With help from Alex Guillén, Eric Wolff, Zack Colman and Ben Lefebvre
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— Oil and gas industry insiders and even some green groups say last week’s pipeline setbacks have barely made a dent in the sector’s growing web of infrastructure.
— The full House appropriations panel will mark up its bill today that sets fiscal 2021 funding for both the Energy Department and Army Corps of Engineers.
— EPA Administrator Andrew Wheeler will soon announce he will seek no changes to the current national air quality standard for ground-level ozone.
WELCOME TO MONDAY! I’m your host, Kelsey Tamborrino. Chris Bliley of Growth Energy gets the trivia win for knowing that former Obama-era Interior secretary, Ken Salazar, also served in Congress simultaneously with his brother. He served in the Senate, while his brother John Salazar served in the House. For today: What is the only U.S. state with a Spanish state motto? Send your tips, energy gossip and comments to [email protected].
Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today’s episode: The future of U.S. pipelines.
OIL TAKES HIT, BUT NETWORK STILL GROWING: Despite the high-profile courtroom losses by the Keystone XL and Dakota Access pipelines and the cancellation of the Atlantic Coast natural gas project last week, the oil and gas industry has succeeded in putting tens of thousands of miles of new steel in the ground in recent years, Pro’s Ben Lefebvre and Eric Wolff report this morning.
“One thing for sure is there is a lot going on in the pipeline world outside of the public attention on shiny objects like Keystone XL, DAPL or Atlantic Coast,” said John Stoody, vice president of government and public relations at Association of Oil Pipelines, pointing to government records showing about 10,000 miles of oil pipelines were built since 2015. “While the many have been focused on debating the Atlantic Coast Pipeline, we’ve actually built and have newly operating over the last five years the mileage equivalent of over 18 Atlantic Coast Pipelines.”
Trump administration officials and many in the oil and gas industry blame green groups for the recent high-profile setbacks. But some of the blame sits with the Trump administration itself, said Jason Bordoff, the founding director of the Center on Global Energy Policy at Columbia University, who is currently advising Joe Biden’s campaign. It was Trump’s attempts to fast track the Keystone XL and DAPL projects that ironically led to fatal environmental permitting flaws that prompted the courts to block them, Bordoff said.
Most pipeline projects draw little or no litigation at all, and green groups may not even have won the recent cases if the administration had done a better job of permitting, agreed Lorne Stockman, senior research analyst at Oil Change International, a group that advocates for renewable energy. If anything, the oil industry may now have to take a breather from building new pipelines after the construction “frenzy” in the years that followed the oil and gas boom that has made the U.S. the leading global energy producer.
Coming this week: The president is soon expected to announce final changes to the National Environmental Policy Act, the bedrock environmental permitting law. President Donald Trump will be in Atlanta on Wednesday to tout his administration’s progress on accelerating environmental reviews for infrastructure projects and likely announce the implementation of his NEPA rule.
DAPL SHUTDOWN WOULD COST BILLIONS, COMPANY WARNS: Shutting down the Dakota Access oil pipeline will cost Energy Transfer over $1 billion in losses, the company told the D.C. Circuit Court of Appeals in a Friday night filing appealing a judge’s order last week to empty the pipeline by Aug. 5. The company also contends it will cost North Dakota’s companies and state coffers $7.5 billion, kill thousands of jobs and cause “serious damage to national security” via “increased foreign oil dependence.” The company also argued that the pipeline has operated safely for three years and that closing it would force oil to be shifted to rail transport, “which is statistically more likely to result in spills.”
Another two cents: Judge James Boasberg in his lower court ruling had written that he had already mulled Energy Transfer’s economic arguments but that he considered a spill in the nearby waterways to pose a greater economic risk. It could also be argued that the import argument isn’t as big a deal now that U.S. oil demand remains well below where it was before the Covid-19 pandemic. But even if oil demand picks up, a ramp up in production in Texas would most likely pick up much of the slack, analysts have said.
What’s next: The company asked the U.S. Court of Appeals for the D.C. Circuit to provide relief from the shutdown order by July 20 and for the court to speed the appeal. The appellate court might temporarily stay the shutdown order for a few days or weeks while it briefs out and considers what to do longer-term.
COURT BACKS ENERGY STORAGE ORDER: The D.C. Circuit on Friday upheld FERC’s order mandating that organized markets grant access to energy storage projects, Pro’s Eric Wolff reports. The court said FERC had not acted arbitrarily by not allowing states to opt-out of the rule, and it said FERC was working within its authority under the Federal Power Act. With the court decision in hand, organized markets will now have to clear the way for stand-alone batteries and aggregated energy storage to enter into wholesale markets.
ENERGY & WATER UP: House appropriators turn to the energy and water funding bill this afternoon as they speed through their 2021 full committee markups. The measure, typically one of the least controversial, would provide $41 billion to DOE in annual funding, $7.63 billion to the Army Corps of Engineers and $1.66 billion to the Bureau of Reclamation.
APPROPRIATORS WANT TO KNOW: WHERE’S THE NUCLEAR WASTE PLAN? House appropriators want to know what the Energy Derpartment is doing to develop an interim nuclear waste storage plan. When Trump slammed the door on using Yucca Mountain in Nevada for long-term nuclear storage, he promised new innovative solutions to the storage problem. But according to the Energy-Water Appropriations report released Sunday, the committee hasn’t gotten any new information from the department. “The Committee is disappointed with the lack of details in the Department’s proposal for interim storage activities, many of which appear to be generic efforts that have been underway for years,” the report says.
How about some deets on that uranium reserve? House appropriators haven’t closed the door on a domestic uranium reserve, but they’d like to know a little more about it before they provide funding. Energy Secretary Dan Brouillette has been touting a $150 million-a-year budget request to buy uranium from domestic miners as the first step in establishing a U.S. nuclear fuel production program, but he has not provided any details to Congress, the Appropriations Committee says.
“The Department has been unable to provide specific information about how it would implement the program, including in congressional justifications, briefings, and in responses to questions from the Committee about how the funds would be spent, including the process for the purchase, conversion, or sale of uranium in a reserve,” they write. However, the committee grants DOE 180 days from passage of the bill to provide a detailed plan. In the meantime, DOE is forbidden from spending money on the reserve outside the report.
ICYMI: The House Appropriations Committee approved the $36.8 billion funding bill for the Interior Department, EPA and other agencies on a party-line vote of 30-19 on Friday, sending the measure to the floor.
DEMOCRATS SOUND OFF ON NUCLEAR POLICY CHANGE: A pair of senators are warning the U.S. International Development Finance Corporation that its proposed rule change to finance overseas nuclear reactors would take money away from important development work, including more cost-effective alternatives to fossil fuel projects. “DFC financing of overseas nuclear reactors may offshore the physical risks associated nuclear power, but they would keep U.S. taxpayers on the hook for the steep financial ones,” Sens. Ed Markey (D-Mass.) and Bernie Sanders (I-Vt.) wrote in a Friday letter to CEO Adam Boehler — the same day the 30-day comment period on the proposed rule ended.
Meanwhile, Sen. Sheldon Whitehouse (D-R.I.) and Rep. Conor Lamb (D-Pa.) led a bicameral letter supporting the policy change and its help to advance low-carbon energy solutions globally, as long as critical safety structures for licensing and regulation are upheld.
WELCOME TO THE O-ZONE: EPA Administrator Andrew Wheeler as soon as today is expected to announce he will propose “retaining without revision” the current national air quality standard for ground-level ozone, more commonly known as smog. It was last set in 2015 at 70 parts per billion, though environmentalists even then argued it should go as low as 60 ppb.
Wheeler recently proposed keeping in place the particulate matter, or soot, standard, a move that brought significant criticism from environmentalists and public health experts. But for the ozone standard at least, Wheeler has a more clearly stable footing. While he rejected EPA’s internal experts’ call to strengthening the PM standard, on ozone the agency’s scientists recommended no change this time around. And six of the seven members of a key advisory committee also recommended no change. EPA aims to finish both rulemakings this year.
One detail to watch for is whether the proposal in any way addresses background ozone, the natural levels found sometimes in parts of the U.S., especially in the West. Former Administrator Scott Pruitt in a 2018 memo told EPA to consider “the relative contribution of natural and anthropogenic activity” during this review cycle. But in a ruling last year upholding the 2015 standard, the D.C. Circuit Court of Appeals rejected industry’s argument that EPA can use background ozone levels to set a standard higher than the level science considers protective of public health.
OIL AND GAS EYES ZERO-CARBON SOURCES: Oil and gas field operations are slowly looking into running their output with renewables, according to new analysis by IHS Markit. During the early 2000s and until 2017, there were fewer than 15 of those renewable energy projects. But IHS Markit now counts more than 45 announced projects, with 13 of those made in 2018 and 15 in 2019.
COAL COMMUNITIES COULD SEE 20% DROP: Coal-dependent communities could see municipal government revenues shrink 20 percent as the industry declines, according to a National Bureau of Economic Research working paper. A federal carbon tax could steer a fraction of hundreds of billions of dollars raised to struggling coal communities for which “economic revitalization will require large investments and thus significant external support,” the authors wrote. The researchers studied 27 coal-reliant counties with at least 8 percent of its labor force involved in coal mining. The authors’ revenue projections do not account for a “downward spiral” such as the flight of property tax revenue and other sources.
Creditors who have bought municipal bonds might also suffer, as interest and principal payments “could be due during a period of precipitous decline in the coal industry.” The paper was written by Adele Morris, a senior fellow at the Brookings Institution who was a senior Treasury Department economist under Presidents Bill Clinton and George W. Bush and served on Clinton’s Council of Economic Advisers, Noah Kaufman, a research scholar at Columbia University’s Center for Global Energy Policy who was an adviser at White House Council on Environmental Quality under President Barack Obama, and Siddhi Doshi, a senior research assistant at Brookings.
— Principle Power appointed Aaron Smith as chief commercial officer in charge of business development, strategy, commercial and public affairs. Smith previously was an economist at the National Renewable Energy Laboratory.
— “A casualty of Trump’s immigration policy: Millions of trees,” via POLITICO Pro.
— “Supreme Court ruling on Oklahoma tribal land raises questions for oil industry,” via Reuters
— “OPEC, allies set to ease oil cuts, anticipating demand recovery,” via The Wall Street Journal.
— “Rivian raises $2.5 billion in aggressive plan to beat Tesla and Nikola with the first all-electric pickup,” via CNBC.
— “Energy secretary: Oil and gas will ‘come back very, very strong,’” via Houston Chronicle.
— “This is what it looks like when a Texas oil boom busts,” via The Wall Street Journal.
THAT’S ALL FOR ME!
