The Trump administration wants offshore drillers to tap more of the shallow waters of the Gulf of Mexico for oil and natural gas production.
And it has just figured out a way of encouraging them to do so: cutting the operators of some new wells a break on how much they have to pay the federal government.
The new policy, described this week by two federal agencies in charge of overseeing the sea of petroleum underneath the Gulf and other public waters, is designed to spur business to drill for more than $20 billion worth of oil and gas near the coasts of Texas, Louisiana, Mississippi and Alabama.
That offshore oil and gas, supporters say, is needed to keep the United States energy-independent. “We should embrace policies that ensure U.S. offshore production remains a vital source of the energy that builds our modern lives,” said Erik Milito, president of the National Ocean Industries Association, a trade group that cheered the move.
But the change comes in the face of opposition from environmentalists, who say that it constitutes yet another handout to President Trump’s oil and gas allies that could hurt the the Gulf ecosystem. And that its announcement was hidden in the middle of a much larger 93-page report.
"It's buried halfway through this report," said Matt Lee-Ashley, a senior fellow at the Center for American Progress. "So I think they're trying to hide whatever they're doing."
Here’s how the policy works: Whenever a driller produces oil and gas in federally owned waters, it pays part of the proceeds to the government in the form of a royalty rate. Recent leases for drilling in waters less than 200 meters deep have royalties of 12.5 percent. Now the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) want to allow more new offshore wells to apply for lower royalty rates that are reserved for projects that are economically struggling.
Specifically, drillers will be allowed to use a higher discount rate — 25 percent instead of just 15 percent — on future cash flows when assessing the value of a well.
The result of that highly technical tweak to the accounting arithmetic? More new wells probably will qualify for the lower royalty rates.
That new policy is in effect as of Tuesday. But the administration also signaled that in future lease sales it may allow some new wells to produce a certain amount of oil entirely royalty free.
“These policy changes represent a massive breach of trust with American taxpayers who are legally owed a fair return on publicly owned oil and gas resources,” Lee-Ashley said.
The policy to boost oil and gas production in the shallower waters of the Gulf comes as oil companies have lost interest in drilling there. Between 2008 and 2018, the number of offshore wells drilled at depths of less than 200 meters have decreased 89 percent.
The stretch of shallow water near the Gulf shore was historically rich in oil, but a lot of the best pockets of petroleum have already been tapped. More recently, oil companies have turned to drilling deepwater wells in the Gulf. BSEE spokeswoman Eileen Angelico said deepwater wells waters are not affected by the new policy.
The Trump administration tried to expand offshore drilling far beyond the Gulf — into new corners of the Atlantic and Pacific oceans — only to be stymied by local opposition. Both state-level Democratic and Republican politicians objected to drilling over concerns of another spill like the 2010 Deepwater Horizon disaster.
But the Trump administration's new royalties rules have the strong support of Republicans in the Louisiana congressional delegation.
"By taking advantage of the stranded resources in the shallow waters of the Gulf, we will create jobs, grow the economy, and continue to build our energy independence," Rep. Ralph Abraham (R-La.) said in BSEE's press release. "This is good news for Louisiana and for the nation."
Still, the effort to boost offshore oil drilling in the Gulf stands in stark contrast to what most Democratic candidates for president want. Almost every candidate, including former vice president Joe Biden and Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), has vowed to end leasing for fossil fuel extraction on all federal lands and waters.
The broader American public is largely opposed to more drilling, too. More than 8 in 10 Americans say drilling either off the coasts and on public lands should “decrease” or “stay as is,” according to a recent nationwide public opinion poll by The Washington Post and the Kaiser Family Foundation.
— Another new effort to expand drilling, this time in the Arctic: The Trump administration also this week unveiled a plan that could enable oil drilling on more than three-fourths of the 23 million-acre National Petroleum Reserve-Alaska. The swath of wilderness “has attracted relatively little public attention compared with the neighboring Arctic National Wildlife Refuge. But it ranks as one of the most ecologically valuable and promising oil prospects in the country,” Juliet Eilperin reports.
- The details: After the Obama administration put half the reserve off limits to development six years ago, the Trump administration says it's weighing numerous options for the reserve, “from slightly scaling back the 11.7 million acres eligible for development to expanding the leasing area to 18.3 million acres.”
- The reaction: “The Trump administration is marching ahead with its plan for energy dominance, no matter the cost to our public lands, wildlife and people,” said Nicole Whittington-Evans, Alaska program director at the advocacy group Defenders of Wildlife. “Instead of protecting imperiled polar bears, ringed seals and migratory birds in the National Petroleum Reserve-Alaska, the Trump administration wants to sell their habitat off to oil companies.”
— Another day, another rollback: The Environmental Protection Agency has eased a rule meant to determine how companies store dangerous chemicals. It was adopted by the Obama administration following an explosion at the West Fertilizer Company plant in Texas that killed 15 people in 2013.
- The change: “Under the new standards, companies will not have to provide public access to information about what kinds of chemicals are stored on their sites,” The Post’s Juliet Eilperin reports. “They also will not have to undertake several measures aimed at preventing accidents, such as analyzing safer technology and procedures, conducting a “root-cause analysis” after a major chemical release or obtaining a third-party audit once an accident has occurred.”
- What the EPA says: Former EPA chief Scott Pruitt had already suspended the rule in his first month on the job. Current Administrator Andrew Wheeler said the agency is “listening to our first responders and homeland security experts. Today’s final action addresses emergency responders’ long-standing concerns and maintains important public safety measures while saving Americans roughly $88 million per year.”
.@Janefonda on which of the 2020 candidates has the best climate change policies: “There’s three of them: Bernie Sanders Elizabeth Warren and Tom Steyer.” https://t.co/FC5wxJnfVg #postlive pic.twitter.com/qCCPZgbc6d— Washington Post Live (@postlive) November 21, 2019
— “It’s too late for moderation”: During a Washington Post Live event on the impact of climate change on oceans, The Post’s Robert Costa asked actress and activist Jane Fonda about which 2020 candidates have the best climate agendas. “There’s three of them: Bernie Sanders, Elizabeth Warren and Tom Steyer,” she said. When pressed about whether a particular candidate stands out, she responded: “All I can say is it’s too late for moderation … When we vote we have to vote for somebody who is very, very brave. Just think what it’s going to take in terms of courage to demand that the fossil fuel industry leave 11 trillion dollars in the ground.”
- On Pelosi: Fonda also said she’s not quite satisfied with how House Speaker Nancy Pelosi (D-Calif.) has handled climate issues. “She’s bad-mouthing the Green New Deal, and I don’t quite think she gets it, but she’s got her hands full and I’m really glad she’s Speaker,” Fonda said. “I really, really, really admire her. When the impeachment is over and things like that, then we’ll talk to her about climate.”
- Why she's in D.C.: For several weeks, the two-time Academy Award winner has led a weekly climate protest at the Capitol, occasionally gettign arrested over the civil disobedience.
— Another climate protest in Nancy Pelosi’s office: Speaking of Capitol Hill arrests, nine demonstrators were arrested after barging into the House speaker’s office to demand a meeting on the climate after a four-day hunger strike outside her office. “The arrested activists, according to the environmental group Extinction Rebellion, belong to a global network of protesters holding demonstrations to call attention to a crisis that could lead to food shortages, more wildfires and a loss of land from rising seas,” The Post’s Darryl Fears writes. “The standoff between the group and Pelosi — the nation’s highest-ranking Democrat — shows the divide between young liberals and politicians who they say are not moving fast enough to curb carbon emissions.”
— House Democrats introduce sweeping climate legislation: The bill, dubbed the 100% Clean Economy Act of 2019, sets a target of transitioning the nation’s economy to net-zero emissions by 2050. Reps. A. Donald McEachin (D-Va.), Deb Haaland (D-N.M.), Debbie Dingell (D-Mich.), Earl Blumenauer (D-Ore.), Paul Tonko (D-N.Y.) and Chellie Pingree (D-Maine) introduced the bill with 150 original co-sponsors. The legislation also directs the EPA to evaluate agency plans and conduct annual reports on the progress toward the 100 percent clean economy goal and also creates an advisory committee to make recommendations toward the goals.
— Senate sets up Brouillette for a final confirmation: The Senate voted 74 to 18 to advance the nomination of Dan Brouillette, Trump’s pick to replace Rick Perry at the helm of the Energy Department. Brouillette is set to face a final confirmation vote in the chamber on Dec. 2 when the Senate reconvenes after the Thanksgiving recess.
— Fiona Hill said she heard Putin express concern about American fracking: During former White House adviser Fiona Hill’s testimony before the House Intelligence Committee as part of the impeachment inquiry, she recalled hearing Russian President Vladimir Putin say fracking in the United States was a “great threat” to Russia. The remarks were in response to a question from Rep. Mike Conaway (R-Tex.) about anti-fracking ads and messages being pushed on the television channel RT.
- What she said: “In November 2011, I actually sat next to Vladimir Putin, at a conference, in which he made precisely that point,” she said. “It was the first time that he had actually done so to a group of American journalists and experts that were brought to something called the Valdai Discussion Club. So he started in 2011 making it very clear that he saw American fracking as a great threat to Russian interests. We were all struck by how much he stressed this issue. And since 2011, and since that particular juncture, Putin has made a big deal of this.”
- Meanwhile, Graham wants info on Bidens, Burisma and Ukraine: In a move seen as an effort to counter the House impeachment inquiry, Senate Judiciary Chairman Lindsey O. Graham (R-S.C.) sent a request to the secretary of state for documents related to former vice president Joe Biden and his communications with Ukrainian officials. “Graham’s inquiry is focused on any calls Biden may have had with Petro Poroshenko, then the Ukrainian president, regarding the firing of the country’s top prosecutor as well as any that referenced an investigation into Burisma, the Ukrainian natural gas company that employed Biden’s son Hunter Biden,” The Post’s Colby Itkowitz reports.
— He’s running: Environmental philanthropist and former New York mayor Mike Bloomberg has filed federal papers to enter the crowded Democratic primary field running for president. The move “reflects his view that the field of Democratic contenders was not well positioned to win next year and that a candidate with his experience, political moderation and deep pockets would have a better chance of defeating President Trump in a general election,” The Post’s Michael Scherer reports.
- Who's working for him: Mitch Stewart, who worked as a field organizer for Barack Obama’s presidential runs, will work on ground operations and suggested the “strategy will build on relationships Bloomberg has already formed through his philanthropic efforts with mayors, environmentalists and gun-regulation activists, among others.”
— What the wet conditions meant for farmers this year: This was the wettest year on record for the Lower 48 states, and extensive flooding throughout the Midwest and Northern Plains in the spring meant that many farmers were unable to get crops in the ground or had to delay planting until it was too late, the New York Times reports. And for many, the conditions did not improve in the fall. “The Agriculture Department tracks how many acres of insured farmland went unplanted, a statistic referred to as prevented planting, and this year’s figures are the highest since the agency started reporting the figures in 2007,” the Times reports. “Overall, farmers reported being unable to plant on some 19 million acres for all crops in 2019 with more than 70 percent of those acres occurring in the rain-soaked Midwest.”
- The Environmental and Energy Study Institute hosts a briefing on on the report "Legal Pathways to Deep Decarbonization in the United States."
- The Atlantic Council’s Global Energy Center and South Asia Center holds an event "Energizing India: Conversations on energy access and security."
- Politico hosts an event on environmental issues and the 2020 presidential election on Dec. 4.
— “We would be disappointed if it’s not carbon-neutral”: Coldplay says it won’t tour until it figures out how to make its concerts environmentally beneficial. “Frontman Chris Martin told the BBC that the band plans to spend the next year or two figuring out how to make their tour for ‘Everyday Life,’ which drops Friday, carbon-neutral,” The Post’s Marisa Iati writes. The band is planning one performance of “Everyday Life” at London’s Natural History Museum, and proceeds will go to London-based environmental law nonprofit group ClientEarth.