Trump Should Reverse Obama-Era South Atlantic Oil and Gas Restictions
CARL BENTZEL | APRIL 7, 2017
In its waning days, the Obama administration took two actions to restrict potential offshore drilling off the South Atlantic coast. First, last March, in the final five-year schedule of OCS lease sales, the administration abandoned plans to open the coasts of Virginia, the Carolinas, and Georgia to offshore oil and gas drilling, reversing its position in an earlier issued draft proposal. Then, early this year, just in advance of the transfer to power to the Trump administration, the Obama administration announced it had denied six permit applications to conduct seismic exploration testing for oil and gas reserves in the South Atlantic Ocean.
The Trump administration should reverse this decision and allow both seismic testing and limited drilling exploration to allow for an honest appraisal of oil and gas resources in the South Atlantic.
The current market for oil and gas will probably not justify the level of financial commitment to effectively produce oil or gas on the South Atlantic Outer Continental Shelf. Simply put, the costs of regulatory compliance, exploration and new infrastructure will not justify investment at this point. However, given what’s at stake economically with new investment in infrastructure and supporting services for offshore oil and gas production, a reasonable alternative would be to authorize seismic permitting. The administration should impose restrictions on its use to add additional protections for marine mammals, and allow exploratory drilling to move forward. We should have an informed debate on whether the resources available in the South Atlantic and the economic gain of the creation of a new energy infrastructure in the Southeast outweigh the potential for environmental harm. Potential environmental harm should be evaluated considering post Macondo safety mandates and considering what should be state-of-art production techniques.
Opponents of potential offshore oil and gas exploration fall into two camps — residents concerned about potential environmental damage caused by a spill, and national groups supporting policies that insist on “keep it in the ground.” Local residents, relying primarily on tourism, recreation, and fishing to sustain local economies have a legitimate stake in the environmental safeguards that would be implemented should a decision be made to authorize offshore drilling, and will have a stake in planning and approving the substantial amount of infrastructure necessary to achieve energy production. I believe that they should also be fully appraised of the potential economic benefits, based on assessment of potential oil and gas resources and on the infrastructure and services necessary to conduct production in the South Atlantic.
The groups supporting “keep it in the ground” — while I understand the rationale behind their position — seem to be conveniently forgetting the international nature of the production of oil and gas. While they may be able to delay, or stop production of energy in the United States, they seem to deny that other nations with less well developed regulatory regimes will ultimately be able to produce energy, cause more environmental harm producing it, and sell it into our energy market with little economic benefit to our nation.
Offshore energy production off the coast of North America occurred from 1947 to the early 1980s, on the Mid- and South Atlantic OCS, however, most drilling was exploratory in nature and none of the more than 50 wells were completed as producing wells. However, since this time-frame, significant enhancements in technology allow deeper wells to be produced, and horizontal and directional drilling have increased access to a wider area of oil and gas production. In 2014, the Bureau of Ocean Energy Management estimated that there was an average of 4.72 billion barrels of undiscovered technically recoverable oil, and similarly 37.51 trillion cubic feet of natural gas in the adjacent Atlantic Ocean.
Offshore oil and gas production in the North Atlantic Ocean and the South Atlantic Ocean is not an anomaly: Canada has been successfully producing offshore oil and gas since 1992, Cuba has three producing offshore facilities and is in the process of evaluating new sites in water within 60 miles of Florida’s coast, and the Bahamas are also in process of setting up a regulatory system to govern offshore drilling and anticipate exploratory wells being dug in 2017.
The world economy relies on oil and gas for transportation and energy, and will for the foreseeable future, as ultimately, we transition to renewable fuel sources. There is hope that we can continue to reduce carbon and other emissions caused by oil and gas use, but not to acknowledge that energy usage will not continue to be controlled by the laws of supply and demand is fantasy. We should be looking at other countries that have successfully balanced their environmental obligations with successful programs to produce offshore oil and gas.
Norway initiated offshore oil and gas production in 1971, as a country dedicated to environmental protection of its marine and coastal resources, and the protection of its pristine coastline. A report issued by the Norwegian government in 2014 estimated that revenues collected by offshore oil and gas revenues generated close to 30 percent of all state revenues and that each Norwegian had amassed more than $100,000 in revenues that were deposited in a fund to establish social programs. In 1991, they were one of the first nations in the world to establish a carbon tax, and remain committed to strong oversight and safety systems.
There can be a balance between domestic production of offshore oil and gas, the need to protect the environment, and to generate economic growth. The first steps should be responsible assessment of oil and gas resources in our South Atlantic Ocean.
Carl Bentzel is the founder of Bentzel Strategies LLC, a consulting firm established to conduct public policy advocacy. He has represented private industry in the areas of transportation, energy, and other federally regulated areas for more than 10 years. He was previously a senior counsel in the Senate working on surface and maritime transportation issues.
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