Page 5 - NorthAmOil Week 33 2021

NorthAmOil COMMENTARY NorthAmOil
statement. “Together, federal onshore and off- shore oil and gas leasing programs are respon- sible for significant greenhouse gas [GHG] emissions and growing climate and community impacts.”
However, the DoI continued, the current programmes “fail to adequately incorporate consideration of climate impacts into leasing decisions or reflect the social costs” of GHG emissions. “Furthermore, past operation of the programmes did not adequately reflect the breadth of the Interior Secretary’s stewardship responsibilities,” it said.
What next?
The details of the DoI’s next lease sale are now being awaited, while the department contin- ues its review of the programmes and what it describes as their shortcomings. The DoI also said that it would “undertake a programmatic analysis to address what changes in the depart- ment’s programmes may be necessary to meet the President’s targets of cutting greenhouse gas emissions in half by 2030 and achieving net zero greenhousegasemissionsby2050”.
Separately, the DoI issued a notice on August 19 saying it would conduct a review of coal sales on federal land to assess their impact on climate change, as well as their value to taxpayers.
Federal land accounts for around 42% of US coal production, according to the DoI, primar- ily in Montana and Wyoming. The federal coal programme generated revenue of $377.7mn last year, compared with more than $1bn in
2015, illustrating the decline of coal use as it has increasingly been edged out by natural gas in power generation. Total revenue from energy and minerals on federal land came in at about $7.6bn in 2020.
The pace of the Biden administration’s response seems to suggest that it is unwilling to resume oil and gas leasing currently – though it has no choice in the matter. It looks as though states and industry groups will keep the pres- sure on, however, while the litigation continues, resulting in a lease sale taking place eventually.
This does not guarantee that there will be significant interest in the lease sale, however, as producers may be wary of investing in a pro- gramme that could later be scrapped or over- turned if the Biden administration gets its way in court.
There are other reasons to hold back too, as more and more producers adopt decarbonisa- tion goals, which in some cases involve a pivot away from oil and gas over the longer term. And while market conditions have improved consid- erably since last year, it was evident under the Trump administration that producers were more hesitant to take up new federal leases – especially offshore – following a series of indus- try downturns. Trump administration attempts to open up new federal acreage to drilling drew comparatively little interest among oil and gas producers.
It is therefore possible that even if a federal lease sale is held soon, participation may end up being limited.™
It was evident under the Trump administration that producers were more hesitant to take up new federal leases – especially offshore.
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