Interior official ducks leasing pause questions

May 14, 2021

A Biden offshore energy official yesterday declined to disclose just how long the administration's freeze on leasing might last, but said she expected oil and gas production to continue on federal lands for the foreseeable future.

At a hearing of the Senate Energy and Natural Resources Committee, Bureau of Ocean Energy Management Director Amanda Lefton said a comprehensive review of the way that the Interior Department manages oil and gas on public lands and waters was ongoing, but she stressed that fossil fuel production was not going to be abruptly halted by the administration.

"We expect that we will see continued production on our public land and waters for many years to come," she said.

Lefton — the latest of several Biden officials senators probed for answers — spoke in one of two hearings yesterday in which lawmakers debated, sometimes hotly, the merits of the country's federal offshore oil and gas sector as the country explores avenues toward a more carbon-constrained future (E&E Daily, April 28).

Republicans have bitterly complained ever since President Biden paused new oil and gas leases in the Gulf of Mexico and other federal lands and waters, pending a review of the federal oil and gas program's economic and climate impacts.

"This isn't a pause or a review. It is a ban with no end in sight," the top Republican on the committee, Sen. John Barrasso of Wyoming, said of the leasing moratorium. He blamed the administration for not being more forthcoming with its long-term plans for oil and gas.

Democrats, however, have championed the opportunity to reenvision how the country manages its vast stores of natural gas and crude oil in light of climate change.

But the White House moves have sparked consternation among GOP lawmakers who say the leasing freeze has a chilling effect on businesses and that Biden's real intention seems to be throttling the federal oil and gas sector (Energywire, May 13).

Those arguments played out again yesterday.

"Oil will be part of our economy, our global economy, for years, generations to come. It may just look different how we utilize. But I think our challenge here is to figure out, 'All right, if we are going to need this resource as humans, how are we going to be able to access it?'" said Alaska Sen. Lisa Murkowski (R).

She added, "I don't think we should put ourselves in this position that in order to get to a low-carbon and no-carbon future that oil is no longer a part of our reality."

Chilling effect on investors?

Sen. Cindy Hyde-Smith (R-Miss.) during a hearing yesterday. Francis Chung/E&E News

The Biden administration has promised an interim report on its review in early summer. But oil companies, and their lawmaker supporters, said the leasing freeze is already chilling confidence in the federal oil patch.

Mike Minarovic, CEO of independent oil and gas company Arena Energy LLC, told lawmakers that the leasing moratorium was weakening investment confidence and diverting future production out of the Gulf of Mexico.

"It's the fear that's out there," he said. "How long the leasing ban is going to continue is of great concern to the industry and capital providers."

Pressed by Nevada Democratic Sen. Catherine Cortez Masto on whether the moratorium barred use of a company's existing drilling rights, Minarovic said the impact was more about financial investors.

"It doesn't affect the permit. The permit is there. It affects the capital," he said.

Louisiana Democratic Gov. John Bel Edwards, who appeared as a witness, said his state supported climate initiatives to try to drive down its emissions.

"We are committed to these goals, but at the same time we are a major oil- and gas-producing state," he said.

Edwards said that Biden should resume federal oil and gas leasing by the third quarter of this year and that Congress should increase the portion of offshore energy revenue that the federal government returns to coastal states.

Lefton attempted to push back on the GOP argument that Biden was destroying energy jobs with the short-term moratorium, noting that such jobs have been declining year over year.

The decline has come about due to a variety of factors, including energy busts, greater mechanization and a weakening of investment support for drillers.

She instead pointed to the Biden administration's massive offshore wind push. If its goal of raising 30 gigawatts of offshore power by 2030 were realized, she said, the industry would generate as many as 80,000 jobs.

Edwards said that he could foresee a boon for Louisiana, which has roughly 250,000 oil and gas sector workers, in offshore wind power, but he warned that time was working against them.

"We can develop these things simultaneously, but if you pull the rug out from the traditional oil and gas too abruptly — and the pause goes on too long — that trend is not going to be seamless," he said.

Murkowski, who is a proponent of a gradual transition that retains oil development long term, warned that halting or slowing production from federal leases could be in conflict with the Biden administration's stated conservation aims by slashing conservation dollars.

Lefton agreed that energy revenues were an important part of the federal oil and gas program review.

She said the bipartisan Land and Water Conservation Fund provided "critical conservation dollars," and the future of that funding was something the administration and Congress should look at together.

"We believe LWCF will continue to be supported," Lefton said.

House weighs offshore reform, oil bans

House Democrats also looked offshore yesterday and found partisan friction. Members pressed a suite of bills to ban new oil and gas drilling off the coasts of California, Florida and other areas.

They also debated new regulations on offshore pipelines in the wake of a Government Accountability Office report last month that found thousands of miles of abandoned pipe littering the Gulf seafloor.

Members weighed six pieces of legislation, all of which dealt in some way with offshore energy exploration (E&E Daily, May 10).

In a pivot from the GOP focus on oil and gas economies, House Democrats argued that oil and gas could threaten tourism and fishing industries in places like Florida.

Rep. Jared Huffman (D-Calif.) said banning oil and gas drilling off the Northern California coast — as his bill, the "North Pacific Ocean Protection Act," would do — is not a controversial proposal.

"Drilling would hurt our coastal economy, not help," he said. "Where you drill, you spill."

Rep. Kathy Castor (D-Fla.), sponsor of H.R. 2836, the "Florida Coastal Protection Act," argued that Congress needed to enact protections on the chance that future presidential administrations try to expand oil and gas activity in new waters.

"Executive orders can be changed, they can be reversed," she said. "The future of our way of life depends on decisive action."

Rep. Donald McEachin (D-Va.) said his H.R. 570 would make public the reporting of safety violations to remove a "veil of secrecy" that currently exists.

"It is my strong belief that the public deserves to know what is happening in their waters," he said.

Rep. Julia Brownley (D-Calif.) said her bill was a direct response to the GAO report last month that 97% of pipelines in the Gulf have been allowed to be abandoned.

H.R. 2643 would order oil and gas companies to pay for third-party inspections and would levy per-miles fees on pipelines to provide a fund to clean up abandoned infrastructure when companies go bust.

Louisiana Republican Rep. Garret Graves argued that it was unthinkable that Gulf Coast residents who support the oil and gas industry would wantonly risk their home regions with industrial pollution.

Republican Minnesota Rep. Pete Stauber said Democrats were "tone deaf" to the importance of national energy, and he pointed to the recent ransomware attack on the Colonial pipeline that has caused gas shortages in the Southeast.

As for reforms, Republicans were hesitant. Stauber said the McEachin and Brownley bills were "ham-handed" attempts at "regulations for the sake of regulating."

"While I appreciate that these bills are intended to ensure safety and accountability ... I can't support these bills in their current form," Stauber said.

By:  Heather Richards
Source: E&E News