Offshore group backs Democrats’ energy bill in split with oil and gas industry – Washington Examiner

A leading offshore energy trade group is celebrating the Democrats' climate and healthcare bill for rewarding both renewable and fossil fuel energy, setting it apart from other industry organizations representing oil and gas interests that oppose the legislation.

The National Ocean Industries Association, which represents a range of energy firms from oil and gas majors such as BP to wind developers such as Danish company Orsted, threw its weight behind the Inflation Reduction Act's "all of the above" energy strategy after the Senate narrowly passed the bill on Sunday. By contrast, a number of other trades with oil and gas membership slammed the green energy-focused tax-and-spending bill as inadequate to address the global energy crisis.

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"No legislation is perfect, and the Inflation Reduction Act certainly reflects compromises, but American offshore energy is an issue of national and global consequence," Erik Milito, the NOIA's president and CEO, said in a statement.

Oil and gas companies that lease acreage in federal waters have much to gain if the bill becomes law because it requires the Interior Department to carry out three offshore lease sales it canceled in May. Those leases, which were provided for in the 2017-2022 offshore leasing program, would otherwise have likely gone unsold due to the expiration of the offshore program in June.

The bill also requires the Interior Department to reinstate the lone offshore lease sale the Biden administration carried out last year but whose leases were never awarded, and it conditions the issuance of offshore wind energy leases to the sale of offshore oil and gas leases.

The latter arrangement is seen as functionally locking in more oil and gas leasing from an administration, such as President Joe Biden's, for which offshore wind is a priority but which wants to restrict or end federal oil and gas leasing programs.

The oil and gas industry has been entangled in legal fights over how the Biden administration has carried out its leasing responsibilities, including for Biden's attempt to pause all new oil and gas leasing, a decision that was put on hold by a federal judge last year. The NOIA is a party to some of those suits.

Milito said that with the reconciliation bill's oil and gas leasing provisions, the offshore oil and gas sector will "go back, hopefully, to business as usual."

"When you look at the Gulf of Mexico, the future was becoming more and more uncertain based on the policies that have been advanced by the administration," Milito told the Washington Examiner.

Beyond the oil and gas leasing provisions, the bill provides tax credits for clean energy, including wind, designed to incentivize the deployment of more carbon-free generating sources. It also makes more acreage for offshore wind available for potential leasing by pulling back moratoria on areas in the southeastern U.S. and eastern Gulf of Mexico.

Milito said the bill's higher royalty rate for offshore oil and gas production is among the bill's drawbacks but noted the new minimum rate of 16.66% is lower than the 20% minimum rate contemplated in the House-passed Build Back Better Act. He emphasized further that the bill is "favorable across the board" for oil, gas, and wind.

"We're just not seeing negatives in the legislation that counter-weigh anything on the positive side that we have here for our members," he said.

The NOIA's stamp of approval sets it apart from other prominent industry groups representing oil and gas interests, which have largely come out against the tax and climate change spending bill.

Mike Sommers, president and CEO of the American Petroleum Institute, said the group welcomes the provisions for oil and gas leasing and carbon capture technologies but said it's "opposed to policies that raise taxes and discourage investment in U.S. oil and natural gas."

Sommers also complained that the bill excluded reform measures for infrastructure permitting, which the industry sees as critical for enabling more oil and gas production to help relieve high prices. Congress is expected to take up permitting reform in separate legislation, according to a deal outlined by Majority Leader Chuck Schumer's office.

Separately, the American Exploration and Production Council, which represents large independent oil and gas producers, encouraged the House to vote against the bill.

Anne Bradbury, AXPC's CEO, asserted the bill "will raise energy costs for the American people, hurt our nations competitiveness, and threaten our nations energy security," referencing the bill's methane fee plan, as well as the higher royalty rates.

Republicans in the Senate unilaterally opposed the Democrats' bill, and House Republicans are expected to do the same in spite of the provisions favoring oil and gas leasing. Republicans have criticized the Biden administration for seeking to restrict oil and gas development on federal lands and waters in the face of high energy prices.

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At the same time, the reconciliation bill won over numerous environmental groups, even those that are hawkish against oil and gas development, because of the hundreds of billions of dollars it provides for green energy and climate change mitigation measures.

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Offshore group backs Democrats' energy bill in split with oil and gas industry - Washington Examiner