What effects will Donald Trump’s election as president have on policies affecting Alaska’s oil gas industry? For starters, don’t expect a lot to happen soon.
Energy, public lands and the Arctic aren’t on the front burner for the new president-elect, who is preoccupied right now with making cabinet picks, industrial policy and dealing with China.
Who Trump chooses as secretary of the Interior is important, and there haven’t been a lot of names tossed out since Sarah Palin’s was floated shortly after the election.
Palin’s name may be crossed out, however, after the maverick former Alaska governor unloaded on Trump over business cronyism in appointing Wall Street high-ups to cabinet positions.
Another name floated, at least in Alaska newspapers, is local billionaire Robert Gillam, known best for being an arch-foe of Pebble mine development. Whether Trump will warm to a fellow billionaire for the job is unknown. Having money hasn’t hurt his other appointees.
Unknown on resources
What the new president-elect will do, and what his attitude really is on resource issues, is a complete unknown. “In my lifetime, no one has ever become president after having said so little about what they will actually do with the reins of power,” said University of California professor David Victor in an article published by Brookings Institute.
Trump is unpredictable and is even showing signs of waffling on some campaign positions, even on climate change - the president-elect says he is now “open” on the issue.
His appointment of Scott Pruitt, Oklahoma Attorney General and a fierce critic of President Obama¹s climate-change policy, as new head of the U.S. Environmental Protection Agency, seems to contradict that, however.
However, even with a pro-development president and a development-friendly Interior secretary, it will take time for policies at the top to trickle down to the field-level agencies where Alaska industries operate.
What could happen?
Meanwhile, here are some things that could happen fairly soon, some believe.
Here are some things not to expect and things that might be expected.
•Is it possible for the president-elect to undo President Obama’s refusal to include Arctic lease sales in the new five-year Outer Continental Shelf program? Some think it might be, although there are different legal views. Some say the record of decision on the government’s environmental impact statement could be redone fairly quickly, which would allow the Arctic sales to be re-inserted into the sale schedule (they were in the draft schedule).
•Likewise, undoing parts of the highly restrictive Arctic offshore drilling rules might be possible, such as requirements like having a standby rig nearby. Although these rules also apply nationwide in the OCS the Arctic rules are more restrictive.
•What could easily change, however, are federal agency interpretations of the Arctic rules, such as agencies’ rigid interpretation of rules that Arctic OCS drilling operations must be 15 miles apart. This was sprung on Shell late in its Chukchi Sea drilling and it stopped the company from drilling two exploration wells instead of one even with the rig was available and ready to go.
Senate filibusters
Any change that can be done without new legislation might allow near-term action. However, if a change in law is required, the probability of a U.S. Senate filibuster will delay things.
If that happens on the Arctic OCS sale issue it might be more practical to wait for the next cycle in the five-year schedule, the cycle starting in 2022. However, given the time needed for sale preparations and more work on an EIS that could push any new Arctic sales back into the mid-2020s.
•Don’t bet on the coastal plain of the Arctic National Wildlife Refuge being opened to exploration and development, at least in the near term. ANWR is such a lightning-rod nationally that it will be difficult to get this through even a Republican-controlled Senate (it failed last time, when Republicans also were in control).
However, if a bill did get through Congress a President Trump would probably sign it. What might also be possible is that the state of Alaska’s plan for a limited one-year winter exploration drilling program in ANWR’s coastal plain, which would involve no leases being issued (and thus no congressional approval) might find favor with the incoming administration.
Walker another unknown
Interior Secretary Sally Jewell nixed this plan previously when former Gov. Sean Parnell advanced it, even though the state offered to foot the $50 million bill. It’s not known that Gov. Bill Walker will resubmit the plan, however, or that the Legislature would appropriate the $50 million.
•There could also be changes in the Interior Department’s rules establishing large protected areas in the National Petroleum Reserve-Alaska, particularly those along the northeast coast of the reserve where there are very good prospects for discoveries.
These policies were set in the framework of the U.S. Bureau of Land Management’s plan for the NPR-A, and they could be redone by a new administration with a rewrite of the record of decision, which would involve no lengthy new EIS process, some believe. There would still be protected areas but they would be smaller, this argument goes.
However, this would set off a firestorm of opposition and lawsuits from environmentalists, who would set up protection of Teshekpuk Lake, which is near the NPR-A coast, as a new poster-child and fund-raising gambit.
•More easily done, however, are changes to agency policy decisions not done in a regulatory framework, such as interpretations or policy statements. An example is the Obama administration’s presidential order last year requiring federal agencies to develop their own wetlands mitigation and compensation policies, with no regard for current rules under the Clean Water Act administered by the U.S. Army Corps of Engineers.
•Likewise, there could be a review of BLM’s policy for requiring mitigation on oil and gas projects in NPR-A that is separate and in addition to the Army corps’ requirements. These policies affected ConocoPhillips in its permits for GMT-1, a new project in the reserve.
Authority an issue
Critics have argued that BLM has no authority under its statutes to impose these requirements and that the agency’s claim of authority under regulations is flimsy. If BLM’s policies go away it would leave wetlands policy back with the U.S. Army Corps of Engineers.
•Don’t expect, however, a shift in more traditional mitigation rules set out by the corps under the federal Clean Water Act. The Clean Water Act and Clean Air Act, the foundations of federal environmental law, have been in place for decades and have strong bipartisan support.
Overall, “The regulatory apparatus for oil and gas probably won’t change much, although public lands could be different,” Prof. Victor said in his Brookings Institute article.
“A Trump presidency presumably would ease the process for leasing on public lands, although any changes would likely be tied up in the courts as will efforts to speed pipeline projects,” he wrote.
Relief of rules for emissions of methane and use of water for shale gas and oil operations could occur, “but it is already becoming clear that these rules do not have a ruinous effect on drilling. They are instead a compliance cost,” he said.
Victor warned that one of the greatest challenges for the oil and gas industry will be, “to avoid looking at a Trump presidency as a blank check for any production and infrastructure here in the U.S.”
“Instead, oil and gas companies looking at the long term will need to keep working on to find smart ways to reduce emissions and environmental footprints and to sustain public trust, even if the federal government doesn’t offer a credible threat of regulation,” Victor wrote.
