New Offshore Drilling Plan Will Reverse Obama Restrictions, Unleash US Energy Dominance

America is moving forward in its march toward energy dominance, and the Trump administration just took an important step forward in achieving that goal.

In unveiling its draft five-year Outer Continental Shelf leasing plan on Thursday, the Interior Department is reversing the Obama administration’s “Keep it in the Ground” anti-energy policy.

An abundance of untapped energy lies beneath America’s ground and off the coasts. For six years, America has been the world’s largest petroleum and natural gas producer, supporting more than 10 million jobs and contributing more than $1.3 trillion to the economy.

The increase in energy supplies has lowered prices for households and businesses. Families are saving hundreds, if not more than $1,000 each year on electricity bills and home-heating costs, and paying less at the gas pump.

It also means companies around the country devote less money to paying energy bills and more to investing in labor and capital.

All of these benefits have accrued to Americans, despite the fact that the Obama administration made a majority of America’s coastal waters off-limits to natural resources exploration and production.

In fact, 94 percent of federal offshore acreage is off-limits to development. The United States is the only country in the world that has placed a majority of its territorial waters off-limits to natural resources extraction.

Until now, that is.

Interior Secretary Ryan Zinke’s draft plan is the first part of a multiyear process that would make more than 90 percent of the total federal acreage available, which includes 98 percent of the undiscovered, technically recoverable oil and gas resources in the Outer Continental Shelf.

As highlighted by Interior’s press release:

The Draft Proposed Program … includes 47 potential lease sales in 25 of the 26 planning areas—19 sales off the coast of Alaska, seven in the Pacific region, 12 in the Gulf of Mexico, and nine in the Atlantic region. This is the largest number of lease sales ever proposed for the National Outer Continental Shelf Program’s five-year lease schedule.

The 47 potential lease sales top the number of sales listed in President Ronald Reagan’s two submissions of 41 and 42.

At several points in time, offshore drilling was not such a partisan issue. When President Jimmy Carter, a Democrat, made his 1979 energy speech, he said, “We will step up exploration and production of oil and gas on federal lands.”

As a result, the Carter administration’s Interior Department proposed 36 lease sales. As recently as 2013, both Democratic senators from Virginia offered legislation to open parts of the Atlantic to offshore development.

It’s understandable why.

Offshore drilling is a critical component of the Gulf of Mexico economy, one of the limited areas where offshore activity takes place in federal waters.

Recognizing that offshore resource exploration is systematically safe, the energy industry has a very strong relationship with the seafood and tourism industries. In fact, Louisiana hosts a Shrimp and Petroleum Festival each year.

Despite the Deepwater Horizon incident that adversely affected the Gulf environmentally and economically, there was a broad recognition among these three industries that the blanket drilling moratorium was bad policy and bad for the region as a whole.

The economic benefits of realizing America’s true energy potential could be significant. Opening the Atlantic and Pacific Outer Continental Shelves and the eastern Gulf of Mexico could create more than 800,000 jobs by 2035.

Increased supplies, which could equate to as much as 3.5 million barrels of oil per day, would lower prices for families.

Furthermore, federal and state governments would stand to benefit as well, since increased production would increase revenues from bonus bids (for new leases), royalties, rents, and increased economic activity.

By 2035, the federal government could collect more than $200 billion in revenue. With the country burdened with massive amounts of federal debt, policymakers should welcome the potential for revenue generation.

No one knows where oil prices will be once the Interior Department finalizes the plan. Therefore, it’s difficult to fully project where the industry will invest.

Nevertheless, the market will determine what areas the oil and gas companies will pursue. The federal government should not stand in its way.

It’s encouraging to see Interior take a hatchet to a long-standing barrier to energy dominance and improved economic well-being.

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5 Ways Energy Dominance Can Bolster Trump’s National Security Strategy

The Trump administration’s new national security strategy emphasizes the importance of a strong economy to enhance national security.  “America’s central position in the global energy system as a leading producer, consumer, and innovator,” the report says, “ensures that markets are free and U.S. infrastructure is resilient and secure.”

As a global energy leader already, the United States has demonstrated both the broad and household economic benefits of increased access to natural resources, innovation, competition, and choice.

President Donald Trump’s first national security strategy highlights five ways for the U.S. to improve its energy standing in the world: reduce barriers, promote exports, ensure security, attain universal access, and further our technological edge.

Some detail on how Congress and the Trump administration have a unique opportunity to capitalize on U.S. energy abundance:

Reduce barriers. In response to Trump’s executive order on “Promoting Energy Independence and Economic Growth,” the Environmental Protection Agency, Department of Interior. and Department of Energy released reports documenting agency actions that burden the safe development of domestic energy sources.

In many respects, these documents provide a useful road map to rolling back costly, ineffective regulations and expanding opportunities for new resource development and energy infrastructure. To provide the energy industry with more certainty, Congress should codify changes so they can’ be undone by an administration that is more hostile to energy production.

Promote exports. Providing more energy choices to both producers and consumers will generate jobs and grow the economy. Expediting the permitting process for liquefied natural gas exports is a commonsense reform that would improve national security by increasing global energy supplies and reducing the ability of any one nation to use its control of energy resources to threaten U.S. interests.

Embracing energy dominance should  include imports, whether  imported oil, ethanol, or solar panels. Cheaper imports would make American businesses more competitive and successful.

Ensure energy security. Many policies that harm consumers have been implemented in the name of improving energy security. Government planning, quotas, subsidies, tariffs, and other market-distorting policies have promoted favoritism, not energy dominance.

Competition and diversification can improve energy security, and the Trump administration should reduce impediments that thwart the private sector’s ability to properly protect the electricity grid and energy infrastructure.

Attain universal energy access. Energy touches every aspect of our lives, from providing a daily sense of comfort to powering the global economy. So having an energy platform that provides choices at competitive prices would only enhance the well-being of families and businesses across the country.

Given America’s energy wealth, the U.S. should be a major supplier to meeting energy needs in the developing world, where more than 1.2 billion people (17 percent of the global population) don’t have access to reliable electricity.

Further America’s technological edge. As demonstrated with smart drilling technologies, innovation unlocks new resources, supplies affordable power, and generates new employment opportunities. Government favoritism, however, is one major source of pumping the brakes on technological innovation.

When the government picks winners through the tax codes or bails out uneconomical power plants, companies focus more on obtaining the next handout and less on reducing costs to be competitive in a market without subsidies.

A variety of energy sources and technologies provide Americans with dependable electricity and transportation fuels. Whether it is conventional fuels, nuclear power, renewable technologies, batteries, or a concept still developing in a lab, America’s entrepreneurial spirit will drive innovation forward without the help of Washington.

As my Heritage Foundation colleague Nile Gardiner writes, Trump’s national security strategy reasserts American leadership.

Thanks to the free market, the U.S. is already a global energy leader. These policy reforms will ensure that America stays there.

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Tax Reform Bill Would Give Back Alaskans Control of Their Energy Future

In a compromise tax reform package, Senate and House negotiators have agreed to include language to open Alaska’s coastal plain for energy exploration and production.

If passed, the bill would finally give Alaskans more control over their energy future by opening the Arctic National Wildlife Refuge (ANWR).

The entire Arctic refuge comprises roughly 19 million acres on Alaska’s North Slope region. Through the 1980 Alaska National Interest Lands Conservation Act, Congress and President Jimmy Carter set aside 1.5 million acres on the North Slope (known as Section 1002), recognizing the possibilities for oil and natural-gas development.

The energy potential of Section 1002 is enormous, while the industry’s footprint would be minimal.

The U.S. Geological Survey estimates that between 4.3 billion and 11.8 billion barrels of technically recoverable oil lies underneath Section 1002. Importantly, the Geological Survey also notes, “nearly 80 percent of the oil is thought to occur in the western part of the [Arctic National Wildlife Refuge] 1002 area, which is closest to existing infrastructure.”

Oil produced in refuge could relieve potential technological challenges that the Trans-Alaska Pipeline System faces if the current supply becomes too low.

The area is not a designated wilderness area and is without sunlight for 15 percent of the year.  The Department of Interior highlights that the refuge’s Section 1002  has no trees, deep-water lakes, or mountain peaks.  The entire refuge gets fewer than 1,000 visitors per year.

Once companies drill exploratory wells, there will be a better sense of just how much oil and natural gas the area holds.  The surface-area footprint would be limited to 2,000 acres—a bit more than 1/10th of 1 percent of Section 1002 and 1/100th of 1 percent of the whole refuge.

Opponents of domestic-energy production have criticized the decision, claiming that oil prices are too low to generate any interest in the area. The market will determine the economic viability of Alaskan resource development, not politicians in Washington.

Furthermore, no one has any idea where oil and natural-gas prices will be 10 months from now, let alone in 10 years.

For instance, in July 2008, the Wall Street Journal asked a variety of energy experts to anonymously predict where the price of a barrel of oil would be at the close of the year. Answers ranged from $70 to $167.50 a barrel. Instead, a number of market factors caused the price to plummet to $44.60.

Whether it’s a market crash, a natural disaster, or technological innovation, there are unknowable circumstances that exist in energy markets.

To opponents, however, there is never an opportune time to increase domestic natural-resource production. Whether oil prices collapse or the price at the pump surpasses $4 per gallon, environmental activists argue opening new areas to exploration will take too long for the fuel to reach the market to have any impact on prices.

Energy policy should not be predicated on what analysts or members of Congress think is going to happen, but rather, on opening access and establishing the framework for competitive markets, while ensuring the protection of property rights and the environment.

Opening access now will ensure that businesses can be more responsive to changes in prices, rather than waiting for Congress to react after prices become politically uncomfortable.

Importantly, Alaskans should be in charge of the decisions to develop new resources. Alaskans understand that energy development, tourism, recreation, and wildlife protection harmoniously co-exist.

Oil revenues have been a critical component of the state’s economy for decades, as have the tourism, seafood and timber industries.  As Sen. Lisa Murkowski, R-Alaska, recently tweeted, “There is no question that development & environmental protection can and do exist in Alaska.”

It’s long past time that Congress empower the people who have a direct stake in the wise management of land, natural resources, and the environment.

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