017-22. Related: Argentina’s YPF Ousts ‘’Magician’’ In Favor Of Banker

Jewell said there was simply too much opposition to Atlantic drilling — coming from environmental groups and local communities on the U.S. East Coast. As well as from groups like the Department of Defense and NASA, who said that drilling could interfere with their operations.

The move is a major disappointment for the oil industry. That had been looking at some potentially major prizes in this little-explored part of the offshore.

But those plans will now have to wait until at least 2023, when the next 5-year energy plan will be due. Related: Oil Won’t Stage A Serious Rebound Until This Happens

As it stands, the current plan calls for 10 potential lease sales in the go-to exploration climes of the Gulf of Mexico. As well as three sales in U.S. Arctic waters.

But Secretary Jewell cautioned that even the Arctic sales could be dropped from the final version of the leasing program. Saying that the government is still examining these areas and considering additional protections or even a complete withdrawal of the Arctic. Related: Putin’s Dilemma: To Sell Or To Nationalize Oil Assets

Of course, lower oil and gas prices likely played some role in this decision. With interest in frontier regions almost certain to be much lower these days than a few years ago when Atlantic drilling was first proposed.

But the move is also a signal that American lawmakers are unwilling to defy bad press to open new areas for exploration. Offshore activity may be confined to its traditional stomping grounds for some time to come.

Here’s to sticking firm,

By Dave Forest

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