Daily on Energy: A win for vulnerable Republicans

“Thanks to the hard work of Senators Gardner and Daines, we’ll be able to take up their bipartisan Great American Outdoors Act in the next work period,” Senate Majority Leader Mitch McConnell said on the Senate floor Thursday. McConnell called the bill “a milestone achievement to secure public lands and ensure their upkeep well into the future.”

Earlier in the week, Colorado Sen. Cory Gardner had threatened to block the Senate from leaving for its week-long recess. Gardner said it was “unfathomable” for senators to leave town without considering additional pandemic relief legislation, according to Politico.

It seems like Gardner got what he really wanted, though: The Senate gaveled out Thursday, and Gardner touted having secured floor time for the public lands bill.

“Now is the time to pass this bill that will provide billions of dollars in funding for new jobs across Colorado and the country while protecting our public lands,” Gardner said in a statement, adding President Trump has already backed the legislation.

Montana Sen. Steve Daines, too, said the upcoming vote “will be one of the most historic conservation wins in Montana and the nation in decades.”

Gardner and Daines are among the Senate’s most vulnerable Republicans this cycle. Both are facing well-known former governors of their states — John Hickenlooper (who still faces a June 30 primary) and Steve Bullock (who jumped in the race after his failed 2020 bid).

Lucky for Gardner and Daines, their bill is all but guaranteed to pass: The legislation has a wide array of support, including from environmental groups like Sierra Club and the Natural Resources Defense Council, who are often at odds with Republicans over environmental policy. Hundreds of conservation groups, in a letter earlier this month, called on congressional leadership to quickly pass the bill.

House members from both parties, too, are ready to move the bill. In their own letter to leadership, more than 100 lawmakers called for the inclusion of public lands legislation in future virus relief packages.

The broad support is in part because the legislation fully and permanently funds the Land and Water Conservation Fund, a popular program that uses earnings from offshore oil and gas lease sales to preserve national parks and fund other conservation efforts. The bipartisan bill would also create a separate fund to address backlogged maintenance in national parks.

“One thing we’ve learned during the COVID-19 pandemic is that Americans want and need to get outside to exercise and find solace on our public lands and community parks,” said Tracy Stone-Manning, associate vice president of public lands at the National Wildlife Federation. “But too many Americans don’t have that access now. Expanding access to these spaces in the coming months and years should be an essential part of our collective national recovery.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

NOTE TO READERS: Daily on Energy will not be published Monday, May 25, in observance of Memorial Day.

SIGNS OF RECOVERY…CHINA’S RETURN TO BUSINESS AS USUAL: China’s oil demand last month recovered to 89% of what it was the same month a year ago, as the country where the coronavirus started emerged from lockdown measures and resumed travel and economic activity.

China, the largest consumer of oil outside the U.S., used about 12.7 million barrels per day of oil in April, compared to 14.3 million barrels per day in April of 2019, research group IHS Markit projected Friday.

The group expects Chinese oil demand to reach 92% of the prior year level in May.

Chinese oil demand had cratered by more than 40% in February.

“The degree to which it is snapping back offers reason for some optimism about economic and demand recovery trends in other markets such as Europe and North America,” said Jim Burkhard, IHS Markit’s vice president and head of oil markets.

Road traffic during weekdays is now at pre-lockdown levels in China. Large industrial activity has returned to near-or-at prior year levels. But use of public transportation and ride-sharing remains down from previous levels.

China’s priorities: Beijing, meanwhile, is dropping key environmental targets as it focuses on restoring economic growth, Bloomberg reported Friday.

China will strive for “a further drop in energy consumption per unit of GDP,” Premier Li Keqiang told the annual National People’s Congress, but he did not indicate a percentage decrease that China is targeting. China had pledged to cut its energy intensity by 15% from 2016 levels by 2020, and had listed a percentage target every year since 2014.

BROUILLETTE…US OIL SHUT-INS TO KEEP CLIMBING: Energy Secretary Dan Brouillette said Thursday that U.S. oil producers have shut in 2.2 million barrels per day of production, and he projected that output would fall even further.

“We’ll probably see that climb a little bit more before we start to see the demand curve pick up again,” Brouillette said during a remote meeting of the Secretary of Energy Advisory Board. “Hopefully that will allow us to stabilize this recovery and also begin the process of perhaps increasing our production and seeing this industry come back as strong as it was pre-pandemic and hopefully even stronger.”

Most projections, based on announcements by producers, have pegged U.S. oil shut-ins at 1 million to 1.5 million barrels per day. IHS Markit projected Thursday that U.S. producers would curtail about 1.75 million barrels per day of production by early June.

But, as we reported earlier this week, pipeline companies that purchase crude are reporting higher shut-in numbers.

Plotting a comeback: Producers will restore most of the curtailed wells in the summer and fall of 2020, IHS Markit projected, and that process could accelerate if the U.S. oil price remains above $30 per barrel — a level that allows operators to cover their operating costs.

However, about one-third of the shut-in oil (approximately 550,000 barrels per day) will stay off the market for the long-term, IHS Markit said.

National labs in the crosshairs: Brouillette also said during the meeting that DOE’s national labs, which have been focused on COVID-19 research, are seeing “slight increases” in cyberattacks.

“We know that there are nation-states around the world interested in some of the research being done in the laboratories,” Brouillette said. “They are very interested in the specific research into COVID-19. We are very, very protective of that type of information and that type of work. We have done a very good job of protecting this taxpayer research.”

COAL MINING COMPANY SUES OVER TRUMP MERCURY RULE REWRITE: Westmoreland Mining is bringing the Trump administration to court over its revisions to the Obama-era mercury and air toxics standards, in a signal that some in the coal industry don’t want to let the underlying standards remain in place.

The lawsuit puts the Trump EPA in the awkward position of defending the Obama-era regulations that it withdrew the legal basis for. Last month, the EPA scrapped the underlying justification for the mercury rules, though it decided to keep the standards themselves on the books.

Asked during a press call last month whether the EPA would defend the standards if challenged, EPA Administrator Andrew Wheeler said, “Well, of course, we defend all our rulemakings.”

GOP SENATORS GO TO BAT FOR RENEWABLES: A trio of Republican senators are asking the Treasury Department to take additional steps to help renewable energy, after the agency signaled earlier this month it would give some relief to the sector.

The senators — Senate Energy Chairwoman Lisa Murkowski, Susan Collins of Maine, and Thom Tillis of North Carolina — are calling on the Treasury to extend certain deadlines for the federal tax credits to account for equipment delivery delays. They’re also seeking modifications to requirements that projects must show continuous construction to remain qualified for the tax credits.

Their Thursday letter comes after solar industry groups raised concerns that Treasury’s plans to modify the so-called “safe harbor” for wind and solar tax credits wouldn’t help the solar industry that much, since solar projects don’t take as long to construct as wind turbines.

“At a time when the renewable energy industry is facing significant challenges, these steps will help protect American jobs and provide investor certainty as we work to rebuild our economy,” the senators wrote Treasury Secretary Steven Mnuchin.

THE UNINTENDED CONSEQUENCES OF ANTI-FLARING POLICIES: Current policies to limit flaring of oil and gas are counterproductive and ineffective at reducing emissions, according to a new research paper by Raphael Calel of Georgetown University and Paasha Mahdavi of the University of California Santa Barbara.

Restrictions on flaring, or deliberately burning unwanted gas as a byproduct to oil, can push oil producers to greater venting, the direct release of natural gas into the atmosphere during the development process. Whereas flared gas is visible and easier to measure with remote sensors, venting gas is invisible and harder to track.

Flaring and venting responsible for 6% of global greenhouse gas emissions.

“The policies might appear to be successful because they are reducing the burning of gas, but that success is masking the failure of what producers might be doing, which is venting the gas instead,” Mahdavi said.

The authors say policymakers should finance development of remote sensor technologies that can work to detect methane emissions.

Another problem is policies to promote the building of gas pipelines as a tool to transport the excess gas that would otherwise be flared, “is effectively a subsidy for oil and gas production,” the professors write in the paper, published in the Proceedings of the National Academy of Sciences. That’s because providing more economic uses and customers for the natural gas ensures there are more downstream emissions associated with it.

To solve that problem, the authors say policymakers should level new production taxes on oil and gas to finance the building of pipelines.

FIGHT HEATS UP OVER WHETHER TO PAUSE TRUMP WATER RULE: Industry groups, including the American Petroleum Institute, the American Farm Bureau, and the U.S. Chamber of Commerce, as well as landowners, are intervening in a lawsuit brought by California and more than a dozen states to defend aspects of the Trump administration’s replacement of Obama-era water protections.

The states are seeking to invalidate the Trump administration’s rule, which narrows the scope of waters covered by federal protections. They’re also calling on a federal district court to pause the Trump administration’s rule from going into effect until the legal challenges against it are resolved.

Defending and challenging simultaneously: The Pacific Legal Foundation is supporting the Sacketts, an Idaho couple who have long fought EPA water regulations, as they defend the wetlands provisions in the Trump rule. That’s even as the foundation supports other clients who are challenging the Trump rule, saying other provisions are still too broad.

A federal district court judge in California will hear arguments over whether to pause the Trump administration’s rule in a June 18 hearing.

SENATE FILLS UP NRC IN LAST DANCE BEFORE MEMORIAL DAY: The Senate on Thursday confirmed David Wright and Christopher Hanson by voice vote to be members of the Nuclear Regulatory Commission, giving the regulatory panel a full slate of five members.

The NRC had operated short for the past year.

“A fully staffed NRC will help ensure the agency meets its mission during this crucial time for America’s nuclear energy industry,” said Sen. John Barrasso, chairman of the Environment and Public Works Committee.

DEMOCRATS SEEK AIR MONITORING DATA FROM EPA: A coalition of Democrats from both chambers want to know that the EPA is continuing to track air pollution emissions amid the pandemic, and they’re seeking information about whether any monitoring equipment has broken or been shut down.

The recent letter, led by Illinois Senator Tammy Duckworth and Delaware Congresswoman Lisa Blunt Rochester, also asks the EPA to say whether it plans to add air quality monitors this year and whether it plans to monitor sources of ethylene oxide, which is emitted from medical sterilization facilities.

The Rundown

Reuters US shale bust slams rural economies as oil checks shrivel

Wall Street Journal Harold Hamm, fracking pioneer, faces a career reckoning

New York Times Scientists predict a ‘busy’ Atlantic hurricane season amid virus crisis

Axios Prince Charles leads global meeting on climate change and economy

New York Times ‘Expect more’: Climate change raises risk of dam failures

Calendar

FRIDAY | MAY 22

The House and Senate are out.