Trump Takes Step To Change Offshore Oil, Gas Leasing Program

U.S. President Donald Trump is moving forward with plans to change the five-year offshore oil and gas leasing program approved by the Obama administration in his quest to open up more federal land—including the Atlantic and in the Arctic—to drilling.

Flanked by Vice President Mike Pence and Energy Secretary Rick Perry, Trump said June 29 the federal government is creating a new offshore oil and gas leasing program, a move that follows his executive order late April to expand offshore drilling.

“America will be allowed to access the vast energy wealth located right off our shores. This is all just the beginning, believe me,” Trump said during a briefing. “The golden era of American energy is now underway.”

A request for information (RFI), published in the Federal Register on July 3, marked the first step in developing the new program. The RFI begins a 45-day public comment period.

The planning process for crafting a five-year program typically takes two or three years, the Interior Department said in a news release.

The current 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Program has 11 scheduled lease sales, ten of which are in the Gulf of Mexico region. The other is for blocks in Alaska’s Cook Inlet.

Oil and gas industry players had pushed for additional acreage, including in the Atlantic region.

BOEM Lowers Royalty Rate For Shallow-water GoM Oil, Gas Leases

The U.S. Bureau of Ocean Energy Management (BOEM) has lowered the royalty rate to 12.5% for shallow-water leases for the proposed Gulf of Mexico (GoM) Sale 249.

The change, which comes after the completion of an analysis of the rates, brings the rate in line with federal onshore oil and gas leases. The new rate is lower than the proposed 18.75% royalty rate that was published in the proposed notice of sale, BOEM said in a news release.

“Hydrocarbon price conditions and the marginal nature of remaining GoM shelf resources suggest a royalty rate reduction is an appropriate and timely action,” BOEM said. “The shallow water royalty rate reduction targets the GoM shelf where exploration, development and production are in decline and where critical infrastructure already exists.”

The rate change applies only to leases at water depths below 200 m. The rate for greater depths is unchanged at 18.75%. However, BOEM said it is analyzing a price-based royalty system and will engage stakeholders on this concept later this year.

If BOEM moves forward with the sale, which is scheduled for Aug. 16, royalty rates and other lease terms related to the sale will be formally announced in the Final Notice of Sale at least 30 days prior to the sale date, the release said. The sale is the first under the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program.

Nigeria Cabinet Approves National Gas Policy

Nigeria’s cabinet has approved a national gas policy that aims to reduce the country’s dependence on crude oil by increasing gas exploration and facilities, the oil ministry said in a statement.

The policy was made public on July 5.

Nigeria has for decades relied on its ample supplies of oil to power its economy. But despite having a wealth of crude, the vast majority was sent overseas for refining, and the country instead has had to import refined fuels at great expense.

Nigeria has the world’s ninth largest proven gas reserves—187 Tcf. A move to using gas could reduce the drain on foreign exchange that importing refined oil products requires.

The 100-page National Gas Policy seeks to set up a single independent petroleum regulator. It also aims to separate upstream from midstream operations and to separate gas infrastructure ownership and operations from gas trading, the oil ministry said.

The policy will also divide the Nigeria Gas Co. into separate transport and gas marketing companies and introduce “market-led wholesale gas pricing” after a transitional period.

Kenya Delays Crude Production Until Oil Law Amendments Are Made

Kenya has delayed plans to start crude oil production and exports until the government passes an amended law that includes setting out how revenues will be shared between national and county government and local communities.

The law is expected to be in place by late September when a new senate and national assembly convene after August elections.

Kenya announced plans in 2016 to start small-scale production in June 2017, involving trucking about 2,000 bbl/d to the coast. The government said this was not expected to generate any profit.

“After consultation with the leadership of Turkana (county) and the community, we have decided that instead of having the project commence by this month, we will defer it until the bill which is pending before the Senate,” Energy and Petroleum Cabinet Secretary Charles Keter said during a news conference.

“So the one-month extension [is] until the next parliament—essentially August or September. We will do it before the end of the year, because it is a program that will run until the pipeline is done.”

Kenya has an estimated 750 MMbbl of recoverable reserves in onshore fields but no pipeline to take the waxy crude from the northwest to an export terminal on the east coast.

—Staff &Reuters Reports