In a move long awaited by the U.S. energy industry, President Trump will order a review of the offshore oil and gas drilling bans that the previous administration introduced, the latest just weeks before the end of President Obama's second term. Speaking to media, Interior Secretary Ryan Zinke said that the review will result in an executive order named the America-First Offshore Energy Strategy.
The document will seek to remove measures implemented by the Obama administration to protect vast areas from oil and gas drilling and is certain to cause outrage among environmentalists. For Trump, however, the drilling bans are an obstacle standing in the way of energy independence.
While some, notably Commerce Secretary Wilbur Ross, believe that the removal of drilling bans will stimulate not just the oil industry but also the wider U.S. economy, others are skeptical.
It will likely take years to remove at least one of the bans-the one concerning Arctic and Atlantic drilling, for which President Obama invoked a rarely used clause from the 1953 Outer Continental Shelf Land Act. Invoking provision 12(a) from the OCSLA could theoretically ban oil and gas licensing in these areas for an indefinite future. The powers to do this lay exclusively with the President and the decision cannot be rescinded automatically by a future president. In other words, drillers will likely have to wait a while before they venture into the Arctic, if they even want to.
Related: Why Is China Buying Up These Unprofitable Natural Gas Assets?
Some analysts, as quoted by CNN, also note that it is not lack of access to new oil and gas reserves that is hobbling the energy industry; it was low international prices brought about by the shale revolution. ClipperData commodity research Matt Smith said "Prices were suppressed because of oversupply. These changes in regulation aren't going to do anything to alleviate that. If anything, they're going to do the opposite."
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
U.S. Power and NatGas Prices Plummet to Below Zero
Ukrainian Drones Hit Major Rosneft Refinery in Russia
First Niger Oil Bound for China Blocked in West Africa Border Row
Gas Prices Likely to Keep Falling Ahead of Peak Driving Season
Drone Attacks Take Khor Mor Gas Field Offline, Claims Lives