Secretary of the Interior Ryan Zinke expects offshore oil production to “remain steady and then begin to decline” because onshore drilling, particularly in shale formations, is much more lucrative for companies.
“The offshore oil and gas industry probably will remain steady and then begin to decline. It is more expensive to produce energy offshore, and it’s riskier,” Zinke said in a speech at the National Clean Energy Week summit.
“BP paid $100 billion for that oil spill, and we’re running things like spot inspections, surprise inspections,” Zinke said. “Our regulatory framework looks at innovation, but we hold them accountable.”
Zinke said the Interior Department was seeing more interest in onshore drilling operations, citing a September lease sale in New Mexico that brought in nearly $1 billion in bonus bids for drilling rights. (RELATED: ‘It’s Never Nice To Be Rude’: Ryan Zinke Criticizes Woman Who Interrupted His Speech To Ask About Brett Kavanaugh)
In that lease sale, a single 1,240-acre parcel went for a record-breaking $81,889 per acre, which brought in more than $101.5 million for the entire parcel. That’s compared to the somewhat tepid response to a March lease sale in the Gulf of Mexico that only attracted $124.7 million in high bids.
The National Ocean Industries Association (NOIA), a trade group representing offshore energy exploration, were encouraged by the lease, but also cautioned the results showed the need for U.S. regulators to make offshore leases more competitive.
NOIA President Randall Luthi said at the time “the United States must continue to evaluate how to keep the Gulf of Mexico and other parts of the U.S. outer continental shelf attractive in light of competition from Brazil and Mexico.”
“What we’re seeing is investments, really, onshore,” Zinke said. “You look at the last one with New Mexico, a billion dollars in lease.”
Indeed, New Mexico oil production hit record levels in 2018 as companies tap into the Permian Basin in the southeastern corner of the state.
Zinke also expected renewable energy generation to grow, including on federal lands and waters. Zinke, however, noted that offshore wind farms faced “a lot of resistance along the coastline” from people who didn’t want their views tainted by turbines.
The secretary also said officials are “looking at some interesting technology in solar” that’s much more efficient than what’s already been put onto the grid, and cautioned there were environmental trade-offs to renewables.
Zinke said the vast acreage used to build solar panels, including a 500-square-mile project in California, prevented the land from being used for recreation and hurt habitats for local flora and fauna.
“Those scales, while they produce a lot of power, they also have a downside too,” Zinke said.
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