The U.S. government estimates that more than 3.3 billion barrels of recoverable oil and more than 31 trillion cubic feet of natural gas lie off the country’s Atlantic Coast. That’s equal to the energy required to heat every U.S. household for about six years.
There is no doubt that the world will need this energy in the decades ahead.
The practical result of the decision – which cancels planned lease sales off the coasts of Virginia, North Carolina, South Carolina, and Georgia – will be to weaken America’s energy future and prevent the creation of jobs and the economic stimulus that would arise from increased energy production.
Moreover, as the American Petroleum Institute (API) noted, the switch “is inconsistent with the will of American voters, governors and members of Congress who overwhelmingly support offshore oil and natural gas exploration and development.”
Defense Department concerns
Officials with the Interior Department cited a number of reasons for the proposed policy reversal.
There was opposition from the Pentagon over use of Atlantic waters for defense-related activities. But as was reported in the Washington Post, industry has addressed such concerns in the Gulf of Mexico and could have done the same in the Atlantic, where the Defense Department had concerns about only 10 percent of the proposed leasing areas.
Current market dynamics
A more troubling justification was the administration’s claim that “current market dynamics” make lease sales in the South- and Mid-Atlantic coastal regions unnecessary.
Yes, energy prices are down because of oversupply and soft global demand. But if there is one thing we know about commodity cycles, it is that “current market dynamics” are temporary, never permanent.
The cancelled auctions would have occurred between 2017 and 2022 and actual drilling likely wouldn’t have begun for another decade.
Nobody – including the Interior Department – knows exactly what energy markets will look like six years from now, much less in 2032.
But one thing made clear by ExxonMobil’s annual Outlook for Energy report – which offers broad projections about energy and economic trends over the next several decades – is that global energy demand is poised to grow significantly.
Meeting that demand growth will require new resource opportunities to be developed – opportunities exactly like those offered off the U.S. Atlantic coast. It doesn’t make sense to limit the development of future supply sources whose production may be decades away.
The best path forward would be for the government to put in place policies that enable markets to plan, invest, and find innovative solutions over the long term.
Arctic energy development
It’s worth noting the proposed 2017-2022 offshore program contains plans for three lease sales in Alaska’s arctic waters. That’s an important validation of last year’s National Petroleum Council report on U.S. arctic oil and natural gas resources – a study showing that energy in the U.S. arctic can be safely and responsibly developed.
That’s good news, but shying away from Atlantic Coast energy development represents a lost opportunity for American consumers and American energy security.