Washington, 10 January (Argus) — President Donald Trump’s administration has abruptly withdrawn offshore acreage around Florida from its proposal to open more federal waters to oil and gas leasing, dealing a blow to industry hopes to develop the area.
US interior secretary Ryan Zinke said today he decided to remove Florida from a draft offshore leasing plan after talking today to Florida governor Rick Scott (R). The offshore acreage near Florida includes the eastern Gulf of Mexico, an area thought to hold 3.6bn bl of oil that industry officials say would be easier to develop because it is close to existing oil and gas infrastructure.
“I support the governor’s position that Florida is unique and its coasts are heavily reliant on tourism as an economic driver,” Zinke said. “As a result, I am removing Florida from consideration for any new oil and gas platforms.”
Earlier in the day, Republican leadership in the US House of Representatives had floated the idea of using an upcoming funding bill to block oil and gas leasing in the eastern US Gulf of Mexico. The administration proposed allowing leasing in the area once a congressional drilling moratorium expires in June 2022, as part of its broader plan to open most federal offshore acreage to oil and gas development.
The eastern Gulf would “probably be a priority” for industry investment because it is close to existing oil and gas infrastructure, American Petroleum Institute president Jack Gerard said today at an event the trade group hosts to highlight the industry’s agenda.
“Areas where there is existing infrastructure make a big difference in where you might invest your dollars,” Gerard said following his annual State of American Energy speech.
But Scott and other state officials oppose the leasing plan because of concerns that drilling operators or an oil spill could harm tourism and fishing. The US military also uses the area for training exercises and has previously supported a drilling moratorium for the region.
Offshore drilling opponents said the including of Florida in the leasing plan was not seriously under consideration. Senator Bill Nelson (D-Florida) said it was a “political stunt” intended to help Scott, who has been considering running against Nelson in the 2018 elections. Removing Florida from the plan could also drive other coastal states to push for similar removal from the offshore leasing plan, which would not take effect until 2019.
US oil and gas groups have supported the administration’s push to open 90pc of federal offshore areas to leasing, even as they acknowledge there might only be industry interest in a fraction of eligible areas. Gerard said the market would drive where “multibillion-dollar” investments are made in offshore developments, which he said can take 7-15 years between the time an area is leased and drilling occurs.