American Oil and Gas Reporter - August 2022 - 30

· $700 million to speed permitting
by funding agencies' work on environmental
permits;
· A fee on methane leaking from oil
and gas wells, pipelines and other infrastructure
that may climb as high as $1,500
a ton in 2026; and
· $850 million-$1.5 billion for
methane abatement measures.
Press accounts add that the bill also
includes a provision in which DOI must
offer at least 2 million federal acres a
year for onshore oil and gas lease sales
or it cannot offer rights-of-way for solar
and wind projects.
According to Energy In Depth, the
proposal also includes provisions that
will make investing in federal lands less
attractive. The group says the bill will
raise the royalty rate for offshore production
from 12.5% to between 16.67%
and 18.5%, a 33%-50% increase.
The bill would have an even greater
effect on development costs for onshore
federal lands, EID cautions, with provisions
that:
· Increase the royalty rate from 12.5%
to 16.67%-a 33% increase, but less than
the royalty rate for the June 2022 lease
sales, which was set at 18.5%;
· Raise the minimum bid amount for
acreage from $2 an acre to $10 acre and
extend the time period for payments from
two years to 10 years;
· Increase the rental rate from $1.50
an acre to $3 an acre, an amount that will
last for two years after the lease begins
and then increase to $5 an acre for six
years and at least $15 an acre for each
year after that; and
· Add an expression of interest fee
of $5 an acre nominated, an amount that
is to be increased at least every four
years.
The bill also would increase the bonding
requirement from $10,000-$25,000 a
well to a minimum of $150,000 a lease.
For operators seeking to bond all leases
in a state, the amount will be $500,000,
and for all leases nationwide, it would be
$2 million, EID adds.
All Of The Above
Manchin's initial description of the
new package casts it as both a climate
change solution and an investment in
U.S. energy security. The senator maintains
that the country should emphasize energy
innovation instead of seeking to eliminate
fossil fuels.
" I support a plan that will advance a
realistic energy and climate policy that
lowers prices today and strategically
invests in the long game, " he says. " As
the superpower of the world, it is vital
we not undermine our superpower status
30 THE AMERICAN OIL & GAS REPORTER
by removing dependable and affordable
fossil fuel energy before new technologies
are ready to reliably carry the load. This
legislation ensures that the market will
take the lead, rather than aspirational political
agendas or unrealistic goals, in the
energy transition that has been ongoing
in our country.
" The Inflation Reduction Act of 2022
invests in the technologies needed for all
fuel types-from hydrogen, nuclear, renewables,
fossil fuels and energy storage-to
be produced and used in the cleanest
way possible, " Manchin continues.
" It is truly all of the above, which means
this bill does not arbitrarily shut off our
abundant fossil fuels. It invests heavily
in technologies to help us reduce our domestic
methane and carbon emissions
and also helps decarbonize around the
world as we displace dirtier products. "
The senator decries the country's dependence
on energy imports from U.S.
adversaries, and faults the Biden administration's
efforts to undercut American
energy producers amid geopolitical turmoil.
Although enabling more domestic
energy production " may seem like common
sense, " Manchin says, " this administration's
current solution is to push forward
more costly regulations resulting
in less U.S. production while inexplicably
asking other nations to pump more oil
and relying on Chinese President Xi for
the critical minerals our economy needs.
" I will not vote to support policies
that make the United States more dependent
on foreign energy and supply
chains or risk moving the country closer
to the unstable and vulnerable European
model of energy we are witnessing today, "
Manchin states.
As for the forthcoming permitting reform
proposal, media accounts say
Schumer has called it pivotal to gaining
Manchin's support for the Inflation Reduction
Act, and pointed out that streamlining
permitting will help alternative energy
projects. Representative Alexandria
Ocasio-Cortez, D-N.Y., also has signaled
flexibility on the matter in published reports.
" There is something to be said that
it's not just oil and gas permitting, " she
is quoted. " As we build out renewable
infrastructure in the United States, that
too will also be subject to permitting issues. "
Meanwhile,
press accounts say, some
oil and gas allies in Congress, including
senators Bill Cassidy, R-La., and Kevin
Cramer, R-N.D., are wary of permitting
reform that leaves the executive branch
with much leeway. " Unless there's kind
of like a shot clock-you've got to accomplish
it by this amount (of time)-I
don't trust them, " Cassidy is quoted.
Nevertheless, Manchin says he and
his colleagues are ready to tackle the
matter. " I am heartened by the bipartisan
recognition that for America to achieve
our energy and climate goals, it is critical
we reform the broken permitting process, "
he states. " President Biden, Leader
Schumer and Speaker Pelosi have committed
to advancing a suite of commonsense
permitting reforms this fall that
will ensure all energy infrastructure, from
transmission to pipelines and export facilities,
can be efficiently and responsibly
built to deliver energy safely around the
country and to our allies.
Some Assessments
Although many were still examining
the bill in early August, several industry
advocates seem to agree that the proposal
is a mixed bag. The Texas Alliance describes
the package as " Some good (lease
restarts), some bad (new corporate taxes,
tax on methane emissions, higher royalty
rates on federal lands), the potential for
more good (permitting reform), and the
potential for more bad (lease sale disruption,
ongoing pursuit of regulation, inability
to guarantee pipeline or export approvals,
looming climate emergency declaration). "
The Alliance adds that its economist,
Karr Ingham, predicts that despite its
name, the legislation will not ease inflation
and seems likely to accomplish the opposite.
Meanwhile, some conservative
analysts have expressed skepticism about
the legislation's extensive alternative energy
outlays.
" What these subsidies amount to is a
reverse carbon tax, " writes National Review's
Kevin Williamson. " The idea of a
carbon tax is to make the costs of petroleum
and coal high relative to renewables,
in order to encourage the flourishing of
those alternative sources; a subsidy does
the same thing on the other end of the
question: The government is, in theory,
spending money rather than collecting it,
but the point is still to make wind, solar,
and-with any luck-nuclear competitive
with hydrocarbons by taking money out
of someone's pocket. "
Although some green groups have
expressed alarm at any forthcoming permitting
reform that includes substantive
changes to the National Environmental
Policy Act, environmental voices generally
have applauded the Inflation Reduction
Act. Press accounts cite University
of California professor and climate
activist Leah Stokes as estimating the
proposal contains four times as much
clean energy spending as the 2009 stimulus
bill passed during the early days of
SEE POLICY PAGE 34
American Oil and Gas Reporter - August 2022

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