By David Paganie, Chief Editor
There is renewed optimism in the US offshore oil and gas industry as the Republican Party now controls both the executive and legislative branches of the government, led by President-elect Donald Trump. Industry associations and other organizations are advocating for new and/or amended energy policies, ahead of the official swearing in of the new president and members of Congress in January. The Offshore editorial team will unpack any new laws that impact readers, but for now, it’s all just speculation and wish lists.
In the meantime, Trump’s Cabinet is taking shape. His picks must be approved by Congress, but most should have an easy path to approval given the Republican Party’s control of the US Senate and House of Representatives. The nominees that will directly impact the offshore oil and gas industry are Chris Wright, secretary of energy; Doug Burgum, interior secretary; and Lee Zeldin, EPA administrator. All are widely considered fossil fuel-friendly picks.
A couple items that the industry is anxiously awaiting on include the new administration’s position on a refresh of the five-year offshore leasing program, and what, if anything, will happen to the Inflation Reduction Act (IRA) that was passed by Congress in 2022. The IRA is mainly a mechanism for transitioning away from fossil fuel-based energy production. It included $783 billion in renewable energy spending, and tax subsidies and credits for offshore wind projects. Trump has criticized the IRA, but he is unlikely to call for a repeal in full.
The biggest impact to offshore oil and gas during the new Trump term could be related to permitting reform for drilling and development on federal lands, and in bidding for leases if a new sale schedule is proposed and approved. This could encourage the operators that have flexible capital spending plans to allocate more funds to offshore oil and gas activities.
Regardless of any new policies that are signed into law, the short-term impact on US offshore oil and gas production should be minimal. In fact, offshore oil production has steadily increased each year post-COVID. Current, and soon to be former, US President Joe Biden and his administration tried to discourage new investment in oil and gas with legislation during his four-year term in office. But as readers know, offshore is a long-lead business and it requires long-term investments.
US offshore oil and gas is expected to continue rising through at least 2025 from about 12 new field startups in the Gulf of Mexico. Ongoing investments will be required to offset natural production declines and maintain this upward trajectory. One could safely assume that Trump and his Cabinet nominees for energy leadership positions will encourage lawmakers to enact new policies to make it more appealing to invest in US offshore oil and gas development.
