New Proposed Program for Offshore Drilling in the US
The Trump administration is touting the DPP as a victory in implementation of its "America-First Offshore Energy Policy". But clients in the offshore drilling sector shouldn't start preparing for increased U.S. activity just yet.
First, the DPP is vulnerable to legal challenge. It clashes with President Obama's executive orders withdrawing certain Alaskan and Atlantic offshore acreage from exploitation; a number of environmental groups have already sued to block the DPP. Second, governors and legislators from several coastal states have come out firmly against the DPP. Since offshore development would require accessing state coastlines, proceeding with the DPP will be difficult without coastal states' support. Third, many of the areas that the DPP would open lack pipeline infrastructure, raising development costs considerably.
For now, offshore seismic companies may be best placed to take advantage of the DPP. While the debate about the DPP continues, these companies can begin applying for the licenses necessary to conduct seismic surveys on the US continental shelf. The license application process can take up to two years. During this time, seismic companies can monitor the DPP's progress. If it is shelved, the cost of applying for the seismic survey licenses will be sunk. But if the DPP is approved, the offshore seismic companies will have a head start against competitors who have not begun the licensing process.