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Trump Order Eases Offshore Drilling -- WSJ

29 Apr 2017 6:32 am
By Erin Ailworth 

President Donald Trump signed an executive order Friday to ease regulations on offshore drilling and eventually allow more to occur, particularly in the Arctic Ocean.

The order, which takes aim at last-minute Obama administration actions restricting drilling in the Arctic and Atlantic oceans, will likely have limited immediate impact owing to low oil prices, which make drilling in the affected areas economically unattractive. It specifically directs Interior Secretary Ryan Zinke to consider leasing in the Chukchi and Beaufort seas, the Atlantic, and other areas.

In a signing ceremony, Mr. Trump touted the order as a way to move the country toward energy independence and lift restrictions that have curtailed job and economic growth.

"It's going to lead to a lot of great wealth for our country, and a lot of great jobs," he said.

Environmentalists decried his action as a damaging and politically motivated reversal of necessary protections for sensitive federal waters.

"Some places are too precious to drill, foremost among them all the Arctic Ocean," said Jamie Williams, president of the Wilderness Society. "The Arctic Ocean itself is too fragile to develop safely for oil and gas."

Given low energy prices -- after a more than a 2 1/2 -year bust, U.S. crude is trading under $50 a barrel -- it is unclear how much immediate interest oil and gas producers have in developing such expensive-to-drill areas.

But given the nation's continued dependence on fossil fuels, companies need to be planning long term to meet future energy needs, said Erik Milito, director of upstream and industry operations at the American Petroleum Institute, an oil and gas trade association.

"There could be huge potential in places like Alaska, the Atlantic, the eastern Gulf," Mr. Milito said. "While there may not be a company wanting to go out and drill tomorrow in the Atlantic, over time it's going to be important."

Dan Naatz, senior vice president of government relations and political affairs at the Independent Petroleum Association of America, said offshore investment by independent U.S. producers has been shown to generate thousands of jobs, as well as billions of dollars in economic benefits, tax revenues and royalties. He lauded the action by the Trump administration "as a step in the right direction for America's energy economy and national energy security."

Mr. Trump said the order directs Mr. Zinke to allow "responsible development" of offshore areas "that will bring revenue to our treasury and jobs to our workers". It also orders him to reconsider "burdensome regulations" that slow job creation, including a proposed offshore air rule and a well control rule.

The directive also calls for Mr. Zinke to implement a streamlined permitting process for the privately funded collection of seismic data needed to assess potential offshore resources.

Environmentalists say the president's order will likely face legal challenges. Peter Shelley, senior counsel at the Conservation Law Foundation, said the Obama administration's moves to restrict oil and gas drilling along the East Coast and in the Atlantic had "huge support from fishing communities, from beach communities, from tourists, and businesses."

Billy Keyserling, mayor of Beaufort, S.C., said he worked with other local leaders and businesses for several years to protect the state's coast from offshore drilling. He called Mr. Trump's directive terrible, and said area leaders were already regrouping to resume their fight against offshore drilling.

"We're not happy with it and we think it's the wrong decision," Mr. Keyserling said.

Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former Obama administration adviser, said it would take time for any challenges to play out. Meanwhile, he estimates that redoing the five-year plan that guides offshore lease sales is likely to take at least two years.

As such, Mr. Bordoff said he sees little immediate impact from the Trump administration's executive order.

"In today's lower oil price environment, there will be much less interest from oil companies in going back into high-cost, complex areas in the Arctic," he said. But the executive order creates "the option for companies to go and explore in the Arctic when market conditions make that favorable."

Friday's order followed a Trump administration directive made earlier in the week to review national monuments created by the Antiquities Act since the start of 1996 that are more than 100,000 acres. That review may eventually open federally protected land to oil and gas drilling and development of other natural resources.

Michael C. Bender contributed to this article

Write to Erin Ailworth at Erin.Ailworth@wsj.com

(END) Dow Jones Newswires

April 29, 2017 02:32 ET (06:32 GMT)

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