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The Oil Canal That May Never Be

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Global Energy Advisory - 16th March 2018

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Trump To Give Oil Companies Access To Offshore Drilling


President Donald Trump is working on an executive order that will open the waters around the U.S. coast to oil and gas drilling just months after President Obama effectively banned Atlantic and Arctic offshore drilling.

Although all it takes is an executive order to start the process, in reality, the leasing of new oil and gas blocks in Atlantic and Arctic waters could take years, Bloomberg notes, especially since the rescinding of Obama’s latest legislation, which excluded the arctic and parts of the Atlantic shelf from lease tenders indefinitely, will certainly be challenged in court.

To make matters more confusing, the President himself will most likely have to approach a court to remove the ban, which is based on a rarely invoked provision from the 1953 Outer Continental Shelf Land Act. As Oilprice noted at the time, this will take years, providing enough time for oil and gas explorers to amass the cash they would need to tap these new deposits.

Some, however, including environmentalists and congressmen, believe that Trump must tread very carefully to avoid failure. One environmental advocate, Niel Lawrence, Alaska director of the Natural Resources Defense Council, told Bloomberg that “The administration can stare all day at the statute Obama used to protect large parts of the Arctic and Atlantic, but they won’t find a syllable allowing Trump to revoke those protections. Neither will the courts.”

Related: U.S. Threatens OPEC As Oil Exports Hit Record High

In case they do find grounds for revoking the Obama legislation, Big Oil, which is currently forced to focus on the Gulf of Mexico, will have millions of new acres to drill in, using their new, more cost-efficient, lower-production-cost technologies. These technologies are gradually bringing down the cost of deepwater drilling close to the costs of drilling shale, which is increasing energy companies’ appetite for offshore projects.

The executive order is expected soon, according to Interior Secretary Ryan Zinke, though no firm timetables were given. Zinke’s ministry will be responsible for moving things along to tenders and leases.

By Irina Slav for Oilprice.com

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  • William Hershaw on April 09 2017 said:
    Drilling offshore costs a lot more money and is totally different compared to onshore in any sense, not just technical, so please, no misinformation regarding this one. For starters, you need to float on a big vessel for few months, can't just drag a cabin and dump it onto ground.
  • Naomi on April 08 2017 said:
    Congress can change any law.

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