The hints from the White House could not have been much of a surprise to API executives, but leaders of the largest oil and gas trade association still expressed exasperation over treatment of their members’ work — and favoritism toward renewables.
“Just the disparate treatment of oil and natural gas projects to renewables with respect to the overall GHG [greenhouse gas] impacts across the value chain—not just downstream but across the value chain,” Frank Macchiarola, API’s senior vice president for policy, economics and regulatory affairs, said during a media call on Jan. 11.
The call was to discuss API’s annual State of American Energy report, which argued for a shift in policy priorities to support investment in the domestic oil and natural gas industry.
The prime takeaway from API’s request for interim guidance from the White House Council on Environmental Quality (CEQ) was that President Joe Biden’s administration is seeking to expand the reach of the National Environmental Policy Act (NEPA).
“NEPA is one of the most important environmental statutes that, historically, started out as a very small statute that has grown, through the [environmental impact statement and environmental assessment] process, to impede critical energy infrastructure for years,” Macchiarola said. “Now, CEQ is seeking to expand the reach of NEPA when we should be limiting the expansion of NEPA and moving projects along.”
Pushing back on expanding regulations is what API’s members expect from the trade group, Emily Easely, CEO of Novus Energy Advisors, told Hart Energy. But of greater importance is tracking how the rollout of legislation such as the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law affects the industry. Another point of focus? Permitting reform.
“There’s no way that there will be one standardized package for infrastructure projects,” Easely said. “There are regional issues, so it can’t be a one-size-fits-all.”
For example, on the East Coast, delays in pipeline permitting have dogged the industry for years. Citing the problem in a report won’t push Congress to flip the switch in the year or so left to legislate before the 2024 campaigns kick in.
Not So Fast: Manchin’s Deal to Speed Permitting is Not a Done Deal
“I think that’s why they were so hopeful about [Sen. Joe Manchin] bringing that pipeline [permitting reform] bill, but I don’t think Manchin has any political currency anymore,” she said.
Solutions take time
API’s report did succeed in pointing out issues of concern to the oil and gas industry, even if doing so won’t move the legislative or regulatory needle immediately, according to Jack Belcher, principal at Cornerstone Government Affairs.
“I think they did a good job of starting at, ‘OK, here are the problems that we’ve identified and here are the solutions,’” he said. “They can’t get into the weeds too much on the legislative technique because quite frankly, none of that’s going to happen, right? They’ll pass bills in the House all day long, but they’re not going to go anywhere. So, what they’re doing is laying the groundwork here for a future bill.”
Belcher noted that he was working on the Energy Policy Act (EPAct) of 2005 when he was a staff member for the U.S. House Subcommittee on Energy and Mineral Resources in the 1990s. The process takes a long time, he said, but the report is part of the drumbeat that gets it moving. He is also optimistic about the chances for permitting reform.
“Some of it might influence the Senate to pass some kind of a bill later this year, which I think is possible under the context of Joe Manchin’s permitting deal [with Sen. Chuck Schumer],” Belcher said. “It doesn't just address fossil energy. It helps enable a lot of these things that are part of the IRA.”
API’s report offered numerous concrete suggestions to resolve issues, including increasing oil and gas production, adding pipeline infrastructure and supporting continued innovation to lower carbon emissions. Among them:
- The U.S. Department of the Interior issuing a new five-year program for offshore oil and natural gas leasing;
- The department holding quarterly onshore lease sales with “equitable terms” and reinstating canceled leases and valid leases on U.S. lands and waters;
- Allowing U.S. refineries to continue to use hydrofluoric acid (HF) alkylate—replacing HF units would cost $12 billion-$19 billion;
- The Securities and Exchange Commission (SEC) reconsidering its climate disclosure proposal, which would boost investor confidence in future development;
- Congress recognizing major energy infrastructure projects as critical to the national interest and enact strict deadlines for environmental reviews, as well as revamping the cross-border permitting process;
- Amending the Natural Gas Act to streamline the review process for LNG facilities;
- Halting overreach by the Federal Energy Regulatory Commission;
- Rescinding Trump administration-era steel tariffs;
- Enacting performance-based regulations to push innovation in pipeline safety technologies;
- Supporting use of natural gas to lower emissions in power generation; and
- Providing additional guidance for Section 45Q tax credits to develop carbon capture, utilization and sequestration.