Biden suspended the rental. Oil still exploded – Tuesday July 13, 2021 –

Oil production is increasing on federal lands in states like New Mexico and Wyoming, contradicting claims that President Biden’s climate program has effectively strangled the oil and gas industry by banning new rental and rental policies. ‘other.

For now, prices support more drilling, and the administration does not seem to oppose it. Peak oil is impacting not only emissions, but also Biden’s clean energy program – and the level of political hindsight he receives for it, observers say.

New Mexico, where one in two oil and gas wells is federal, overtook North Dakota this spring to become the second-largest U.S. oil producer after Texas, breaking state production records, for example.

The rebound in prices led to a return of 10 rigs in Wyoming, a major federal producer of oil and natural gas, where there were none last June.

At sea, better prices also supported a recovery in federal production. Crude oil production in the Gulf of Mexico has fallen from a low of 33 million barrels in October to nearly 52 million barrels in April, according to the most recent monthly data available from the Bureau of Safety and Environmental Enforcement. Offshore natural gas production jumped 71% over the same period.

“We do not think that [Biden] today’s policies have had a big impact on production, ”said Pablo Prudencio, senior research analyst at Wood Mackenzie covering oil and gas supply in the Lower 48.

Crude prices have recovered in recent months, supported by an increasingly vaccinated population returning to work and travel. Two weeks ago, the price of West Texas Intermediate hit the highest position since 2018, at $ 75 a barrel.

US tight shale operators are demonstrating much more discipline than historical standards with such a steep rise in prices. Listed companies are returning money to shareholders and paying off their debts rather than going into a wave of drilling, analysts say (Climate wire, June 4).

Federal land drillers are taking the price signal and putting lumps in the ground at a substantial rate.

“Most of our members are cautiously optimistic about global markets and the direction we are heading,” said Ryan McConnaughey, spokesperson for the Petroleum Association of Wyoming.

While the Biden administration froze the sale of new leases, it continued to approve drilling permits, the main federal development control mechanism.

The Bureau of Land Management approved 616 permits in May. Since the Biden administration took office, the government has approved 2,141 drilling permits, according to federal records.

“The pace of approvals has been quite rapid,” said Prudencio. According to his analysis, the Biden administration’s approval rating exceeds fiscal year 2020, when companies gathered drilling rights over fears that a Democratic White House would freeze access.

Many experts say they are not surprised by the increase in production, even in the face of federal uncertainty.

In a recent report, New Mexico state legislative staff noted that 90% of the state’s existing federal leases could continue to operate, whether or not the Biden administration has implemented a lease freeze in the state. long term.

This is in part because the drillers anticipated the Biden administration, with numerous drilling rights ahead of the inauguration. They also stake out the best land positions in southeastern New Mexico for years, as horizontal drilling in the prolific basin has produced excellent returns, leaving few areas untouched or unclaimed today.

“Only about 7% of Delaware’s inventory is threatened by a federal rental ban,” said Bernadette Johnson, senior vice president of energy data firm Enverus, referring to the prolific oil basin that straddles New Mexico and the United States. Texas, where most New Mexico residents are drilling. “If we narrow that down further by excluding areas where drilling is underway right now… that’s only 5% of Delaware’s inventory at risk.”

So far in 2021, onshore permit approvals in the oilfield are on par with previous years and could be heading for a record high.

Between January 20 and July 15 of last year, BLM approved 2,189 drilling permits – barely more than this year under Biden, according to federal records. This year is set to overtake 2019, when the Trump administration strongly supported the oil and gas industry. That year, BLM approved 1,696 onshore permits.

The hike undermines complaints from GOP lawmakers and drillers that federal oil development is blocked by politics. But it also stokes fears among environmentalists that the Biden administration will not take the kind of action needed to make big progress on the climate.

Oil or climate?

Drillers fear, and environmentalists hope, that the administration will take bold action to change the oil and gas landscape on public lands and waters. Administration officials have signaled their support for higher royalties on oil and gas production and tighter controls over where oil and gas operators are allowed to drill. But it is unclear, seven months after the start of the Biden administration, how ambitious his reform of the federal oil program will be.

The Biden administration’s actions on oil and gas include freezing new leases and temporarily halting licensing decisions by local BLM offices. A federal judge has temporarily barred the administration from continuing its rental ban, although it is unclear when the auction will resume. The administration mainly lifted its directive that headquarters officials should approve permits, but it is closely monitoring federal permit or lease extensions, according to E&E News reports.

An interim report on possible changes to the oil and gas program – commissioned by Biden just after taking office as one of many initial steps in the administration’s plan to deal with the climate crisis – is expected from the House shortly. White. But until then, the form of any overhaul by the Home Office will remain speculative.

Nonetheless, pro-oil lawmakers have responded to the administration with hostility.

“We have witnessed a total attack on American energy,” Steve Scalise (R-La.) House Minority Whip (R-La.) Said in a statement released earlier this month, outlining legislation which would give states more power over federal oil and gas licenses.

Wyoming Representative Liz Cheney (right), which represents the largest state producing gas from federal minerals, introduced legislation on June 30 to protect current royalty rates on federal lands, responding to signals from the White House that it is likely to increase that rate. to account for the climatic costs of drilling for federal minerals.

Cheney said in a statement that the move “would eliminate jobs, reduce energy production, increase energy costs and unnecessarily harm our state’s economy.”

For their part, climate champions say the rise in drilling in the oilfield is proof that the oil and gas industry has exaggerated the impacts of Biden’s policies.

“Basically, this highlights that as much as the oil and gas industry needs to drill on public land, it certainly feels no pain under the Biden administration,” said Jeremy Nichols, climate director for WildEarth Guardians.

But Nichols added that his group is wary of where this administration will land on climate reform, if so far it has done little to quell drilling.

“It worries us where the rental break can go,” he said. “The rhythm of [drilling permit] the approvals certainly raise concerns that the interest of the oil and gas industry outweighs the interest in dealing with the climate crisis, and that is unacceptable. “

For others, the increase underscores the need for immediate reforms unrelated to the broader leasing pause or domestic review of the oil program.

Several conservation groups wrote a letter last month asking Home Secretary Deb Haaland to immediately limit oil and gas development. They argued that almost every barrel of crude produced on federal lands is sent downstream to be turned into gasoline, diesel or other fuels that generate greenhouse gas emissions.

Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center, said the Biden administration was under a lot of political pressure but ultimately had to hamper the oil and gas industry.

“I am sympathetic to the political glove that the Biden administration must execute to follow through on its climate commitments,” said Schlenker-Goodrich, who signed the letter. “We intend to support the administration in the management of this gauntlet, but also to hold it accountable for its commitments.”

“Never a good answer”

Still, oil and gas champions argue that the Biden administration’s stance on oil increases regulatory uncertainty. And it could unfairly depress corporate confidence in drilling their federal oil and gas concessions, some say.

Western states’ oil and gas reserves are “inextricably linked” to federal lands and therefore also to federal energy policies, said Kathleen Sgamma, president of the Western Energy Alliance in Denver.

The activity does not offset the downward pressure on federal policy, she said.

“Regulatory uncertainty is one of many variables. How do you separate her? ” she said. “I’ve been asked this question for the past 15 years. And there’s never a right answer because it’s an interplay between markets and regulatory uncertainty.”

Prudencio, of Wood Mackenzie, said his team couldn’t predict the long-term outlook for Biden’s oil policies until the administration says what they are.

But if prices hold, current estimates indicate that oil and gas production will only grow across the country next year, he said.

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