U.S. District Court Upholds Trump's Offshore Drilling Plans

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

Summary

Trump's offshore drilling plans survived a challenge from environmental advocacy groups. Recent lease sales and offshore production, however, have been somewhat lackluster.

Too Early to Call a Foul, Court Rules

A district court judge in Alaska on Monday shot down a lawsuit filed by environmental groups opposing offshore drilling, noting the drilling was not yet underway.

Environmental groups argued that offshore development can cause irreparable harm even before drilling begins as several marine species are at risk from the seismic surveys that precede upstream activity. Leasing in areas previously set aside, such as the Arctic waters of Alaska and the Floridian coast of the Gulf of Mexico, could be an inherent danger, they've argued.

Industrial Info is tracking programs in U.S. territorial waters, with some of the largest by investment value in the U.S. territorial waters of the Gulf of Mexico.

In onshore Alaska, Industrial Info Resources finds active capital oil- and gas-related production projects have a combined investment value of about $32 billion, with ConocoPhillips leading one of the largest, Willow Bear Tooth.

Willow is in the Bear Tooth Unit of the National Petroleum Reserve-Alaska (NPR-A). There are plans to build a central processing facility with five drill sites, five infield pipelines and other associated infrastructure.

Ice roads and a temporary island are necessary to work in the extreme north of Alaska, where warming temperatures make work in the tundra complicated. Willow could be completed before the end of the decade.

Elsewhere, Australian energy company Santos recently loaded 450,000 barrels of oil from the Pikka development on the North Slope onto the Polar Resolution, its inaugural cargo bound for the U.S. West Coast earlier this month.

In court, U.S. District Court Judge Sharon Gleason of the Alaskan District Court ruled that while it's likely the federal government would continue issuing permits for offshore development, there are several steps before drilling actually begins.

"Presently, the Court can only speculate as to whether any of the previously withdrawn (outer continental shelf) acreage will be included in any new oil and gas leasing program or proposed lease sale," she said in her ruling, according to Reuters.

Earthjustice, an advocacy group behind the lawsuit, said in a statement that it was disappointed by her decision, noting U.S. President Donald Trump's administration has done "everything in its power" to open the continental shelf to drillers. Trump in one of his first acts of office for his second term overturned offshore drilling moratoriums enacted by his predecessors.

Alaskan oil production peaked at 2 million barrels per day (bpd) in 1998, and output has stayed below 1 million bpd on average since 2003. Proved oil reserves in Alaska amount to more than 3.1 billion barrels, the fourth-largest in the United States.

Is the Commercial Appetite Strong?

Elsewhere, the entire Florida congressional panel, including state Republicans, sounded the alarm in December over proposals to drill off the state's coast. Governor Ron DeSantis at the time urged the Trump administration to honor a ban from his first administration on drilling off the state's western shores until 2032.

Bidders put nearly $83 million on the table earlier this month to secure rights for drilling in the U.S. territorial waters of the Gulf of Mexico. Drilling advocates lauded the lease, arguing that a strong domestic energy sector was essential for national security.

The latest lease sale drew more bids than the $47 million from an auction in March. But both lease sales this year drew far less bids than a lease sale from December that saw $279.4 million in high bids.

The U.S. Gulf territorial waters account for around 15% of total domestic crude oil production. A monthly report from the U.S. Department of Energy shows offshore production is expected to decline by around 4.5% annually to average 1.89 million bpd next year.

By the Numbers

• 4.5% annual decline in Gulf of Mexico oil production expected by 2027
• 450,000 barrels of oil delivered from a North Slope operation this year

Key Takeaways

• Environmentalists lost an early fight against offshore drilling.
• Offshore accounts for only a fraction of total U.S. crude oil production.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).