|June 11, 2020|
Interior to push drilling in Florida waters after November election
|The Trump administration is preparing to open the door to oil and gas drilling off Florida's coast --- but will wait until after the November election to avoid blowback in a swing state whose waters both parties have long considered sacrosanct, according to four people familiar with the plan.|
Drilling in the eastern Gulf of Mexico would fulfill a long-sought goal of energy companies, giving them access to potentially billions of barrels of oil that have been off-limits since the federal government withdrew leases it had sold in 1985. But even the possibility of drilling is a politically explosive topic for Floridians, who worry that oil spills would devastate their tourism-based economy in a reprise of the 2010 Deepwater Horizon disaster.
President Donald Trump, who has set "energy dominance" as a key national goal, has eased regulations on offshore drilling put in place by the Obama administration. Interior has spent years working on a proposed drilling plan that would expand oil companies' access to waters around the country's coastline, including a draft plan issued in 2018 by the Trump administration that considered opening the federal waters off both of Florida's coasts.
That plan also included an expansion of offshore drilling in California, a move that would escalate the ongoing battles between the state and the administration over environmental issues since Trump took office. The people did not know whether the final proposal will include that section of coastline as well.
"Whatever is decided is expected to come out within two to three weeks of the election," said one person who has had recent discussions with Interior officials about the issue and who agreed to speak only on condition of anonymity. The eastern Gulf is the "golden trophy" for the industry because it could be producing oil within 10 years using existing infrastructure from the Gulf's western portion, the person said.
A second person who recently spoke to Interior officials said they had predicted that the plan would probably come out after the Nov. 3 election but before Trump's current term ends in January. The timing was driven partly by the sensitive politics in Florida, but also because Interior Secretary David Bernhardt was conducting reviews to ensure it was legally defensible, the person said.
Two people who work in the energy industry said they had heard a similar timeline from agency officials several months ago for releasing the plan, which has been under development since the early days of the Trump administration.
"It's a given that new acreage will become available when the politics of reelection are behind Trump," said one person in the industry, who described the eastern Gulf of Mexico as "the prize acreage."
Interior did not answer specific questions about when it might release the proposal. The agency has been mostly silent on the plan's future after Bernhardt in April 2019 said it was "indefinitely" delaying releasing its offshore drilling proposal, following a court ruling that upheld an Obama-era ban on drilling in certain Arctic coastal areas --- a decision that blew a hole in the department's plans to also include that area in the new plan.
Once Interior releases the plan proposal, it will take public comment before implementing a final version.
The Trump administration's efforts to open up additional stretches of shoreline to oil and gas production have run into opposition from both Republican and Democratic governors of coastal states. Former Trump Interior Secretary Ryan Zinke had initially issued a draft plan to open the eastern Gulf once the current federal drilling moratorium ends in 2022 --- but then walked that back in 2018, when he promised Florida's then-governor, Republican Rick Scott, that the state's coasts would remain off-limits. (Scott is now a U.S. senator.)
Interior's drive to open up more areas to drilling is currently facing market headwinds. Oil producers have slashed their 2020 budgets amid a cash crunch brought on by low oil prices from the coronavirus pandemic, and U.S. production has declined by about 2 million barrels per day from record levels seen in March. New deepwater offshore drilling projects, which often cost billions of dollars to bring online, have also fallen out of favor with many companies in the industry, which has in recent years focused on developing onshore shale fields.
But with 3.6 billion technically recoverable barrels of oil and 11.5 trillion cubic feet of gas estimated to sit beneath the sea floor off Florida's west coast, large, well-financed companies would probably be interested in lease sales for eastern Gulf acreage, especially if they faced little competition for the new acres, one of the industry sources added.
"They'd watch and think, 'It's ridiculous we haven't purchased leases for dimes on the dollars,'" the person said.
The offshore drilling plan, details of which remained closely guarded, has been developed by Bernhardt, Deputy Secretary Kate MacGregor and acting Assistant Secretary for Land and Minerals Management Casey Hammond, the people familiar with the proposal said. Details around the timing could still change before its release, they added.
But such a plan would face opposition from Florida's lawmakers. Scott and Republican Sen. Marco Rubio introduced the Florida Shores Protection and Fairness Act earlier this year to extend the eastern Gulf's existing drilling moratorium by 10 years. Senate Majority Leader Mitch McConnell has not called the bill up for debate.
Florida lawmakers in recent weeks have taken their concerns directly to Trump, who last year declared himself an official state resident. They have also spoken to Senate leadership on possibly including Rubio and Scott's bill in upcoming legislation, according to one Senate aide who requested anonymity to discuss the negotiations.
"It's something we're actively working on," the aide said. "This is the one issue in Florida that every person agrees on."
But opening up the waters off Florida has been a long-held goal of major companies in the industry who have spent years amassing politically-connected allies.
Interior documents obtained by POLITICO show lobbyists, including former Louisiana GOP Sen. David Vitter, requesting in March 2018 that the agency open Florida's waters for exploration. Three months after Interior released its draft leasing plan in 2018, former Interior Assistant Deputy Secretary Todd Willens forwarded to Joe Balash, Interior's then-assistant secretary for lands and minerals, a letter of introduction for Vitter sent from former GOP Montana Rep. Denny Rehberg, another lawmaker-turned-lobbyist at the political strategy and consulting firm Mercury LLC.
"He [Vitter] doesn't know his way around DOI yet and I offered to help," Rehberg wrote in his March 2018 email.
Vitter's message to Interior contained a letter from EnVen Energy Ventures, a Houston-based company focused on oil production in the Gulf of Mexico. In it, EnVen Executive Vice President Nick Gibbens asked for access to federal waters in the eastern portion of the Gulf now off limits for drilling.
"While we respect that Florida's economy relies heavily on tourism, oil and gas platforms and rigs 20 miles from the coastline would not be visible to tourists," the EnVen letter says.
Interior did not directly answer POLITICO's specific questions on the timing of the release of its offshore drilling proposal, or what regions it would include. Tracey Moriarty, spokesperson for Interior's Bureau of Ocean Energy Management, pointed to the agency's January 2018 draft plan written during Zinke's tenure that had sought to open virtually all the U.S. coastline for oil and gas exploration.
That plan had drawn widespread criticism, and had included possible lease sales in the eastern Gulf of Mexico in 2023 and 2024, after the expiration of the current moratorium on drilling in the region.
The Trump administration also considered reopening federal waters off California to new drilling, according to documents POLITICO obtained through a Freedom of Information Act request. The waters off California's southern coast contain 5.3 billion barrels of recoverable oil, according to a BOEM estimate.
However, many industry analysts have cast doubt on whether the administration would seek to open up California's federal waters to new drilling beyond the modest footprint it now has. Coastal drilling has long been unpopular in the state since a massive 1969 oil spill off Santa Barbara --- the third largest spill in U.S. history, and one factor that led President Richard Nixon to create the Environmental Protection Agency.
But a late-2018 briefing plan that BOEM head Walter Cruickshank gave to Balash described the benefits of opening up at least the southern coast of California to new drilling.
"Currently, California imports nearly 60% of its crude oil refinery input whereas 10 years ago imports only comprised 45% of refinery input," according to presentation notes dated November 2018. "Production offshore California could replace imports and reduce California's dependence on foreign oil."
Rep. Jared Huffman, a California Democrat and staunch opponent of the fossil fuel industry, said in an interview that Zinke had repeatedly brought up possible leases around the Santa Barbara Ship Channel.
"I did have some conversations with Ryan Zinke and he kept coming back to the Santa Barbara Ship Channel," Huffman said in an interview. "As much as he acknowledged that the West Coast was a heavy lift, he always left room for something in Santa Barbara."
Zinke did not reply to questions.
Exxon and other companies still produce oil in the area. But the drilling industry would be unlikely to test the waters in a state that has been vocally against new oil and gas drilling and has set up regulations that would make it more difficult to do so, several people in the industry said.
"Nobody wants to do business in California. My God, that would be torturous," one industry person said. "I would see this as something to antagonize Democrats and to create leverage to open up other acres."
Kevin Slagle, spokesperson for the Western States Petroleum Association, a trade group that includes Exxon, Chevron, Shell and other companies, concurred.
"Our members are not champing at the bit for offshore exploration and production in the West," Slagle said.