Wednesday May 24, 2017

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Oil & Minerals
Week Ahead

Looking to end the end

Successfully re-opening America’s Arctic waters to oil drilling will require the help of an invisible hand
Oil & Minerals
Remember the ‘Kulluk’ (Photo: US Coast Guard)

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The Week Ahead
Each week, The Arctic Journal gets our readers ready for the week ahead by profiling some of the events we expect to be reading about in the coming days. If you have an event you think ought to be profiled in a coming week, please contact us.

As one of the last things he did as president, Barack Obama locked up the waters of America’s outer continental shelf, including 125 million acres in the Beaufort and Chukchi seas, putting them out of reach to oil drilling for good.

As expected, Donald Trump, in one of the final acts of his first 100 days in office, signed a counter-order that, if all goes as planned, will, eventually, re-open the Arctic for drilling.

Doing so will not be as easy or a quick as supporters of Arctic to resource development hope. In the first place, Mr Trump’s bureaucrats must figure out how to undo the Obama ban, which was based on legislation that has previously been used to give permanent protection to other maritime sites.


Even if a handle for overturning the decision can be found, any attempt to do so will be slowed by years-long legal challenges. Public scrutiny is also sure to be formidable: choosing today to sign the order gave Mr Trump a way to end his presidential honeymoon by fulfilling a campaign pledge, but it also coincides with the high profile release this week of a an assessment documenting that the climate of the Arctic suffers disproportionately under global warming. Further, it makes it clear that changes in the region will have a big effect elsewhere. Drilling in the Arctic as it melts will be a rig too far even for many outside the conservationist movement.

Another reason for delay: the Trump administration must restart the process of selling permission to explore for oil in the region. Before issuing a permanent ban, Mr Obama put new drilling in the Arctic off limits for a period of five years, banning the sale of new licences until 2022. Identifying which areas to lease and conducting mandatory reviews could take “a couple of years”, admitted Ryan Zinke, the Trump cabinet member responsible for breaking down the Obama bans, during today’s signing ceremony.

Not being able to make the 2022 deadline would be an annoyance for Mr Trump, but if the real goal is the permanent opening of the Arctic, then legal protests and other measures that kick a decision far into the future may only play into the hands of proponents of drilling.

SEE RELATED: Letting the genie out of the well

Currently, prices are low and plenty of places offer easier access to untapped reserves. Opening up the Arctic to drilling during an era of low prices is likely to backfire; offering licences and having no-one show interest will undermine arguments that the region’s oil is necessary. If the sale must wait, oil prices could be higher, and the demand to buy them greater.

Signing an executive order signals to the industry that Mr Trump’s administration is as friendly to oil as had been expected. Unfortunately, when it comes to prices, only the markets can make the Arctic great again.