BILLINGS, Mont. (AP) — The U.S. government this week is holding its first onshore oil and natural gas drilling lease auctions since President Joe Biden took office after a federal court blocked the administration’s attempt to suspend such sales because of climate change worries.
The online auctions start Wednesday and conclude Thursday. About 200 square miles (518 square kilometers) of federal lands were offered for lease in eight western states. Most of the parcels are in Wyoming.
The sales come as federal officials try to balance efforts to fight climate change against pressure to bring down high gas prices.
Republicans want Biden to expand U.S. crude production. He faces calls from within his own party to do more to curb fossil fuel emissions that are heating the planet.
Oil production increased in the U.S. in recent months, but it’s still well below pre-pandemic levels. Companies have been hesitant to expand too quickly because of uncertainty over how long high prices will continue.
A coalition of 10 environmental groups said in a lawsuit filed before the sales even began that they were illegal because officials acknowledged the climate change impacts but proceeded anyway.
An immediate ruling was not expected. Interior Department spokesperson Melissa Schwartz said the agency did not have comment on the litigation.
Beginning with this week’s sales the royalty rate for oil produced from new federal leases is increasing to 18.75% from 12.5%. That’s a 50% jump and marks the first increase since the 1920s.
Parcels also are being offered in Colorado, Utah, New Mexico, Montana, Nevada, North Dakota and Oklahoma.
Hundreds of parcels of public land that companies nominated for leasing had been previously dropped by the administration because of concerns over wildlife being harmed by drilling rigs. More parcels covering about 19 square miles (49 square kilometers) were dropped at the last minute in Wyoming because of potential impacts on wilderness, officials said.
But attorney Melissa Hornbein with the Western Environmental Law Center said the reductions in the size of the sales were not enough.
“They are hoping that by choosing to hold sales on a smaller amount of acreage they are threading the needle. But from our perspective, the climate science is the one thing that doesn’t lie,” Hornbein said.
Oil industry representative Kathleen Sgamma said the environmentalists’ lawsuit ignores the fact that lease sales from U.S. lands are required under federal law.
“Public lands are managed in a balanced manner. Balance is a word these groups don’t understand,” said Sgamma, president of the Denver-based Western Energy Alliance, which represents oil and gas companies.
Fossil fuels extracted from public lands account for about 20% of energy-related U.S. greenhouse gas emissions, making them a prime target for climate activists who want to shut down leasing.
Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume, saying Interior officials had offered no “rational explanation” for canceling them and only Congress could do so.
Follow Matthew Brown on Twitter: @matthewbrownAP
Cenovus Energy to buy remaining stake in Toledo refinery from BP for $300 million
CALGARY — Cenovus Energy Inc. has reached a deal with British energy giant BP to buy the remaining 50 per cent stake in the BP-Husky Toledo Refinery for $300 million.
The Calgary-based oil producer has owned the other 50 per cent of the Ohio-based refinery since its combination with Husky Energy in 2021.
Cenovus says its U.S. operating business will take over operations when the transaction closes, expected before the end of the year.
The company says the Toledo refinery recently completed a major, once in five years turnaround to improve operational reliability.
It says the transaction will give Cenovus an additional 80,000 barrels per day of downstream throughput capacity, including 45,000 barrels per day of heavy oil refining capacity.
The deal brings Cenovus’ total refining capacity to 740,000 barrels per day.
Alex Pourbaix, Cenovus president and CEO, says fully owning the Toledo refinery provides an opportunity to further integrate the company’s heavy oil production and refining capabilities, including with the nearby Lima Refinery.
“This transaction solidifies our refining footprint in the U.S. Midwest and increases our ability to capture margin throughout the value chain,” he said in a statement.
This report by The Canadian Press was first published Aug. 8, 2022.
Companies in this story: (TSX:CVE)
The Canadian Press
Surprise Senate vote would overturn Biden environmental rule
By Matthew Daly in Washington
WASHINGTON (AP) — In a surprise victory for Republicans, the Senate on Thursday voted to overturn a Biden administration rule requiring rigorous environmental review of major infrastructure projects such as highways, pipelines and oil wells — an outcome aided by Democratic Sen. Joe Manchin of West Virginia.
Manchin, a key player on energy and climate issues and a swing vote in the closely divided Senate, joined Republicans to support the measure, which was approved 50-47. The vote comes as Manchin has proposed a separate list of legislative measures to speed up federal permitting for major projects in return for his support of a Democratic bill to address climate change.
Republicans voted unanimously to overturn the Biden permitting rule, while Manchin was the only Democrat to support it. Three senators were absent: Republican John Cornyn of Texas and Democrats Patrick Leahy of Vermont and Jeff Merkley of Oregon. The vote sends the measure to the Democratic-controlled House, where it is unlikely to move forward.
Still, the vote signaled strong Senate support for action to reform the often onerous federal permitting process, which can take up to eight to 10 years for highways and other major projects. Streamlining federal review is a top Manchin and GOP priority that is not shared by most Democrats.
Sen. Dan Sullivan, an Alaska Republican, sponsored the measure to overturn the Biden rule, saying new regulations under the National Environmental Policy Act, or NEPA, will further bog down the permitting process and delay critical infrastructure projects the country needs.
The Biden rule — which overturns an action by the Trump administration loosening environmental reviews — requires regulators to consider the likely impacts on climate change and nearby communities before approving major projects. The new requirement “is going to add to the red tape” that prevents major infrastructure projects from being approved in a timely manner, Sullivan said.
While President Joe Biden has called infrastructure a priority — and pushed for a $1 trillion bipartisan infrastructure law passed last year — the new NEPA rule actually “makes it harder to build infrastructure projects” in the United States, Sullivan said.
“The only people, in my view, who really like this new system are radical far-left environmental groups that don’t want to build anything … and probably the Chinese Communist Party,” he said on the Senate floor. China and other competitors likely “love the fact that it takes 9 to 10 years to permit a bridge in the U.S.A.,” Sullivan said.
The White House strongly opposed the measure and threatened a veto if Congress approves it.
“This action would slow the construction of American infrastructure, lead to the waste of taxpayer resources on poorly designed projects and result in unnecessary and costly litigation and conflict that will delay permitting,” the White House said in a statement Thursday.
Manchin countered that, “for years I’ve worked to fix our broken permitting system, and I know the (Biden) administration’s approach to permitting is dead wrong.”
Manchin called Thursday’s vote “a step in the right direction” but said the measure likely “is dead on arrival in the House. That’s why I fought so hard to secure a commitment (from Democratic leaders) on bipartisan permitting reform, which is the only way we’re going to actually fix this problem.”
The new rule, finalized this spring, restores key provisions of NEPA, a bedrock environmental law that is designed to ensure community safeguards during reviews for a wide range of federal projects, including roads, bridges and energy development such as pipelines and oil wells. The longstanding reviews were scaled back under former President Donald Trump in a bid to fast-track projects and create jobs.
The White House Council on Environmental Quality said in implementing the new rule that it should restore public confidence during environmental reviews. The change could speed development by helping to “ensure that projects get built right the first time,” said CEQ Chair Brenda Mallory.
Projects approved by the Trump administration were frequently delayed or defeated by lengthy court battles from groups challenging environmental reviews as inadequate.
Manchin, who brokered a surprise deal last week on climate legislation with Senate Majority Leader Chuck Schumer, said he’s won promises from Biden and Democratic leaders in Congress to pursue permitting reforms in the Senate to speed approval of projects in his energy-producing state and across the country. Manchin’s wish list includes swift approval of the controversial Mountain Valley natural gas pipeline in his home state and Virginia. The pipeline is nearly complete but has been delayed for years by court battles and other issues.
Manchin’s list includes a number of proposals supported by Republicans, including a two-year deadline on environmental reviews; changes to the Clean Water Act; limitations on judicial review; and prompt action on projects determined by the Energy secretary to be in the national interest.
Environmental groups have decried Manchin’s proposals as counter-productive to the climate legislation and a threat to the environment and communities where projects would be built.
Madeleine Foote, deputy legislative director of the League of Conservation Voters, dismissed the Senate vote Thursday as “nothing more than a Republican-led stunt to appease their fossil fuel-industry allies.”
Foote and other environmentalists said strong NEPA review is needed to ensure that those most affected by an energy project have a say in the projects built in their communities.
“Thorough, community-based environmental reviews are critical to helping eliminate environmental racism and making sure low-income communities and communities of color are protected from polluters who want to build dirty, toxic projects in their backyards,” Foote said.
She called on Congress to approve the Manchin-Schumer climate bill as soon as possible. Schumer said votes on the bill are likely this weekend.
Kabir Green, director of federal affairs at the Natural Resources Defense Council, another environmental group, said Americans are “seeing the effects of climate change in catastrophic detail, from the heat waves in Texas to wildfires in New Mexico to the devastating flooding in Kentucky. But the Senate is voting to prevent the federal government from considering climate change when making decisions. This makes no sense.”
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