The Trump administration approved an Italy-based energy company’s plan to drill exploratory offshore wells in federally-controlled Arctic waters.
The Bureau of Ocean Energy Management (BOEM) gave Eni’s U.S. subsidiary approval to explore the Beaufort Sea Wednesday, determining drilling activities would have no significant environmental impact.
“Eni brought to us a solid, well-considered plan,” BOEM acting director Walter Cruickshank said in a statement. “We know there are vast oil and gas resources under the Beaufort Sea, and we look forward to working with Eni in their efforts to tap into this energy potential.”
Eni plans to drill four exploratory wells using its already operating Spy Island Drill Site, which operates in state-controlled waters. Drilling is set to begin in December 2017.
It’s a sharp reversal from the previous administration.
Former President Barack Obama designated “the vast majority of U.S. waters in the Chukchi and Beaufort Seas as indefinitely off limits to offshore oil and gas leasing,” in December and promised to review drilling through a “climate” lens.
President Donald Trump reversed an Obama-era decision to keep most Arctic waters off-limits to development. The administration also began working on a more expansive offshore drilling five-year plan in late June.
Trump’s put an emphasis on “energy dominance,” which he believes can be aided by opening up more offshore areas to drilling. Trump’s also focused on rolling back overzealous Obama-era environmental regulations.
Ninety-four percent of U.S. offshore areas are off-limits to all development. Offshore areas are estimated to hold 90 billion barrels of oil and 127 trillion cubic feet of natural gas.
The Trump administration has leased 990,157 acres of offshore areas, generating nearly $278 million in high bids revenues. Most of this revenue was raised from leases in the Gulf of Mexico.
But attracting offshore oil investors is trickier than just removing regulations. Crude prices are well below where they were in 2014, which makes costly offshore ventures less attractive than, say, onshore hydraulic fracturing operations.
Royal Dutch Shell suffered numerous setbacks in its 2012 Arctic drilling bid, sparking increased regulatory scrutiny from the Obama administration.
The company finally pulled out of the Arctic in 2015 after a disappointing find. The company said they “found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the Burger prospect.”
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