Today’s Key Takeaways: Granholm previews more trouble for Americans at the pump and is grilled about breaking the stalemate on nuclear energy waste. EU calls Putin’s gas-for-ruble demand a breach of supply agreements. GOP blocks bills over proposed drilling and mining bans.
NEWS OF THE DAY:
Granholm talks nuclear waste, warns of gasoline price hikes
Nico Portuondo, Energywire, May 5, 2022
Energy Secretary Jennifer Granholm kicked off her second week on Capitol Hill telling Senate appropriators about the potential effects of a European Union oil import ban and her department’s plan for nuclear waste.
Energy Secretary Jennifer Granholm kicked off her second week defending the department’s budget request before Hill lawmakers yesterday, fielding questions from Senate appropriators on a potential new rise in gas prices and DOE’s nuclear waste management efforts.
During the Senate Energy and Water DevelopmentAppropriations Subcommittee hearing, Granholm previewed more trouble for Americans at the pump after being grilled by House Republicans last week for failing to bring down prices. Granholm said a proposal by European Union officials to gradually ban Russian imports of oil will likely bring more oil price volatility — and financial pain for consumers — if it is finalized.
“If [the E.U.] says no more Russian oil for us, that will be another perhaps million-and-a-half barrels that are pulled off the markets,” said Granholm. “That will create additional volatility, we’ll see prices likely increase.”
Granholm said the Biden administration is doing everything possible to bring down gas prices through Strategic Petroleum Reserve releases and the emergency waiver on E15 gasoline (E&E News PM, April 29).
Still, she said such a major loss in global oil supply will inevitably raise prices. Biden announced a U.S. oil ban for Russian oil imports in March, but the U.S. buys much less oil from Russia than the E.U. does.
Ranking member John Kennedy (R-La.) wasn’t buying Granholm’s explanation that global pressures and Russia’s war on Ukraine were the reason for high energy prices, instead pointing to Biden administration policies and its recent updates of the National Environmental Policy Act that would drop Trump-era streamlining of energy project permitting rules (Energywire, April 20).
“You know as well as I do the impact this is going to have on [liquefied natural gas] plants, on pipelines, on fossil fuel infrastructure,” said Kennedy to Granholm. “It’s going to slow them down to the pace of an amoeba.”
Lawmakers also pushed Granholm on policies surrounding nuclear waste. DOE has struggled for decades to find a permanent home for the long-lasting dangerous waste from reactors, and subcommittee Chair Dianne Feinstein (D-Calif.) said she hasn’t been impressed with DOE’s recent efforts.
“How does the administration plan to break this stalemate on nuclear waste disposal?” asked Feinstein. “I know there’s a recent request for information, but it’s taken a long time, and I’ve watched literally nothing happen.”
DOE closed a request for information in March fielding interest from communities on housing a consent-based interim storage site for nuclear waste. Granholm did not go into great details on the next step, but said that DOE would “hone in on” realistic options in the over 200 responses sometime this summer. She added that a funding opportunity will eventually be available after that process.
Sen. Patty Murray (D-Wash.) also took Granholm to task on nuclear waste, specifically at the Hanford nuclear site in her home state. DOE has been undertaking cleanup efforts to deal with leftover highly radioactive waste at the Cold War-era site for several years.
Murray wondered why DOE’s recent budget request proposed cutting around $170 million from Hanford cleanup efforts compared to the 2022 omnibus spending bill passed in March, calling the request “incredibly disappointing” for an ongoing problem.
Granholm said the cut was a reflection of all the other DOE priorities that need funding.
“We believe Hanford is extremely important. It is the largest cleanup site that we have,” said Granholm. “But we want to make sure that we do right by the whole of the budget, and so it is a balance.”
This week, the Government Accountability Office released a report finding that DOE’s nationwide cleanup efforts at sites like Hanford have suffered from a lack of consistent leadership for the past two decades (E&E News PM, May 3).
OIL:
Cook Inlet And Alaska Peninsula Oil And Gas Lease Sale Bidding Open
Anthony Moore, KSRM, May 4, 2022
The Alaska Division of Oil and Gas 2022 spring lease sale in the Cook Inlet and the Alaska Peninsula is currently live. Bidding is available online through the online platform EnergyNet until May 19, 2022.
The State of Alaska typically holds two oil and gas lease sale offerings per year, one in spring and one in fall in different regions, according to the Alaska Department of Natural Resources. At this ongoing spring lease sale, DNR is offering 2.9 million acres in Cook Inlet and 5 million acres across the Alaska Peninsula. The leases include a primary term of 10 years and a fixed royalty rate of 12.5%, with minimum bids of $15 per acre in Cook Inlet and $5 per acre on the Alaska Peninsula.
Since the last sale in spring 2021, more than 11,000 acres has become available, which includes lands with tax credit seismic data available from the Division of Geological & Geophysical Surveys (DGGS), and more lands on which data will be released in 2023.
2-D and 3-D seismic data is available now for more than 72,000 acres of lands open for leasing.
Cook Inlet has seen a sizeable amount of exploration and development activity over the past 12 months, with three exploratory wells drilled: the Whiskey Gulch 1, the Seaview 9, and the Beluga River Unit 223-24 wells targeting Sterling, Beluga, and Tyonek formations. Additional development wells were also drilled in the Ninilchik, North Cook Inlet, Swanson River, and Granite Point fields during this period. Cook Inlet exploratory activity can be found on the activity map from January 2022. Additionally, the Alaska Oil & Gas Conservation Commission (AOGCC) expects to release records and data on 8 wells completed in 2020 in the Cook Inlet region in 2022.
To find out more about the Division Oil and Gas lease sales, go to the Lease Sales and Best Interest Findings website.
GAS:
From the Washington Examiner, Daily on Energy:
MORE ON THE EU AND RUSSIAN NATURAL GAS: EU leaders also have their work cut out to forge a clearer guidance and uniform agreement on Putin’s gas-for-ruble demand, as evidenced both by intra-EU — and in some cases, intra-national — disagreements about whether it violates gas supply agreements, and by the fact that some buyers have already reportedly acquiesced.
It comes down to the nuts and bolts of Putin’s decree, which requires buyers to open special accounts with Russia’s Gazprombank to pay for gas but technically still allows for them to transfer payment denominated in euros.
Interpreting the degree: Scholz and some in the Italian government got out in front of the matter after Putin went public with the demand in March and called it a breach of supply agreements.
Once the decree was put in writing, though, Italian ecology minister Roberto Cingolani expressed that “not a lot will change” (precisely the promise Putin himself had made to Scholz), and he said Putin “could show that the Europeans are paying in roubles and Europe could pay in euros.”
The Italians are now considering opening an account with Gazprombank and are demanding imminent guidance from the EU, Bloomberg reported this morning.
Separately, French ecology minister Barbara Pompili also said in early April of Putin’s decree, “[Since] companies pay in euros, the contracts are respected.”
Even still, Energy Commissioner Kadri Simson was unequivocal this week in calling Putin’s decree “a unilateral change to contracts.” She said “payments in rubles lead to a clear breach of sanctions” but promised further guidance on the issue.
Whatever the next interpretation and round of guidance entail, one source close to the Slovak diplomatic core emphasized that “solidarity, particularly in the gas segment” will be necessary for reducing dependence on Russia and serving the motivations behind Europe’s sanctions regime.
“We support a common approach and a Europe-wide solution to this issue,” the source told Jeremy. He said Slovakia intends to pay its forthcoming bill for gas in euros.
One final note: Scholars with the Oxford Institute for Energy Studies said in an analysis of the payment decree that the context of war and sanctions are “key” to understanding how to interpret it relative to existing supply agreements.
The terms of the decree themselves “could have been understood as a purely technical change to the payment mode” in ordinary circumstances, the analysis said, which could have been “agreed by the parties in negotiations for the sake of a good business relationship.”
It was instead unilaterally imposed by Russia with the promised, and now demonstrated, consequence of shut offs.
MINING:
ALASKA MINING DAY CELEBRATION – From our Friends at the Alaska Miners Association:
10th Annual Alaska Mining Day
Tuesday, May 10, 2022
Wedgewood Resort
Fairbanks, AK
We’re thrilled to be celebrating the 10th Annual Alaska Mining Day in person!
Alaska Mining Day was created through legislation in 2013 sponsored by Senator Cathy Giessel “to recognize and honor the intrepid individuals and industry that played an enormous role in settling and developing the territory and the state and that continue to contribute to the economy of the state.”
The legislation allows for May 10 of each year to be observed by celebratory events and activities. We’ve had to take a couple of years off from these important celebrations, and we are ready to make up for it!
Schedule of Events
2022 Alaska Mining Day will be held at the Wedgewood Resort in Fairbanks, Alaska and include a day of presentations outlining relevant and timely issues relating to mining in Alaska and will wrap up with a party where we can get together and celebrate our achievements! We are also excited to partner with the Greater Fairbanks Chamber of Commerce and feature Alaska Mining Day at their General Membership Luncheon (held onsite at the Taiga Center).
9:00-11:30am: Presentations in Gazebo Room
Noon-1:30pm: Fairbanks Chamber Luncheon at Taiga Center
2:00-4:00pm: Presentations in Gazebo Room
4:00-6:00pm: Alaska Mining Day Reception Party in Borealis Room
Alaska Mining Day Celebration Reception
Join us from 4-6pm for a reception where we celebrate some major accomplishments of the last year and toast individuals that have given such significant contributions to our industry. The reception will include an exclusive featured event beer and cocktail, other beverages, appetizers, and a guaranteed great time visiting with your fellow miners and members of the community.
Registration
This event will be open to AMA members and the general public. If you’re not a member of AMA, and just curious about mining in Alaska, we would love to welcome you as our guest!
Registration Now: https://alma.memberclicks.net/mining-day
POLITICS:
GOP blocks 3 land bills over proposed mining, drilling bans
Scott Streater, E & E Daily, May 4, 2022
Republican senators said they would present a united front against any bill proposing to withdraw federal lands from mining and drilling.
Three ambitious public lands bills with broad local support failed to advance yesterday as Senate Republicans sent a clear message to their Democratic colleagues that they will strongly oppose legislation that bans energy development and mining on federal land.
Republican members at yesterday’s Energy and Natural Resources Committee markup say they want the committee to approve legislation advancing critical minerals extraction and oil and gas development, and they vowed to continue a united front against any bill proposing to withdraw federal lands from mining and drilling until it does so.
Thus, the committee yesterday deadlocked 10-10 along party lines on S. 173 , the “Colorado Outdoor Recreation and Economy (CORE) Act,” sponsored by Colorado Democratic Sens. Michael Bennet and John Hickenlooper. It would extend varying levels of protection to more than 400,000 acres in the state, including banning oil and gas drilling in sections of the Thompson Divide. Bennet has championed the bill for years.
The committee also failed to advance S. 182, from New Mexico Sen. Martin Heinrich (D), which proposed to withdraw federal land in the Pecos Watershed area of New Mexico from mineral entry in an effort to protect a watershed from pollution.
Ditto for S. 455, sponsored by Sen. Patty Murray (D-Wash.). It would have designated and expanded wilderness areas in Olympic National Forest in Washington state where mining and oil and gas drilling are banned, and designated certain rivers in Olympic National Forest and Olympic National Park as wild and scenic.
The committee deadlocked on all three bills because each contained provisions that directly, or indirectly, proposed to permanently remove thousands of acres of federal lands from oil and gas development or mining activity.
The key word among Republicans at yesterday’s markup was “balance.”
“I’m not opposed to mineral withdrawals. But when are we going to have the bills that kind of balance that out?” said Montana Sen. Steve Daines (R), noting the war in Ukraine, the ban on imports of Russian oil and surging gasoline prices at the pump in the past year.
“We should look at withdrawals on their own merits. We also should be looking at ways at how we accelerate additional production where we haven’t right now,” Daines added. “And it seems like it’s kind of a one-sided direction at the moment.”
Sen. Lisa Murkowski (R-Alaska) struck a similar tone.
“It comes down to balance, and how we are able to find that balance,” Murkowski said.
She added: “If we take [parcels] off the table over here, where are we making sure that we’re doing a little bit more on the production side? If you’re looking at these on balance, what are we doing to make sure that we are doing more than just talking about increased access to our minerals and our mineral resources in this country?
“Because we’ve got statements that come out of the administration saying we need to be doing more, [and] that can be encouraging. But when we take off the table permanently, or we put into place barriers or blockades through regulation or the like that effectively don’t allow us to do what we say we need to do, you are not in that place where I think it could be suggested there’s a balance here.”
‘End our dependence on Russia and China’
Another common theme among GOP lawmakers was energy independence.
“While I support many items on today’s agenda, I don’t support bills that would needlessly restrict multiple use of our public lands. I also don’t support measures that take critical minerals extraction or energy production off the table,” said Sen. John Barrasso of Wyoming, the committee’s top Republican. “We must end our dependence on Russia and China for critical minerals and energy that we can produce right here at home.”
Utah Sen. Mike Lee (R), who proposed failed amendments to remove a ban on oil and gas development included in the “CORE Act” and mining withdrawals in Heinrich’s Pecos Watershed bill, said he agreed.
Mineral withdrawals, Lee said, “jeopardize some of our national interests, in many circumstances, and have the potential to make us increasingly reliant on mineral imports from nefarious sources, like Russia and China.”
The committee failure to advance the three bills does not necessarily kill them. Majority Leader Chuck Schumer (D-N.Y.) could call on the full Senate to discharge them for a floor vote. But even if they were advance by a simple majority on the Senate floor, they would need to overcome the 60-vote threshold before final passage.
Yesterday’s committee votes underscore the cavernous partisan divide over conservation of federal lands and energy development at a time when gasoline prices are soaring and critical minerals like zinc and lithium are in high demand.
All three bills enjoyed broad local support among various stakeholders in their individual states.
Bennet, in particular, has spent the past decade developing the “CORE Act” with local government leaders, ranchers, and others, including the mining industry.
“Communities in these areas came together to write this bill from the ground up. Literally, this is a model for collaboration and how public lands bills should come about,” Hickenlooper said during yesterday’s hearing.
Said Heinrich of his “Pecos Watershed Protection Act:” “This legislation was requested by my constituents in San Miguel County to protect what is their irreplaceable water supply and resource. There are many places, many places, that are appropriate for mining, and places that just aren’t, and this is one that just isn’t.”
That argument from Heinrich and other Democrats at the markup appeared to rile Lee.
“If so many places seem to be the wrong place, where is the right place?” Lee said. “The more we bind ourselves into these statutory contortions, the more difficult it’s going to be when we need the energy.”
A rare success
Yesterday’s markup included a dozen other public lands bills, all of which were advanced to the Senate floor by unanimous consent.
Among them was S. 3266, introduced last year by Committee Chair Joe Manchin (D-W.Va.) and Barrasso to improve certain recreation opportunities on, and facilitate greater access to, federal public land.
The “Outdoor Recreation Act of 2022” is a package of public lands and recreation legislation designed to improve the visitor experience through measures that would upgrade broadband internet and utilize public-private partnerships to improve federal campgrounds.
It would require the Bureau of Land Management and the Forest Service to establish more shooting ranges, ease permit requirements for outfitters and guides, and loosen restrictions on filming inside federal lands.
The bill would also support businesses, hotels and restaurants near federal lands with technical and financial assistance to bolster tourism (E&E Daily, Nov. 18, 2021).
Manchin said he was “very proud” of the bill. He noted that with increased visitation to public lands during the Covid-19 pandemic, “innovative approaches are needed to make our public lands more accessible, improve our recreation infrastructure, and make it easier for businesses to locate in rural areas and thrive.”
Barrasso called markup of the bill a “historic day for America’s outdoor recreation economy. This legislation is a monumental achievement for all who enjoy our public lands and our shared natural resources.”
Conservation groups praised the committee’s vote to advance the bill.
Other bills
The committee approved nine other natural resources and public land bills by unanimous consent yesterday:
- S. 1942, sponsored by Sen. Debbie Stabenow (D-Mich.), would standardize the designation of national heritage areas.
- S. 177, introduced by Heinrich, would amend the John D. Dingell Jr. Conservation, Management and Recreation Act to establish the Cerro de la Olla Wilderness in the Rio Grande del Norte National Monument and modify the boundary of that national monument.
- S. 1128, sponsored by Murkowski, would provide for the continuation of higher education through the conveyance to the University of Alaska of certain public land.
- S. 1222, from Sen. Mitt Romney (R-Utah), would designate and adjust certain lands in Utah as components of the National Wilderness Preservation System.
- S. 1321, sponsored by Sen. Mark Kelly (D-Ariz.), would modify the boundary of the Casa Grande Ruins National Monument.
- S. 1538, introduced by Sen. Jeff Merkley (D-Ore.), would amend the Smith River National Recreation Area Act to include certain additions to the Smith River National Recreation Area and amend the Wild and Scenic Rivers Act to designate certain wild rivers in Oregon.
- S. 1631, from Kelly, would authorize the Department of Agriculture to convey certain National Forest System land in Arizona to the Arizona board of regents.
- S. 1769, sponsored by Sen. Dianne Feinstein (D-Calif.), would adjust the boundary of the Santa Monica Mountains National Recreation Area to include the Rim of the Valley Corridor.
- S. 2438, from Sen. Bill Cassidy (R-La.), would modify the boundary of the Cane River Creole National Historical Park in Louisiana.