View all newsletters
Receive our newsletter – data, insights and analysis delivered to you
  1. Comment
June 11, 2019updated 02 Jul 2019 11:35am

America-First Offshore Energy Strategy unlikely to deliver significant gains

A recent sentence from the District Court for the District of Alaska has forced Trump to halt the proposed new oil and gas lease sales programme.

By GlobalData Energy

A few months after entering office President Trump issued a directive aimed at opening additional federal acreage.

The ‘America-First Offshore Energy Strategy’ executive order, issued in April 2017, looked to spur hydrocarbon exploration and exploitation in the US Outer Continental Shelf (OCS). The order also reduced the areas defined as the Marine Sanctuaries to the geographical extension as of July 2008 revoking the enlargements introduced during the Obama administration.

However, the Trump administration will find it difficult to open additional OCS acreage to oil and gas exploration and exploitation before the end of the current presidential term.

A recent sentence from the District Court for the District of Alaska and legislative initiatives at the federal and state level has forced the Trump administration to halt the proposed new oil and gas lease sales programme. Until the end of the presidential term, OCS activity will continue to be based on the open areas of the Gulf of Mexico (GoM).

The OCS has not shared in the productivity gains seen for the US as a whole over the past 10 years. US oil and gas production (onshore and offshore at state, federal and private level) was 16.7 million barrels of oil equivalent per day (mmboed) in 2010 and 27.4 mmboed in 2018, showing a 64% increase. Onshore production was 13.9 mmboed in 2010 and 24.7 mmboed in 2018, showing a 78% increase. Conversely, the OCS production was almost 2.7 mmboed in 2010 and 2.3 mmboed in 2018, showing a 12% decrease, though OCS production is now slightly increasing and is expected to once again hit its 2010 level in 2021.

US, onshore production and OCS production (2010 base year)

Source: GlobalData Oil and Gas © GlobalData

The reason behind the onshore production increase is the development of shale oil and gas resources. These new industry dynamics means that the onshore and OCS production trends will continue to diverge in the coming years. Shale oil and gas operations require lower capital investment and shorter development time frame than OCS oil and gas operations.

As a result of the District of Alaska’s sentence, the administration will postpone substantial changes to its OCS policy until all legal challenges are solved. In the foreseeable future, OCS lease sales and activity will continue to be centred on the GoM, a mature basin with a well-advanced infrastructure and supporting industry alongside the US GoM coastal states.

Related Companies

Related Report
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Friday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy


Thank you for subscribing to Offshore Technology