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RECAPPING EVERYTHING THAT’S HAPPENING WITH OFFSHORE LEASING: Willow’s approval in Alaska is the energy production news of the year, but there’s a lot else simultaneously developing related to offshore leasing, between Interior’s updated five-year plan schedule and advancement of new lease sales in the Gulf of Mexico.
The Outer Continental Shelf is set to be another proving grounds for the administration, which has new mandates from Congress to lease but also maintains wide authority over what happens on those leases after the fact.
Here’s the rundown of what is planned for this year: Interior and the Bureau of Ocean Energy Management announced a proposed notice of sale Friday for Lease Sale 261, the second of two offshore oil and gas lease sales it must carry out pursuant to the Inflation Reduction Act. The first Gulf sale will be held later this month and covers 73.3 million acres. BOEM proposes to offer another 73.4 million acres in 261.
Environmental plaintiffs filed suit last week to block the March lease sale, a strategy they had success with prior to passage of the IRA, if it only lasted for a few months time.
The five-year program: All offshore oil and gas lease sales advancing this year are doing so at express direction from Congress in the IRA and independently of any active five-year leasing program in the Outer Continental Shelf, which is new for BOEM.
Interior intends to finalize its new five-year program in December, it said last week in a court filing, blaming the delay on the mechanics of “changing presidential administrations with contrasting policies” and adverse federal court decisions.
The administration is urging the D.C. circuit Court of Appeals to reject a request from the American Petroleum Institute to mandate finalization of the program by September. Interior said it doesn’t have all of the data it needs to complete its analysis for the plan and argued that speeding up issuance of a program would be harmful to the public.
It also argued that Congress has already “stepped in to address the gap between the 2017-2022 Program and the next Program” and remarked that Congress did not similarly give it a date to complete the program, as it did for the lease sales.
Mike Sommers, president and CEO of API, said the IRA’s leasing mandates were positive but not a long-term solution, likening them to the incremental extensions of tax credit provisions for one to two years. Solar and wind advocates long complained about such incremental extensions in years past because they gave those sectors little to work with in the way of incentives.
“You’d hate to have it be like it’s a tax credit, like tax extenders at the end of every year. ‘Oh, we have to do another series of legislatively enacted lease sales.’ That doesn’t give any certainty to the industry on a long-term basis,” Sommers told Jeremy.
Cook Inlet: Cook Inlet was a demo of the administration’s balancing congressional mandates with its agenda to limit climate change and constrain new development on federal lands. The Biden administration’s hand was forced in a way on the Gulf lease sales and the Cook Inlet sale, but it has found ways to compensate by implementing higher royalties on new leases, something the IRA also authorized.
Interior declined to go with a lower-royalty “energy-security” option in Cook Inlet after BOEM had urged it not to “since it would not include an appropriate surcharge to account for [GHG] impacts,” as expressed in a BOEM memo to principal deputy assistant secretary Laura-Daniel Davis.
It was over this that Sen. Joe Manchin said he would block Daniel-Davis’s nomination to be assistant secretary.
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INTERIOR PAIRS WILLOW APPROVAL WITH FURTHER RESTRICTIONS: The Biden administration approved ConocoPhillips’s Willow project this morning while announcing further restrictions on development in the National Petroleum Reserve-Alaska.
Interior’s record of decision allows the oil and gas major to develop three drilling sites, although it excludes the possibility of a fourth site as was provided for in the department’s preferred alternative.
“This is significant in the fact that not only will this mean jobs and revenue for Alaska, it will be a resource that is needed for the country and for our friends and allies,” Sen. Lisa Murkowski told reporters.
What else is off the table: Interior will initiate a rulemaking to consider additional protections against development for the more than 13 million acres designated as Special Area in the NPR-A.
President Joe Biden signed a memorandum today to withdraw approximately 2.8 million acres of the Beaufort Sea in the Arctic Ocean near the NPR-A. Covered acreage is “indefinitely” off limits for future oil and gas leasing.
Available acreage in the NPR-A has gone back and forth between administrations. Biden effectively returned the Reserve to its Obama-era integrated activity plan, restricting oil and gas development to 11.8 million out of 23 million total acres. This decision reversed the Trump administration’s decision to open up development on 18.6 million acres within the Reserve.
Sen. Dan Sullivan said he got assurances from administration officials that the restrictions they’re pursuing would not touch existing leases in the Reserve covering a total of 1.5 million acres, but the extent of the restrictions remain unclear.
“We know what the map looks like, we know what the areas are, but in terms of actually defining what these special protections mean … we are all going to be waiting to see this,” Murkowski said.
Disappointments: The resource protections and exclusion of the fourth drilling pad were not enough to allay concerns of environmental and other NGOs, as well as Democrats in Congress who strongly opposed the project.
Sen. Ed Markey called the approval an “environmental injustice” that “sends the wrong message to our international partners” and others who share the Biden administration’s priority in fighting against climate change.
RUSSIA SAYS NORD STREAM BLAME ON ‘PRO-UKRAINE’ GROUP IS DISINFO: A top Russian Security Council official said the U.S. and Britain were sowing deception by blaming a pro-Ukrainian group for carrying out the Nord Stream pipeline explosions last fall, describing the new allegations as an attempt by the West to “cover up” those truly responsible for the blasts.
“In an attempt to cover up the true people behind the crime, pro-government Anglo-Saxon media—on orders from above—have named a culprit – a group of Ukrainian terrorists,” Nikolai Patrushev, the security council official and longtime ally of Russian President Vladimir Putin, told the newspaper Argumenti i Fakti.
“If newspapers claim with zeal that the sabotage was committed by a group of Ukrainian terrorists, then it is necessary to ask whether or not there is indeed such a group at all, and if it is capable of carrying this out,” said Patrushev, a former Soviet spy believed to be influential in Putin’s thinking.
His remarks come after the New York Times reported last week that a pro-Ukraine group believed to comprise Ukrainian or Russian nationals had exploded the Nord Stream 1 and 2 gas pipelines last fall, citing intelligence reviewed by U.S. officials.
The Times’ report was bolstered by German broadcast outlets and the print publication Die Zeit, which said the crew was believed to have rented a yacht from a Poland-based company to transport the explosives and place them at the crime scenes.
According to Die Zeit, the six-person group consisted of a captain, two divers, two diving assistants and a doctor, who were believed to have used professionally forged passports to rent the boat. That report also claimed investigators found traces of explosives at a table in a cabin of the yacht.
INDIA TO ENSURE COMPLIANCE WITH RUSSIAN OIL PRICE CAP: Indian government authorities have asked banks and traders to comply with the G7-led Russian oil price cap, Bloomberg reports, in what would be a notable change in tone from a country that has emerged as a top buyer of Russian crude since the start of the war in Ukraine.
To date, India has not publicly said it will adhere to the $60 per barrel Russian price cap imposed by Western leaders in December, though senior U.S. officials said this month that they are “satisfied” the import-dependent country is purchasing Russian crude below the capped price.
Indian officials held a “detailed discussion” with the U.S. and G-7 nations on the sidelines of a recent G-20 meeting. Though it was unclear what the leaders discussed, sources told Bloomberg that Indian officials seemed “satisfied” with the dealings.
Russia continues to ship much of its crude to buyers off-book via its growing fleet of unregistered “shadow” tankers and by using ship-to-ship transfers to transfer its supplies off the coasts of Spain and Greece.
UK AUTO INDUSTRY CALLS FOR URGENT RESPONSE TO US AND EU EV PLANS: Britain’s auto industry body warned in a new report today that the country risks falling behind in the global EV manufacturing race if it does not respond “urgently” to U.S. and EU efforts to incentivize production, and outlined a series of steps it viewed as necessary to help the country’s automakers compete.
“Britain’s ability to compete as an EV production leader is at risk unless government responds urgently to increasingly fierce international competition,” Britain’s Society of Motor Manufacturers and Traders said in the report, titled “Race to Zero: Powering Up Britain’s EV Supply Chain.”
The report called for Britain to provide more lucrative incentives and tax subsidies for EV battery producers, streamlining plans for battery production, and expanding the UK’s free trade agreements.
British Finance Minister Jeremy Hunt has described the IRA as a “very real competitive threat,” and said in February he expects Britain to issue its own policy response to the law “in the next few months.”
… The report also comes just days after European Commission President Ursula von der Leyen and Biden announced that the two sides will begin negotiations on a “targeted critical minerals agreement” working to allow minerals extracted or processed in the EU to qualify for EV tax credits included in the IRA.
The law had driven a wedge between Washington and Brussels, with EU leaders viewing it as a discriminatory law that would undermine its ability to compete. The European Commission last month unveiled its Green Deal Industrial Plan aimed at helping it compete with the U.S. as an EV and clean energy manufacturing hub.
The Rundown
Euractiv Biden, von der Leyen signal thaw on trade tensions
Wall Street Journal Nord Stream mystery looms in multibillion-dollar arbitration cases against Russia
CNN Norfolk Southern balks at compensating homeowners in East Palestine
Calendar
WEDNESDAY | MARCH 15
10:00 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing to examine implementation of the Infrastructure Investment and Jobs Act, focusing on perspectives on the Drinking Water and Wastewater Infrastructure Act.
