In January, the Bureau of Ocean Energy Management (BOEM) released its “America-First Offshore Energy Strategy,” as part of the 2019-2024 National OCS Oil and Gas Leasing Draft Proposal Program (DPP). While the Obama Administration’s 2017-2022 program opened up only 6% of total outer continental shelf (OCS) acreage to resource exploration and development, the 2019-2024 Program proposes to open up approximately 90%. The BOEM estimates the U.S. OCS has about 90 billion barrels of undiscovered oil and 327 trillion cubic feet of undiscovered, natural gas. If implemented, the 2019-2024 DPP would dramatically expand America’s capacity for offshore oil and gas drilling, yielding both economic and environmental costs and benefits.
President Trump’s America-First offshore drilling policy is a departure from the Obama Administration’s, particularly with respect to CO2 emissions. Although the 2019-2024 Program has not released an Environmental Impact Statement, we can project the total magnitude of CO2 emissions will likely be greater than the 2017-2022 scenario since a much larger area of the OCS will be open for exploration and development. The significant uptick in estimated CO2 emissions may increase the likelihood of economic and environmental consequences. Additionally, with a larger area OCS open to leasing, the probability of an oil spill is likely to increase, especially in the Arctic where the OCS is more fragile.
Despite the possible environmental consequences, the DPP does offer an economic boost. The American Petroleum Institute released economic impact reports for the OCS that estimate a total of $615.1 billion in GDP growth and $153.9 billion in federal and state revenue. According to the EIA’s Annual Energy Outlook, the DPP would place the U.S. as an oil and gas net exporter by 2022 notwithstanding the environmental and social costs. Ultimately, the economic costs and benefits of the Program will depend on the price of oil, advancements in technology, and the costs of developing offshore wells. It will be interesting to see if the predicted economic gains will offset the possible environmental and social costs of the DPP, as well as, if the administration will be able to overcome considerable implementation barriers from states who wish to protect their coastal waters for tourism.