Trump’s Energy Initiatives:

What Are They and

Where Do They Stand

Demetri J. Economou
July 19, 2018 – Houston, Texas
By the Numbers

• 1,129 days since Candidacy

• 545 days since beginning of First Term

• 916 days until end of First Term

• 2,377 days until end of Second Term

By the Numbers:
Executive Orders
• 80 Total Executive Orders (2017, 55; 2018, 25)

• 10 related to Energy (12.5%)

Energy
All Others
By the Numbers:
“A Pen and a Phone…”
• Trump on pace for over 100 EO’s in first 2 years.

• Obama signed 74 EO’s in first 2 years.

• Obama’s highest yearly total was 41.

• GWB 35, Clinton 53 EO’s in first 2 years.

By the Numbers:
Congress
• Since 2017, 289 energy-related House and
Senate bills and resolutions introduced.

• Vast majority are constituency-related, rather

than national.

• Vast majority have no chance being enacted.

By the Numbers:
Congress
• Since 2017, only 3 of the 289 bills and
resolutions made been enacted.

• They are….
By the Numbers:
Congress
• PASS Act – certain security systems don’t have
to have power-saving efficiency standards.

• EPS Improvement Act – certain ceiling fans don’t

have to meet power-saving efficiency standards.

• Ceiling Fan Energy Conservation Harmonization

Act.
Tax Cuts and Jobs Act of 2017
• Not really fair to say there has been no real energy legislation.

• TCJA (12/2017) had major impact on energy companies from

a pure tax perspective.

• Lowering corporate tax rate; lack of changes to deductibility of intangible

drilling costs or ability to take percentage depletion; increased
availability for expensing. Tax plan was generally favorable to energy
industry.

• One, big “hidden” energy initiative (ANWR 1002 Area leasing).

Much to Discuss, Little Time

• Focus on two topic areas:

• Leasing and Drilling Initiatives

• Steel and Aluminum Tariffs

Leasing and Drilling
ANWR 1002 Area
• Arctic National Wildlife Refuge 1002 Area:
Leasing and Drilling
ANWR 1002 Area
• ANWR 1002 Area – What’s there?

• Last major USGS assessment: 1998.

• Mean recoverable oil of 7.7 bbls on federal

portion of 1002 Area; over 50.0 bbls regardless
of recoverability.
Leasing and Drilling
ANWR 1002 Area
• ANWR 1002 Area – When Will Leasing Start?

• TCJA mandates two lease sales within 10 years,

subject to an environmental impact study, which
is underway (albeit in an early stage).

• Economics will keep most participants from the

market.
Leasing and Drilling
OCS “Five-Year Plan”
• January 2018 – total reversal of federal Outer
Continental Shelf development plans.

• Prior plan – over 94% of OCS areas off limits.

• New Five-Year Plan (2019-2024) – opens 25 of

26 OCS areas for leasing; 47 proposed sales.
Leasing and Drilling
OCS “Five-Year Plan”
• New OCS Areas – When Will Leasing Start?

• Like ANWR Section 1002, leasing subject to

environmental impact statement returned.

• Then, final plan and lease sales approved.

Leasing and Drilling
OCS “Five-Year Plan”
• New OCS Areas – Leasing Currently Proposed:
• 2019 – Alaska (Beaufort Sea)

• 2020-2021 – Pacific (All Areas); Alaska

• (Beaufort/Chukchi/Cook Inlet); GOM (All Areas); Atlantic (All

Areas except Straits of Florida)

• 2022-2023 – Pacific (All California); Alaska (All Areas); GOM

(All)

• 2024 – GOM (All); Atlantic (Mid and South); Alaska (Chukchi).

Leasing and Drilling
Notable OCS Areas to Be Opened
Leasing and Drilling
Atlantic OCS
• Atlantic Outer Continental Shelf – What’s there?

• Last major BOEM assessment: 2014.

• Mean recoverable oil of 4.72 billion barrels,

mostly in Mid-Atlantic OCS (NC, VA, MD, DE);
Mean recoverable gas of 37.51 Tcf.

• No lease sales since early 80s; no production.

Leasing and Drilling
Notable OCS Areas to Be Opened
Leasing and Drilling
National Monuments/Antiquities
• Obama designated 550+ million acres of
protected national monuments under 1906
Antiquities Act.

• Almost double all prior administrations combined

(Note: GWB ~215 million acres).

• Trump EO 13792 (4/2017) – Review of

Antiquities Act for proposed rollbacks.
Leasing and Drilling
National Monuments/Antiquities
• Bears Ears and Grand Staircase (Southeast UT)
(opened as of 2/2/2018):
Leasing and Drilling
National Monuments/Antiquities
• Bears Ears (parts opened 2/2018)

• Eastern edge of new boundaries of most interest

(San Juan Basin).

• BLM lease sale 3/2018, all 43 parcels sold

(maximum price $91/acre).
Leasing and Drilling
BLM Fracing Rule Rescinded
• BLM’s 2015 Final Rule imposed requirements for
well casing and cementing, flowback storage,
and public disclosure of chemicals used on
fraced wells.

• In the spirit of EO 13783 (“Promoting Energy

Independence and Energy Growth”) the BLM
totally rescinded the rule by actions in July and
Dec. 2017.
Leasing and Drilling
Further BLM Leasing Changes
• July 2017 – a few months after the EO “Promoting
Energy Independence and Energy Growth”:

• BLM increases to quarterly lease schedule; and

• Takes steps to reduce time for approval of applications

for permit to drill – 257 days in 2016, no comparative
data yet available year over year.

• Most backlog in the western states. By comparison, the states

themselves can usually process permits in 30-45 days.
“Trump Tariffs”
• March 1, 2018:

• 25% tariff on steel

• 10% tariff on aluminum

• Section 232 of the Trade Expansion Act of 1962, allowing

action against imports that “threaten or impair the
national security”
• Position based on overall proportion of imported vs. domestic
metals, especially aluminum (90% imported).
“Trump Tariffs”
Steel and Aluminum
“Trump Tariffs”
Legal Challenges – WTO
• World Trade Organization Complaints:

• Canada, China (Twice), Mexico, Switzerland, India,

Norway, Russia, and the EU.

• U.S. Retaliatory WTO Complaints:

• U.S. vs. Canada, China, Mexico, Turkey and the EU;

• State that a purely retaliatory tariff is a breach of WTO

agreement.
“Trump Tariffs”
Legal Challenges – Court
• Plaintiffs American Institute for International Steel, Sim-Tex LP, and
Kurt Orban Partners.

• U.S. Court of International Trade

• Argument: Trade Expansion Act of 1962 was an improper delegation of powers

to the executive and, thus, unconstitutional.

• Plaintiff Severstal Export GmbH (PAO Severstal, Russian/Swiss).

• U.S. Court of International Trade

• Argument: Trump’s national security reasoning was pretext for his true intent to
correct a natural trade imbalance. Lost request for preliminary injunction.
“Trump Tariffs”
Product Exclusions
• Concerned parties can petition the Department of
Commerce to exclude products and projects from the
tariffs if domestic sources are unavailable.

• So far, DOC has 26,400 exclusion requests:

• 267 approved;
• 452 denied;
• High-priority projects are getting first looks.

• Purely American steel companies (not subs) are

opposing the product exclusions on a case-by-case
basis.
“Trump Tariffs”
Exclusions: Grants and Denials
• Shell and Chevron have won exclusions for steel casing for GOM wells.

• Reasoning: No equivalent corrosion-resistant offerings in the U.S., plus the national

security of the country is not served by delay of fuel extraction.

• Mixed results with same companies on different projects.

• Plains All American was denied the highest-profile exclusion petition in its
industry (for its Permian-Corpus Christi “Cactus II” pipeline).

• Reasoning: DOC found sufficient domestic steel pipe of similar quality and supply was
available.

• Other pipeline operators, E&P companies, transportation companies, and

large-scale refiners have filed exclusion requests for their projects that still
remain pending.
“Trump Tariffs”
Ultimate Cost?
• American Petroleum Institute; American Chemistry
Council; and Association of American Railroads Joint
Position:

• 50% of all current investment in chemical projects (totaling

about $194B) at risk of delay or abandonment.

• Price of pipeline construction could increase by $270,000+

per mile.

• Stifling across all parts of the energy sector in the

hundreds of billions of dollars.
Thank You!

Demetri J. Economou
Associate, Energy Practice Group
Kane Russell Coleman Logan PC – Houston TX
(713) 425-7432 deconomou@krcl.com