Editorial: Streamline the process

The Biden administration has leased very few federal offshore acres for oil and gas drilling. Even the tracts awarded have taken a torturous route. Lease Sale 257 was held Nov. 17, 2021, but only after an order from a US District Court compelled the Department of Interior to do so. In January 2022 the results were vacated by another federal judge, who described flaws in the Bureau of Ocean Energy Management’s (BOEM) environmental impact analysis as “a serious failing.”

Lease Sale 257 was the eighth and final sale under Interior’s 2017-22 5-year plan. Vacating it seemed to bring life to Pres. Biden’s campaign promise to end drilling on federal land. An early September 2022 analysis by the Wall Street Journal noted that no post-World War II administration had leased fewer acres in its first 19 months.1

Several days later, BOEM reinstated Lease Sale 257’s bids in compliance with congressional direction stemming from the Inflation Reduction Act. But of 80.9 million acres offered (the most ever), just 1.7 million received bids. This didn’t improve Biden’s rankings but did roil industry and environmentalist sentiment alike; the former still leery of the administration’s intent and the latter outraged anew by the size of the offering.

It didn’t take long for industry’s skepticism to be borne out, Interior next deciding to conduct additional reviews of five lease sales held 2019-20 on allegations that their climate impacts had not sufficiently been studied.

Staying warm

In the meantime, a more immediate concern has emerged: storage levels of both natural gas nationally and heating oil in the US northeast as winter approaches. Working gas in underground storage for the Lower 48 states totaled 2.874 tcf as of Sept. 16, 2022, up 103 bcf from the week before but still 6.4% below year-ago levels and 10.4% below the 5-year average. Shortages in the east were more pronounced, off 7.8% and 12%, respectively.

PADD 1 commercial stocks of ultra-low sulfur distillate stood at 17.8 million bbl as of June 2022. This region includes the northeast US, and the last time distillate inventories were below 20 million bbl was March 2015. New Jersey has the largest inventories in the northeast at 3.3 million bbl, but this number is also low, having not been below 5 million bbl since the same March 2015 timing.

Given that retail heating oil prices in the northeast US are already at or near all-time highs and that the threat of supply disruption has also increased, starting the heating season with lower-than-normal stocks is not ideal.

There is one readily available (if not immediate) solution to both situations: increase the number and redundancy of pipelines so that supplies can more readily reach areas of acute demand. Sen. Joe Manchin (D-W.Va.) put forward permitting reforms intended to streamline the process by which pipeline projects are vetted and approved. Under the Energy Independence and Security Act of 2022, a lead agency would coordinate permitting of each project, attempting to remove redundancy when possible.

Objections to the plan again came from both sides of the political spectrum; Republican leadership saying it didn’t go far enough, while the liberal wing of the Democratic Party decried it as a sellout of its climate agenda. It was eventually withdrawn.

The idea that the US can’t simultaneously move toward what needs to be done regarding emissions while keeping its people warm via improvements to already existing processes is a false dichotomy and should be ignored as such. Accordingly, a new version of this legislation needs to be initiated, passed, and signed into law.

Reference

1. Puko, T. and DeBarros, A., ‘Federal Oil Leases Slow to a Trickle Under Biden,” Wall Street Journal, Sept. 4, 2022.