Just in case there was any doubt, President Donald Trump made it clear in his inauguration speech Monday that during his second term “we will drill, baby, drill.”
Among his first acts, Trump declared a National Energy Emergency — enabling him to employ federal powers to bring down energy prices and boost production.
To goose Big Oil’s animal spirits, Trump revoked a slew of Biden’s executive orders targeting the industry. That included Biden’s January 2021 cancelation of the Keystone XL pipeline and his January 2025 order attempting to permanently withdraw some 600 million acres in the Atlantic, Pacific and eastern Gulf of Mexico from oil exploration. Trump also ended Biden permitorium against new LNG export projects.
Alaska received special attention. Trump revoked Biden orders that had put off limits 16 million acres in the Alaska National Petroleum Reserve and Beaufort Sea, he further ordered the government to study how better to utilize the strategically vital Trans-Alaska Pipeline System (at risk of being shut down for lack of oil volumes to move) and also ordered priority attention given to a long-stalled Alaska LNG export project, which could tap some of the 30 trillion cubic feet of available natural gas at Alaska’s megafield Prudhoe Bay.
The United States is already the world’s biggest producer of oil (13 million barrels per day) and natural gas (110 billion cubic feet per day), but Trump appears convinced that both prices and demand will rise enough to entice America’s drillers to boost their activity beyond the current 560 onshore rigs running today.
Growth in demand for gas looks secured by the construction of dozens of giant new datacenters set to run artificial intelligence systems powered by reliable gas-fired turbines. Pipeline giant Kinder Morgan last week said it sees 10 bcfd in new gas demand coming on its network alone.
Undoing Biden’s restrictions against drilling on federal acreage will help encourage more drilling and more supply. Trump also aims to support growth in demand. He revoked Biden’s order aiming to push electric vehicles to 50% of total car sales by 2030. And he declared that his administration would refill the Strategic Petroleum Reserve “right to the top.”
When Biden came to office the SPR held 640 million barrels, according to the Energy Information Administration. Biden sold that down to 350 million bbl in 2023, the lowest level in 40 years.
This SPR move was a pleasant surprise to analyst Matt Portillo at TPH Energy Research, who in a note this morning did some math on how long a refill would take. Given that the SPR’s network of hollowed out salt down caverns on the Gulf Coast now hold about 400 million barrels out of 700 million total capacity. And given a theoretical maximum fill rate believed to be about 800,000 bpd, it would take about 60 weeks minimum to refill.
Biden sold off the SPR to levels not seen in 40 years.
EIA
However, notes Portillo, the caverns have never been refilled at this rate over any extended period of time, and there is the possibility that the physical integrity of the caverns suffered during the drawdown period. Realistically, we shouldn’t expect a refill rate of any faster than 400,000 bpd. At that pace it would take about 3.8 years, nearly to the end of Trump’s second term.
Finding that much marginal oil supply would be a challenge, with big shale oil fields in Texas and North Dakota having plateaued. Alaska, however, could do the trick. ConocoPhillips expects its Willow project on Alaska’s North Slope to add 200,000 bpd over the next few years. Also thrilled at Trump’s move is Hilcorp Energy, owned by Houston billionaire Jeff Hildebrand, which controls Prudhoe Bay and the Alaska pipeline, which it acquired from BP several years ago, and has been working on its own drilling plans in the area. To maximize refinery efficiency, the Dept. of Energy would prefer to refill the SPR with heavier crude oil, like that from Alaska’s North Slope, rather than lighter shale oils.
Potentially complicating matters — Trump’s threat to enact tariffs of as much as $25/bbl on the import of Canadian crude oil as of February 1. Reducing the flow of Canadian oil would make the demand pull on Alaska and the U.S. frackers even stronger.
Not satisfied only with helping out the oil and gas industry, Trump took aim his first day at the wind power industry. He called a moratorium on new offshore wind projects, ostensibly to prevent dangers to marine birds and whales. Additionally he brought a halt to the 1,200 megawatt Lava Ridge wind project in Idaho which was to be built on federal land near a historic site. The Idaho House of Representatives passed a unanimous resolution against the wind project in 2023.
Trump critics, naturally, lament Trump’s withdrawal (again) from the Paris Climate Agreement (though the U.S. does already lead the world in CO2 reductions).
Supporters of Trump’s energy dominance policy are understandably giddy. “If you’re a fan of American energy, the last 24 hours are like Christmas all over again,” said Daniel Turner, executive director at 501(c)4 nonprofit Power The Future. “Make no mistake, it is American energy liberation day and we’re just getting started.”
Read the full article here