The US is a huge country in terms of surface area and very rich in terms of geological diversity and natural resources. Donald Trump, the country’s new president, is willing to take advantage of these resources at any cost and to do so he has signed an executive order to declare a “national energy emergency” that gives him the authority to open the doors to the countryside to anyone who wants to open a hole and look for oil, speaking badly and soon. Although the impact on the international crude oil market will be limited in the short term (since the US already produces close to its potential and other factors such as sanctions on Russia or OPEC cuts limit the falls in crude oil), it is interesting to analyze which are the hidden treasures beneath American soil that can be rescued thanks to this executive order. Although an immediate impact is not expected, the truth is that the price of crude oil falls sharply this Tuesday due to a forecast of higher future production in the US.
On his first day back in office, Trump declared two national “emergencies”: one on the southern border to address his anti-immigration agenda and the aforementioned energy agenda. The latter contemplates measures that increase national oil and gas production without delay. Restrictions will be lifted imposed on oil and gas producers by the Biden Administration, such as banning oil and gas production on federal lands and off the coast. In addition, the ban of the outgoing Administration on granting licenses for new liquefied natural gas (LNG) export projects will be revoked. Strategic oil reserves will also be fully replenished and energy will be exported “to the whole world.”
Announcements of this type, which analysts already expected, They will not have a great impact on the sector in the short termthese same experts say. “This is not expected to have an effect on US oil and gas production, at least not in the short term. Both have already reached record levels despite the restrictions imposed to date,” says Carsten Fritsch, commodities strategist. Commerzbank premiums.”The economy today dictates the supply of oil and gas in the US, not regulation. Deregulation will not cause a drilling boom,” consider Norbert Rücker and David Kohl, strategists at Julius Baer. But What these orders do is open doors for the future.
These news and orders make, for now, more noise than anything else. But the truth is that they open the door for companies to extract oil from areas that were now banned. If crude oil continues to be in intense demand in the future, Alaska and US federal soil will be the target of new drilling to extract a very profitable resource (currently, recoverable reserves in the US reach 48 billion barrelsbut the potential of Alaska alone is 50 billion if its reserves were allowed to be exploited). However, in the short term the impact will be limited, since this requires a high investment and with the current price of crude oil some of these investments are not attractive. Despite everything, analysts such as those at Capital Economics expect that US crude oil production will continue to increase, “although the advances in horizontal drilling techniques allow us to achieve this without necessarily investing in more drilling.
The treasure under Alaska
In an executive order dedicated exclusively to Alaska, the president stressed that that state “has an abundant and largely untapped supply of natural resources.” “Unleashing this abundance of natural wealth will increase the prosperity of our citizens and at the same time help improve the economic and national security of our nation for generations to come,” highlighted the US president.
Alaska, known as the last frontier of the United States, keeps beneath its surface an energy treasure that could change the country’s oil landscape. Since it was purchased from the Russian Empire in 1867Alaska has been both a source of wealth and the scene of intense debate. Now, with the Trump Administration’s recent measures eliminating key restrictions on oil extraction, the most unpopulated state in the US is preparing for a new era of energy exploration and development.
The subsoil of this territory hides about 50 billion barrels of technically recoverable oil and about 132 trillion cubic feet of natural gas, according to data from the Arctic Institute. The maritime regions of the Beaufort Sea and the Chukchi Sea alone concentrate approximately 23 billion barrels. This potential makes Alaska a key piece for the energy self-sufficiency of the United States. “The Arctic has been considered the world’s last energy frontier, and Alaska is its gateway,” the report notes.
Most of the remaining resources are found on federal lands and coastal areas to which access has been difficult or blocked, whether due to federal policies, environmental litigation or a complex and constantly changing regulatory regime During the Administration of Barack Obamastrict environmental restrictions were implemented, including a ban on drilling in 115 million acres of federal waters in the Beaufort and Chukchi seas. Exploration in the ANWR’s “Area 1002”, which hosts an estimated 7.7 billion barrels of technically recoverable oil, was also vetoed. These policies were intended to protect the region’s biodiversity, but they also limited economic development. “Alaska’s wealth was trapped under its own feet,” pro-oil sectors criticized for years.
Alaska oil development started strongly in 1968 after the discovery of the Prudhoe Bay field, in the north of the state. This region gave way to the creation of the Trans Alaska Pipeline System (TAPS), a pipeline that has transported more than 17 billion barrels of oil since its opening in 1977. However, production at Prudhoe Bay and other fields has declined, leading to TAPS to operate at only 25% capacity.
It is a reality that Alaska production has been in a long-term declining trend since peaking in 1988when the state represented 25% of US domestic production. Oil production in Alaska has fallen about 75% since peaking at more than two million barrels per day (bpd) in 1988, according to data collected by the Resource Development Council, an Alaska business association. New opportunities in areas like the Arctic National Wildlife Refuge (ANWR) could revitalize this critical infrastructure.
With the arrival of Donald Trump it opens a window of opportunity for Alaska. The Republican Administration revoked several of these restrictions, allowing seismic exploration in the ANWR and granting new drilling licenses in the Beaufort Sea. “Trump’s pro-oil policies have fueled a renaissance in Alaska, offering the possibility of exploiting reserves that were out of reach for decades,” notes the Arctic Institute.
Not just Alaska. With the regulatory change, crude oil companies fracking will be able to drill on federal land, allowing more of New Mexico and Texas to be targeted for drilling and hydraulic fracturing (fracking) in the future. It is true that these deserts are already heavily exploited (unlike Alaska) because a good part of the land is in private hands that have allowed (rather took advantage of) the drilling and exploitation of oil. Even so, with Trump’s new order it will be easier for the areas that are protected and where drilling is hindered to now begin a new golden era for crude oil.
#release #oil #treasure #hidden #Alaska #ice #desert #fracking
