Obama’s Arctic Ban Overturned

Donald Trump has signed an executive order aimed at reducing restrictions on oil drilling in the Arctic and Atlantic in order to “unleash American energy”.

reports the BBC.

It could undo a ban put in place by Barack Obama in order to protect swathes of the ocean from development.

A ban put in place via executive order in December 2016 is one of many pieces of legislation Obama petulantly signed in his last hours in office mainly to hamstring his successor. In other words, reversing the ban will take us back to the end of last year. Was America a vast wasteland where any human peaking out of the ash piles would be picked off by giant, mutant pterodactyls? No.

It is debatable how much income might be generated by a reversal of Mr Obama’s order. Worldwide prices for oil have dropped in recent years, with a review by news agency Reuters finding the amount of money oil companies spent in the central Gulf of Mexico’s annual lease sale dropped by more than 75% between 2012 and 2017.

Perhaps Trump, unlike Reuters and BBC journalists, is aware that the oil industry is cyclic and the period in question mostly covers a downturn.

David Jenkins, president of Conservatives for Responsible Stewardship, a non-profit conservation group, said: “The Trump administration’s hasty move today toward expanding offshore oil drilling … defies market realities and is as reckless as it is unnecessary.”

If it defies market realities, i.e. nobody is going to drill in these waters anyway, then what’s the problem? How can it be both reckless and unnecessary? Alas, thanks to the BBC’s policy of quoting environmental groups’ press releases without scrutiny, we don’t get to find out.

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15 thoughts on “Obama’s Arctic Ban Overturned

  1. “Petulant” is a great word to describe Obama. Actually, it is great word to describe liberals, lefties and all progressives.

    Very little is done by these people to move life forward despite what they claim, but a lot of it is merely done out of spite and to hold back the economy.

  2. Never heard of Conservatives for Responsible Stewardship. Wonder how long it took the BBC find them to stage their contrived rebuttal to Trump’s decision.

  3. Howard, I cannot be bothered to look, but I suspect a false flag outfit, even if they exist.

  4. POTUS 1: Executive Order
    POTUS 2: Cancels Executive Order

    Violet Elisabeth Bott (aka Hiilary and friends):
    I’l scweap and scweam until I am thick!

  5. On the subject of US energy resources, oil prices, turning on and off the valves valves, shale gas is by far the only show in town, and this is on every conceivable market dynamic.

    “The scale and velocity of the shale revolution is underappreciated. It is the fastest and biggest addition to world energy supply — not just hydrocarbons, but all forms of energy — that has occurred in history. The only time something close to as dramatic has occurred was in the decade following the 1968 opening of Saudi Arabia’s giant Ghawar oil field.”

    …….

    “And second only to its staggering scale, the single most remarkable and revolutionary feature of the shale ecosystem is, in a word, velocity. It’s not just the speed with which that industry went from essentially zero to a $100+ billion per year business – about which we note: this was a faster and bigger growth in revenues than the contemporaneous rise in smartphone sales in the U.S. It is also the speed with which wells can be drilled. Rather than planning and development that can take not just multiple years but even decades for traditional billion-dollar hydrocarbon projects, each shale well is an individual decision involving nearly a thousand-fold less capital. Those decisions are made in weeks to months. And, critically the wells can be drilled in a week or two.”

    “The world has never seen anything like this. The net effect of all this is a collective U.S. shale ecosystem that can respond organically and rapidly to price fluctuations. We’ve already seen the result of this in action. The huge oil price collapse that began in 2014 and lasted until only a few months ago did lead to a pullback in U.S. production, but only about a 10% decline. Now with a modest price rise of the past several months, investments, and drilling and production, have come roaring back and are on track and could reach new record levels this year.”

    http://www.realclearenergy.org/articles/2017/04/26/energy_revolutions_hidden_in_plain_sight_part_1_of_3_–_shale_crushes_solar_110215.html

  6. Meant to say turn the flow valves on and off.

    You also have to wonder if the Aramco IPO is related, cash in at today’s price and level as the future price when they sell 5% of themselves, maybe that will mark the top of the market in terms of oil price later on when we look back in time.

    Coincidentally Aramco are talking about a US $100 billion IPO valuation, which equates to the current yearly revenue of the US shale gas sector, although it will no doubt be far higher when they eventually list judging by their phenomenal growth trajectory.

  7. Does anyone have a decent estimate of how high the oil price will have to be to keep the frackers flourishing? 40-45 bucks?

  8. Not sure and cant guess with any level of accuracy. But if you listen to that podcast on that site and accept the exponential productivity claims that the dude is saying they are achieving then it is dropping quickly and will continue to do so.

    It all appears to be quite deflationary for oil prices, power prices, material cost, manufacturing costs and transport costs on the productivity gains mentioned. They also say that they are only just getting started with the big efficiency gains now and are just commencing “Shale 2.0” so it could well be yet another disrupt-er emerging, oil and gas merchants being the Kings of Rentierism will not be very impressed if the frackers get digital with the internet of all things and start encroaching on “their” market pricing.

    It has the potential to be quite a significant market development especially given all the other parts of the world with massive unconventional hydrocarbon reserves sitting untapped.

    Its just not the Saudis time in the sun at the moment, even the Yemenis are getting to kick their ass.

  9. Bardon,

    I agree, the fracking revolution has turned the industry on its head.

  10. Does anyone have a decent estimate of how high the oil price will have to be to keep the frackers flourishing? 40-45 bucks?

    About $60+ but that’s not the issue. The thing is, most oilfields cannot be stopped and started: once they are in production they can’t be stopped, even if the price collapses. But the US shale wells appear to be able to be stopped and started on a whim (perhaps because they are made up of thousands of small ones rather than a few large ones, plus the absence of a conventional reservoir). So they can mothball everything and wait for the price to pick up and the supermajors to get all excited again, and simply switch the gear back on quickly and cheaply, thus depressing the price again. They’ve got the world by the balls, which is why I think the industry has been transformed.

  11. Never heard of Conservatives for Responsible Stewardship. Wonder how long it took the BBC find them to stage their contrived rebuttal to Trump’s decision.

    Exactly. But I suppose it’s still more authoritative than their increasingly common “random person on Twitter”.

  12. I’ve heard break even figures for Eagle Ford below 30$. North Dakota. maybe 50-60$.

    The big difference,as Tim says, is that the swing producer is not a rag head but a guy in a stetson. And this guy innovates. Good.

    And the key element: the oil business has always been a punt. Would you prefer to bet $10 million or $10 billion at a go?

  13. “They’ve got the world by the balls, which is why I think the industry has been transformed.’

    What has piqued my interest the most is the claims that it is changing from an extractive to a manufacturing process and the potential for digitization, managing production by iSteer and the like. Most of the good info is probably closely guarded and commercial in confidence and hidden behind paywalls but I will be following this one closely. I see that Exxon have committed one third of its drilling budget to US Shale now as well, now that the big boys are entering it may catapult this technology into orbit.

    http://business.financialpost.com/news/mining/leaner-fitter-faster-u-s-shale-2-0-challenges-opec-again

    You may recall the oil and gas start up that we had, we were in the box seat for a shale development in the NT with Pangaea resources (can say now) but it was canned overnight due to the price drop, massive tariffs to get it to Gladstone (which is what it is all about) and the state ban on fracking. Lots of small guys done their ass overnight on that one, just financed a fleet of exploration rigs and the like and we parked the business up. But we have recently brought it back out again as things are heating up. Lots of political posturing down here in oz and legislation announced last week that suppliers to the Gladstone LNG hub must sell to locals at local prices if ordered to. I think the outcome will be that the gas moratoriums in NSW and VIC will have to be lifted.

  14. What has piqued my interest the most is the claims that it is changing from an extractive to a manufacturing process and the potential for digitization, managing production by iSteer and the like.

    Yup, I think that’s the absolute key. Tim Worstall picked up on this a year or two ago.

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