Daily on Energy: Biden leasing pause threatening jobs even while permits are issued, offshore lobby says

National Ocean Industries Association, the offshore energy industry lobby group, is out with a report today showing jobs associated with oil and gas production in federal waters are dependent on new leases being issued.

Erik Milito, NOIA’s president and CEO, told me he expects the biggest job losses to be felt by contractors who are hired to do seismic surveys of newly leased offshore waters, along with companies that drill exploratory wells on new leases.

Why offshore energy jobs are ‘different’: The offshore oil and gas industry is capital-intensive and highly speculative, requiring years of planning.

In addition to operators who drill on leases, there are also geologists, geophysicists, computer scientists, petroleum engineers, accounting and finance professionals, and economists employed during the pre-lease phase for tasks such as analyzing the potential of new offshore acreage before procuring a lease.

There are more than 200 different types of jobs identified in the report directly involved in offshore oil and gas projects, with average annual wages of $69,650, a number that is 29% higher than the national average.

Milito warns some of those jobs are at risk the longer Biden’s leasing pause lasts (although he couldn’t put a number on jobs already lost because of it).

“The idea is to show these offshore projects are different than most types of economic activity we have in the world,” Milito said. “You have a facility being constructed in the Gulf that will be running for 20 to 30 years that requires high levels of capital investment and labor. It’s not like you put out a piece of equipment, turn it on and leave it.”

Gulf production ‘crown jewel’: Nearly all U.S. offshore drilling occurs in the western and central portions of the Gulf of Mexico, and the industry even before Biden came into office had lost hope on opening up new areas to drill, such as the Eastern Gulf, offshore Alaska, and parts of the Atlantic.

Who can forget that former GOP President Donald Trump, in a pre-election pivot, imposed a 10-year extension of a moratorium on drilling in the eastern Gulf of Mexico, and expanded it to other coasts in the Atlantic.

But Milito says restricting new leasing in the industry’s “crown jewel” western and central Gulf, accounting for 15% of the nation’s oil production last year, could push offshore development to countries with less strict environmental rules.

An analysis in the Obama administration that considered an option of offering no new leases in the Gulf found that it would lead to more greenhouse gas emissions because it would shift production overseas to more carbon-intensive barrels.

“As part of climate discussion, offshore rises above any other form of production, but we won’t kid ourselves and think windows will be opening to new areas because offshore has become such a contentious issue,” Milito said.

Leasing state of play: The Biden administration has already canceled one oil and gas lease sale in the Gulf of Mexico scheduled for March, and has not announced plans for another lease sale expected this month.

Louisiana and other Gulf states filed a motion this week to a federal district judge to compel compliance with his ruling that Biden’s leasing pause is illegal and must end.

Interior Secretary Deb Haaland has argued Interior “is complying with the court order” but “it’s not a switch you can turn on.”

“Instead of turning to foreign, higher-emitting sources of energy and asking OPEC to increase oil production, President Biden should fulfill his legal obligation to schedule and hold offshore oil and gas lease sales and abandon the shortsighted leasing pause,” Milito said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [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.

BILL GATES’ PLEDGE — AND THREAT — OVER INFRASTRUCTURE BILL: Billionaire Bill Gates through his Breakthrough Energy fund is committing $1.5 billion to support clean energy demonstration projects passed as part of the bipartisan infrastructure bill approved by the Senate.

Gates made the announcement in an interview with the Wall Street Journal as he sought to generate momentum for the infrastructure bill, which still faces roadblocks among liberals in the House before becoming law.

He said Breakthrough would likely shift funding for the biggest projects to Europe and Asia instead if the package doesn’t become law.

Gates is pledging to apply for matching funds through an Energy Department public-private partnership clean energy demonstration program that would receive $25 billion in government funding as part of the infrastructure bill.

The bill would fully fund more than a dozen clean energy demonstration projects originally authorized under the Energy Act of 2020 approved at the end of last year, including for energy storage, advanced nuclear reactors, carbon capture, direct air capture, and renewables.

“Critical for all these climate technologies is to get the costs down and to be able to scale them up to a pretty gigantic level,” Gates said. “You’ll never get that scale up unless the government’s coming in with the right policies, and the right policy is exactly what’s in that infrastructure bill.”

Energy Secretary Jennifer Granholm welcomed Gates’s interest in the demonstration program, ​​tweeting that it “shows the private sector is ready to answer the call to combat the #climatecrisis & achieve a net zero economy.”

WHERE’S GRANHOLM? The energy secretary is in Richmond, Virginia, today to pump up the bipartisan infrastructure bill and its funding to build a network of electric vehicle charging stations.

Granhom is traveling with Rep. Abigail Spanberger, Democrat of Virginia, to a training center where union workers are learning how to install EV chargers.

Later this weekend Granholm will join Republican Sen. Lisa Murkowski in her home state of Alaska to tout how the infrastructure bill would “spur domestic manufacturing, build a clean energy economy, and create millions of good-paying jobs in Alaska and across the country,” although specific details on their itinerary are vague at this point.

SCHUMER DOWNPLAYS PARTY SQUABBLING OVER SPENDING PACKAGE: Senate Majority Leader Chuck Schumer said Democrats will settle their differences and pass a $3.5 trillion spending package in September despite warnings from key centrists that the price tag is too high and complaints from liberals that it falls short.

“We’ve got a chance,” Schumer told reporters yesterday, as the Washington Examiner’s Susan Ferrechio reports. “It’s a good, decent chance.”

The New York Democrat made the prediction hours after Senate Democrats advanced the $3.5 trillion spending framework in a resolution that allows them to pass the bill with only 51 votes.

“We all need to be unified, and everyone knows that,” Schumer said. “So, that doesn’t mean people don’t fight for their beliefs, but at the end of the day, we have to come together. Thus far, we have.”

Schumer will have to broker an agreement that can win the support of his Left and centrist factions.

The budget resolution calls for the package to include a “clean electricity payment program” that would pay utilities to generate more power from carbon-free sources, boost and expand clean energy tax credits, create a Civilian Climate Corps, and more.

DELTA VARIANT CRIMPS OIL DEMAND OUTLOOK: The International Energy Agency has downgraded its global oil demand forecast for the rest of this year because of the economic fallout from the Delta variant.

But the agency still expects the world’s consumption of oil to return to pre-pandemic highs in the second half of next year.

The IEA sliced its 2021 global oil demand growth forecast by 100,000 barrels a day, while boosting its 2022 forecast by 200,000 barrels a day, in its closely watched monthly oil market report out today.

Global oil demand surged by 3.8 million b/d on a month-to-month basis in June, as North American and European economies opened up. However, demand growth abruptly reversed course in July.

Watch for a surplus, not a shortage: “A recent rally has lost steam on concerns that a surge in Covid-19 cases from the Delta variant could derail the recovery just as more barrels hit the market,” IEA said.

Meanwhile, global oil supply is ramping up fast, as the time of Delta’s spread has coincided with a deal reached last month by a group of oil producing nations known as OPEC+ to restore production.

That means there could be a surplus of oil next year if OPEC+ continues to undo its cuts and producers not in the deal ramp up in response to higher prices.

ELECTRIC VEHICLE-RELATED JOBS PRIMED FOR GROWTH: There will be a doubling of the domestic electric transportation workforce throughout the supply chain by 2024, the clean energy business group Advanced Energy Economy projects in a report out yesterday.

The group expects industry employment to double from 2019 levels to nearly 300,000 jobs within the next three years, as demand for EVs and investment in charging grow.

The analysis, produced by BW Research Partnership for AEE, also identifies 2.1 million people in related industries, including in manufacturing, whose skills would enable them to work in EV-related work with little retraining.

Biden has touted his new push for 50% of new vehicle sales to be electric by 2030 as a job creator.

But auto unions are anxious because electric vehicles require less labor to make, threatening employment opportunities. Bernard Ricky, president of United Auto Workers Local 600, insisted at a White House event with Biden last week that his workers are “ready to build” electric cars, trucks, and batteries.

CALIFORNIA PUSHES OFF FOSSIL FUELS IN HOMES AND BUILDINGS: The California Energy Commission approved building code changes yesterday that would extend the liberal state’s push away from using fossil fuels in new homes and buildings.

The code, which would go into effect on Jan. 1, 2023, calls for new homes to be wired in ways that encourage conversion of natural-gas heating and appliances to electric sources such as heat pumps. It sets stronger ventilation standards for gas stoves, which environmental groups say could prompt builders to forgo gas in new construction. The rules also require many new California buildings and high-rise residential projects to be equipped with solar power and battery storage.

Combined, the Energy Commission projects the changes would reduce 10 million metric tons of emissions, equivalent to taking nearly 2.2 million cars off the road for a year, over 30 years.

The changes still have to be approved by the California Building Standards Commission.

The Rundown

Bloomberg How to sell ‘carbon neutral’ fossil fuel that doesn’t exist

Wall Street Journal Frackers, shippers eye natural-gas leaks as climate chance concerns mount

Reuters Exxon, Chevron look to make renewable fuels without costly refinery upgrades

Washington Post Senate push for expansive electric-vehicle incentives in $3.5 trillion budget could hit bumps

Politico Boris Johnson’s climate problem

Calendar

TUESDAY | AUG. 17

10 a.m. ConservAmerica will hold a webinar exploring a federal Clean Energy Standard.