New Arctic Drilling Regulations Help 'Keep It In the Ground' Movement

Jul 08, 2016 - 4:45pm

Senior Editor, Digital Content

The Obama administration has made it harder to tap into American energy when it will be needed the most. Unintentionally it advances the “Keep it in the ground” movement.

The Interior Department finalized new regulations on oil and gas drilling in the Arctic Ocean, Bloomberg reports:

Energy companies that hunt for crude in icy Arctic waters will have to stash extra equipment nearby and take other potentially costly steps meant to prevent oil spills in the fragile, remote region under regulations the Obama administration imposed Thursday.

The Interior Department estimates the measure will cost as much as $2 billion over the next 10 years, with the bulk of that coming from a new requirement that energy companies have a backup rig nearby to bore a relief well in case of an emergency, at rental rates that can reach a million dollars a day. Those compliance costs could shrink if oil companies agree to pool resources and collaborate on emergency response, following a model that has been used in the Gulf of Mexico since the 2010 Deepwater Horizon disaster.

This $2 billion cost doesn’t include the value projects not started because of higher regulatory barriers.

Right now, low oil prices are keeping companies from exploring in the Arctic, but that will change.

Tom Walsh, the owner of Petrotechnical Resources of Alaska, told The Hill, “The prices will rebound, and they will come back up, and [companies] are going to have cash again, and they’re going to want to invest again.”

The National Petroleum Council estimates there is 34 billion barrels of oil off the Arctic coast of the U.S. Unfortunately, these new regulations will make it harder to get at that energy.

While not intentional--federal regulators have been putting up obstacles to Arctic Ocean energy exploration years before environmental activists cranked up their demands to a new level of extreme--this action advances the “Keep it in the ground,” anti-fossil fuel agenda.

Raising the regulatory hurdles to energy exploration makes it less likely that companies will take a risk developing energy in the Arctic and locks energy away from energy-hungry businesses and households.

Add this to the administration’s many steps to limit fossil fuel production and consumption:

The next chapter in the Arctic energy story will be seeing if the Interior Department includes Arctic oil and gas leases in its next schedule of offshore lease sales. Sen. Lisa Murkowski (R-Alaska) is worried because of how it will affect the future of the Trans-Alaska Pipeline.

“We must continue to fight to boost the throughput in that pipeline, which is vital to the energy security of the United States,” she said at a June Senate hearing on energy infrastructure.

If oil stops flowing by law the pipeline must be dismantled. If that happens, under the current permitting environment it would be nearly impossible to rebuild it—see Keystone XL.

Vast quantities of American energy would then be off limits.

While it’s far away from most Americans and out of mind, locking away energy resources could end up costing American families when that energy will be needed the most.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.