What Biden’s $6T Budget Plan Means for Energy

E&E News recently published an article highlighting President Biden’s $6T budget plan’s impact on the American energy sector. This fiscal budget request for 2022 would push federal spending to the highest sustained levels since World War II. Ambitious in the largest sense, the plan includes a wide set of clean energy and climate investments― increasing the DOE’s budget by nearly $5 billion for such matters. While it is of value to invest in innovative, renewable energy sources, oil and natural gas is the cornerstone of US energy. It cannot and should not be overlooked. 

As shown by EIA data, renewable energy sources made up less than 12% of the United States’ primary energy intake in 2020. Whereas, petroleum and natural gas sustained 69% of the total US energy needs. Biden’s proposed budget does not mirror such data. If a blind eye is turned to the heaping majority of America’s power, we will feel the repercussions of investing in the small 12% slice that cannot withstand the pressure. Senate Minority Leader Mitch McConnell (R-Ky.) said the budget dollars “would just disappear into a million mediocre socialist daydreams, from electric car subsidies to work-discouraging welfare programs.”

Along with the budget proposal, dozens of tax breaks were unveiled last week that are aimed at boosting clean energy. Jennifer Granholm, current Energy Secretary under the Biden Administration, alongside other Democrats in office, will be tasked with the mission of getting as much of this plan passed as possible. Where the Trump Administration sought to slash needless energy spending as frequently as possible (i.e. DOE’s Advanced Research Projects Agency-Energy), Biden’s Admin has become fixated on doing just the opposite. More money to R&D for renewables. Less attention to traditional, prominent sources of energy that have consistently served as the backbone of American energy. All in all, there are both fair and injurious elements of Biden’s proposed budget. From the clear numbers, we know that fiscal resources must continue to bolster the oil & gas sector so that, in turn, our nation can keep turning. R&D funneling into cleaner, greener technologies will prove beneficial in the long run, but they cannot sustain us solely in the short-term.

Former Oklahoma Corporation Commission Chairman: “Judge Got It Right With Dakota Access Pipeline”

RealClear Energy recently published an op-ed by GAIN’s Patrice Douglas, an attorney and former chairman of the Oklahoma Corporation Commission, regarding U.S. District Court Judge Boasberg’s recent decision to allow the Dakota Access Pipeline (DAPL) to continue operating while the Army Corps conducts additional review of a 1,000-foot water crossing under Lake Oahe. Boasberg’s decision affirms that regulatory experts should have authority over pipeline safety.

Earlier this year, the Corps independently determined that DAPL, after nearly four years of operating safely, does not need to suspend operations while the review is completed.

Douglas points out the tensions this decision has brought to the surface. The balance between regulatory powers and legal oversight is usually a foggy one to figure out. As Douglas puts it, “Judges and lawyers are good at parsing legalese. They are not experts experienced at assessing the technical detail necessary to determine the safety of sophisticated, complex infrastructure. Regulators, on the other hand, are.” Thankfully, the Biden Administration has acknowledged the subject matter expertise of the Army Corps and sided with their reasoning in recent actions.

With the recently displayed vulnerability of US energy markets (through the cyber attack of the Colonial Pipeline, blockage of the Suez Canal, and so on), it is clear that a DAPL shutdown would have reverberating repercussions throughout the nation. Douglas draws attention to the hard numbers: “The pipeline moves about half a million barrels of Bakken crude oil per day. Legal filings suggest the disruption could cause as much as $1.4 billion in lost tax revenue and 24,000 jobs.” She continues to highlight further damage, “the [shutdown] would have shifted shipments to rail and truck, which have a much poorer track record.”  The effects of a shutdown would be felt economically, socially, and environmentally.

The facts reign clear in this case. Halting the DAPL’s operations on behalf of .002 percent of the full pipeline does not make sense. The Army Corps of Engineers recognizes this. The Biden Administration sees this. And thankfully, Judge Boasberg defended this same position: trust the experts.

DHS Announces New Cybersecurity Requirements for Critical Pipeline Owners and Operators

As of yesterday, May 27th 2021, the Department of Homeland Security’s Transportation Security Agency has announced the first Security Directive regarding cybersecurity in the pipeline industry. The purpose of this directive serves to “better identify, protect against, and respond to threats to critical companies in the pipeline sector.” These new regulations will strengthen the US energy infrastructure network amidst surging cyber threats. At all costs, we must ensure energy can be safely and efficiently transported from the field to end users.

As the recent ransomware cyberattack on the Colonial Pipeline highlighted, American consumers heavily rely on the infrastructure responsible for the safe and efficient transportation of fuel and other energy resources. After Colonial was compromised, nearly half of the East Coast’s fuel supply was jeopardized. If the dilemma would have lasted longer than its 11-day stint, it would have affected airlines, mass transit and chemical refineries that rely on diesel fuel. This vast lack of resources would position the US in an extremely vulnerable position. Not only are Americans reliant upon pipeline success, but the overall security of our nation is contingent upon our energy independence that is bolstered largely through our pipeline network. 

For DHS to support private sector partners in pursuit of increased energy resiliency, the Security Directive “will require critical pipeline owners and operators to report confirmed and potential cybersecurity incidents to the DHS Cybersecurity and Infrastructure Security Agency (CISA) and to designate a Cybersecurity Coordinator, to be available 24 hours a day, seven days a week.” Moreover, pipeline owners and operators must review their current practices to ensure cyber-related risks have been optimally mitigated. In the following month, there will be a robust, extensive set of mandatory rules for pipeline owners and operators to employ to prevent future cyberattacks, as well as the steps to take in the wake of a catastrophe as such.

Through this Security Directive, DHS has made clear the importance of eliminating cyberattacks to our nation’s crucial pipeline network. If our energy infrastructure were to be compromised, the US would suffer in more ways than one. A strong partnership between the private sector and the federal government will be key to protecting our nation’s critical infrastructure network.

U.S. Needs More Oil & Gas Pipelines

The Dallas Morning News recently published an op-ed by GAIN advisor and former geologist with the Texas Railroad Commission Bill Godsey highlighting the crucial need for continued investment in oil & gas pipelines across the nation. The demand for gasoline has heightened as people return to the office, families hit the road for summer road trips, and the world starts to turn again in light of the COVID-19 vaccine. Yet simultaneously, the supply of gas has been continually challenged. Godsey points his focus towards the essentiality of bolstering oil & gas supply for the sake of today’s― and tomorrow’s― economy.

The highest it’s been in six years, the average price of a gallon of gasoline in the U.S. currently sits at is $3.04. Godsey points out that this 41% increase in gas prices since 2020 also makes other operational purchases, like groceries, more expensive. This skewing of supply and demand is caused by the suffocation oil & gas providers have recently undergone. In light of the Keystone XL pipeline cancellation and other administrative decisions recently proposed, President Biden’s energy policies are estimated to reduce U.S. oil production by 1 million barrels per day by 2023.

Yet thankfully, the Biden administration is starting to recognize the importance of pipelines. After the Colonial Pipeline, which functions to carry 3 million barrels of gasoline between Texas & New York per day, was recently compromised through a cyber-attack, President Biden’s Energy Secretary, Jennifer Granholm, asserted “pipe is the best way to go.” Moreover, Biden’s Justice Department and Army Corps of Engineers allowed the Dakota Access Pipeline to remain operational while under environmental review – a decision that was last week backed by a federal judge in Washington DC. Energy independence through steady, effective supply correlates with national security (lessened dependence on Russia, Venezuela, Middle East, etc.); the Biden Administration is acknowledging this fact.

Furthermore, Godsey is sure to point out that the share of oil amongst total (global) energy production will only fall 8% over the next 20 years. As reported by the Congressional Research Service, transporting crude oil by pipeline is both substantially cheaper and significantly cleaner than transportation by rail/truck; these savings facilitated by pipeline then transfer to the consumer. Therefore, access to pipelines is crucial to our nation’s overall economic well-being― not to mention overall independence. America can’t afford to fall behind in this sector.

Godsey urges anti-pipeline activists to not overlook the havoc that shutting down pipelines will bring to our nation. Shutting down pipelines won’t reduce the role of oil & gas in our everyday lives; it will only force it to be funneled through less safe, less efficient, less affordable, and less environmentally-conscious avenues.

Federal Judge Rules DAPL Can Continue Operations

In a significant win not only for the Dakota Access Pipeline, but also for American energy consumers, infrastructure developers, and the American economy and national security, U.S. District Court Judge James Boasberg on Friday ruled DAPL can continue operating while the Army Corps of Engineers completes an additional environmental review on the project. Friday’s decision comes after nearly four years of DAPL’s safe operation, transporting up to 570,000 bpd of crude oil from Bakken oilfields to an energy hub in Patoka, Illinois – and various legal challenges from the Standing Rock Sioux Tribe and pipeline opponents.

In his 31-page opinion, Judge Boasberg came to the conclusion that the Tribes have not been able to demonstrate a “likelihood of irreparable injury from the action they seek to enjoin – to wit, the pipeline’s operation.”

GAIN Coalition spokesman Craig Stevens welcomed the court’s decision:

“We applaud the Court’s straightforward, fact-based decision to allow the Dakota Access Pipeline to continue operating. Pipelines are the safest and most efficient way to transport petroleum and petroleum products, and the Dakota Access Pipeline is arguably one of the safest and most technologically-advanced pipelines ever constructed.

“We continue to believe that if the government and the courts make their decisions based on the facts – not politics – DAPL will be allowed to remain operational. Today, Judge Boasberg, in his decision, said as much. We hope that the administrative process is allowed to move forward allowing the Army Corps of Engineers to complete its work – free of political pressure.

“We look forward to the completion of the Army Corps’ additional review and are confident the Corps – if allowed to follow facts and science – will validate previous findings that Dakota Access presents no significant impact or risk.”

Friday’s ruling – and the Corps’ approach to DAPL – sends an important message to infrastructure developers about regulatory certainty. It is critical that developers have assurance that if they follow all the rules, receive all necessary permits, invest billions of dollars, and safely operate for years – they won’t have the rug pulled out from under them.

As the Corps’ completes its review, and for decades beyond, DAPL will continue to play a key role in safely and efficiently delivering energy resources to market – bolstering the American economy and our energy and national security.

Former EIA Administrator: “Pipelines Have a Role in Our Energy Present and Future”

Morning Consult recently published an op-ed by Guy Caruso, former Administrator of the U.S. Energy Information Administration (EIA), regarding the latest developments with the Dakota Access Pipeline. Getting louder and louder, the anti-pipeline community has been very vocal in light of the Biden administration’s recent decision to keep the Dakota Access Pipeline operating while it remains under environmental review. Keep in mind: at this point in its life, DAPL has enjoyed four accident-free years of safe operation.

As most Americans realize, 73% according to Morning Consult’s findings, oil and natural gas remain as and will be integral parts of the energy landscape for the next few decades. It takes time— not to mention a heaping amount of resources— to effectively develop, test, and implement these green technologies to cultivate a cleaner environment. As Caruso writes, “In the meantime, the International Energy Agency is predicting that global energy demand is poised for a 4.6 percent increase this year, with nearly 70 percent of that increase in emerging markets and developing economies.”  Emissions-cutting, “green” technology and renewables just can’t keep up; there is no way they are able to meet this demand. Therefore, why don’t we seek to ameliorate our existing, effective energy avenues through innovative upgrades? For example, Caruso writes that the Center on Global Energy Policy proposes “ upgrading and retrofitting the 2.5 million miles of pipeline infrastructure throughout the nation for the future transportation of green fuels like hydrogen.” Practicality must meet ingenuity to unify this problem.

To come to a clean yet practical solution, a combination of energy resources will need to be utilized— not leaving oil and natural gas in the dust. There doesn’t need to be a harsh binary of green solutions or fossil fuels. We must invest in both green technology and traditional pipelines to both support and enhance our nation’s multi-tiered prosperity.

Former Army Corps Colonel on DAPL: “Fine line between judicial oversight and regulation from the bench”

Bloomberg Law recently featured an insight from GAIN strategic advisor and former U.S. Army Corps of Engineers Colonel Tom Magness regarding the Dakota Access Pipeline and ongoing legal challenges to its operation. The pipeline’s fate remains in limbo despite nearly four years of safe operation and its critical role in providing reliable, affordable American energy to consumers.

Opponents have challenged DAPL’s ability to continue operations while the Corps completes additional environmental review for the line’s Lake Oahe crossing. The analysis is expected to be completed by March 2022. Under the Biden Administration, the Corps in recent weeks has solidified their position that DAPL should be able to remain operational as the agency completes the review.

However, despite the professional recommendation from the Corps, U.S. District Judge James Boasberg could order the pipeline be shuttered. This could have serious ramifications for American energy consumers, and the future of U.S. infrastructure permitting and development. Col. Tom Magness explains:

The issue reveals the fine line between judicial oversight and regulation from the bench. Our nation’s experts, the engineers at the Corps, have made it clear that DAPL should be allowed to continue operations. But will Boasberg step over the Corps’ regulatory authority to decide whether the pipeline can safely operate until the study is completed?

By precedent and statute, the Corps—an extension of the Executive Branch— has the authority to decide whether the pipeline should continue to operate. There are many examples, from immigration to traffic laws, in which such discretion is held at this level. In fact, a lawsuit filed by North Dakota contends that the Corps did not go far enough to assert its authority. Maybe so. But what’s certain is that the Corps’ support for keeping the pipeline running is not arbitrary.

The Corps is an organization of career, non-partisan professionals. These men and women are tasked with assessing the impact of major infrastructure projects and ensuring the safety of our communities and the environment. Their decisions are based on science and evidence, not political influence.

That the Corps ruled against shutting down the pipeline reiterates its safety, which is further proven by nearly four years of operations without a single major incident. The omitted study was a process oversight, not a safety hazard, for a 1,000-foot section representing less than 0.002% of the total pipeline.

In addition to the broad repercussions for future infrastructure development, there are immediate, severe impacts that will be felt by local and tribal communities in North Dakota and around the country. Magness notes:

Those shipments would have to be moved by rail or truck if the pipeline were shut down, which have much less reliable safety records and produce significantly higher emissions. The resulting backlog would cost producers up to $5.4 billion this year, up to $1.4 billion in lost tax revenue for local and state governments, and eliminate as many as 24,000 jobs.

This decision has broad impacts. Mark Fox, tribal chairman of the Mandan, Hidatsa and Arikara Nation, cautioned the court that if DAPL is shutdown, “much of our Reservation’s production will be difficult to move to market and future production will be sharply curtailed.”

The tribe relies on the pipeline to move about 60% of its oil production to markets. Further, more than 80% of the MHA Nation’s budget is made up of oil and gas royalties and tax revenues. The MHA Nation estimates a shutdown would incur losses of over $160 million a year.

In conclusion, Col. Magness emphasizes the rigorous and thorough nature of the U.S. regulatory process. He reiterates that it is key we trust the career professionals and experts who oversee critical infrastructure development, rather than second-guessing their analysis. While the system benefits from checks and balances offered by the courts, “it is jeopardized when jurisprudence crosses the line and prematurely usurps regulatory oversight. For that reason, it’s critical that Boasberg stand by the Corps’ decision to keep DAPL running.”

Army Corps’ Latest Filing Reaffirms Position on Dakota Access Operations

The U.S. Army Corps of Engineers yesterday reiterated its position with the U.S. District Court for the District of Columbia regarding the continued operations of the Dakota Access pipeline – advocating for its ability to continue transporting crude oil while the Corps completes additional environmental review.

In a hearing last month, the Corps told U.S. District Court Judge James Boasberg that they had no immediate plans to force a DAPL closure. Yesterday, the Corps reaffirmed that position and stated opponents have “not met the applicable standard” required for injunction to be granted to shutter DAPL, and that “the Corps is not aware of information that would cause it to evaluate the injunction factors differently than in its previous filing.”

The Corps estimates the Environmental Impact Statement (EIS) will be completed in March of 2022.

DAPL has safely operated for nearly four years, transporting Bakken crude from North Dakota to an energy hub in Patoka, Illinois. It plays a critical role in our nation’s economy, ensuring access to reliable, domestic energy. Further, DAPL and other infrastructure investments bolster the United States’ energy and national security goals, reducing our dependence on foreign energy sources.

If DAPL is shuttered – even temporarily – more oil trucks and trains will be put on our roads and rails, which introduces new environmental concerns, additional safety hazards, and further wear and tear on our roadways.

Simply put, the Dakota Access Pipeline is the safest, most efficient, and most environmentally-conscious method of transporting the energy resources Americans rely on each and every day.

New Poll Finds Americans Recognize Importance of Natural Gas and Oil

The American Petroleum Institute (API) highlighted recent polling by Morning Consult that underscores Americans are putting common sense over ideology when it comes to American energy, and broadly recognize its important role in our nation’s future.

API points out key findings from the poll:

  • 59% believe the world will use more energy in 2050 than it does now. Majorities of Democrats, Independents and Republicans believe more energy will be needed to heat and cool buildings, run electrical appliances, travel, grow crops and more.
  • 73% agree that natural gas and oil will be part of the energy mix for decades to come and should be included in the country’s energy policies. Majorities of Democrats, Independents and Republicans agree.
  • 73% believe the natural gas and oil industry should be allowed to participate when governments are considering energy and environmental policies. Again, Democrats, Independents and Republicans agree.
  • 55% believe private-sector scientists and experts will do better than the government in solving the issue of climate change. Just 22% believe the government will do a better job than the private sector.

It is paramount that these views help guide and inform our elected decision-makers when it comes to American energy policy. While developing alternative energy resources is important progress, the cornerstones of American energy – oil and natural gas – will continue to play a critical role for decades to come.

Experts Warn of Negative Impact of Continued Federal Drilling Ban

The Interior Department this week announced they won’t sell new drilling rights on federal lands and waters until at least midsummer – a move that has raised concern among experts and elected officials. GAIN strategic advisors Col. Tom Magness (US Army, retired), former EIA Administrator Guy Caruso, and former Representative Charlie Melancon recently sent letters to Secretary of the Interior Deb Haaland regarding the negative economic, environmental, and national security implications of the ongoing moratorium on new oil and gas leases on public lands.

Energy-producing states with large amounts of federally-owned land have much to lose, as a report from the American Petroleum Institute found nearly one million jobs would be lost by 2022, and over $9 billion in government revenue at risk.

Below are key excerpts from Col. Magness and Rep. Melancon’s letter to DOI:

Environmental Impact

Rep. Melancon argues:

Combating climate change must be a high priority and the Biden administration should be commended for proposing bold action, but halting federal leasing could actually be counterproductive. An analysis by the American Petroleum Institute found that a leasing ban on new and existing permits would cause U.S. coal use to increase by 15% by 2030, a departure from the path the U.S. is currently on, which involves aggressive switching from coal to gas. Because of the transition to natural gas, there was a 10% decrease in net nationwide greenhouse gas emissions from 2005 to 2018. The same time period also saw the U.S. reduce harmful emissions by 57%, but a federal leasing ban could reverse decades of progress our country has made in reducing its carbon footprint.

A federal leasing ban would walk back progress on conservation, too, as DOI recently announced $249 million for Gulf states for coastal conservation, restoration, and hurricane protection programs, including nearly $88 million for Louisiana. This funding, which is central to state-run conservation efforts, could be jeopardized because of the federal leasing ban, endangering conservation efforts in my state, as well as Alabama, Mississippi and Texas. For example, Louisiana uses such funding for outdoor recreation, public parks, supporting the Louisiana Department of Wildlife and Fisheries, and protecting places such as the Bogue Chitto National Wildlife Refuge.

Economic Impact

Col. Magness notes:

Another detrimental impact of the ban is the effect on jobs in our country, as the same analysis predicts the potential of nearly 1 million jobs lost by 2022, in top producing states including your home state of New Mexico, Utah, Colorado and Wyoming. Now is not the time to put good paying oil and gas jobs at risk, while our country continues to rebound from the economic downturn brought on by the COVID-19 pandemic.

Rep. Melancon also points out the impact to his home state of Louisiana, as well as other top energy producers:

A Louisiana Mid-Continent Oil and Gas Association analysis last fall, in fact, found that such a moratorium would cost 48,000 jobs in Louisiana alone by 2022. As Louisiana’s governor, John Bel Edwards, explains, “The continued leasing and development of oil and natural gas in the Gulf of Mexico is critical not only to the coastal Gulf states that host the infrastructure and support industries for the Gulf OCS exploration, but to the economy and energy security of the nation as a whole.”

Beyond the Gulf, states like New Mexico would also suffer, with New Mexico’s Democratic Sens. Martin Heinrich and Ben Ray Lujan voicing concerns that they have asked for “financial assistance to offset the impact of the moratorium and give certainty as they plan for the future, and explained that New Mexico might also need more time to transition away from drilling.” If the administration sustains its leasing ban, eight Western states could face tax losses of more than $110 billion and state governments would see lease-generated royalties and tax revenues that fund public services such as education and police disappear.

National Security Impact

Col. Magness writes:

My primary concern is the impact the federal leasing ban will have on our country’s national security, as a result of increased reliance on countries like Russia and Saudi Arabia for our energy needs. If recent incidents in the Suez Canal have taught us anything, it is the fragility of energy security and the importance of energy independence.

Should the Biden administration decide to move forward on the federal leasing ban, our imports from foreign sources have the potential to increase by 2 million barrels a day and spend $500 billion more on energy from foreign suppliers by 2030, according to an analysis last year. This would put our country at a severe disadvantage and leave the United States vulnerable to supply shortages from adversarial nations.