Let’s start with your reaction to this possibility of selling new leases on sectors in the ocean and places along the Atlantic or Pacific coast. Could we see more platforms showing up in the next couple of decades?
[5:00 ] Tom Lyon, “I think we need to consider the story as to whether this will create jobs, and avoid dependence on foreign oil, however there’s been no mention of offshore wind. Wind would probably create more jobs than offshore oil and gas drilling. Avoiding dependence on foreign oil is not a bad thing, but the question is how to do that? In my view, the most effective way to do this is to reduce our use of oil and gas, rather than increasing our consumption from the U.S. And of course this totally ignores the climate impacts of increasing oil and gas drilling and overrides states rights in many of the Atlantic and Pacific states which are totally unhappy with this proposal. In reality the main benefit is increased profits for oil and gas companies, which is not a bad thing per se, but we need to weigh it against all of these other considerations.”
Let's talk about the environmental impact of having a wide range of areas where we may see drilling in the next couple of decades.
[11:07] Tom Lyon, “Governors up and down the Atlantic coast are universally opposed. There are 500K jobs in the Florida beach tourism industry; a $50 billion industry. Gov. Rick Scott, a Republican, opposes drilling. New Jersey’s Gov. Chris Christie also opposes drilling due to a $44 billion beach industry with 300K jobs. So, I don’t think Altantic states are not going to be any more interested in drilling than the Pacific states are.”
Alaska may be the area in which they will find the most significant opportunity for development. Even though this represents a smaller piece there are “already estimations that this could be bringing in billions upon billions of dollars economically to the U.S.”
[14:28] Tom Lyon, “The amount of oil that would come from ANWR would supply the U.S. for a very short period of time. Yes, it would bring additional billions of dollars to the oil and gas industry, however it’s not clear to me that they are in any great state of need that. In terms of what that does for U.S. jobs or reducing dependence on foreign oil, its really a drop in the bucket; it has very little benefit for us.”
In the words of Ryan Zinke, he indicated that this is a "first step for responsible development." However, all you have to do is look at the path of the administration, whether it be 2 years or 5 years, to plainly see their intent to open these sectors of the ocean to oil companies to explore.
Today U.S. Secretary of the Interior Ryan Zinke today announced the next step for responsibly developing the National Outer Continental Shelf Oil and Gas Leasing Program (National OCS Program) for 2019-2024, which proposes to make over 90 percent of the total OCS acreage and more than 98 percent of undiscovered, technically recoverable oil and gas resources in federal offshore areas available to consider for future exploration and development.
“By comparison, the current program puts 94 percent of the OCS off limits. In addition, the program proposes the largest number of lease sales in U.S. history. Responsibly developing our energy resources on the Outer Continental Shelf in a safe and well-regulated way is important to our economy and energy security, and it provides billions of dollars to fund the conservation of our coastlines, public lands and parks,” said Secretary Zinke. “Today’s announcement lays out the options that are on the table and starts a lengthy and robust public comment period. Just like with mining, not all areas are appropriate for offshore drilling, and we will take that into consideration in the coming weeks. The important thing is we strike the right balance to protect our coasts and people while still powering America and achieving American Energy Dominance”
–U.S. Department of the Interior 1/4/2018
[18:25] Tom Lyon, “I think it’s important to keep in mind that this administration says a lot of things, but then the next day comes and they get distracted. The intent will be to provide more opportunities for the industry. One of the things that Ryan Zinke said is that they plan to do this in a way that is environmentally sound, at the same time it is important to note that the Interior Department also just recently suspended a study on the safety of offshore oil and gas platforms that was going to be done by the National Academies of Science and Engineering and Medicine. These are the most respected researchers in our country and after the Deep Water Horizon disaster people realize that we need to make our oil platforms safer. This administration is now proposing to not bother with that, essentially saying that we don’t need to know more about how to increase safety. So I find their claims that they want to do this in an environmentally responsible way a bit unbelievable.”
When you hear the commentary of Secretary Zinke of wanting to proceed with the best intentions and in a respectful manner moving forward, you're talking about an industry where there’s never a guarantee that you’ll have 100% safe drilling at any location.
[22:00] Tom Lyon, “I just want to point to a different factor, the way Secretary Zinke has been framing this is in terms of Energy Dominance, which is a new phrasing in the energy business. For 30 years U.S. presidents have been talking about energy independence, but this notion of energy dominance is a whole new idea and I think it is important to take a step back and realize that this is a fundamentally meaningless claim. Even if we were the number one producer of oil in the world that means nothing, there’s no Olympics for oil production there are no awards that go out. We don’t suddenly get to rule the world if we produce more oil than anybody else. And so its a deeply misguided and meaningless framing that appeals to a simple-minded nationalism.”
If there is some sort of plan, I can’t see a path for it not being challenged in court and even passing in court here are the greatest concerns that you have.
[26:00] Tom Lyon, “I’d also just point out that this may be a move that is on the wrong side of history from the perspective of the investment community also. Over the last few years there’s been a whole series of large investors who’ve announced their divestment from fossil fuels. Going back to Sept. 2014 the Rockefeller Bothers Fund announced that they would divest from fossil fuels; and I think the irony of the Rockefeller fund wanting to be one of the first to divest is pretty funny! In 2016 Norway’s central bank, which manages the world’s largest sovereign wealth fund worth $1 trillion, announced that it would divest its shares in oil and gas. In 2016 JP Morgan Chase & Co. agreed to revise its coal policy so as to no longer invest in coal mines and the World Bank announced that it would no longer fund oil and gas exploration. Right at the end of 2017, the State of New York announced that its $200 billion pension fund would stop investing in fossil fuels and within an hour the City of New York announced that its $190 billion pension fund is going to follow suit. So, it could be the market itself will end up raining on this parade and stopping it, but I don’t think we should count on that.”