General
News
Report:
BLM Says Oil And Gas Operators Should Set Their Own Royalty Rates For Public Lands Drilling.
According
to The Hill, “State offices for the Bureau of Land Management (BLM) were instructed to allow oil and gas operators to set their own rates for royalties they pay to the government as part of their leases for public lands drilling, High Country News reported
on Thursday. High Country News reported that state BLM directors were emailed a document in which the national office said they should let oil and gas firms make those determinations. The document reportedly suggests a rate of 0.5 percent as opposed to the
12.5 percent fees typically paid by companies on oil and gas extracted from public lands. The BLM did not immediately respond to a request for comment from The Hill about this document. The report comes as some in the industry has been requesting that the
Trump administration lower the fees, known as royalties, that companies have to pay the government in order to extract oil and gas on public lands. Asked last month whether they would be implementing widespread royalty cuts, an Interior spokesperson told The
Hill that companies that want such measures should apply for it through ‘established processes.’ ‘Entities who believe such relief may be appropriate to promote continued energy production and development can submit an application for relief to the appropriate
bureau program,’ the official said. Based on the data that’s available so far, it looks as if every request sent to the government for royalty relief was granted. These 75 rate cuts were all in Utah.” [The Hill,
5/21/20
(=)]
Trump
Administration Slows On Fracking Plans After Outcry For Impacted Navajo Nation.
According
to The Independent, “The Trump administration has relented and will allow more time for opinions on plans to lease public land to oil and gas companies after outrage that the tribal communities who would be most affected were unable to join the scheduled ‘virtual’
meetings and are being severely impacted by the coronavirus. Department of Interior (DOI) Secretary David Bernhardt agreed on Wednesday to extend the comment period on drilling plans for areas around Chaco Canyon Historical Park in New Mexico. Last week, the
Bureau of Land Management (BLM), part of the DOI, held a series of Zoom meetings - despite the fact that many Native American communities in the area have limited access to internet. A Federal Communications Commission report found that less than half of households
on tribal lands have access to fixed broadband service. The Navajo Nation, who are most impacted by the fracking plans, has now surpassed New York as the area with the highest number of coronavirus cases per capita in the US. Navajo Nation has a population
of around 173,000 people across their lands in Arizona, Utah and New Mexico. The tribe has 4,153 confirmed cases and 144 deaths from Covid-19. The crisis prompted Doctors Without Borders - who typically work in war zones - to send a team to the Navajo Nation,
the first time the organisation has done so in the US. The Chaco Canyon region is home to thousands of sacred, ancestral sites of indigenous peoples including the Hopi, Navajo and Zuni. It was named a UNESCO World Heritage site in 1987.” [The Independent,
5/21/20
(=)]
Exxon,
Groups Launch Project To Slash Methane Emissions. According
to E&E News, “The University of Texas, Austin, announced a project this week in conjunction with Exxon Mobil Corp., nonprofits and other companies to monitor methane emissions in the oil-rich Permian Basin through a continuously operating network of sensors.
The Project Astra initiative will install sensors that provide data on a roughly hourly basis, according to David Allen, lead investigator on the project and a professor of chemical engineering at UT Austin. While some isolated sites already do continuous
monitoring, the network seeks to monitor emissions continuously across a broad oil- and gas-producing region, Allen said, and will provide emissions information about individual sites. ‘This project has incredible potential and will open new pathways for companies
to find and reduce methane emissions from the more than 1 million existing oil and gas wells in the United States,’ Allen said in a statement. The project anticipates hundreds of sensors, a network UT Austin called a ‘first-of-its-kind’ for monitoring emissions
across an oil- and gas-producing region. The university is working with the Environmental Defense Fund, Exxon Mobil, Pioneer Natural Resources Co. and the Gas Technology Institute on the partnership. Officials from each of those organizations serve on the
project’s steering committee. In an analysis last month based on satellite measurements, EDF reported that the largest methane emissions ever reported over a U.S. oil-producing region came from the Permian (Energywire, April 23).” [E&E News,
5/22/20
(=)]
Harold
Hamm, Fracking Pioneer, Faces A Career Reckoning. According
to the Wall Street Journal, “Harold Hamm, the wildcatter who helped usher in the American fracking boom, has weathered his share of oil busts. None of them matched this one. The 13th child of Oklahoma sharecroppers, Mr. Hamm rose from the bottom of the oil
business to become a self-made billionaire. He is one of the pioneering prospectors who turned the U.S. into the world’s leading oil producer by using hydraulic fracturing and horizontal drilling techniques to unlock huge volumes from rock formations. As an
oil rout fueled by the coronavirus pandemic forces energy companies to take drastic measures, Mr. Hamm has more to lose than nearly anyone. He owns nearly 80% of the company he founded, Continental Resources Inc., an unusually large stake among publicly traded
oil-and-gas companies. As its shares have plunged, so has his net worth. Mr. Hamm lost more than $3 billion in just a few days in March after Saudi Arabia and Russia triggered oil’s crash by flooding the world with crude in a poorly timed war for market share.
Still full of fire at age 74, the man who once called OPEC a ‘toothless tiger’ didn’t take the losses lying down. Mr. Hamm made numerous calls to President Trump, urging him to take a more forceful role in persuading Saudi Arabia and Russia to end their standoff,
according to people familiar with the matter. When Mr. Trump helped broker a 23-nation pact to cut output on April 12, Mr. Hamm took a victory lap, calling other executives to take credit for getting the president involved. Days earlier, he sent an email to
Continental’s workers suggesting the worst was over.” [Wall Street Journal,
5/21/20
(=)]
Offshore Drillers Left Out. According to the Washington Examiner, “The Interior Department
is cutting royalty payments that oil companies pay to drill on federal lands, but has been less active in helping offshore oil and gas drillers. Just in the state of Utah, where there is little federal drilling compared to other Western states, Interior’s
Bureau of Land Management has granted all 75 requests for rate reductions from 12 companies, according a review of public data by activist groups and Democrats. Aaron Weiss, deputy director of the Center for Western Priorities, told Josh that BLM is likely
approving similar requests in other bigger producing states such as New Mexico, Wyoming, and Colorado, but the agency has not regularly updated its public database. ‘It’s safe to assume BLM is processing hundreds, possibly thousands of these requests,’ Weiss
said. Kathleen Sgamma, president of the Western Energy Alliance, a lobby group for oil producers on federal lands, told Josh that companies forced to shut-in production due to low oil prices ‘are flooding BLM with requests for lease suspensions,’ in addition
to seeking royalty rate reductions. ‘Temporary royalty relief can enable wells to ride out this period where production is uneconomic so that when the economy recovers, those wells return to producing royalty revenue for the government,’ Sgamma said.” [Washington
Examiner,
5/21/20 (=)]
Bernhardt Extends Public Comment On Chaco Following Pushback.
According to E&E News, “Interior Secretary David Bernhardt will allow an additional four months of public comment on whether to expand
oil and gas drilling in northern New Mexico, the second time he’s granted a reprieve in a fierce debate about development in the vicinity of the Chaco Culture National Historical Park, a UNESCO World Heritage site. Bernhardt tweeted his decision this morning,
following a trip to meet leaders of the Navajo Nation regarding efforts to curb the impact of COVID-19. The secretary’s comments were first reported by the Albuquerque Journal. ‘I have heard the voices of the pueblos; I heard the voice of Sen. [Martin] Heinrich
[D-N.M.], who feels very strongly about this,’ Bernhardt told the Journal. ‘And I heard the voice of [Bureau of Indian Affairs] Assistant Secretary [Tara] Sweeney, who feels strongly about this.’ The Bureau of Land Management is currently updating its 2003
resource management plan for the area in the northwest corner of the state, which encompasses the park and overlaps with the Navajo reservation. BLM is also currently reevaluating its estimates of future oil and gas drilling there, given renewed interest in
development because of horizontal drilling and fracking potential. Public comment was scheduled to close May 28. New Mexico’s congressional delegation, state leadership and the All Pueblo Council of Governors have each sought extended time on revisions, noting
the limiting impact of the health crisis on affected communities.” [E&E News,
5/21/20
(=)]
FERC Approves Alaska Project As Financial Headwinds Grow.
According to E&E News, “A liquefied natural gas export terminal that would ship gas pulled from Alaska’s North Slope to Asian markets received a key Federal Energy Regulatory Commission approval this morning, even as the project’s financial viability has been
called into question. The commission voted 3-1 to approve the Alaska Gasline Development Corp.-led Alaska LNG project and its corresponding 807-mile-long natural gas pipeline that would span much of the length of the state. It marks the 13th such LNG-related
approval granted by the Republican majority on the commission since the start of 2019 — a breakneck pace that has the potential to reshape global LNG markets. ‘This is the 13th LNG project we’ve approved since I joined the commission,’ Chairman Neil Chatterjee
said during the monthly meeting. ‘I appreciate the efforts everyone has made to achieve this feat.’ Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) touted the project’s economic positives during a hearing yesterday and again today.
‘This is a capstone moment for Alaska LNG at the federal level, and it is the result of a robust and comprehensive review process,’ Murkowski said in a statement today. ‘A final FERC certificate and order are immensely valuable assets for the project and the
State of Alaska.’ Even so, the project — like some of the other LNG export terminals approved by FERC over the past year — may hit financing problems stemming from a global natural gas glut that has driven down prices.” [E&E News,
5/21/20
(=)]
FERC Takes Action On LNG. According to the Washington Examiner, “FERC also approved the
$43 billion Alaska LNG project to export North Slope natural gas, and denied a ‘rehearing’ request to revisit its decision in March approving the Jordan Cove LNG export facility in Oregon. Both projects would diversify the U.S.’ growing LNG export capacity,
which is mostly situated on the Gulf Coast. The Alaska project is the 13th LNG export facility approved by FERC since Chatterjee joined the commission in 2018. Democratic FERC commissioner Richard Glick, who opposed both of FERC’s actions on LNG Thursday,
expressed doubts on whether either project would ever get built considering financial challenges exacerbated by the coronavirus pandemic, which has restrained demand for U.S. LNG. Glick accused his Republican colleagues of ignoring these financial concerns
so it can keep notching approvals of LNG projects in order to ‘brag about it on Twitter as some kind of achievement we can put on a toteboard, like they do at telethons.’ ‘The commission continues to build these projects at a breakneck pace,’ Glick said. A
‘shoot first, ask questions later attitude is problematic,’ he added. Republican Bernard McNamee countered the projects would create jobs and help make the U.S. energy secure. ‘As we come through the economic challenges, having a strong energy base can only
help the U.S. lead on recovery,’ McNamee said. Bonus: Chatterjee announced FERC will host a remote technical conference July 8-9 to consider the long-term effect of the coronavirus on the energy industry. He said the conference would examine potential changes
to oil and gas demand, and issues related to energy developers’ access to capital, including credit and liquidity.” [Washington Examiner,
5/21/20 (=)]
Democrat Seeks Investigation. According to the Washington Examiner, “Raul Grijalva, chairman
of the House Natural Resources Committee, wrote a letter to the Government Accountability Office Wednesday asking it to investigate whether BLM is ignoring regulatory requirements. He said BLM is acting in a ‘haste to approve huge numbers of royalty cuts,’
which he said can have ‘significant impacts’ on state and federal budgets dependent on royalty revenue. BLM regulations require it to confirm a royalty reduction is ‘necessary to promote development or that the leases cannot be successfully operated.’ By the
numbers: The royalty rate for onshore leasing stands at the statutory minimum of 12.5%, but the Interior Department can defer payments on a short-term basis, for up to 60 days. BLM has approved cuts to between 2.5 and 5% for some companies, according to the
public database. BLM issued a statement to Josh saying it is following laws and regulations that ‘have existed for decades and across multiple administrations.’ ‘BLM state offices are only approving suspension of operations and royalty rate reduction applications
when it is in the best interest of conservation to do so or when it would encourage the greatest ultimate recovery of our natural resources,’ the statement said.” [Washington Examiner,
5/21/20 (=)]
Chad Ellwood
Senior Research Associate
Climate Action Campaign
202.448.2877 ext. 119