The Strategist

Trump to reverse the offshore drilling ban


04/07/2017 - 15:24



The US President Donald Trump is preparing to issue an order that gives oil companies more opportunities to drill the country’s shelf.



Thus, Donald Trump is preparing to abolish the decrees of former US President Barack Obama, who has actually prohibited drilling on the US shelf. Recall that in December 2016, before leaving the post of US President, Barack Obama blocked issuance of new licenses for drilling oil and gas wells on the shelf of the Atlantic Ocean and the Arctic. This ban has been accorded with the Canadian authorities, which introduced a similar initiative. The ban covers the waters near Alaska in the Chukchi Sea, the Beaufort Sea and part of the Atlantic Ocean from New England to the Chesapeake Bay.
 
This initiative was preceded by a series of measures seriously limiting work of oil and gas companies on the shelf.

In April 2016, the country’s government proposed new, very stringent safety rules for shelf drilling, and extended their zone of influence to the northern seas in July 2016.

In November 2016, Barack Obama imposed a ban on development of oil and gas deposits on the shelf of the Arctic Ocean off the coast of Alaska. Then the American politicians decided to stop licensing drilling in the Chukchi Sea and the Beaufort Sea for 2017-2022.
 
This state of affairs doesn’t look acceptable to new US president, who initially relied on shale hydrocarbons and offshore projects.

It’s not all that simple. The US law will not allow Donald Trump to change Barack Obama’s law within 5 years. Yet, there is a loophole - 12 (a) provision of the Outer Continental Shelf Lands Act, which would allow D. Trump to change the current situation. Everyone is expecting that US President will soon introduce a directive on offshore drilling, but the document’s details are still unknown. Once the order is released, the US Interior Ministry will make changes to Barack Obama’s five-year plan for bidding on oil and gas sites in the United States.

The final decision is still far away, but environmentalists have already begun to ring the alarm bells. They are calling the possible abolition of Obama's decision unprecedented, and are threatening to go to court.

In the last days of his presidency, Obama banned drilling of new oil and gas wells in federal waters in the Atlantic and Arctic Ocean. At that, the States began to increase oil production in the Gulf of Mexico during his stay in the office. At the end of 2016, the production volume amounted to 1.68 million barrels per day, the historic maximum since February 2010. Currently, total production in the United States reaches 9.088 million barrels per day, and commercial reserves amount a record level of 528.4 million barrels. According to forecasts, the indicators will only be growing in the coming years, and the next round of the "shale revolution" may occur in the US.

source: bloomberg.com




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