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Archive for the ‘energy policy’ Category

BOEM’s five year plan presented one of the few recent opportunities to “vote” solely on the issue of offshore oil and gas leasing. Advocates facilitated the voting process by providing form letters for and against leasing. Both opponents and supporters are quite good at these campaigns, so neither side had a significant organizational advantage.

BOEM summarized (Table A-11 of the plan) the public comments, and I tabulated the 748,719 letters on the attached spreadsheet. The number of letters supporting oil and gas lease sales exceeded those opposed by 72,383 or 21.4%. The supporters campaign also had more breadth in that there were 49 separate campaigns vs. 45 for leasing opponents.

The NRDC demonstrated their organizational clout with the largest single campaign (107,355 letters). Denise Neal, a name that is unfamiliar to me, impressively organized the largest proponent campaign (61,122 letters).

Summary:

  • letters supporting offshore oil and gas leasing: 410,551
  • letters opposing offshore oil and gas leasing: 338,168
  • letter campaigns supporting leasing: 49
  • letter campaigns opposing leasing: 45
  • largest campaign: NRDC – 107,355 letters in opposition (32% of all such letters)
  • largest pro-leasing campaign: Denise Neal – 61,122 letters in support (15% of all letters in support)

Reasons for and against leasing per BOEM Table A-11:

Reasons for supporting lease salesReasons for opposing lease sales
reduce energy costs, farming costs, prices of gasoline and other goodsclimate
jobsenvironmental justice, local communities
energy independencefisheries
intl competitivenessmarine environment
national securitymarine mammals
GoM production is lower in carbon intensity, higher US environmental stds.fossil fuel dependency, unnecessary to meet energy needs, oppose new fossil fuel investments, leasing “would not reduce gas prices”
domestic oil and gas preferable during transitionoil spill risks
help improve supply chainair pollution
help address inflationstockpiling ocean space, energy price gouging

Interesting contradiction: Opponents of Sale 257 argued in Federal Court that BOEM failed to consider the positive GHG effect that higher prices (the logical result of lower production) would have as a result of reduced demand. The judge agreed with that argument and vacated the sale. Some of the same groups have now commented (per the BOEM summary) that additional leasing “would not reduce gas prices.”

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The January 2022 post about a 5 year leasing plan with no lease sales would have been reality were it not for the congressional mandate in Section 50265(b)(2) of the IRA. That provision requires BOEM to offer at least 60 million OCS acres for oil and gas leasing within the 12 months prior to issuing an offshore wind lease. While I initially thought that requirement was petty, it is now apparent that without it we would have had a leasing plan with no lease sales.

The current leasing policy as articulated in both the draft and final proposed program is to phase out oil and gas production:

The long-term nature of OCS oil and gas development, such that production on a lease may not begin for a decade or more after lease issuance and can continue for decades, makes consideration of
net-zero pathways relevant to the Secretary’s determinations on how the National OCS Program best meets the Nation’s energy needs.

p. 6, Five Year Leasing Plan

Basing leasing decisions on highly uncertain “net-zero pathways” would seem to be a considerable stretch of the Secretary’s authority under the OCS Lands Act. A strategic shutdown of the offshore oil and gas program, which would dramatically increase energy supply and security risks going forward, should be authorized by Congress. Even the threat of such a shutdown could have major economic implications.

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The Proposed Final Program includes a maximum of three potential oil and gas lease sales – the fewest oil and gas lease sales in history – in the Gulf of Mexico Program Area scheduled in 2025, 2027 and 2029. 

DOI News Release

Tearing down what a lot of dedicated folks worked hard to build. 😢

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The plan looks good. It appears to be consistent with previous contingency plans. Offshore operations should not be impacted.

“During the shutdown BSEE will continue critical permitting, oversight, preparedness verification, and related activities that are necessary to protect workers and the environment from operations associated with conventional and renewable energy development on the Outer Continental Shelf. Approximately 40% of the 851 BSEE employees will be retained to accomplish these activities and will be designated as exempt, as their salaries will be funded from non-lapsing prior year carryover. Should an extended shutdown occur, exhausting current funding sources, all the exempt personnel would be designated as excepted as they are essential for life and safety.”

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Federal funding lapses, real or threatened, are rather common. They range from false alarms to the extended shutdown of 35 days that occurred in 2018-19. In no case have offshore oil and gas operations been significantly affected. BSEE and its predecessors developed and implemented contingency plans that identified “essential employees” needed to monitor operations and review necessary permits.

Most Federal agencies have posted updated Federal contingency plans on the OMB page established for the purpose. Noticeably absent is the plan for the Department of the Interior (DOI), which includes the bureaus responsible for overseeing energy operations on Federal onshore and offshore lands. Presumably this is just a bureaucratic delay, and DOI has plans for the safe continuation of operations. However, the Petroleum Association of Wyoming was sufficiently concerned that they wrote a letter to Secretary Haaland and the Director of the Bureau of Land Management, which is responsible for oil and gas operations on Federal onshore lands. That letter is attached below.

Hopefully, DOI will provide clarity on these matters today, since a Federal government shutdown could begin at midnight tomorrow. Needless to say, any disruption in ongoing oil and gas production operations would have significant safety and economic implications.

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Followup to our previous post on this matter:

  • How does a Coast Guard station casually post an endangered species observation on Facebook before confirming the accuracy of the sighting?
  • Even if the species identity had been confirmed, is a Facebook post an appropriate means of making such announcements?
  • Shouldn’t the observation have been reported to NOAA for any further action?
  • Was the Coast Guard station aware of Lease Sale 261 and the related Rice’s whale litigation?
  • Did the Coast Guard station understand the potential economic implications of the alleged sighting, not just for offshore oil and gas but for all commercial activities in the GoM?
  • Why did so many media outlets run with the Facebook post without confirmation from the Coast Guard or NOAA?
  • Why has only one organization, the Miami Herald, published the corrected information?
  • Why has there been no public statement from the Coast Guard?

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Over the weekend, the Coast Guard station in Venice, LA rather recklessly announced the following on Facebook: “CRITICALLY ENDANGERED SPECIES SIGHTING: Station Venice presents to you……. Rice’s Whale.” The Facebook comment captioned a 16-second video of the whales swimming nearby, reportedly in the Mississippi Canyon area of the Gulf of Mexico. The video was removed on Tuesday. CBS reported on the Facebook post but was unable to obtain confirmation from the Coast Guard.

Given the timing and significance of the Coast Guard announcement relative to Lease Sale 261, this was a massive report. However, we now learn that the whales were incorrectly identified. Both the Coast Guard and NOAA are confirming that the whales were misidentified as Rice’s whales and were actually sperm whales.

CLARIFICATION: This story has been updated to reflect that Coast Guard officials identified the whales spotted in the Gulf of Mexico as sperm whales after previously identifying them as critically endangered Rice’s whales. The National Oceanic and Atmospheric Administration also told McClatchy News in a statement that they are sperm whales.

Miami Herald

Wow!

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Assuming the Gulf of Mexico oil and gas lease sale proceeds tomorrow in accordance with Judge Cain’s order, some interesting questions and issues remain:

  • Will the lingering Rice’s whale issues affect bidding for deepwater leases? Friday’s court order is not a final resolution of those issues, either legally or administratively. While the Rice’s whale stipulation, at the direction of the Federal court, will not be included in the Sale 261 leases, BOEM’s Notice to Lessees and Operators (NTL) includes the same provisions and still stands pending further consultations with NOAA. Although the NTL is a “guidance document” (wink-wink), there are ways of making it stick through the exploration plan approval process. Even without binding requirements, companies might choose to fully comply to minimize legal risks.
  • When will the next GoM lease sale be held? Will the uncertainty spur or constrain bidding?
  • Will the 14 blocks with rejected high bids at Sale 259 receive bids at Sale 261? If so, will the bids be higher or lower?
  • Will bp, Chevron, Shell, Equinor, Oxy, and Woodside continue to be bullish on the GoM?
  • Will Red Willow Offshore, owned by the Southern Ute tribe, again be an active bidder?
  • Will Exxon again seek to acquire carbon sequestration leases at an oil and gas lease sale? After a long absence, it would be good to see the US super-major acquire leases for oil and gas purposes. Ditto for ConocoPhillips.
  • How many companies will participate in the sale? 30-35 would be a nice outcome.
  • What will be the sum of the high bids? >$300 million would be a good result.

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Not only have no official findings been released, but there has been little new speculation since our June 2023 update. Given the political stakes, it is increasingly unlikely that the responsible parties will be identified.

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The Federal Government has joined the Sierra Club et al in appealing Judge Cain’s order on Sale 261. BOEM has nonetheless committed to complying with the order if the appeal fails (likely).

BOEM is taking steps to comply with an order issued on September 21, 2023, by the U.S. District Court for the Western District of Louisiana regarding Gulf of Mexico Outer Continental Shelf Oil and Gas Lease Sale 261.   

Lease Sale 261 will be conducted on September 27, 2023. In accordance with the court’s order, BOEM will include lease blocks in Lease Sale 261 that were previously excluded due to concerns regarding potential impacts to the Rice’s whale distribution in the Gulf of Mexico.  

BOEM is also extending the bid submission period to 3 p.m. CST on September 26, 2023. 

BOEM

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