[USA] Environmental groups sue for oil and gas leasing phaseout on federal lands

On April 25, 2023, environmental groups[1] sued the U.S. Department of the Interior for failure to respond to a January 2022 rulemaking petition to phase out oil and gas development on federal lands[2]. More than 360 groups signed the initial petition, which asked the Biden administration to enact a policy framework to phase out nearly all oil and gas development on federal lands by 2035.[3] According to the press release announcing the lawsuit, research published since this petition shows that developed countries must end oil and gas extraction by 2031 to avoid the negative effects of warming 1.5 degrees Celsius, the target the United Nations has set to prevent some of the worst potential climate impacts. In the two years since coming to office, the Biden administration has approved 6,430 permits for oil and gas drilling on public lands, outpacing the Trump administration.

Under the Administrative Procedure Act, federal agencies are required to initiate rulemaking or provide a substantive response to rulemaking petitions within a reasonable timeframe. The lawsuit alleges that the Biden administration’s failure to respond to the petition is an unreasonable delay, citing the urgency of the climate crisis.

[1] Center for Biological Diversity, Wildearth Guardians, and Friends of the Earth

[2] https://biologicaldiversity.org/w/news/press-releases/lawsuit-targets-us-delay-on-petition-to-phase-out-public-lands-oil-drilling-2023-04-25/

[3] https://biologicaldiversity.org/programs/public_lands/energy/dirty_energy_development/pdfs/Petition-to-Phase-Down-Fossil-Fuel-Production-on-Public-Lands-and-Water-19-Jan-2022.pdf

[USA] Environmental groups file lawsuit against Biden administration over Willow project in Alaska

On March 14, 2023, Trustees for Alaska filed a lawsuit against the Biden administration’s approval of ConocoPhillips’ Willow project in Alaska.[1] The $8 billion project, approved on March 13, opens three new drilling areas in Alaska’s North Slope and is expected to produce about 600 million barrels of oil over the next 30 years. The lawsuit, filed on behalf of a coalition of environmental and Indigenous groups, requested that the U.S. District Court for the District of Alaska reverse the administration’s approval because the federal government had not considered the project’s climate risks and harm to wildlife. The lawsuit claims that the Bureau of Land Management's (BLM) approval of the Willow project did not take the required "hard look" under the National Environmental Policy Act. They also claimed that BLM violated provisions of the Naval Petroleum Reserves Production Act, the Alaska National Interest Lands Conservation Act, procedural law, and other federal statutes. It also alleges that the Biden administration’s environmental review did not address all concerns raised by Judge Sharon Gleason when she blocked the project in 2021.

A similar lawsuit was filed by Earthjustice and the Natural Resources Defense Council on March 14, 2023, claiming that National Oceanic and Atmospheric Administration (NOAA) Fisheries had failed to consider the impact of greenhouse gas emissions on two different species of seal.[2]

[1] https://trustees.org/wp-content/uploads/2023/03/2023-03-Groups-take-Biden-administration-to-court-over-illegal-approval-of-massive-ConocoPhillips-Willow-proposal.pdf

[2] https://earthjustice.org/press/2023/conservation-groups-sue-to-stop-the-willow-oil-project-in-alaskas-western-arctic

[World] Exxon to exit Russian oil and gas operations

Exxon Mobil Corp. announced on March 1, 2022, that it will cease operations at Sakhalin-1, a major oil and gas project in Russia.[1] According to the press release, Exxon will not invest in new developments in Russia, given the current situation. Reuters reported that Exxon is also removing employees from the country who are U.S. citizens.[2] “ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” the company said.

Exxon Neftegas, a subsidiary of Exxon, operates the Sakhalin-1 project on behalf of a consortium of Japanese, Indian and Russian companies. The consortium includes Russia's Rosneft, which holds a 20% stake in the project. The project is comprised of three oil and gas fields near Sakhalin Island. According to Exxon’s website, the Sakhalin-1 project represents “one of the largest single international direct investments in Russia.” It pumps about 220,000 barrels of oil per day and is the company’s last project in Russia. In a statement, Exxon said the process to discontinue operations will be closely coordinated with other members of the project to ensure safety. The company did not provide a timeline for ceasing operations.

[1] https://corporate.exxonmobil.com/News/Newsroom/News-releases/2022/0301_ExxonMobil-to-discontinue-operations-at-Sakhalin-1_make-no-new-investments-in-Russia

[2] https://www.reuters.com/business/energy/exxon-mobil-begins-removing-us-employees-its-russian-oil-gas-operations-2022-03-01/

[USA] Federal judge blocks largest-ever U.S. offshore oil lease

On January 27, 2022, Judge Rudolph Contreras for the U.S. District Court for the District of Columbia blocked the Bureau of Ocean Management’s (BOEM) approval for Lease 257 in the Gulf of Mexico.[1] The lease sale was held in November 2021 and included 80.8 million acres on the outer continental shelf. It was the largest offshore lease sale in U.S. history. Initially, the Biden administration blocked the lease sale, which was approved under the Trump administration, as part of the president’s executive order pausing new oil and gas leasing on public lands and federal waters. However, in June 2021, the U.S. District Court for the Western District of Louisiana found that the Biden administration’s pause violated requirements under the Outer Continental Shelf Lands Act (OCSLA) to offer areas up for oil and gas development. BOEM then proceeded with the lease sale in the Gulf of Mexico.

In August 2021, Earthjustice filed a lawsuit on behalf of Healthy Gulf, Center for Biological Diversity, Sierra Club, and Friends of the Earth to prevent BOEM from authorizing development on the leases sold in 2021. The conservation groups claimed that the 2017 environmental analysis that the Biden administration used to hold the lease sale was faulty. They claim that BOEM failed to look at new information about the emissions impact of leasing when it reissued its record of decision for Lease 257. They also argued that leasing has negative impacts on threatened marine life. The judge ruled in the conservation groups’ favor, stating that BOEM’s failure to calculate potential emissions from foreign oil consumption had violated the National Environmental Policy Act.

[1] https://int.nyt.com/data/documenttools/78-memorandum-opinion-1-27/b0903c94e57b0cb5/full.pdf

[USA] Pennsylvania regulators release draft rules to cut methane emissions from existing oil and gas wells

On December 10, 2021, the Pennsylvania Department of Environmental Protection (DEP) released draft final rules to cut methane emissions from existing oil and gas wells. Pennsylvania is the second-largest gas-producing state after Texas.[1] The DEP first released the draft rules for new wells in 2019 and has collected comments over the past two years. The newly released draft applies to existing oil and gas wells and associated facilities. It includes an exception for oil and gas wells that produce less than 15 barrels of crude a day. The draft requires operators to conduct leak searches four times a year and upgrade existing equipment to reduce pollution from controllers, pumps, compressors, and tanks. According to the DEP, the final rules are expected to reduce emissions of volatile organic compounds by nearly 12,000 tons per year and methane emissions by about 214,000 tons per year, compared to about 75,000 tons in the previous draft. The draft was released in advance of the DEP’s Air Quality Technical Advisory Committee meeting. It still has to be reviewed by several state boards and could be in place by mid-2022.

[1]https://files.dep.state.pa.us/Air/AirQuality/AQPortalFiles/Advisory%20Committees/Air%20Quality%20Technical%20Advisory%20Committee/2021/12-9-21/post_OG_CTG_FRN_ANNEX_A__DRAFT_AQTAC.pdf

[USA] Biden announces oil release from the Strategic Petroleum Reserve in effort to lower prices

On November 23, 2021, President Biden announced that the Department of Energy (DOE) will release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) in an effort to lower prices and address the lack of supply around the world.[1] The decision is a response to the highest oil prices experienced in seven years, which the Biden administration attributed to the pandemic recovery. The announcement is in coordination with other major energy consuming nations, including Japan, China, India, the Republic of Korea, and the United Kingdom. According to the White House press release, the effort “culminates weeks of consultations with countries around the world” and has already affected oil prices, with oil prices dropping nearly 10% since reports of the change became public.

32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the SPR in the coming years. The exchange is a tool matched to the current economic environment, where markets expect future oil prices to be lower than they are today. The tool helps provide immediate relief and bridge the gap to a period of expected lower oil prices. The exchange also automatically provides for re-stocking of the SPR over time to meet future needs. The DOE said the exchange will be conducted with crude oil from all four SPR storage sites: approximately 10 million barrels from Big Hill, Texas; 10 million barrels from Bryan Mound, Texas; 7 million barrels from West Hackberry, Louisiana.; and 5 million barrels from Bayou Choctaw, Louisiana.  The other 18 million barrels will be an acceleration of a sale of oil that Congress had previously authorized.

[1] https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/23/president-biden-announces-release-from-the-strategic-petroleum-reserve-as-part-of-ongoing-efforts-to-lower-prices-and-address-lack-of-supply-around-the-world/

[USA] BOEM releases draft EIS for oil lease sale in the Gulf of Alaska

On October 22, 2021, the Bureau of Ocean Energy Management (BOEM) released a draft environmental impact statement (EIS) that lays out the proposal and alternatives for a potential 2022 oil lease sale in the Gulf of Alaska south of Anchorage.[1] The sale would be among the first since the Biden administration paused new sales under the federal oil leasing program in January 2021. In June 2021, Louisiana U.S. District Judge Terry Doughty ordered the leasing program to temporarily restart while the court considers the legality of the moratorium. To comply with that ruling, the Department of the Interior (DOI) has proposed oil and gas lease sales in several states and in federal waters, including the Cook Inlet, Alaska sale. The administration has appealed the federal judge’s ruling but has still pledged to hold auctions.

The draft EIS is part of a federal process and will be used to decide whether to move forward with the sale. The document found that the proposal would have low to no effect on the habitats of nearby wildlife. The document does note that the sale could contribute to the release of 88.3 million metric tons of greenhouse gas emissions. Not holding the auction would result in slightly higher oil prices. BOEM will next hold three days of virtual hearings on the proposal from November 16-18, 2021, during a 45-day public comment period.

[1] https://www.boem.gov/sites/default/files/documents/oil-gas-energy/leasing/LS258-DEIS.pdf

[Japan] Eneos announces deal to acquire Japan Renewable Energy for $1.78 billion

On October 11, 2021, Eneos Holdings Inc., Japan's largest oil refiner, announced it had reached a deal to acquire Japan Renewable Energy (JRE), a renewables developer and operator, for about 200 billion yen ($1.78 billion/EUR 1.55 billion) to expand its low-carbon business.[1] Under the deal, JPE will be a wholly-owned subsidiary of Eneos in late January 2022. Eneos will buy JRE from the infrastructure arm of U.S. investment bank Goldman Sachs and Singaporean sovereign wealth fund GIC. The agreement is the first big purchase of a renewables firm by a top Japanese oil company.

Founded by Goldman Sachs in 2012, JRE has 708 MW in renewable energy assets, including those under construction on an equity basis. Most of JRE's portfolio consists of solar, onshore wind, and biomass, with some offshore wind projects under development. After the agreement, Eneos' renewable assets will reach 1,220 MW. The deal will enable Eneos to meets its target of having over 1,000 MW of renewables in Japan and abroad by March 2023. The deal will also help Eneos reach its goal to achieve carbon neutrality by 2040.

[1] https://www.reuters.com/business/energy/eneos-says-buy-japan-renewable-energy-177-bln-2021-10-11/

https://www.japantimes.co.jp/news/2021/10/12/business/corporate-business/eneos-japan-renewable-energy/

[USA] BLM approves $4 billion oil project in the National Petroleum Reserve-Alaska

On October 27, 2020, the Bureau of Land Management (BLM), an agency within the Department of the Interior (DOI), approved ConocoPhillips Alaska Inc.'s Willow Master Development Plan, a $4 billion oil project in the National Petroleum Reserve-Alaska (NPR-A).[1] The NPR-A is a 23-million-acre piece of federally managed land that lies west of Alaska's Prudhoe Bay oil field and the Arctic National Wildlife Refuge (ANWR). According to BLM, the project could produce up to 160,000 barrels of oil per day over its anticipated 30-year life which will equal approximately 590 million total barrels of oil. BLM estimates the project will generate up to 1,000 jobs during construction and 400 permanent positions to keep it operating. BLM’s decision allows construction of up to three drill sites and associated processing and support facilities. BLM says the decision also adopts modifications to the project based on input from tribal governments, cooperating agencies and various other stakeholders received during the comment period for the project’s environmental impact statement (EIS).

[1] https://www.blm.gov/press-release/trump-administration-approves-willow-master-development-plan

[USA] DOE Announces Crude Oil Storage Contracts to Help Alleviate U.S. Oil Industry Storage Crunch

The U.S. Department of Energy (DOE) announced on April 14, 2020 that it is discussing contract awards with nine U.S. companies with the intention to storing their U.S. produced crude oil in the U.S.’s Strategic Petroleum Reserve (SPR).[1] The U.S. oil industry is currently faced with storage demand exceeding availability which stems from the combined effects of a sharp decline in demand due to COVID-19 and an excess of supply. In a response to this, President Trump directed the DOE to fill the SPR to capacity in mid-March 2020, though Democrats were strongly critical of the move, stating that it is a waste of resources to save the oil industry.[2] [3] On April 2, 2020, the DOE issued a Request for Proposals to use available storage capacity at the SPR for temporary storage to alleviate the strain on oil companies.[4] The awards under negotiation are for approximately 23 million barrels of crude oil storage, to be distributed across all four SPR sites. Many of the deliveries will be received in May and June 2020, but there is a possibility of early deliveries in April 2020. Companies can schedule the return of their oil through March 2021, minus a small amount of oil to cover the cost of storage.

[1] https://www.energy.gov/articles/doe-announces-crude-oil-storage-contracts-help-alleviate-us-oil-industry-storage-crunch

[2] https://www.energy.gov/articles/doe-applauds-swift-action-president-trump-initiates-process-purchase-oil-strategic

[3]https://www.markey.senate.gov/imo/media/doc/2020_03_12%20COVID%2019%20Oil%20Tax%20Break%20Trump%20signed%20copy.pdf

[4] https://www.energy.gov/articles/us-department-energy-make-strategic-petroleum-reserve-storage-capacity-available-struggling

[USA] “U.S. Becomes World’s Largest Crude Oil Producer and Department of Energy Authorizes Short Term Natural Gas Exports”

[DOE, 13 September 2018]  

The Energy Information Administration, in their Short-Term Energy Outlook, has found the US to be the largest global crude oil producer, greater than even Russia and Saudi Arabia. This past February, America’s crude oil production surpassed Saudi Arabia – a first in over 20 years. In June and then again in August, the U.S.’s crude oil production was greater than that of Russia’s for the first time since 1999. On a separate issue, the Department of Energy (DOE) has issued a short-term order for the Freeport LNG project to export up to 2.14 bcf/d of natural gas as LNG over a two-year term both to free-trade and non-free trade agreement countries; of course, this does not include countries that have been expressly banned from U.S. trade relations.