NEWS STORIES

Largest U.S. Offshore Lease Sale Part of
Effort to Ramp up Oil Production

On March 21, 2018, the U.S. Department of Interior auctioned off more than 77 million acres in the offshore Gulf of Mexico, reflecting the Trump administration’s desire to increase American oil and gas production by decreasing royalty rates and opening up more federal lands.

The lease sale earned approximately $124.8 million in high bids from 33 companies.

• “Today’s results will help secure high-paying offshore jobs for rig and platform workers, support staff onshore, and related industry jobs, while generating much needed revenue to fund everything from conservation to infrastructure,” said Interior Assistant Secretary for Land and Minerals Management Joe Balash.
• Revenue generated from the leases (including high bids, rental payments and royalty payments) will go to the U.S. Treasury, Gulf Coast states, the Land and Water Conservation Fund and Historic Preservation Fund.

While the offshore Gulf of Mexico lease sale was the largest its history, most industry observers found the response among bidders to have been tepid.

• This week’s auction results represent only a modest uptick from August 2017, when 27 companies submitted $121.1 million in high bids on 90 tracts.
• The anticipated impact of new American tariffs on steel imports and Latin American competition were among the probable limiting factors, according to energy consultancy firm Wood Mackenzie.

Terms of the lease sales include provisions designed to protect biologically sensitive resources and mitigate potential adverse effects on protected species.

U.S. Federal Judge is Presented with a
Tutorial About Climate Change

In the fall of 2017, attorneys from Oakland and San Francisco, CA, filed lawsuits against BP, Chevron, ConocoPhillips, Exxon Mobil, and Shell. The lawsuits alleged that oil companies are “creating, contributing to and/or maintaining a public nuisance,” and they are responsible for past and future ecological damage caused by climate change.

• The attorneys from San Francisco and Oakland also alleged that the oil companies “have known for decades that fossil fuel-driven global warming and accelerated sea level rise posed a catastrophic risk to human beings and to public and private property.”
• If the lawsuit is successful, lawyers suing the energy companies can expect a 23.5% cut from a multibillion dollar payout.

On Wednesday, the five oil companies presented a courtroom tutorial before a federal judge to answer several questions related to climate change science.

• U.S. District Judge William Alsup asked for a presentation on the best scientific research explaining climate change.
• The tutorial was a forum to present neutral scientific findings in line with mainstream climate science.
• The oil companies presented an analysis based on the most widely-accepted peer-reviewed scientific views on climate change.
• The climate change tutorial is fairly significant; it sets federal judicial precedent of establishing the facts of climate change science.

The attorneys on behalf of the energy companies said that the lawsuit presented in the San Francisco court should be dismissed because Congress gives the regulatory agencies, not the courts, the authority over fossil fuel and emissions regulations.

New North Carolina Analysis Confirms Trend of Falling Energy-Based Emissions – Thanks to Fracking

This week, Jon Sanders of the John Locke Institute, released an analysis of the market forces behind North Carolina’s falling emissions. The report examines how clean-burning natural gas from the fracking revolution has provided a price-competitive source of energy, the use of which is directly contributing to a decrease in greenhouse gas emissions in North Carolina.

• The report draws data from the U.S. Energy Information Administration (EIA).
• The study shows that North Carolina’s carbon dioxide emissions decreased by 34% between 2000 and 2016.

The report is in line with other data showing that across the United States, relatively clean-burning and affordable natural gas is leading the way on CO2 emissions reductions.

• U.S. energy-related carbon dioxide emissions fell 14% below the 2005 level in 2016, according to the EIA.
  – A 2017 analysis by London-based Carbon Brief concluded that the shift from coal to natural gas was the “largest driver” behind that 14% decrease, “accounting for 33% of the emissions reduction in 2016.”

Due in large part to the displacement by natural gas, the amount of electrical power in the United States generated from coal decreased by 226,000 gigawatt-hours (GWh) just between 2014 and 2015, according to EIA figures released in February 2018. During the same short period, electricity generated from natural gas increased by 208,000 GWh. In comparison, renewable energy sources generated just 10,000 GWh during that period.

• The Carnegie Mellon University report Will We Always Have Paris? CO2 Reduction without the Clean Power Plan published in February 2018 determined that by 2017, market forces had been so successful that the Clean Power Plan’s carbon dioxide reduction target for 2025 had already been met.
  – The same Carnegie Mellon report concludes, “Even without the CPP, the U.S. power sector can meet the short-term goals of the Paris Agreement and put the country on the path to meeting the long-term goals.”