The U.S. oil and gas industry is urging policymakers to support LNG exports, permitting reform for energy infrastructure, and increased leasing in federal lands and waters.
The sector’s most prominent lobbying group, the American Petroleum Institute (API), laid out its policy priorities during a recent industry event and subsequent call with reporters.
As the industry heads toward a pivotal election later this year, “We will work to dismantle policy threats and empower voters with the facts,” API CEO Mike Sommers said.
Among the top threats perceived by the industry is the prospect of regulatory roadblocks for new liquefied natural gas export projects.
“Two years ago, President Biden committed to sending American LNG overseas to our allies,” said Sommers. “Yet recent reports indicate the administration may abandon this promise. Halting U.S. LNG approvals would put our allies at risk.”
Sommers’ comments come amid rumblings that the Department of Energy (DOE) may overhaul the approval process for LNG exports to countries with which the United States does not have free trade agreements (FTA).
A coalition of Congressional Democrats sent a letter to DOE Secretary Jennifer Granholm in November urging the department that climate impacts be taken into account when determining whether new licenses for LNG exports to non-FTA countries were in the public interest. Multiple news outlets reported earlier in January that top-level discussions were underway to determine what the more stringent approval criteria could look like.
Sommers continued, “This should not be controversial. In fact, one of the best things we can do for the environment is to send more U.S. LNG overseas to displace coal and help cut global carbon emissions.”
‘Cut The Red Tape’
On the permitting front, Sommers alluded to language in the bipartisan debt deal signed by President Biden last June. The legislation gave approval to the Mountain Valley Pipeline natural gas project and streamlined the review process for energy projects under the National Environmental Policy Act, aka NEPA.
Because of the bill’s passage, “we started the conversation on permitting reform,” Sommers said. “But it will take a lot more to rebuild our nation’s infrastructure for the demands of the future. We need to permanently cut the red tape that is blocking construction, investment, jobs and progress in America.”
He also noted that the White House Council on Environmental Quality (CEQ) substantially curtailed the NEPA reforms made in the debt ceiling law with a subsequent rulemaking.
In any event, “Today, energy infrastructure projects either take too long to permit, or they go the way of the Atlantic Coast and Keystone [XL] pipelines, and don’t get permitted at all,” Sommers said. “This broken process has consequences. For example, the lack of natural gas pipeline approvals is one of the reasons why New England families pay some of the highest wintertime energy bills in America.”
He added that, “it’s not just pipelines and LNG. Other energy projects like wind and solar can take four to six years to clear federal environmental reviews. These permitting delays could also impact emerging technologies like carbon capture and hydrogen – where our industry is leading in innovation.”
Sommers told reporters, “We’re seeking to have a coalition, not just with the oil and gas industry, but with other parts of the economy as well who are struggling with this. I think it’s unlikely that they get anything more done this year, given that it’s an election year, but we’re going to keep at it.”
Citing the almost immediate reversal of the NEPA reforms by CEQ, Sommers said, “I think going forward, we may have to be more prescriptive to whatever administration is in office…to make sure that these projects actually get built. And unfortunately, the example may be, being more explicit like we were with the Mountain Valley Pipeline…”
He also cited the Inflation Reduction Act of 2022, which mandated offshore oil and gas lease sales as a prerequisite for offshore wind lease sales.
“It shouldn’t be that way,” Sommers said. “There should be a predictable permitting process that everyone can agree to…but if not, we’re going to have to continue to go to the Congress to get them to authorize these important projects.”
Where Are The Lease Sales?
As for federal leasing, Sommers said that, “The Biden administration has locked up federal lands and waters to resource development. They released the federally mandated offshore leasing program about 500 days late….and included only three lease sales through 2029. In fact, this year - for the first time - there will be no offshore lease sales.”
In the onshore segment, “the situation isn’t much better,” Sommers said. “The administration initially suspended quarterly lease sales, even though they’re required by law. They announced last year that they were indefinitely blocking nearly half a million acres from energy development in Alaska – in a federal reserve created by Congress for petroleum development.”
The Biden administration did, however, greenlight ConocoPhillips’ massive Willow oil project on Alaska’s North Slope. Total U.S. production of natural gas and oil also has risen by about 12% and 19%, respectively, since President Biden took office.
Leasing has slowed down dramatically, however. Sommers noted that the Obama administration offered 96 onshore leases during his first three years in office, compared with 18 under the current administration.
“To maintain America’s energy advantage going forward, policymakers must increase energy leasing in federal lands and waters, approve permits in a timely manner, and remove barriers to developing American energy,” Sommers said.
Methane Rules In Effect
Meanwhile, the Environmental Protection Agency (EPA) on Friday announced a proposed waste emissions charge for excess methane pollution by oil and gas producers, as mandated by the IRA.
The methane fee would apply to certain oil and gas facilities that report emissions of more than 25,000 metric tons of carbon dioxide equivalent/year to EPA’s Greenhouse Gas Reporting Program.
The fee starts at $900/metric ton of wasteful emissions in 2024, rising to $1,200 for 2025 and $1,500 for 2026 and beyond, “and only applies to emissions that exceed the statutorily specified levels,” regulators said.
EPA Administrator Michael Regan said, “Today’s proposal, when finalized, will support a complementary set of technology standards and historic resources from the Inflation Reduction Act, to incentivize industry innovation and prompt action. We are laser-focused on working collectively with companies, states, and communities to ensure that America leads in deploying technologies and innovations that aid in the development of a clean energy economy.”
API’s Dustin Meyer, senior vice president of policy, economics and regulatory affairs, expressed disappointment in the proposed fee. “As the world looks to U.S. energy producers to provide stability in an increasingly unstable world, this punitive tax increase is a serious misstep that undermines America’s energy advantage,” Meyer said. “While we support smart federal methane regulation, this proposal creates an incoherent, confusing regulatory regime that will only stifle innovation and undermine our ability to meet rising energy demand.
“We look forward to working with Congress to repeal the IRA’s misguided new tax on American energy.”
EPA in late 2023 finalized revisions to methane and volatile organic compound (VOC) emission standards under the Clean Air Act designed to sharply curb emissions from new and existing oil and gas operations. The rule changes are expected to avoid an estimated 58 million tons of methane emissions from 2024 to 2038, or nearly 80% less than projected emissions without the rule, according to EPA estimates.
