Trump taking ‘drill, baby, drill’ plan to Venezuela ‘terrible’ for climate, experts warn | Trump administration

Donald Trump has taken his “drill, baby, drill” mantra global by dramatically taking on Nicolás Maduro and asserting dominance over Venezuela’s vast oil reserves. Realizing the president’s dream of increasing the nation’s oil production would be financially challenging and “terrible for the climate” if realized, experts say.

Trump has aggressively sought to increase oil and gas production in the United States. Now, after the capture and arrest of Maduro and his wife, Cilia Flores, Maduro is trying to accelerate drilling efforts in Venezuela, which has the largest known oil reserves in the world, equivalent to approximately 300 billion barrels. accordingly Research company Energy Institute.

After Maduro was removed from Caracas, the US president said, “Oil companies will come in, they will spend money, we will take the oil back, frankly we should have taken it back a long time ago.” “There’s a lot of money coming out of the ground, everything we spend will be paid back to us.”

Trump added that as his administration pressures Venezuela’s interim government to repeal a law requiring half of oil projects to be state-owned, U.S. oil companies will “spend billions of dollars, fix badly deteriorated infrastructure … and start making money into the country.”

Major US oil companies such as Exxon and Chevron have so far remained silent on whether they will spend the large sums needed to realize the president’s vision for Venezuela. But if Venezuela increases its production to near its 1970s peak of 3.7 million barrels per day (more than three times current levels), that would further weaken the already faltering global effort to limit dangerous global warming.

Even increasing production from about 1 million barrels per day to 1.5 million barrels per day would produce about 550 million tons of carbon dioxide per year when the fuel is burned, according to Paasha Mahdavi, an associate professor of political science at the University of California, Santa Barbara. This is more carbon pollution than major economies such as the UK and Brazil emit annually.

“If millions of barrels of new oil are extracted a day, that would add a lot of carbon dioxide to the atmosphere, and the people of the Earth can’t afford that,” said John Sterman, a climate and economics expert at the Massachusetts Institute of Technology.

Climate costs will be particularly high because Venezuela produces some of the world’s oil with the highest carbon density. Mahdavi said large reserves of extra-heavy crude oil were particularly dirty and other reserves were “quite carbon and methane intensive.”

The world is close to breaching agreed temperature rise limits; As a result, we are already experiencing more severe heat waves, storms and droughts. Sterman added that increased drilling in Venezuela would further reduce global oil prices and slow the necessary momentum towards renewable energy and electric cars.

“If oil production increases, climate change will worsen faster and everyone loses, including the people of Venezuela,” he said. “The climate damages for Venezuela, along with other countries, will almost certainly outweigh the short-term economic benefits of selling a little more oil.”

During his first year back in the White House, Trump demanded that the world continue to run on fossil fuels rather than “rogue” renewables and threatened the annexation of Canada, a major oil-producing country, and Greenland, an Arctic island rich in mineral resources.

Critics have accused Trump of a fossil fuel-focused “imperialism” that threatens to disrupt international politics as well as further destabilize the world climate. “The United States must stop viewing Latin America as a resource colony,” said Elizabeth Bast, executive director of Oil Change International. “The Venezuelan people, not US oil executives, should shape the future of their country.”

Patrick Galey, head of fossil fuel research at climate and justice NGO Global Witness, said Trump’s aggression in Venezuela was “yet another conflict fueled by fossil fuels that are overwhelmingly controlled by some of the world’s most despotic regimes.”

“As long as governments continue to rely on fossil fuels in their energy systems, their voters will be hostage to the whims of autocrats,” he said.

A complex economic picture

Although the President’s stated vision is for U.S.-based oil companies to profit from Venezuela’s oil reserves, experts say keeping that promise may be complicated by economic, historical and geological factors.

Sterman said oil companies “may not be willing to make the investment needed because it would take much longer than President Trump’s three-year term.”

“It’s a lot of risk — political risk, project risk,” he said. “It looks very difficult.”

Galey said increasing production “is also a bad bet overall.” “A meaningful increase in current production would require investments of tens of billions of dollars in things like repairs, upgrades and replacement of creaky infrastructure,” he said. “This doesn’t even take into account the dire security situation.”

Venezuela’s oil production has fallen significantly from historic highs; Experts attribute the reason for this decline to both poor management and US sanctions imposed by Barack Obama and increased by Trump. By 2018 the country producing Only 1.3 million barrels per day; that is, roughly half of what Maduro produced when he took office in 2013, just over a third of what he produced in the 1990s, and about a third of his peak production in the 1970s.

Trump said US companies would revive production levels and the cost of doing so would be “reimbursed.” But experts say the economics of that expansion may not appeal to energy giants, and even if they choose to play along, it would take years to meaningfully increase output.

Increasing Venezuela’s oil production by 500,000 barrels per day would cost about $10 billion and take about two years, according to Energy Aspects. Mahdavi said that by using intermediate crude oil reserves, production could reach 2 to 2.5 million barrels per day within a decade. But reaching peak production would require development of the Orinoco Belt, where heavy, sulfur-rich crude oil is much more costly and difficult to extract, transport and refine.

A return to 2 million barrels per day by the early 2030s would require an investment of about $110 billion, according to industry consultancy Rystad Energy.

“It will take much more time and much more money to reach or approach 3, 4 or 5 million barrels per day of production,” Mahdavi said.

The increase in Venezuelan mining amid rising U.S. production could also be a challenge for sales. “Heavy Venezuelan crude that could be refined at U.S. facilities on the Gulf Coast will hurt domestic producers who loudly supported sanctions on Venezuelan oil until Trump kidnapped Maduro,” Galey said.

Mahdavi said some companies may be willing to “beat this uncertainty” as the United States plans to provide financial support to companies to drill in Venezuela.

“If you’re willing to take on the challenge … you’re still looking at relatively cheap crude that will give you a higher profit margin than you can make in the United States,” he said. “That’s why they’re still interested: It’s much more expensive to drill in the U.S. Permian Basin.”

Some US oil majors may be more open to Trump’s Venezuela strategy. Chevron, the only U.S. company operating in the country, may be poised to ramp up production faster than its rivals. ExxonMobil, which has invested heavily in oil production in neighboring Guyana, may benefit from the removal of Maduro, who has been staunchly opposed to this expansion.

However, in general, it remains unclear how US oil giants will react to Trump’s regime change and plans to increase oil extraction in Venezuela. What’s clearer, Mahdavi said, is that any expansion would be “terrible for the climate, terrible for the environment.”