Last Thursday, Interior Secretary Ryan Zinke announced the draft proposed program, which could potentially open more than 98% of the U.S. Outer Continental Shelf to oil and gas leasing. The proposal would reverse Obama's permanent ban on offshore drilling, enacted in late 2016.
The proposal is a draft, and at least a year from finalization. Still, this is just the latest step in the Trump administration's plan to make the U.S. "the strongest energy superpower this world has ever known," as Interior Secretary Ryan Zinke put it. "Energy dominance" is one of the Trump administration's main goals. As for environmentalists, the draft seems to be another defeat in their struggle to avoid a repetition of BP's (NYSE: BP) Deepwater Horizon oil spill of 2010, Exxon's (NYSE: XOM) 1989 spill, and other disasters.
The proposal includes a potential 47 auctions of drilling rights, including the lease of 25 offshore planning areas, from 2019 to 2024. Zinke believes that his 5-year plan could increase the federal revenue by $15 billion. This plan will open waters on both the West and East Coast, which were protected from extraction projects by former presidents. Numerous politicians and representatives of coastal communities, backed by environmentalists and the tourism industry, have united to express their outrage against the proposed expansion.
This draft follows another controversial decision: in December 2017, President Donald Trump rolled back the drilling safety rules implemented by Obama Administration in September 2016. Though Obama's regulation was put in place 6 years after the Deepwater Horizon oil spill, it was aimed to prevent the U.S. from similar environmental accidents. According to the current administration, these rules burden the energy industry with unnecessary regulatory requirements. The repeal of these rules may allow the drilling companies to save up to $228 million over 10 years. Almost simultaneously, the Department of Interior issued a stop-work order on Offshore Oil and Gas Operations Inspection Program, led by the National Academies of Science, Engineering, and Medicine. This project, begun only in October 2017, was meant to improve safety regulations on drilling platforms. The decision to suspend it was explained by possible duplication of work.
Over the course of last year, Trump's administration managed to drastically enhance future prospects for the drilling industry. At the beginning of December, the President announced the reduction in the size of two national monuments: Bears Ears National Monument and Grand Staircase-Escalante in Utah. Many local politicians were supportive of the decision, pointing at possible development of the lands and attendant jobs creation, though it also caused an outcry from some corners. Both natural monuments are attractive for drilling and mining, even though the sites would have to be located in remote, wild and difficult-to-access areas.
Since the shale revolution, the U.S. has become major oil and gas producer, which seems to have disruptive power on the global markets. Recent decisions confirm that the president and his cabinet are ready to deviate sharply from precedent to reach their goal of energy dominance.