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Corrected: Analysis - Energy industry says 'no thanks' to Trump offer of marine sanctuaries
September 28, 2017 / 2:58 PM / 21 days ago

Corrected: Analysis - Energy industry says 'no thanks' to Trump offer of marine sanctuaries

(This September 28 story corrects penultimate paragraph spelling to Michael instead of Michel.)

The lagoon from Strawn Island of Palmyra Atoll, part of the Pacific Remote Islands Marine National Monument in the Pacific Ocean south of Hawaii, US in this 2010 handout photo obtained by Reuters September 27, 2017. Laura M. Beauregard/U.S. Fish and Wildlife Service/Handout via REUTERS

By Valerie Volcovici and Nichola Groom

WASHINGTON/LOS ANGELES (Reuters) - In a bid to boost energy development, U.S. President Donald Trump’s administration is considering shrinking or eliminating 11 marine sanctuaries designed to protect 425 million acres of coral reefs, marine mammal habitats and pristine beaches.

The review is part of a broader strategy to open new areas to oil and gas drilling and “put the energy needs of American families and businesses first,” according to the order Trump signed in April that triggered it.

But interviews with energy industry representatives signal the effort will likely miss its target. Opening up these areas would likely help wind power companies - which Trump has lambasted - more than oil producers, they say. And neither industry is interested because of the high costs of offshore development, comparatively rich opportunities on land and the public relations headaches of developing protected oceanscapes.

The White House did not respond to a request for comment.

The U.S. Commerce Department is scheduled to issue its recommendations on the sanctuaries, located in the Pacific, the Great Lakes, and the Atlantic, next month. Most public comments submitted to Commerce favoured preserving existing sanctuaries.

For a graphic on the protected marine areas, see: tmsnrt.rs/2y7IWS5

While it is unclear how much oil the sanctuaries contain, the Bureau of Ocean Energy Management estimates that the Pacific Offshore Continental Shelf holds 10 billion barrels – enough to last the United States nearly two years. Some of that oil may overlap with marine sanctuaries off California’s coast.

But the industry has little interest in drilling there.

“Our members are not currently pursuing this opportunity,” said Catherine Reheis-Boyd, the president of the Western States Petroleum Association, referring to four marine sanctuaries off California’s coast that are under review.

The WSPA represents major integrated companies including Exxon Mobil (XOM.N), BP (BP.L), Chevron (CVX.N), and ConocoPhillips (COP.N), and is focused on the region that would be most affected by the review.

Officials for those companies did not respond to requests for comment.

Other sanctuaries under review include the Thunder Bay Sanctuary in the Great Lakes, the Northeast Canyons and Seamounts in the Atlantic, and sites off Hawaii, American Samoa, and the Northern Mariana Islands.

Government offshore drilling lease data reviewed by Reuters shows the oil industry is bidding on less offshore acreage with less money than it has in years, in part because onshore reserves have become easier to tap with new drilling technology.

The average price drillers have bid for available offshore drilling leases in the Central Gulf of Mexico, for example, declined to about $300 per acre this year, from more than $700 per acre in 2013.

A coral reef ecosystem is pictured at Palmyra Atoll National Wildlife Refuge in the Pacific Remote Islands Marine National Monument in the Pacific Ocean south of Hawaii, US in this undated handout photo obtained by Reuters September 27, 2017. Jim Maragos/U.S. Fish and Wildlife Service/Handout via REUTERS

Even so, U.S. oil and gas production has surged because of the onshore boom: Production hit 8.85 million barrels per day in 2016, from 5.09 million a decade earlier, according to the U.S. Energy Information Administration.

“It is clear we don’t need to take from every portion of our oceans and coasts to maintain a healthy energy economy,” Democratic lawmakers on the House Natural Resources Committee wrote in July in a letter opposing the sanctuary review.

THANKS, BUT NO THANKS

Drillers’ groups such as the American Petroleum Institute and the National Ocean Industries Association have expressed support for the review, mainly on the grounds that it sends a strong signal of federal support for the oil industry.

Neal Kirby, a spokesman for the Independent Petroleum Producers of America, said that “it’s possible to find the appropriate balance between safety, protecting the environment, and making sure we can move forward with responsible offshore energy development.”

Slideshow (5 Images)

Trump had campaigned on a promise to bolster U.S. fossil fuels production by repealing environmental rules he says unnecessarily hinder drilling and mining. So far he has moved to roll back carbon emissions limits, lift curbs on federal energy leasing, and ease permitting requirements.

The Department of the Interior completed a separate but similar review in August of some 27 national monuments across the country, which include vast areas of protected land.

The recommendations from that review have not been announced, but a leaked version obtained by the Washington Post showed Interior will recommend shrinking some of the monuments where energy resources are available or industries like commercial fishing and timber want more access.

SOLUTION WITHOUT A PROBLEM

Wind industry representatives say that firms could power more than 16 million homes by erecting wind turbines on California’s marine sanctuaries - but they would rather look for growth in places where such development is cheaper and less controversial.

California’s waters are deep, requiring costly and unproven floating wind turbine technology. Development there would likely also face onerous state regulatory hurdles and potential public opposition.

“The American Wind Energy Association is not advocating for re-visiting any (marine sanctuary) designations,” said Evan Vaughan, spokesman for AWEA. “In general, the designations have not been a barrier to offshore wind development.”

Trump has long criticized wind power as unreliable, producing only when weather permits. He has also called the industry’s turbines unsightly – at one point fighting a project within view of one of his Scotland golf course.

Michael Conathan, oceans policy director at the Center for American Progress, a progressive policy advocacy group, said the sanctuary review appeared to hold mostly symbolic value given the lack of oil and wind industry demand.

“The reality is it is not going to happen unless something drastic happens with the economics,” he said.

Follow Trump’s impact on energy, environment, healthcare, immigration and the economy at The Trump Effect: www.reuters.com/trump-effect

Writing by Richard Valdmanis; Editing by Brian Thevenot

Our Standards:The Thomson Reuters Trust Principles.
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