Today’s Key Takeaways: Biden’s greenhouse gas EO violates major questions doctrine. U.S. oil and natural gas sector paid a national annual wage averaging $115,166 during 2021 – 76 percent higher than average private sector wages. ConocoPhillips is selling extra flare gas to bitcoin miners in North Dakota. North Slope Borough Mayor Harry Brower testifies in DC about Willow project.
NEWS OF THE DAY:
Federal Judge Blocks Biden’s Social Cost of Greenhouse Gas Estimates
Nicole E. Noelliste, Samuel Boxerman, Mondaq, February 11, 2022
On February 11, 2022, Judge James Cain of the U.S. District Court for the Western District of Louisiana granted a motion for a preliminary injunction filed by Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, South Dakota, Texas, West Virginia, and Wyoming (Plaintiff States) to prohibit federal agencies from adopting and relying on the interim Social Cost of Greenhouse Gas (SC-GHG) estimates established by the Interagency Working Group (IWG). Executive Order 13990 mandated that IWG publish estimates of the monetized damages associated with incremental increases in greenhouse gas emissions.
In granting the preliminary injunction, Judge Cain ruled the following:
- The Plaintiff States had standing under the traditional analysis, as the SC-GHG estimates will cause regulatory standards for air quality, energy efficiency, and power plant regulation to become more stringent, result in significant cost increases, and directly harm the economies and revenues of Plaintiff States. The Plaintiff States have suffered actual injury, as the U.S. Environmental Protection Agency (EPA) has implemented SC-GHG estimates, which resulted in EPA disapproving state implementation plans and imposing federal implementation plans on Louisiana, Kentucky, and Texas.
- The Plaintiff States also have standing under the “special solitude” afforded states as plaintiffs because the SC-GHG estimates significantly limit the discretion granted states under delegated federal programs.
- In addressing the likelihood of success on the merits, the court found that Executive Order 13990 violates the major questions doctrine, which ensures that agencies do not impose new obligations of “vast ‘economic and political significance’” upon private parties and states unless Congress “speaks clearly.” As Congress had not clearly directed the President or any agency to adopt the SC-GHG estimates, the President lacked the power to order this action by the IWG.
On the same day, in a separate order, Judge Cain issued a broad preliminary injunction that enjoins the government from
- adopting, employing, treating as binding, or relying on the work product of the IWG
- independently relying on the IWG’s methodology considering global effects
- adopting, employing, treating as binding, or relying on any SC-GHG estimates based on global effects or that otherwise fails to comply with applicable law
- adopting, employing, treating as binding, or relying on any estimate of SC-GHG that does not utilize discount rates of 3% and 7% or otherwise does not comply with Circular A-4; Circular A-4, issued in 2003 by President George W. Bush’s Office of Management, instructs agencies to use both 3% and 7% discount rates when conducting regulatory cost/benefit analysis and to consider domestic rather than global costs and benefits
- relying on or implementing Section 5 of Executive Order 13990 in any manner
OIL:
What Was the USA Oil and Gas Average Wage in 2021?
Andreas Exerheas, Rigzone, February 16, 2022
According to the Texas Independent Producers and Royalty Owners Association’s (TIPRO) seventh, and latest, state of energy report, which was published recently, the U.S. oil and natural gas sector paid a national annual wage averaging $115,166 during 2021.
This figure was 76 percent higher than average private sector wages, TIPRO highlighted in the report, which also outlined that payroll in the U.S. oil and gas industry totaled $96 billion and direct Gross Regional Product (GRP) for the industry was $573 billion in 2021, or three percent of the U.S. economy.
TIPRO’s sixth state of energy report revealed that the industry paid a national annual wage averaging $113,601 in 2020, which was said to be 86 percent higher than average private sector wages in the United States. According to TIPRO’s previous report, in 2020, payroll in the U.S. oil and gas industry totaled $102 billion and direct GRP for the industry was $741 billion, or four percent of the U.S. economy.
According to TIPRO’s fifth state of energy report, the industry paid a national annual wage averaging $114,745 in 2019, which was said to be more than double average private sector wages. Payroll in the U.S. oil and gas industry totaled $103 billion in 2019, TIPRO’s fifth state of energy report revealed.
Texas Oil and Gas Wage
TIPRO’s latest report outlined that oil and gas jobs in Texas paid an annual average wage of $132,232, which the organization noted was 107 percent more than the average private sector job in the state. Texas was also said to have had the highest oil and gas payroll in the country in 2021 ($41 billion), with California coming in second ($10 billion), then Louisiana ($6 billion).
TIPRO’s previous report highlighted that oil and gas jobs in Texas paid an annual average wage of $129,989, which was said to be 113 percent more than the average private sector job in the state. The report showed that Texas also had the highest oil and gas payroll in the country in 2020 ($45 billion), with California coming second again ($10 billion), then Louisiana third again ($6.8 billion).
In TIPRO’s fifth state of energy report, oil and gas jobs in Texas were said to have paid an annual average wage of $132,104 in 2019, which was said to be 130 percent more than the average private sector job in the state. Texas, again, was shown to have had the highest oil and gas payroll in the country in 2019 ($48 billion), with California again coming in second ($9.2 billion), followed by Oklahoma ($6.9 billion).
Oil and Gas Job Figures
According to TIPRO’s seventh report, the industry supported a total of 832,869 direct jobs in the U.S. last year. Texas was said to have led the nation in oil and gas jobs with 309,396 people employed in the sector. This figure accounted for approximately 37 percent of all oil and gas jobs nationwide, according to TIPRO.
The U.S. oil and gas industry employed 902,223 professionals in 2020, TIPRO’s sixth report revealed. The report showed that Texas again led the nation in oil and gas jobs with 347,529 people employed in the industry, which was said to be approximately 39 percent of all oil and gas jobs nationwide.
TIPRO’s fifth state of energy report outlined that the U.S. oil and gas industry employed 895,629 professionals in 2019. The report highlighted that Texas again led the nation in oil and gas jobs with 361,271 people employed in this industry. This figure was said to represent 40 percent of all oil and gas jobs nationwide in 2019.
GAS:
From the Washington Examiner, Daily on Energy:
FROM GAS TO GASOLINE: The Biden administration has turned from warning about what a Russia-Ukraine escalation would do to Europe’s energy prices to worrying about what it would do to our own.
President Joe Biden assessed yesterday that an invasion into Ukraine by leading oil producer Russia remains a real possibility and said any associated disruption “will not be painless” for American drivers.
“There could be impact on our energy prices, so we are taking active steps to alleviate the pressure on our own energy markets and offset rising prices,” Biden said, adding the administration is “prepared to deploy all the tools and authority at our disposal to provide relief at the gas pump.”
But tools are few: As oil has crept back up from its omicron-driven, post-Thanksgiving low point, the administration has maintained on multiple occasions that it has options to help alleviate prices.
Press Secretary Jen Psaki said much the same yesterday and entertained returning to the Strategic Petroleum Reserve to release more stocked barrels into the market.
She also declined to write off support for a proposal by Democratic lawmakers to suspend the federal gas tax as a means of relief.
The administration, despite its executive actions designed to restrict fossil fuels and pressure from environmentalists to more aggressively target the sector, has encouraged domestic producers to drill for more oil but has declined to exercise any other of the stated options so far, even though Brent crude has risen more than 35% since Dec. 1 and today is flirting with $96 per barrel.
Ryan Mackler, energy policy analyst with Rapidan Energy Group, said the administration is simply out of road.
“So, when you’ve gone to OPEC, when you’ve gone to the domestic producers, when you’ve done your SPR release, what’s left?” Mackler told Jeremy. “Our view here is there’s just nothing there.”
MINING:
ConocoPhillips is selling extra gas to bitcoin miners in North Dakota
Mackenzie Sigalos, CNBC, February 15, 2022
KEY POINTS
- ConocoPhillips is selling extra flare gas to bitcoin miners in North Dakota.
- The company said in a statement to CNBC on Tuesday that it has one bitcoin pilot project currently operating in the Bakken, a region in North Dakota known as an important source of new oil production in the U.S.
- The gas, which would otherwise have been burned off, is instead routed to a bitcoin processor that is owned and managed by a third party, according to the company.
Oil and gas major ConocoPhillips is in the bitcoin mining fuel business.
The company said in a statement to CNBC on Tuesday that it has one bitcoin pilot project currently operating in the Bakken, a region in North Dakota known as an important source of new oil production in the U.S.
A representative for ConocoPhillips said the company is not operating the crypto mine itself. Instead, it sells gas that would otherwise have been burned off to a bitcoin processor that is owned and managed by a third party.
Shares of ConocoPhillips are trading around 2.5% lower as of Tuesday afternoon.
The push into bitcoin mining dovetails with an initiative by the oil and gas major to reduce routine flaring, or burning off extra gas, to zero by 2030.
The company has published reports about efforts to phase out the practice of routinely flaring natural gas in the “Lower 48” states, which represents the largest segment in ConocoPhillips today, based on production. It is comprised of two regions covering the Gulf Coast and Great Plains — an area that includes the Bakken.
Co-locating a bitcoin mine to an oil and gas field is a huge help toward that goal, though it won’t affect the company’s scope three carbon emissions, an industry term used to describe emissions that are a result of activities from assets not owned or controlled by the reporting organization.
For years, oil and gas companies have struggled with the problem of what to do when they accidentally hit a natural gas formation while drilling for oil.
Whereas oil can easily be trucked out to a remote destination, gas delivery requires a pipeline. If a drilling site is right next to a pipeline, they chuck the gas in and take whatever cash the buyer on the other end is willing to pay that day. But if it’s 20 miles from a pipeline, drillers often burn it off, or flare it. That is why you will typically see flames rising from oil fields.
Beyond the environmental implications of flare gas, drillers are also, in effect, burning cash.
ConocoPhillips did not disclose to CNBC which bitcoin miner it sells to, nor how long the pilot project has been underway, but what typically happens is that a company like Denver-based Crusoe Energy Systems places a shipping container full of thousands of bitcoin miners on an oil well, then diverts the natural gas into generators, which convert the gas into electricity that is then used to power the miners.
The process reduces CO2-equivalent emissions by about 63% compared to continued flaring, according to research from Crusoe.
In a slide from a 2021 industry conference presentation by a ConocoPhillips leader, the company indicates that it has placed an “ongoing focus” on gas capture projects to achieve zero routine flaring of associated gas by 2025.
The slide shows photos of what appear to be bitcoin mines located on-site with a title that reads, “Compressed natural gas & digital currency beneficial use technologies.”
ConocoPhillips is one among many oil and gas companies operating in the Bakken. Others include ExxonMobil, Marathon Oil, and EOG Resources
POLITICS:
Republicans champion Alaska drilling project that poses major climate test for Biden
Maxine Joselow, The Washington Post, February 16, 2022
House Republicans on Tuesday urged the Biden administration to move forward with a controversial drilling project proposed in Alaska, saying it would bring enormous economic benefits to the region.
Their comments referred to ConocoPhillips’s Willow project in the National Petroleum Reserve-Alaska, which poses a significant test of the Biden administration’s willingness to block fossil fuel drilling and mining on public lands.
The legal context: While Willow was approved in the final months of the Trump administration, the Biden administration initially defended the project in court, angering many climate activists.
- However, after a federal judge voided Trump-era permits and approvals for the project last year, the Biden administration declined to appeal the ruling.
- The Interior Department’s Bureau of Land Management is now soliciting public comments on a court-ordered supplemental environmental review of the project under the National Environmental Policy Act.
- Climate advocates are urging the administration to conduct a sweeping review of Willow’s climate effects, including its greenhouse gas emissions. They argue that such a review would show the project should not go forward at all.
Interior spokeswoman Melissa Schwartz said the department has no further comment on Willow beyond its announcement of the public comment period this month.
“As with all public comment periods, all perspectives are welcome,” Schwartz said in an email.
What Republicans and industry are saying
At the House Natural Resources Committee hearing yesterday, GOP lawmakers argued that the White House and Democrats have failed to consult with Alaskans who support Willow because of its economic benefits for their communities. The lawmakers urged the Bureau of Land Managementto press ahead with Willow, given its potential to fill local coffers.
“Ninety-five percent of the revenues coming into this community come from oil and gas,” said Rep. Pete Stauber (D-Minn.). “Where else are they going to get that?”
As their witness, Republicans called Harry K. Brower Jr., mayor of the North Slope borough, where Willow would be located. Brower testified that he was not consulted before House Natural Resources Chairman Raúl Grijalva (D-Ariz.) sent a letter to Interior Secretary Deb Haaland expressing concerns about the project.
Stauber criticized the lack of consultation as “hypocritical,” noting that Grijalva has championed outreach to low-income and minority communities affected by pollution. (The nominal focus of the hearing was Grijalva’s Environmental Justice for All Act, which would require federal agencies to give disadvantaged communities greater involvement in the environmental review process for projects affecting them.)
“The hypocrisy here on this particular project is astounding,” Stauber said. His comments were later echoed by Reps. Don Young (R-Alaska) and Tom Tiffany (R-Wis.).
According to the Alaska congressional delegation, Willow is expected to generate $10 billion in revenue for state, local and federal governments during its lifespan, along with 2,000 construction jobs and 300 permanent jobs.
Rebecca Boys, a spokeswoman for ConocoPhillips, said in an email that the company “remains committed to the Willow project” and is “encouraged by the progress being made toward completion” of a supplemental environmental impact statement.
“Willow is an important project for Alaska with a broad distribution of benefits, and it has strong support across Alaska North Slope communities, the state of Alaska, organized labor and others,” Boys said.
CLIMATE CHANGE:
A staggering picture of the net-zero challenge
Ben Geman, Axios, February 16, 2022
A new analysis offers a sobering window into the challenge of slashing emissions enough to meet the temperature-limiting goals of the Paris Agreement.
Driving the news: The International Energy Agency explores per-capita emissions of people born in different decades that would be consistent with a pathway to net-zero global emissions by 2050.
Younger generations’ CO2 output would need to fall massively compared to their elders. IEA analysts say kids born today would emit “10 times less carbon during their lifetimes than their grandparents” under the Paris-based agency’s net-zero roadmap.
The big picture: Net-zero by 2050 is a target that scientists say provides a fighting chance of holding temperature rise to around 1.5°C above preindustrial levels. That would stave off some of the most dangerous climatic changes.
Why it matters: Those massive generational emissions changes are only possible under a sweeping transformation of global energy systems, far beyond anything in evidence today.
- The net-zero roadmap released last year would see a quadrupling of annual solar PV and wind power capacity additions by 2030 and 4% yearly gains in the world economy’s energy efficiency this decade.
- There’s also electrification of transport, buildings, and industrial motors. And almost half the emissions cuts come from tech that’s just in early R&D stages.
The bottom line: IEA said young voices must be heard in today’s policy decisions: “Younger generations have the most at stake, and they also have the most to gain from successful energy transitions.”