An insider in the oil industry responds to TWS regarding the president's recent apparent shift in off shore drilling policy:
1) Overall, it is encouraging that new areas, like Virginia and the Atlantic Coast (south of Delaware) are still included in the plan. The administration could have taken more areas off the table.
2) It is discouraging that areas with proven discoveries, such as Bristol Bay and Destin Dome, Florida, are off-limits. The citizens of both those states are supportive of oil and gas exploration off of their coasts. Additionally, three lease sales were removed from the west coast.
3) Delays in lease sales will decrease the likelihood that oil and gas will ever be produced from those areas where lease sales have been delayed. Just because a lease sale is scheduled, doesn’t mean it will occur and certainly doesn’t mean that oil and gas exploration will be allowed to occur on issued leases. Case in point is Alaska’s Beaufort Sea, North Carolina’s Mateo, and Florida’s Destin Dome.
4) This is merely a draft proposed program. The final program released by the administration might offer substantially fewer areas for leasing.
5) New and complex regulatory requirements will make it less likely that oil and gas will be explored in these areas. The system invites seemingly endless litigation.
6) The White House Ocean Policy Task force and its proposed National Ocean Council (NOC) and Coastal and Marine Spatial Planning will likely add another layer of uncertainty to the process. It is unclear how the new ocean policy will impact the offshore program. The NOC could conceivably negate everything that is in the draft proposed program that was just released.
7) The courts have ruled that a lease issued by the federal government has the same legal standing as a commercial contract. However, the federal government continues to take actions that violate its contractual obligations. Part of the reason for this is that federal agencies are acting at odds with one another. The administration and Congress should act to ensure that the government follows up on its obligation under the lease. By doing this, the government would go a long way toward increasing our domestic energy supply.