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THE FUTURE OF THE WILLOW PROJECT: Interior’s record of decision yesterday cleared Willow, but it does not yet grant ConocoPhillips every license it will need to drill and transport to market its first barrel of oil, nor every subsequent barrel throughout the project’s life.
The oil and gas major will still have to apply for and be granted permits to drill, which will eventually have to be extended pursuant to stricter rules the Bureau of Land Management put in place in November, as well as other authorizations.
It’s a fact Interior was quick to point out, that its record of decision only goes so far.
“This ROD does not constitute the final approval for all actions, such as approval for related individual applications for authorizations, including (but not limited to) permits to drill and [rights-of-way] associated with the Project,” the document said.
What it means: Limiting or declining to extend drilling permits could become a means the Biden administration uses to limit the scope and production of the project to constrain emissions. Interior was clear yesterday that its preferences lie in shrinking Willow and development more broadly of Alaska’s reserves, even if the administration wants more oil production.
BLM issued instructions to field offices in November that put new constraints on extensions for approved applications permits to drill.
Extensions, which last for two years, are “discretionary authorizations and should only be approved when the permit extension serves the public interest,” BLM’s instructions said.
They also provided that field offices should approve no more than one extension for a given drilling permit, as public interest “will generally not favor successive extensions because requests for those extensions reflect a lack of diligence in drilling operations.”
The changes transformed extensions from being a “routine matter,” according to an analysis of the instructional memoranda from ClearView Energy Partners, and enable the bureau to use wider discretion.
Then, there’s litigation: Drilling permits offer a new arena where conservationists and green groups can take their legal fight against Willow now that the project is approved. Environmental plaintiffs have already taken on thousands of Biden administration-approved drilling permits on lands in New Mexico and Wyoming, arguing their approval violates NEPA and other environmental laws.
“BLM oil and gas drilling permit authorizations failed to take a hard look at cumulative greenhouse gas emissions or the severity of resulting climate impacts, and failed to employ available tools for assessing the impact of the climate pollution caused by the production and combustion of the federal mineral resources authorized by the challenged APDs,” plaintiffs said in an amended complaint filed in September. (Anschutz Exploration Corporation, an intervenor-defendant in the case, is owned by the same parent company that owns the Washington Examiner.)
Looking beyond the North Slope: The Biden administration is moving forward with new oil and gas leasing more steadily to comply with the Inflation Reduction Act and maintain its ability to issue leases and rights-of-way for renewable energy on public lands.
But it’s implementing higher rents and royalties on those parcels both onshore and offshore, which is expected to generally dissuade industry interest in leasing and developing on them.
Interior and the Bureau of Ocean Energy Management selected the max royalty rate for its Cook Inlet lease sale. BOEM had said the lower rate would be expected to yield increased interest in the parcels.
The bureau’s Gulf of Mexico oil and gas lease sale scheduled for March 29 also provides for the max royalty rate of 18.75%.
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RELATED – GREEN GROUPS BLAST BIDEN’S WILLOW APPROVAL AS A BETRAYAL: Two dozen of the nation’s leading environmental groups blasted the Biden administration’s approval of the Willow oil project yesterday, saying it flies in the face of his campaign trail pledges and climate commitments.
In a joint statement, the groups said approval of the three drilling sites is a “giant step backwards” in addressing the climate crisis. The decision “again demonstrates how political and industry interests put ‘business as usual’ before the health of people and the planet,” the groups said.
“We will consider every appropriate tool in our continuing fight to stop the Willow climate bomb,” Christy Goldfuss, the chief policy impact officer at the Natural Resources Defense Council, said in a statement.
CHINA RAMPS UP COAL: China is planning hundreds of gigawatts of new coal-fired power plants, creating a “diverging pathway” between it and much of the rest of the world’s progress away from the fuel source.
Neither North America nor the EU have any new planned coal capacity additions, according to a new report out today from European think tank E3G. Meanwhile, China accounts for some 72% of new planned coal capacity.
All world regions outside China saw a decline or plateau in the scale of new coal under consideration in the second half of 2022, according to the report.
Where new capacity is planned outside of China, a handful of other nations, including India, Turkey, and Indonesia, account for much of it.
A task for Kerry: Chinese leaders praise coal as enabling a more reliable energy system, and Xi Jingping pledged last year not to oversee emissions cuts at any costs.
The country’s climate change strategy would be one that will “ensure the normal life of the masses,” Xi said, adding that “reducing emissions is not about reducing productivity, and it is not about not emitting at all, either.”
John Kerry, who has led climate negotiations, reported last week that the Chinese have pulled back from talks with the U.S. due to acrimony between the two, blunting their mutual agreement at COP26 to “raise climate ambition.”
The Biden administration needs buy-in from China, India, and others if U.S. progress on cutting emissions isn’t to be dampened or completely overcome by rising emissions elsewhere.
Kerry made the point in January: “If we could physically go to zero emissions by tomorrow and with Europe, we would still have the same crisis.”
VENTURE GLOBAL ADVANCES PHASE 2 AT PLAQUEMINES SITE: Venture Global LNG announced a final investment decision yesterday for the second phase of its Plaquemines liquefaction terminal in Louisiana, allowing the company to move forward with construction.
The expansion will serve seven customers, from U.S. majors Chevron and Exxon to China Gas and the German EnBW, and brings the total project financing value of Plaquemines Phases One and Two to $21 billion. Phase One of the project reached the FID-stage last spring.
Venture Global, which expects to begin producing LNG at its Calcasieu Pass terminal by the third quarter, is one among a handful of companies out to meet growing demand for U.S. LNG., something the Biden administration seeks to enable.
EPA PROPOSES FIRST-EVER LIMIT ON PFAS IN DRINKING WATER: The Biden administration proposed a new rule today to limit the “forever chemicals” in drinking water nationwide.
The proposed regulation seeks to limit the level of per- and polyfluoroalkyl substances, or PFAS substances, that can contaminate drinking water. The new rule would require water utilities to detect and reduce PFAS contamination at Maximum Contaminant Levels (MCLs) of 4 parts per trillion and require public water systems to monitor for these chemicals.
Water systems would also be required to notify residents if its PFAS levels exceeded the proposed standards.
If fully implemented, EPA officials estimate the rule will prevent thousands of deaths and reduce tens of thousands of serious illnesses linked to PFAS contamination.
PFAS substances have been linked to serious health problems, including thyroid issues, liver damage, and certain cancers.
The rule comes after the EPA said last June that PFAS chemicals were more hazardous to human health than previously thought. At the time, it issued new guidance calling on local officials to take steps such as installing water filters, and monitoring for and notifying residents in the event of PFAS contamination, but stopped short of issuing a formal regulation.
Sen. Shelley Moore Capito, the ranking Republican on Senate Environment and Public Works Committee, praised the news: “After years of urging three consecutive administrations of different parties to do so, I’m pleased a safe drinking water standard has finally been issued for PFOA and PFOS,” the West Virginia lawmaker said in a statement.
“I’m looking forward to hearing from those who will be impacted by this announcement, including local water systems and ratepayers across the country, on how we can provide assistance for implementation,” she added.
VOLKSWAGEN TO BUILD FIRST NORTH AMERICAN BATTERY PLANT IN CANADA: Volkswagen will build its first North American battery plant in Canada, officials announced yesterday, expanding its battery production arm beyond Europe for the first time as it seeks to qualify for tax incentives included in the $369 billion Inflation Reduction Act.
VW said yesterday the PowerCo plant will be located in Ontario, and will supply VW’s $2 billion EV plant in South Carolina, which was announced earlier this month. “IRA is a big tailwind for us, as it decreases the cost of cells and makes possible a faster ramp-up of EV cars in the US,” Thomas Schmall, the head of VW’s components unit, said during a visit to a factory in Germany.
Separately, the automaker told EU officials it has paused development on a planned PowerCo facility in Eastern Europe as it waits for the European Commission to push through its own subsidy package to respond to the IRA.
The Rundown
Financial Times Northvolt: the Swedish start-up charging Europe’s battery ambitions
Bloomberg Why the global shipping industry can’t clean up its act
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.
TUESDAY | MARCH 28
10:00 a.m. 2123 Rayburn. The House Energy and Commerce Subcommittee on Environment, Manufacturing, and Critical Materials will hold a hearing on the government’s response efforts to the East Palestine train derailment.
