The Trump administration’s proposal to open up almost all of U.S. offshore waters to oil and gas drilling could unlock up to 65 billion barrels of oil equivalent (Bboe), attracting billions of dollars in investment, consultancy Rystad Energy said on Jan. 10.
Last week, U.S. Interior Secretary Ryan Zinke said a draft program would make over 90% of the outer continental shelf’s total acreage available for leasing to drillers, a national record.
“Looking purely at areas that are potentially going to come out of restriction, we are talking about something closer to 65 Bboe,” Sonia Passos, senior analyst at Rystad, a major independent consultancy tracking the sector, said in a note last week.
That figure excludes resource potential from western and central areas of the U.S. Gulf of Mexico, but includes the eastern region, she said.
However, the drilling proposal has since faced resistance from various quarters. On Jan. 9, Trump’s administration said it would not allow drilling off the coast of Florida after urging from the state’s governor.
“The resource potential in the basins in the direct proximity to Florida, together may hold about 1 Bboe to 1.5 Bboe, so excluding those will not change the overall picture dramatically,” Passos told Reuters on Jan. 10.
The offshore sector has been overshadowed in the past few years by the shale revolution in the U.S., with investors and drillers pumping the lion’s share of their resources into the Permian and other inland oil basins.
In 2017, companies in the U.S. directed over 60% of their total investments to shale and this trend is likely to increase to about 70% in the coming decade, Rystad said.
The consultancy said if operators utilize the full potential of the newly unlocked offshore regions, exploration activity could reach a new peak after 2030, with some 200 exploration wells drilled per year on average.
That would imply annual investment levels of about $15 billion, Rystad said.