Energy & Environment — Feds set to hold oil and gas lease sales this week

The Biden administration is gearing up for new oil and gas drilling, while the G-7 is also putting out messaging that’s favorable to natural gas.

This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, we’re Rachel Frazin and Zack Budryk. Subscribe here. 

Interior set to hold first oil lease sales under Biden

The Biden administration is set to hold lease sales for new oil and gas drilling on public lands this week will implement new regulations for producers.   

  • Why it’s important: The oil auctions will effectively be the administration’s first, since the only other lease sale it has held was tossed in court on environmental grounds.
  • Where it’s happening: The administration is expected to auction off parcels of federally owned land for drilling in seven Western states: Wyoming, Montana, North Dakota, Nevada, Utah, New Mexico and Colorado.

When it announced the sales in April, the Interior Department said it was shrinking the overall land it was making available by 80 percent compared to the total amount of land it originally considered for the sale.

The department also announced that it would hike fees that oil companies pay to the government for the oil they extract, raising royalty rates from the 12.5 percent imposed on previous sales to 18.75 percent for the new sales.

In a statement from the time, the department said that the changes would help with “addressing deficiencies” in the program.

Not expected to impact oil supply: The lease sales are not expected to immediately impact the country’s oil supply, since it takes more than four years on average from the time they acquire their leases for companies to begin producing oil.

  • However, at a time when many Americans are struggling with skyrocketing gasoline prices, the optics of the sale could matter.

No one is too pleased: Neither industry nor green groups are particularly pleased with the sales, as industry wanted more land and fewer stipulations while many climate hawks wanted no lease sales at all.

Frank Macchiarola, the senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, said he’s glad the administration is holding the sales but didn’t like the smaller size or other stipulations.

“We are concerned about the reduction in available parcels, we’re concerned about royalty rate increases, we’re concerned that the administration’s approach … is limited at a time when we really need something bold,” he said.

Meanwhile, the administration’s decision to hold lease sales at all has irked left-wing environmentalists who note that locking in more oil and gas drilling will worsen climate change.

“Why are they having these lease sales given the climate impacts that the Biden administration itself recognizes?” asked Michael Freeman, a senior attorney at Earthjustice.

Read more about the upcoming sales here

G-7 endorses natural gas investments

The Group of Seven (G-7) countries are endorsing investments in natural gas as many seek to reduce their dependence on Russian fuels.

  • In a communique issued on Tuesday, the group, which is made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the U.S., also backed increased deliveries of the fuel.
  • “In this context and with a view to accelerating the phase out of our dependency on Russian energy, we stress the important role increased deliveries of [liquified natural gas] can play, and acknowledge that investment in this sector is necessary in response to the current crisis,” their statement said.  

The G-7 nations elaborated that in some cases, government investment in the gas sector can be “appropriate as a temporary response.” 

The support for the fossil fuel comes as Russia has moved to cut off gas supplies to several countries when they have refused to pay for it in Russian rubles.   

Some backlash: The endorsement miffed climate advocates, who argue that the countries should be moving more toward energy sources that don’t contribute to global warming.

  • “Climate activists will not sit idly by while our tax dollars lock in another generation of extraction,” said a statement from Kate DeAngelis, international finance program manager for Friends of the Earth U.S.
  • “The G-7 countries are failing as true climate leaders by abandoning their Glasgow commitments and holding up LNG as an energy response,” DeAngelis said.

So what else was in there? The G-7 memo also included the idea of putting a previously discussed price cap on Russian oil, saying that the group may do so by banning services that help Russian oil…

Read More: Energy & Environment — Feds set to hold oil and gas lease sales this week

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