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DECISION TIME NEARING: President Joe Biden is in a position to overhaul the next five-year offshore oil and gas leasing program, which he and many of his fellow Democrats want to dismantle.
But cashing in on that political advantage in the face of ever-changing economic, environmental, and political considerations will be a major challenge for the administration. It’s under immense pressure both to stay the course on an aggressive climate change agenda — and Biden’s campaign promises to restrict drilling and leasing — and respond to a global energy crisis that’s pushed up the price of oil and gas to multi-year highs.
Interest groups have weighed in as Interior moves ahead on its proposed offshore leasing program, the comment period for which expires today.
What kind of program to build: The Interior Department released its 2023-2028 proposed program for leasing in the Outer Continental Shelf behind schedule on July 1 to replace the 2017-2022 program that had expired a day earlier. Interior’s proposed program provides for up to 11 new lease sales between 2023 and 2028, including 10 in the Gulf of Mexico and one in Alaska’s Cook Inlet, while it also considers a “no sale” option.
The oil and gas industry has consistently appealed to the administration to finalize a program with lease sales and abundant acreage, arguing that producers need certainty that the offshore will be available now and in the future in order to justify continued investments in production.
U.S. producers providing more oil and gas to the world “has not only created global environmental benefits, it has also changed geopolitical dynamics for the better, resulting in greater energy security for the U.S. and its allies,” the American Petroleum Institute said in comments filed with the Bureau of Ocean Energy Management.
Republicans are further arguing that the administration’s delays and reforms are harming the effort to support Ukraine and raising energy prices.
“Our allies in Europe are facing an energy crisis forcing the closure of manufacturing businesses and impacting supply chains which also leads to inflationary pressures throughout their economy,” 21 GOP senators wrote to officials, including Biden, earlier this week in pressing for a final program with lots of acreage.
Offshore leasing helps fulfill the United States’ obligation “to do everything within our power to help ease these burdens and remove this uncertainty for both Americans and our allies,” they said.
Fight over the no-sale option: Green groups, who have asked Interior to extend the comment period for the proposed program, have demanded Interior provide no new leases in the final program and were incensed at the department for contemplating the sale of tens of millions of acreage despite Biden’s climate change goals and his promises to restrict offshore leasing and drilling.
Nearly 200 environmental and other community groups wrote administration officials this week to demand no sales and took aim at BOEM’s draft programmatic environmental impact statement released alongside the proposed program.
“Insultingly, the proposal concludes that cumulative impacts of eleven additional sales will be felt less in these areas due to the very fact that they are already sacrificial zones replete with industrial development,” they wrote.
The administration at least is keeping the no-sale option open by including it in the proposal, something that for environmental groups was overshadowed by the potential for 11 new sales but which industry groups clung to.
“There is no precedent for a zero-sales approach in the several decades since [Outer Continental Shelf Lands Act’s] implementation,” API commented, adding that BOEM “cannot comply with OCSLA’s directive to prepare and maintain a five-year schedule of lease sales if it schedules zero sales.”
Big changes from July 1 to today: The passage of the Democrats’ Inflation Reduction Act has complicated the effort to scale down the leasing program further, beyond the existing pressures on the administration to facilitate more domestic production to insulate consumers from volatile prices and the whims of OPEC+.
The bill would prohibit the Interior Department from issuing an offshore wind lease — a priority of Biden’s — in the Outer Continental Shelf unless it carries out an offshore oil and gas lease sale covering at least 60 million acres during the prior year.
Moreover, the discretion Interior and BOEM had to carry out the lease sales it canceled back in May under the previous offshore program has been taken away under the act, the department stated this morning in announcing that it has prepared draft supplemental environmental impact statements for Lease Sale 259 and 261.
BOEM “has no discretion on whether to hold these lease sales,” it said.
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BIDEN FACES GOP HEAT FOR REPORTED DEAL TO LIFT VENEZUELA SANCTIONS: Republicans are bashing Biden over reports that he is looking to provide “significant” sanctions relief to Venezuela’s authoritarian government in order to allow Chevron to resume pumping oil there—clearing the way to resume oil exports to the U.S. and EU.
Under the proposed deal, reported by the Wall Street Journal, the Biden administration would grant sanctions relief to Venezuelan President Nicolás Maduro on the condition he resumes long-stalled talks with political opposition on the conditions needed to hold free and fair presidential elections in 2024.
The U.S. began talks with Venezuela about possible sanctions relief shortly after Russia’s invasion of Ukraine in March. The negotiations gained momentum this weekend after Biden announced a prisoner swap between detainees in Washington and Caracas.
Biden and Democrats are particularly eager for added supply following OPEC+’s production cut decision.
But prominent Republicans have blasted the report as damning for Biden’s energy policies.
“We need to unleash American energy development–NOT rely on dictators in adversarial countries like Venezuela for oil,” Sen. Steve Daines, a Montana Republican, said in a statement.
“Why on earth would you let Venezuela’s corrupt leader Maduro — a Russian lackey – make money by selling oil and not let freedom-loving Pennsylvanians, Kansans, Oklahomans, Texans and North Dakotans before that?,” former CIA director Mike Pompeo said on Twitter. “Unconscionably dangerous.”
The Biden administration said in response to the news that it has no plans to change its sanctions policy on Venezuela without “constructive steps” from Maduro to restore democracy. “Our sanctions policy on Venezuela remains unchanged,” White House National Security Council Spokesperson Adrienne Watson told Reuters in a statement. “We will continue to implement and enforce our Venezuela sanctions,” she added.
CLIMATE CHANGE MADE EUROPE’S EXTREME DROUGHT 20 TIMES MORE LIKELY, REPORT FINDS: The extreme drought that hit Europe this summer—exacerbating wildfires, threatening crops, and causing key waterways to fall dangerously low—was made 20 times more likely due to effects of climate change, according to a new report from the World Weather Attribution.
In the report, scientists found that the drought was caused by an increase in temperatures, rather than a variation in rainfall. (Temperatures have risen by 1.2 degrees Celsius since the 1880s, when collection of reliable temperature data first began.)
Prior to human-caused global warming, WWA said, this type of extreme drought would have otherwise occurred once every 400 years. Now, they said, similar events can be expected every 20 years.
“We are seeing the fingerprints of climate change in the drought we’ve just seen, and climate change is hitting us hard,” Maarten van Aalst, director of the Red Cross Red Crescent climate center, and co-author of the study, told Politico EU.
TREASURY FAST-TRACKS ELECTRIC VEHICLE AND CLEAN ENERGY CREDIT RULES: The Treasury Department is expediting its formulation for determining “scores” of tax credit incentives provided under the Inflation Reduction Act for EV purchases and clean energy investments, in an effort to provide a “roadmap” of sorts for manufacturers, automakers, and energy investors as they seek to determine their eligibility for the roughly $270 billion worth of clean energy tax credits included in the new law.
Under the fast-tracking effort, reported by Bloomberg, Treasury officials hope to complete the rule-writing process for some clean energy programs within “months.” The government has already requested public comments on implementation of the IRA proposals, which will end by Nov. 4 at the latest.
“We have to get implementation right. That means we need to listen, engage and move quickly to translate policy into action,” senior White House adviser John Podesta, who is helping oversee the new guidance, told reporters. “We are trying to do this expeditiously. You will see some of this guidance out before the end of the year.”
BOEM TAKES STEPS TOWARD FIRST CALIFORNIA OFFSHORE WIND SALE: The BOEM published another environmental assessment yesterday for its planned offshore wind lease sale off the coast of California, setting the agency to move forward with the sale this year as planned.
BOEM concluded there would be no significant environmental impact associated with its proposed sale of leases in nearly 240,898 acres in Morro Bay off the coast of San Luis Obispo County.
The agency is also contemplating leasing more than 132,000 acres in the Humboldt wind energy area off the coast of northern California, for which it concluded back in May there would be no significant impact to environmental resources.
Interior has said it plans to hold the California lease sale by the end of this year.
EVIDENCE OF DETONATIONS UNCOVERED IN NORD STREAM PROBE: Swedish authorities said they have discovered evidence of detonations during their investigation into what caused the subsea Nord Stream natural gas pipelines to leak last week, Reuters reported.
The findings have “strengthened the suspicions of gross sabotage,” the Swedish Security Service said today.
The Rundown
Bloomberg The massive gas field that Europe can’t use
Financial Times Moldova’s dependence on Russian gas plays into Vladimir Putin’s hands
Calendar
THURSDAY | OCTOBER 6
1:00 p.m. The Nuclear Regulatory Commission will convene virtually for its meeting of the Advisory Committee on Advanced Nuclear Reactor Safeguards, or ACRS.
