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Fossils ‘Stunned’, ‘Aghast’ After Biden Pauses New Oil and Gas Leases

February 1, 2021
Reading time: 6 minutes
Primary Author: Compiled by Mitchell Beer @mitchellbeer

Gage Skidmore/Wikimedia Commons

Gage Skidmore/Wikimedia Commons

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North American fossils are declaring themselves “stunned” and “aghast” at the wave of climate action emanating from the White House last week, with U.S. President Joe Biden ordering a pause on new oil and gas leases on federal land and climate advisor Gina McCarthy promising “the most aggressive” greenhouse gas reductions the country can achieve.

“Oil and gas companies knew they would face a fight,” Bloomberg reports, after Biden campaigned on a promise to get serious about addressing the climate crisis. But “nobody expected fossil fuel to come under such an immediate attack,” with early moves to cancel the Keystone XL pipeline, rejoin the Paris Agreement, suspend the U.S. government’s fossil leasing program, call a halt to some fossil fuel subsidies, and order federal procurement to focus on electric vehicles.

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“Fossil fuel stocks have plunged on his actions, and banks including Goldman Sachs Group Inc. have warned of a drop in U.S. crude supplies,” the news agency writes.

Analysts noted that the oil and gas leasing was just a pause, not a permanent ban, and it didn’t affect leases already in place. As if to accent the point, the Biden administration approved 31 new drilling permits last Wednesday, the same day it had designated as Climate Day. Inside Climate News has a detailed look at the order, noting that fossils already have access to leases totalling 23 million acres/9.3 million hectares on land and offshore. DeSmog has its own take on how the fossil industry is overstating the job impact of the announcement.

And yet, “the industry is aghast at these changes,” said Dan Eberhart, CEO of oilfield services company Canary Drilling Services. “They are more direct, more fierce, and quicker than what folks expected.”

Biden is already moving faster than the Obama administration, in which he served as vice president from 2009 to 2016, but “more orders will likely follow, along with legislation,” Bloomberg adds, demonstrating “how much has changed in the past four years. While the Obama era ended with a fracking boom that transformed the U.S. as a top energy exporter, the Biden era has started with sharp moves against fossil fuel.”

Rystad Energy calculated the moratorium will cost the U.S. up to 200,000 barrels of oil production per day if it becomes permanent, and “may be the death knell for the Gulf of Mexico’s already dwindling output,” Bloomberg reports. “The region that would bear the brunt of this ban are the deep waters of the Gulf of Mexico since it’s entirely owned by the government,” said ESAI Energy LLC analyst Elisabeth Murphy.

That would be the same Gulf of Mexico that was still seeing persistent environmental impacts 10 years after the Deepwater Horizon disaster, the largest oil spill in U.S. history.

By the end of last week, Politico had 25 Republican senators led by Sen. Cynthia Lummis (R-WY) releasing legislation to require congressional approval for any future moratoria, while an executive order from Texas Governor Greg Abbott directed state agencies to “identify potential litigation, notice-and-comment opportunities, and any other means of preventing federal overreach within the law”. That was after acknowledging that Texas has “either zero or close to zero” federal lands where fossil drilling takes place.

Much of the industry’s ire focused in New Mexico, a state whose public services depend heavily on revenue from oil and gas fracking operations—and coincidentally or not, the home state of Rep. Deb Haaland, soon to be sworn in as the country’s first Secretary of the Interior of Indigenous origin. “During his inauguration, President Biden spoke about bringing our nation together. Eliminating drilling on public lands will cost thousands of New Mexicans their jobs and destroy what’s left of our state’s economy,” Carlsbad, NM Mayor Dale Janway told The Associated Press. “How does that bring us together? Environmental efforts should be fair and well-researched, not knee-jerk mandates that just hurt an already impoverished state.”

“I think we’re going to see companies choosing not to invest in New Mexico and take their jobs and drilling to Texas just three miles away,” added Steve Pearce, chair of the state Republican Party. “They can just scoot across the border where they don’t have federal lands.”

But the state’s two U.S. senators, reinforced by local officials, came out in support of the moratorium, AP wrote in a separate dispatch. While Sen. Martin Heinrich (D-NM) said he would not back a permanent leasing ban, “it’s also crystal clear that the zero-carbon, zero-pollution economy is coming,“ he told the news agency. “Even oil and gas majors are planning for that future. To weather that change, New Mexico needs a transition plan with a predictable glide path for producers and robust investments in the communities where our energy veterans have produced our country’s transportation fuels.”

Inside Climate News notes that the moratorium “will do little in itself to reduce the nation’s oil and gas production, and will not affect the number of wells being drilled for years.” But even so, “it’s hard to overstate the symbolic importance” of the order, and “advocates hope the halt to leasing will be the first step toward developing a comprehensive path to phase out fossil fuel production in a way that also supports workers, communities, and states that depend on the resources for their livelihoods.”

“After years of giving away oil and gas leases at fire-sale prices, tapping the brakes is a sensible and necessary step,” said U.S. Environmental Defense Fund President Fred Krupp told Bloomberg. “With industry already sitting on more than 13 million acres of idle oil and gas leases [on land—the Inside Climate News count included offshore leases—Ed.], claims that a pause on leasing will cause economic harm stretch all credulity.”

“U.S. oil and natural gas producers can survive without new leases on federal lands, with the backlog of potential drilling unlikely to dent activity until the latter half of President Joe Biden’s term,” agreed Bloomberg Intelligence analyst Vincent Piazza.

In other U.S. news, Senate Majority Leader Chuck Schumer (D-NY) pressed Biden to formally declare a climate emergency, unleashing the same emergency powers Donald Trump used to build sections of his southern border wall. “Schumer’s suggestion is what many Republicans feared would happen the next time a Democrat was in the White House after Trump used the emergency declaration to get more funding for the border wall in the face of congressional opposition,” The Hill reports.

“If today, the national emergency is border security,” Sen. Marco Rubio (R-FL) told CNBC in 2019, “tomorrow the national emergency might be climate change.”

Treasury Secretary Janet Yellen promised to set up a climate team within her agency, while the U.S. Federal Reserve established a new Supervision Climate Committee to study the implications of the climate crisis for banks and financial markets. Incoming Energy Secretary Jennifer Granholm focused on clean energy jobs in her Senate confirmation hearing, while the Federal Emergency Management Agency laid plans to free up US$10 billion for advance preparations for climate disasters, an amount that “would dwarf all previous grant programs of its kind,” said former FEMA deputy administrator Daniel Kaniewski. The New York Times looked at the practical steps Transportation Secretary Pete Buttigieg will be able to take to deliver on his climate promises, while a court order opened an easier path for the Environmental Protection Agency to rescind a deeply controversial and damaging “secret science” rule introduced in the dying days of the Trump administration.



in Climate & Society, Community Climate Finance, Ending Emissions, Fossil Fuels, Jobs & Training, Jurisdictions, Legal & Regulatory, Oceans, Oil & Gas, Shale & Fracking, Sub-National Governments, United States

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