Energy Leaders Hoping for Bold Deregulation from Trump
Domestic producers see transformational potential in new administration
Energy sector leaders are hoping President-Elect Donald Trump goes big on deregulation.
And one official is even hoping Trump wades back into a major controversy from the last decade regarding the Arctic National Wildlife Refuge.
“It was always in the national interest to have [Keystone XL Pipeline] approved.”
The refuge, also known as ANWR, is approximately 19.64 million acres of land and water in northeastern Alaska, according to the U.S. Fish and Wildlife Service.
The refuge was created by the federal government in 1960 “to preserve unique wildlife, wilderness, and recreational values.” But its oil reserves underneath have attracted attention from Alaskan state officials, who want to open up a small portion of land for drilling.
Energy companies believe there is more than 10 billion barrels of oil ready to recover in an area named Area 1002. That’s about 1.5 million acres.
But the area of operation would be small. According to Marty Durbin, executive vice president of the American Petroleum Institute, the drilling area would only take up an area the size of Dulles International Airport. Others compare a possible site to two football fields.
But will Trump and a Republican Congress support drilling in ANWR?
Trump has already shown a willingness to fight for cheap power. He nominated ExxonMobil CEO Rex Tillerson to be secretary of state, showing he understands the global issue of power production and trade.
Trump nominated to his Cabinet Oklahoma Attorney General Scott Pruitt, one of many GOP attorney generals who is suing the federal government over President Obama’s controversial Clean Power Plan, which placed harsh restrictions on coal-powered electricity plants.
After an estimate of recoverable oil was made in 1998, a decade-long battle commenced to approve drilling in ANWR. But the Democrats (a few who had supported previous drilling proposals) and environmental groups battled drilling designations for years, threatening to kill overall federal budgets if they contained ANWR provisions.
Even when gasoline passed $4 per gallon in 2008, President George W. Bush could not win approval from Congress.
As time went on, new drilling techniques and new supply from foreign suppliers began to drop the price of oil. Annual oil production on private lands surged. Oil fell from its July 2008 high of more than $147 per barrel, to about $52 per barrel on Friday afternoon.
Durbin admitted the low-cost has caused a downturn in the energy sector.
Low prices also discourage new drilling and discoveries. But Durbin told reporters on Friday that global energy demand will grow, and is growing now.
The United States uses about 19 million barrels of oil per day. The International Energy Agency forecasts worldwide average demand of nearly 96 million barrels of oil and liquid fuels per day, or more than 35 billion barrels a year.
The agency expects worldwide average use to pass 100 million barrels per day.
Durbin said environmental concerns are being addressed, as the wider use of natural gas for electricity production has led to fewer emissions. U.S. emissions from the power sector are at a 25-year low.
But Trump and Republicans may see an easier way to meet U.S. demand, while exporting some oil products.
One way would be to open up more federally controlled land. President Barack Obama has cut off millions of acres from possible energy exploration, but Trump and Republicans have expressed desires to repeal those prohibitions.
Most land eyed by the oil and gas industries are in the West, where the federal government arguably controls too much land.
Trump could also encourage TransCanada, a private oil company, to reapply to the State Department for its expansion of the Keystone XL pipeline. Obama refused to allow the pipeline to cross the border, a decision skewered by energy officials and Republicans.
The expanded pipeline could see about 700,000 barrels of oil a day come from oil fields in Alberta, Canada, a steady trading partner. Such a supply could help cushion the United States from future price shocks.
"It was always in the national interest to have [Keystone XL Pipeline] approved," said Durbin.
Durbin says the incoming Trump administration should also work to approve the controversial Dakota Access Pipeline in North Dakota, which Obama delayed because of protests.
Pipelines produce controversy, but they shouldn't, said Durbin.
Durbin pointed to the Northeast, which has seven states in the top 10 states with the highest electricity costs. The reason is poor pipeline access to nearby natural gas reserves, Durbin said.