Back in the late 1980s and early 1990s, pickup trucks all over the U.S. oil patch could be seen sporting a bumper sticker that read “Lord, please just give me one more oil boom and I promise not to mess it up.”
Fast forward to 2017 and the first few days of 2018, and the oil and gas industry is being handed the first half of that plea by the Trump Administration in the form of radical shifts from the Obama-era energy and environmental policies of the previous 8 years. For its own sake, those in the U.S. oil and gas industry today had better take the promise made in that bumper sticker slogan very seriously. Because if the industry messes this opportunity up, there will be hell to pay the next time the voters decide to put a Democrat in the White House, an inevitability that could come about as soon as 2020.
In just the last week, the Department of the Interior has presented the industry with three major policy reversals that will make it easier and more efficient to conduct drilling and exploration activities on federal lands and in federal waters, but also present major opportunities for the industry to mess things up:
- On December 29, DOI announced the formal rescission of the Bureau of Land Management’s (BLM) so-called “Fracking Rule,” on the grounds that it was unnecessary and largely duplicative of state regulations. While that has the advantage of being true, it also means that the industry must take great care in its hydraulic fracturing operations on federal lands in the coming years, as any incident is now bound to attract major media scrutiny, and you can be sure that the industry’s opponents will be keeping a running tab in anticipation of coming back into power in the next Democratic presidency;
- Also on December 29, DOI’s Bureau of Safety and Environmental Enforcement (BSEE) announced it is embarking on a major overhaul of a pair of safety regulations that the Obama Administration put into effect following the 2010 Deepwater Horizon blowout in the Gulf of Mexico. While the regulations were in some respects unnecessarily onerous and unworkable, revising them will inevitably place the offshore industry under even more media and public scrutiny, and any incidents that result in spills will now inevitably be blamed on whatever changes are made. Another very double-edged sword that elevates the need for offshore operators to beef up their own safety processes;
- And now today, January 4, DOI Secretary Ryan Zinke announced the Administration will pursue a dramatic expansion of the Obama Administration’s 2016 5-year plan for development in the federal OCS. As announced earlier today, the proposed new 5-year plan would open up more than 90% of the OCS to oil and gas leasing, including vast areas along the Atlantic and Pacific Coasts, the Eastern Gulf of Mexico and off the North Slope of Alaska that have long been off-limits. Again, a very bold plan that could result in huge increases in investment and production of oil and natural gas here in the U.S., but also an opportunity that the industry must take great care to not “mess up.”