Page 5 - NorthAmOil Week 04 2021

NorthAmOil COMMENTARY NorthAmOil

said. “We’ll protect jobs and grow jobs, includ- federal lands is going to continue,” McCarthy
ing through stronger standards, like controls said.
from methane leaks and union workers … will- Shale drillers – who are driving US oil and
ing to install the changes.” gas production – appear to be relatively well-
At the same time, Biden is seeking to grow the shielded from any immediate impact of the
production of renewable energy from federal leasing moratorium, particularly if they are
land and waters, including doubling offshore larger and better-resourced. A number of them
wind capacity by 2030. The executive order amassed federal leases prior to the November
included a move to review siting and permitting presidential election, in anticipation of future
processes for renewable capacity. restrictions in the event of a Biden victory.
It is still unclear how much difference Biden’s Reuters reported last week that the seven
orders will make to the US’ offshore wind indus- companies that control half the federal supply
try. In terms of project pipeline, the US East onshore in the Lower 48 US states have leases
Coast is already the most active area globally and permits that could last years. The news ser-
for offshore wind. The total pipeline in federal vice cited EOG Resources – one of the leading
leased waters is more than 28,000 MW, whereas producers on federal land – as saying it had at
so far only 30 MW has been installed. least four years’ worth of federal permits, for
Also included in the executive order was a example. Other top producers on federal land
provision to find ways of ending fossil fuel subsi- include Devon Energy, ExxonMobil, Occiden-
dies from the 2022 fiscal year. Biden commented tal Petroleum, ConocoPhillips and Mewbourne
that he would be taking his request to end fossil Oil.
fuel subsidies to US Congress. He aims to direct In the longer term, shale drillers also benefit In the longer
funding towards clean energy instead. from the flexibility to shift their operations else-
“We’re going to take money and invest it in where. Consultancy Rystad Energy commented term, shale
clean energy jobs in America – millions of jobs this week that even if there is a ban on federal drillers also
in wind, solar and carbon capture,” Biden com- drilling, this would likely only have a marginal
mented. “In fact, today’s actions are going to effect on shale production, as drilling would benefit from the
help us increase renewable energy production largely move from public to private acreage.
from offshore wind and meet our obligation to It added that plenty of high-tier acreage still flexibility to shift
be good stewards of our public lands.” existed on private land.
However, Rystad has noted that the potential their operations
What next? offshore impact could be significant. It estimates elsewhere.
While Biden’s latest steps are seen as negative that the US would stand to lose up to 200,000
by the oil and gas industry, comments from the barrels per day (bpd) of crude output from the
White House national climate adviser, Gina Gulf of Mexico by the end of this decade if the
McCarthy, illustrate that their impact will not be moratorium were to become a permanent ban.
immediate, as existing permits and leases are not Another consultancy, Wood Mackenzie, pre-
affected. In addition, she did not appear to rule viously made similar forecasts, saying that while
out a continuation of fossil fuel development on the onshore impact of a total ban on new federal
federal land following the review. leasing would be minimal, US offshore oil and
“I think that the opportunity for the states to gas production would be about 30% lower by
continue to accrue the royalties from both coal 2035 under a ban on leasing in federal waters
and oil and natural gas that is properly done on than if lease sales could continue.™

Week 04 28•January•2021 www. NEWSBASE .com P5