Trump Executive Orders Re-Open Arctic Offshore for Development, But Challenges Still Remain

May 1, 2017 in Blog, Featured

Last Friday, President Trump signed an Executive Order overturn the moratorium on Arctic offshore development put in place by the Obama Administration. With this Executive Order, Interior Secretary Zinke is required to review the previous five-year Outer Continental Shelf leasing plan, as well as regulations on development and production in Arctic waters. This action represents the first step (albeit, one of the largest) in helping revitalize production and investment in the region.

Offshore oil and natural gas production in the Arctic enjoys a high level of support among Alaskans, with 76 percent backing offshore resource development in the region. Despite this support, the ban implemented by former President Obama barred development from taking place, stalling an estimated $6.3 billion in critical investment projects and damaging a state economy which received 90 percent of its tax revenue from oil and gas development just two years ago.

President Trump’s recent order however, has catalyzed renewed interest in the region, as it reassures companies planning to invest in Arctic infrastructure – often at a cost of hundreds of millions of dollars or more – that their investment will be justified. Developing infrastructure is necessary before production can take place, and will drive the creation of new jobs and economic opportunity for the region. As President Trump stated at the bill signing ceremony,

“This executive order starts the process of opening offshore areas to job-creating energy exploration… It reverses the previous administration’s Arctic leasing ban and directs Interior Secretary Ryan Zinke to allow responsible development of off-shore areas that will bring revenue to our treasury and jobs to our workers.”

But while the Administration supports the job creation benefits of Arctic offshore development, it will not be an overnight solution. As Sec. Zinke noted, a review of US offshore leasing and impacts for a new five-year OCS plan will take at least two years. Add to that a possible legal challenge from environmentalist groups who’ve already ratcheted up their rhetoric on the issue, arguing that the Arctic is too “extreme and sensitive” and environment for drilling to take place (a claim thoroughly debunked).

Indeed given President Obama’s unprecedented use of the Outer Continental Shelf Land Act’s Section 12(a) to ban drilling in the Arctic, the path to overturn the ruling is in equally uncharted territory. But, Christopher Guith, senior vice president of policy at the U.S. Chamber of Commerce’s Institute for 21st Century Energy, said that despite Section 12(a) of the OCSLA never having faced a legal challenge, the ruling will be overturned. As he stated:

“The bottom line is the withdrawal is going away, and presumably the Arctic will be included in the next five-year plan.”

For now, the future of Arctic development looks bright, as the United States looks to catch up with the Arctic development activities of countries like Russia and Norway, and Alaskans eagerly await the return of offshore development and the economic benefits that come with it.