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WHAT’S AT STAKE WITH BIDEN PLAN: The oil and gas industry, like union leaders in Pennsylvania, has taken comfort from Joe Biden’s assurances in recent weeks that he won’t impose a nationwide ban on fracking.
But the American Petroleum Institute, the largest lobby group for the petroleum industry, is still pushing back hard against Biden’s promise to block new oil and gas development on federal lands and waters.
That policy, unlike the more divisive fracking ban, was a mainstay among the entire Democratic primary field, a commonality that makes it feel quaint and overlooked today. But the potential effects on oil and gas operations are serious.
“It’s not enough to say you are against banning fracking when you on the other hand say you will restrict development of oil and gas on federal lands,” said Frank Macchiarola, API’s senior vice president of policy, economics, and regulatory affairs, in a recent interview with Josh, adding he “appreciates” Biden clarifying his fracking position.
It’s true that most fracking occurs today on private lands, but a good chunk happens in federal territory. Biden’s ban would not affect existing oil and gas leases, which can last 10 years.
For example, while most of the Permian Basin exists on private land in West Texas, some of it spills over to public land in New Mexico. And the New Mexico portion of the Permian just so happens to be the hottest place to drill right now, as Bloomberg‘s Rachel Adams-Heard has noted.
As of last month, there were more rigs drilling for oil in Eddy and Lea counties in New Mexico than in any other county in the U.S.
Local and state economies would be harmed: API released a study last month projecting New Mexico would stand to lose more than 62,000 jobs from a federal drilling ban. Oil and gas makes up nearly 40% of the state’s budget.
New Mexico’s Democratic Gov. Michelle Lujan Grisham has previously said she wants New Mexico, the top recipient of energy revenues from federal lands, exempted from any drilling ban. Grisham’s office has been more noncommittal recently, though.
It has clear pluses for Biden though: Supporters of the policy say a federal drilling ban would be symbolically important and would pack a decent punch reducing emissions. Importantly, federal law gives the executive branch broad powers on how to manage public land, meaning this is something Biden could do without Congress.
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.
CHECKING THE RECORD ON TRUMP’S ‘ENERGY DOMINANCE’ PROMISE: President Trump, during his first term, largely delivered for an oil and gas industry that is facing financial stress and increasing public scrutiny, providing tax cuts and cutting regulations, Josh reports in a story this morning.
But the pandemic-fueled price crash slowed progress toward Trump’s “energy dominance” promise, and many deregulatory moves are caught in court and vulnerable to Biden undoing the work (a rollback of the rollback, so to speak).
As oil and gas have become the next target of climate activists after coal’s demise, Trump’s policies might best be remembered for helping to avoid a worse fate had Hillary Clinton won.
“They didn’t just dodge a bullet. They dodged a salvo of cannonballs,” said Bob McNally, president of Rapidan Energy Group and former oil official in the George W. Bush administration.
There was also bad stuff for the oil industry: Hello, China trade war and Trump’s recent flip-flop that produced expanded offshore drilling bans.
Critics say Trump has been harmful for the oil industry long term, by producing sloppy deregulatory work and igniting business and investor climate activism.
“I don’t think Trump delayed problems for industry — he has made them worse,” said Ben Ratner, a senior director with the Environmental Defense Fund+Business.
Look at the courts for Trump’s biggest legacy: He has installed more than 200 federal judges and has a chance to give the Supreme Court a 6-3 conservative majority. As Kevin Book of ClearView notes, “if laws don’t change, that legacy matters for the oil and gas industry.”
Meanwhile, if Biden wins and Democrats end the filibuster to pass new climate legislation, Trump-appointed judges committed to reading the law as written may not be inclined to interfere. That makes this “by far the most pivotal election for energy policy bar none,” McNally says.
OIL AND GAS SCORE A COURT WIN ON METHANE: A federal district court struck down an Obama-era regulation curbing methane from oil and gas production on federal lands, a victory for industry groups after a back-and-forth legal fight that has lasted all of Trump’s first term.
“We are overjoyed that an overreaching regulation has been overturned today,” Western Energy Alliance president Kathleen Sgamma said in a statement on the ruling. Her group had been one of the challengers to the Obama-era rule, which restricted venting and flaring of methane.
The Trump administration had attempted, unsuccessfully, to peel back the Bureau of Land Management’s regulation administratively. That effort was undone by a separate federal district court in California in July, restarting the lawsuit over the original Obama-era rule.
The Wyoming federal district court, in a ruling late Thursday, said the Obama administration’s rule was unlawful in part because it stretched the Bureau of Land Management’s authority and encroached on the EPA’s role to curb air and climate emissions, especially since the EPA hadn’t yet set methane curbs for existing oil and gas wells.
The Trump EPA has since eliminated any federal regulation of methane emissions.
The fight is far from over: California Attorney General Xavier Becerra is already signaling he will appeal the ruling and continue to defend the Obama-era methane rule.
Even the court acknowledged litigation is likely to continue. “Three and a half years later, after several turns and loopty-loops, it seems the roller coaster has returned to the station, though the Court doubts any of the parties will be exiting the ride just yet,” Judge Scott Skavdahl wrote.
DUKE ENERGY TARGETS NET-ZERO METHANE BY 2030: The North Carolina-based utility announced Friday it will strive to zero out methane emissions from its two local gas distribution companies over the next decade.
To do so, the company will improve its monitoring and measurement of methane emissions, including through an ongoing pilot testing out ways to measure methane through satellite and aircraft, said Sasha Weintraub, who heads up Duke’s natural gas business unit. The company will also improve efficiency in its operations and damage prevention, Weintraub said during an investor presentation Friday.
“We may need some offsets in order to achieve these goals, and if we do, we’ll be using renewable natural gas,” Weintraub added. Renewable natural gas is gas derived from organic waste like cow manure.
Other notable news from Duke’s investor day: The utility will be adding a climate metric to its executive compensation next year, tied to its goal to reach net-zero emissions by 2050, said Lynn Good, Duke’s CEO.
On policy, Good addressed concerns that Trump’s recent executive order expanding a ban on offshore drilling off the coast of several southeast states could negatively affect offshore wind leases. Good said Duke Energy is still learning more about the order, but doesn’t expect it to affect existing offshore wind leases. In addition, she said there will be “tailwinds” incentivizing renewable energy growth even if wind and solar tax credits aren’t extended by Congress.
BANK ON NET-ZERO: HSBC, the largest bank in Europe, committed Friday to reducing carbon emissions across its customer base to net-zero by 2050 or sooner.
The bank said it would provide between $750 billion to $1 trillion in financing to help clients transition to cleaner energy.
HSBC aims to reach net-zero emissions for its own operations and supply chain even sooner, by 2030.
Activists applauded HSBC’s plan but criticized the bank for not promising to stop financing fossil fuels, including to the coal sector, in Asian countries.
JPMorgan Chase is facing similar questions regarding how it handles fossil fuel clients like ExxonMobil after announcing this week it will align its financing with the Paris climate agreement. Morgan Stanley last month also announced its own climate commitment to strive for net-zero financed emissions by 2050.
PENDLEY POWER PLAY: Ok, then. “Two weeks after a federal judge in Montana ruled the Trump administration’s choice to direct the Bureau of Land Management rose to his position illegally, William Perry Pendley [said] the decision has changed nothing,” the Powell Tribune reported Thursday.
Pendley, in an interview with the Wyoming-based news outlet, claimed the federal court decision “has no impact, no impact whatsoever.”
“I have the support of the president. I have the support of the Secretary of the Interior and my job is to get out and get things done to accomplish what the president wants to do — which means increase recreational opportunities on federal land and to increase opportunities for jobs, so we can [economically] recover back to where we were pre-pandemic,” Pendley said.
This comes a few days after the Interior Department said Secretary David Bernhardt would supervise BLM while it appeals the court ruling, but also keep Pendley in the position of deputy director for programs and policy.
CAN’T KICK COAL: Trump’s promises to revive coal have faltered due to unstoppable market forces, but the administration is showing support for the industry in the weeks before the election.
Energy Secretary Dan Brouillette, shortly after visiting a Montana coal mine, is headed to Norfolk, Virginia, on Monday to tour the Lambert’s Point export terminal and “highlight the importance of coal in America’s energy future,” according to the agency. More than one third of U.S. coal exports, which were down nearly 30% the first half of this year, leave from the site.
MORE $$$ FOR NUCLEAR: The Energy Department announced Thursday it is providing $26.9 million in funding to three advanced nuclear technology projects.
The recipients’ projects, based in California, Connecticut, and Minnesota, include two hydrogen demonstrations that could increase the flexibility and profitability of existing light-water nuclear power plants.
“These awards continue to demonstrate DOE’s commitment to accelerating U.S. advanced nuclear technology via private-public partnerships with our industry partners and national laboratories,” said Rita Baranwal, assistant secretary for the Office of Nuclear Energy.
DOE is also gearing up next week to unveil the recipients for its Advanced Reactor Demonstration Program, launched in May, offering $160 million for companies to build two reactors that can be operational in five to seven years.
SENATE DEMOCRATS QUESTION BLACKROCK’S CLIMATE COMMITMENT: “You lag of your peers in exercising your fiduciary responsibility to make companies account for their contributions — and exposure — to climate risks,” five Senate Democrats wrote BlackRock CEO Larry Fink in a letter Thursday.
The senators — Sens. Brian Schatz, Sheldon Whitehouse, Elizabeth Warren, Tammy Baldwin, and Martin Heinrich — say BlackRock’s proxy voting record is “troubling and inconsistent” with Fink’s pledge in January to make climate and sustainability central to how it engages with the companies it invests in.
BlackRock supported few “climate-critical” shareholder resolutions in 2020, according to the senators’ letter. The asset manager has also opposed shareholder resolutions that would increase disclosure of election spending and lobbying.
NEW LCV AD TARGETS BIG OIL: “Big oil knew. Big oil lied. We need a president that will make them pay,” reads the text at the end of League of Conservation Voters Victory Fund’s new 60-second spot supporting Biden.
The environmental group launched the ad Thursday as part of a $2 million cable and digital buy, which will start out in major swing state Arizona. Instead of going after Trump’s environmental rollbacks, the ad features portrayals of oil company CEOs boasting about covering up climate science and electing Trump to undo environmental controls on the industry.
The launch comes the same week the Biden campaign released a climate change ad of its own, a 60-second spot featuring Michigan farmers. It’s the first time a presidential campaign has ever run a dedicated ad on climate change during the general election.
TRUMP’S LATEST BOOST FOR ETHANOL: The Agriculture Department announced Thursday it would invest up to $100 million to increase sales of ethanol and biodiesel, in the Trump administration’s latest push to support biofuels in the run-up to the election.
The agency doled out the first $22 million in grants Thursday to projects in 14 states, and it suggested the funding would increase ethanol demand by nearly 150 million gallons each year.
The Rundown
Wall Street Journal Saudis consider canceling OPEC plans to boost output
Wall Street Journal There’s no oil in Wisconsin. The fracking bust hit it anyway.
Reuters Hurricane Delta shuts most US offshore oil output in 15 years
Bloomberg Pipeline billionaire follows playbook, stepping down but staying
Reuters California needs forests to fight climate change, but they are going up in smoke
Bloomberg Law Court prods EPA authority, questions climate rule’s adequacy
Calendar
TUESDAY | OCT. 13
2 p.m. The National Hydropower Association in partnership with ClearPath hosts a virtual event titled, “What does the 2020 Election mean for Clean Energy?”
