OVERNIGHT ENERGY: Drilling battles on tap, wind credit in flux

While overall U.S. oil and natural-gas production has been rising for years, Republicans have seized on a recent dip in production from federally controlled areas to allege the Obama administration has been stifling development.

But administration officials have strongly rebutted the charge, noting that oil production from federal lands and waters rose earlier in the Obama years and that they support expanded drilling.

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And changes in gas-production patterns stem from a migration of development away from federal areas to gas-rich shale plays in states such as Pennsylvania, where the resources generally underlie state and private lands, an Obama administration official will tell the Energy and Power subcommittee.

Here’s a blurb from the testimony for tomorrow’s hearing from Michael Nedd, a senior Bureau of Land Management official:

[H]uge potential natural gas plays in the Marcellus, Fayetteville, Barnett, Niobrara and Bakken shale formations are attracting significant development interest. Industry might consider these gas resources attractive for a number of reasons. All of these geologic formations exist largely on state and private mineral estates, sometimes near populous markets, and do not underlie large expanses of Federally-managed lands in the West, which are also generally more gas-prone.

Given the current technology and industry interest in developing natural gas, these unconventional shale oil and gas formations, mostly on non-Federal mineral estate, are proving to be very productive, possibly impacting demand on Federal lands. Although the BLM has issued oil and gas leases that are still in effect on more than 37 million acres of public lands – comprising a large percentage of BLM acreage that could yield hydrocarbons – only about 12 million acres are in production.

The view from Alaska . . .

The House Energy and Commerce hearing will feature testimony from Dan Sullivan, the commissioner of Alaska’s Department of Natural Resources, who also held a senior energy role in former President George W. Bush’s State Department.

E2-Wire caught up with Sullivan Wednesday. He said he will make the case that federal officials are holding back some of Alaska’s energy-production potential — and for all the wrong reasons. The state has high environmental standards that allow safe development, he said.

“We live here right? We want our environment protected,” Sullivan said in arguing that the Obama administration is wrongly dragging its feet on Alaskan energy in the name of resource protection.

Sullivan, like other state officials, is frustrated by what they consider go-slow — way too slow — Obama administration policies on several issues.

They include leasing federal offshore waters for oil-and-gas exploration and permitting for energy companies who are already trying to get drilling under way. Case in point: Royal Dutch Shell, which has for years been seeking federal permission to begin drilling in Arctic waters off Alaska’s coast and hopes to finally begin this summer.

“The Shell saga is the poster boy of how it shouldn’t work, in our view,” Sullivan said.

Sullivan argues more aggressive development would bolster energy security, create jobs and help the deficit by bringing in new royalties.

Environmentalists bitterly oppose planned drilling in Arctic waters off Alaska’s shores and several other proposals that would allow major expansions of development.

But Sullivan argues that Obama administration policies don’t help the environment because they effectively push industry investment to nations with much more lax environmental restrictions than the United States, such as Russia.

“You can both responsibly develop your resources and be good stewards of the environment. ... What do you do in the global environment by saying no, we are not going to allow responsible production in the highest standard regimes in the world, you just shift it to some of the lowest standards,” Sullivan said.

Twisting in the wind . . .

The Senate Finance Committee could meet Thursday to debate a broad tax package that extends several energy-related incentives. But the fate of the wind industry’s prized production tax credit, which is slated to lapse at year’s end absent extension, remains in flux.

An initial version of the extenders package unveiled Wednesday omitted the renewal of the production tax credit (PTC).

The credit has long enjoyed bipartisan backing, but Mitt Romney’s firm opposition announced this week has complicated the matter for Republicans. Sources tracking the bill say an extension could surface in a revised version of the bill or be offered as an amendment.

“Discussions are going on and I would describe it as fluid,” said Sen. John Thune (R-S.D.) in the Capitol Wednesday.

“There is a considerable amount of interest among members on both sides in the PTC and we are working on trying to come up with the solution on that even though it is not included in the base [bill],” he said.

A procedural maneuver from Sen. Tom Coburn (R-Okla.) could lead the markup to be postponed. The Hill’s On The Money blog has more on that here and here.


NEWS BITES:

Ethanol standoff on display Thursday

Groups on either side of the biofuels production debate on Thursday will use dueling press conferences to battle for ears — both human and corn.
 
At issue is the federal renewable fuel standard (RFS), which requires 13.2 billion gallons worth of corn ethanol to be blended into traditional gasoline fuel this year.
 
A bipartisan coalition of congressmen will hold a Capitol Hill press conference at 10:30 a.m. Thursday to discuss a letter they sent to EPA Administrator Lisa Jackson. They urged her to temporarily reduce the corn ethanol blending target to free up corn supplies for ranchers as drought drives down corn yields.
 
Ethanol industry groups Growth Energy and the Renewable Fuels Association will push back with a noon press conference at the National Press Club.
 
Those groups’ CEOs will contend at the event that waiving the RFS would increase gasoline prices and “will address the current misinformation about the drought, ethanol production and explain why a waiver of the RFS is unnecessary,” Growth Energy said Wednesday in a media advisory.

Energy Department advisers weigh in on fuels


The federal government must take a technology-neutral approach to promoting alternative vehicles as it strives to reach air pollution reduction goals, according to a report from the National Petroleum Council, which is a panel of outside advisers to the Energy Department.
 
The report offers advice for the government on which fuels and technologies to pursue and how to best reach policy goals through 2030. It also includes suggestions for government and industry on how to halve U.S. vehicle greenhouse gas emissions by 2050.
 
The market will sort out which fuels are most economically and environmentally attractive, the Energy Department-commissioned report said. Favoring one technology could stunt disruptive innovations and interfere with markets, the report released Wednesday said.


IN CASE YOU MISSED IT:

Check out these E2-Wire stories that ran on Wednesday . . . 

Wind credit out of Senate tax package — for now

House panel backs another subpoena over offshore drilling freeze

Dems blame weather on climate change

Lawmakers urge EPA to lower ethanol target amid drought

Sen. Bingaman proposes nuclear waste management bill

Stearns says GOP leadership pledges September vote on post-Solyndra bill

Senate Appropriations markup will reconsider Navy biofuels program


Please send tips and comments to Ben Geman, ben.geman@thehill.com, and Zack Colman, zcolman@thehill.com.

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