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Sucking all the air out
Feige: EO 13990 ‘daunting,’ might impact ops on state land, but some good news Kay Cashman Petroleum News
Scratching the surface of the Biden administration’s actions to date, on Jan. 27 Alaska Department of Natural Resources Commissioner Corri Feige made a presentation to the Senate Resources Committee about the potential negative impacts the new administration’s presidential and secretarial orders could have on Alaska’s oil and gas industry.
Most certainly, Feige told committee members, there will at the very least be slowdowns in getting authorizations for oil and gas activities on federal land and moratoriums on leasing and drilling, but the DNR commissioner appears most concerned about one particular Biden executive order, 13990, that she fears has the potential of negatively impacting oil and gas operations on state lands.
Signed by Biden hours after his inauguration on Jan. 20, EO 13990 relates to policy on environmental protection, climate change and climate change response, as well as rule making and plan reviews. Essentially, any actions taken by agencies between January 2017 and January 2021 are open to immediate review and amendment.
One directive in the order is to listen to “the science,” Feige noted.
“Largely those policy initiatives in the Biden administration are focused on climate change and climate crisis,” she told committee members.
“For me, I think where we’re going to see the greatest amount of discussion - and this is certainly something that the state is going to be paying extremely close attention to - is this discussion of listening to the science. The question is, who gets to decide what is the science, and what science is robust enough,” Feige said.
“The National Environmental Policy Act, or NEPA, reviews require that all data submitted in the environmental information documents in support of the application must be derived from the best available data … and that scientific data must be meaningful to the question being asked. And when you are talking about scientific and technical data, that data should be robust, repeatable and peer reviewed,” Feige said.
“It is going to be very interesting to see if the new administration is going to apply that bar to robust, repeatable and peer-reviewed science because there are a lot of questions that exist around climate change science. … This I think is going to be one of the more robust discussions that we see carry forward in the years ahead,” she told committee members.
“Clearly the other policy decisions” per EO 13990 “are to improve public health and protect the environment, ensure access to clean air and clean water, lower the danger of exposure to chemicals and pesticides and make sure that we are holding polluters accountable,” Feige said, noting the order also focuses on the reduction of greenhouse gas emission and bolstering the resistance to climate change, and the prioritization of “environmental justice.”
EPA unknowns EO 13990 further stipulates that U.S. Environmental Protection Agency regulations for the oil and gas sector, such as methane emissions, “also be addressed with some very specific action to be taken by September of 2021,” she said.
“This really is the key area that could impact Alaska’s existing oil and gas operations because it’s unknown at this time how EPA’s view of its operations are going to affect things like air permits … or large oil and gas operations on the North Slope and in Cook Inlet,” so the Alaska Department of Environmental Conservation “will be fully engaged” because they administer the clean air program for EPA in the state. And, of course, she said, air permits are needed for many oil and gas activities on state, as well as federal, land.
Creating new terms EO 13990 calls for holding polluters “accountable” in improving public health and protecting the environment.
As to the “accounting of the benefits of reducing climate pollution, what is concerning here is that they are creating new terms which currently have no definition: Social cost of carbon, social cost of nitrous oxide and methane,” Feige told committee members.
“At the present time the full cost of greenhouse gas emission is unknown. We don’t have a metric and we don’t have a meter for measuring that. There’s a whole lot of assumptions that go into that, bringing us back to the question of listening to the science and who gets to decide what is the science of sufficient quality to answer some of these questions.”
Liberty decision pertinent The Liberty decision, Feige said, came out of this controversy, referring to Hilcorp Alaska’s Liberty development, which sits on federal acreage.
“The 9th circuit court of appeals just a few weeks ago issued a decision that said that BOEM, which is the Bureau of Ocean Energy Management, had done an insufficient job of explaining why they dismissed or didn’t fully develop discussion around this total cost for potential damages or impact globally to greenhouse gas emission that is associated with the Liberty development. So, you can see there is a nexus - a relationship/link - here to what we now see in the executive order,” Feige said.
“And again, this whole discussion of the impact and how do you measure, and then how do you put a monetary value to what those impacts of greenhouse gas emission are around the globe from a well drilled on the North Slope of Alaska. It is a daunting issue, but I really think it has the potential to suck the air out of the room, for lack of a better term,” Feige told the committee.
The feds “are going to be establishing a working group to help define these terms” - if there is a way for the state to be a cooperating agency in that group, it will, she said.
Possible good news The situation with Biden administration orders is “very fluid,” Feige said.
“It is a bit overwhelming at this point in time because we’re seeing all these orders come very fast and we’re still in the process of trying to unpack all the information and really digest what they mean to the state and what has direct implications for operations in Alaska,” she said.
“I do believe we will see a shift to the importance of state lands, and exploration and development on state lands over the course of the next four years.”
That, she said, is a very good thing for the discovery rate.
“Since about 2013, 2014 we’ve seen a pretty steep discovery rate of over 90% on the North Slope that’s related to the Nanushuk and the Torok plays, in particular what we call the Brookian play type which is the Nanushuk, and which is being developed at Pikka,” Feige said.
DNR has been told by oil companies that “dollars invested in Alaska are in competition with dollars that are spent in other basins and in other places around the world, so every policy matters in this market and in this kind of a climate,” she said.
“I also think it is important to note that the current climate we find ourselves in with the curtailment of shale and even the instability of federal acreage across the west and across the Lower 48 actually sets the stage for a bit of opportunity for Alaska because those investment dollars will look for a place to go.”
DNR has seen a “rebalancing of the portfolios in investment houses and in companies in the oil sector who are looking for less … shale resources, shale assets, and putting a great focus back to longer duration, more stable high-level production out of conventional assets,” Feige told the committee.
If the state of Alaska does its “job right at getting the word out about Alaska being open for business and that we are a stable environment in which to operate; that we have durable, predictable permitting processes, we stand to capture a fair bit of that capital looking for a home, if you will,” she said.
Similar to Obama admin. Under the Obama administration permits took longer, the commissioner said. Often, they were sent back to D.C. for review as opposed to being handled in the local Alaska office, which is what happened when secretarial order 3395 was signed on Jan. 20.
It transferred the authority of local Interior bureaus and offices to Biden appointees in Washington, D.C., which is why appointee Laura Daniel Davis, principal deputy assistant Secretary of Land and Minerals Management, had to sign 88 Energy’s Merlin 1 drilling permit.
Davis was most recently the chief of policy and advocacy for the National Wildlife Federation. Prior to that she served as chief of staff to Interior Secretaries Sally Jewell and Ken Salazar in the Obama administration.
Feige anticipates the tempo of issuing authorizations under the Biden administration will be slower than under the previous Trump admiration.
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