BEYOND THE HORIZON
This page reflects viewpoints on the political, economic, cultural, technological, and environmental issues that shape the future of the petroleum industry. Offshore
Magazine invites you to share your thoughts. Email your Beyond the Horizon manuscript to David Paganie at email@example.com.
The election of Donald Trump may have charted an unexpected
course for the offshore oil and gas world in 2017. After eight years of
“just trying to hang on” through the onslaught of new regulations and
the removal of more offshore areas from leasing consideration, the offshore industry could receive an emotional and economic boost from
the new administration. I say “could” because it is yet to be seen what
concrete proposals come forth and to what degree some of the existing
regulations can be stayed or rolled back. I also say “could” because a
commodity price recovery is necessary for the industry to really get
back on its feet. Fortunately, most prognosticators predict a gradual
rise in prices throughout 2017, a prediction bolstered by OPEC’s announced plans for a production cut-back. Regardless, a vital ingredient
for a successful industry turnaround will be regulatory relief.
More regulation means increased costs of doing business. Our industry welcomes smart and effective regulation, but many of the recent
rules and guidance appear to have marginal, if any, safety and environmental benefits and thus needlessly add significant operational costs.
The increased cost of doing business prevents companies from growing and investing in exploration, further delaying our nation’s energy
and economic turnaround. As the commodity market slowly recovers,
true regulatory relief will provide an opportunity for greater efficiency
and the ability to produce vital energy sources at lower costs.
What can the new administration do for regulatory relief within
its first 100 days? To begin with, it should set reasonable expectations. Right now, expectations are unrealistically high that an ever
growing list of rules across the federal spectrum will be rolled back,
canceled, or modified. The reality is that the curtailment of existing
rules, even with a Republican-controlled Congress and White House,
will have to be targeted like a rifle shot rather than a shotgun blast.
Rules that can be revoked must fit certain parameters. For instance,
rules finalized before May 30, 2016, will remain in place, meaning
that most of the rules implemented by the Obama administration
are here to stay, at least in the near term. Congress can do little, if
anything, to change that category of rules. The executive agencies
could initiate a repeal and/or replacement process, but as with any
rule-making process, that would take months to accomplish.
However, there are some rules the incoming Trump administra-
tion could target. One such rule is the Air Quality Rule concerning
emissions from offshore facilities. The development of this rule has
been flawed from the start due to inadequate consultation with af-
fected states and incomplete studies used to inform the rule. While
touted as a much needed “update” to air quality standards, the rule
does much more. The rule is based heavily on the assumption that
offshore activities have a significant impact on onshore air. With the
industry barely limping along for the last two years, it is difficult to
imagine the possibility of significant air impact. In addition, most of
the studies under way to quantify any impact have not yet been final-
ized. Thus, a reasonable approach would be for the new administra-
tion to simply halt efforts to complete this rule until the studies are
finalized and vetted for scientific soundness.
President Trump could impose a similar stay on the implementation
of the Financial Assurance and Bonding Notice to Lessees, NTL 2016-
N01, allowing regulators and industry time to develop a more respon-
sible and sustainable program through a proper rulemaking process.
As for the 2017-2022 OCS Oil and Gas Leasing Program, which
was released in November, there is at least one avenue to rollback
President Obama’s politically-driven decision to drop proposed lease
sales in the Beaufort and Chukchi seas. The Trump administration
could actually expedite a new five-year program. While a new leasing
program would still take about two years to complete, it could replace
the current five-year plan well before it expires in 2022. This has been
attempted before. An off cycle five-year program for 2010-2015 was ex-
pedited by the George W. Bush administration before leaving office,
but the incoming Obama administration failed to adopt it.
Congress provides another avenue for stemming Obama’s final
regulatory assault. With Republicans controlling the Senate and the
House, Congress could use the Congressional Review Act (CRA) to
roll back some of the 11th hour Obama regulations. The CRA allows
Congress to review federal regulations through an expedited legisla-
tive process. Congress has a period of 60 “session days” to overturn
regulations via the CRA. However, Congress can only use the CRA to
address regulations on an individual basis, which complicates things.
If the CRA option is on the table, you can bet every business that has
suffered under the onslaught of new regulations will be banging on
the congressional door with a list of rules they would like to see gone.
Finally, the underlying fabric of the Trump administration will be
determined by those who actually staff it. This is the one time the
quantity of gossip from Washington, D.C. media puts that of Hol-
lywood tabloids to shame. Of importance to the offshore industry,
will be a new Interior Secretary and new leadership at the Bureau of
Ocean Energy Management (BOEM) and the Bureau of Safety and
Environmental Enforcement (BSEE). While there have been some
controversial cabinet appointments, the buzz surrounding the Inte-
rior Department and its bureaus have been relatively drama-free.
Those floated for positions within Interior are thoughtful and well
respected people who would likely perform well. (Official nomina-
tions had not been made by the time of this writing.)
While there are a lot of questions facing our industry, the outlook
for 2017 is much brighter than it was for 2016. Commodity prices
appear to have turned the corner, and, for the first time in years, we
seem to have an administration that will give the offshore industry
a fair shot at developing our oil and gas resources. The National
Ocean Industries Association looks forward to working with the
incoming administration to develop a truly balanced energy policy
that creates a path forward for offshore growth and development.
President, National Ocean Industries Association
How Trump could make
the offshore industry great again