As the oil and gas industry emerges from the previous two-year slump, producers have begun to green-light exploration of new fields and the development of existing projects. While this news is encouraging, the industry must contend with a wave of regulatory announcements from the outgoing presidential administration.
In the last weeks of his administration President Obama announced the sweeping exclusion of large portions of the Atlantic and Arctic oceans from the 2017-2022 Oil and Gas Leasing Program. Following that decision, the administration announced denial of all pending permits for exploratory seismic surveys in the Atlantic. Similarly, onshore producers faced a wave of announcements, including the designation of the Bears Ears National Monument in Utah and cancellation of oil and gas lease sales throughout the western states.
There is little doubt that calls from anti-energy nongovernmental organizations (NGOs) for President Obama to cement his environmental legacy by ending E&P on public lands and waters had a significant impact in these recent decisions. These NGOs have pivoted their attention to President Trump. It is expected that the incoming administration will overturn a number of these regulatory and executive actions. The anti-energy NGOs have vowed to use litigation, lobbying, research studies and global affiliates to apply pressure and halt any rule reversals.
Below is a list of specific regulatory actions impacting onshore E&P at the federal, state and local levels.
Federal actions
Bears Ears National Monument. President Obama designated the Bears Ears region in southeastern Utah as a national monument under the Antiquities Act of 1906. Critics of the decision are calling on Trump to reverse the designation.
Oil shale management regulations finalized. In early January the U.S. Bureau of Land Management (BLM) released its final rule amending regulations to allow the Interior Secretary to impose a higher royalty rate for development on federal lands. It also requires oil and gas developers to include plans for protection of air, water and other natural resources.
U.S. Environmental Protection Agency (EPA) to review rules on drilling waste. The EPA recently settled a suit brought by environmental groups claiming the agency hasn’t revised its rules for management of oil and gas drilling waste since 1988. In a consent decree approved Dec. 28, 2016, the EPA agreed to review the regulations and either propose new rules or determine that new rules aren’t necessary by March 2019.
Proposed rule to add natural gas processing facilities to the Toxics Release Inventory. The EPA proposed a rule in early January that would require gas processors to report chemical discharges on the agency’s Toxic Release Inventory. The EPA estimates the rule would impact at least 282 facilities.
Montana lease sale cancelled. The BLM announced the cancellation of the final oil and gas leases in the Lewis and Clark National Forest. The agency stated that the cancellation is a “significant milestone in protecting [the] area from impacts of energy development.”
State/local actions
Colorado
- At its meeting Jan. 10, the Broomfield City Council delayed its decision on the proposed five-month moratorium until the end of February. A community forum will be held during the interim and will include input from state regulators.
Maryland
- The General Assembly of Maryland opened its legislative session Jan. 11. Lawmakers issued a temporary restriction to prohibit the Department of Environment from implementing new hydraulic fracturing rules while the General Assembly considers a statewide ban.
Recommended Reading
Exxon Versus Chevron: The Fight for Hess’ 30% Guyana Interest
2024-03-04 - Chevron's plan to buy Hess Corp. and assume a 30% foothold in Guyana has been complicated by Exxon Mobil and CNOOC's claims that they have the right of first refusal for the interest.
Pitts: Heavyweight Battle Brewing Between US Supermajors in South America
2024-04-09 - Exxon Mobil took the first swing in defense of its right of first refusal for Hess' interest in Guyana's Stabroek Block, but Chevron isn't backing down.
Exxon Ups Mammoth Offshore Guyana Production by Another 100,000 bbl/d
2024-04-15 - Exxon Mobil, which took a final investment decision on its Whiptail development on April 12, now estimates its six offshore Guyana projects will average gross production of 1.3 MMbbl/d by 2027.
Third Suriname Find for Petronas, Exxon Could Support 100,000 bbl/d FPSO
2024-05-17 - A recent find offshore Suriname in Block 52 by Petronas and Exxon Mobil could support a 100,000 bbl/d FPSO development, according to Wood Mackenzie.
Exxon Mobil Guyana Awards Two Contracts for its Whiptail Project
2024-04-16 - Exxon Mobil Guyana awarded Strohm and TechnipFMC with contracts for its Whiptail Project located offshore in Guyana’s Stabroek Block.