Sintana Energy Inc SEUSF

This could stop drilling in the Golf of Mexico

[farml1234]

Here’s How One Biden-Appointed Judge’s Ruling Could Bring Drilling In Gulf Of Mexico To A Halt


Pennzenergy Company Oil Exploration Drilling Rig In The Gulf Of Mexico During Sunset. (Photo By Getty Images)© The Daily Caller

Asingle ruling from a judge appointed by President Joe Biden may end up halting oil and gas drilling in the Gulf of Mexico in December.

Judge Deborah Boardman, the Biden-appointed district judge in the U.S. District Court for the District of Maryland, sided with suing environmentalists in August to vacate a key National Marine Fisheries Service (NMFS) environmental review — known as a biological opinion — underlying offshore drilling in the Gulf of Mexico. Unless the federal government manages to revise the biological opinion by Dec. 20, and barring intervention from a higher court or the Congress, the ruling could force offshore oil and gas drilling to grind to a halt as developers decide whether to proceed at their own risk or shut down their operations until a new review is issued, according to multiple energy sector experts and stakeholders.

“The revocation of a duly issued permit such as this on such specious grounds by a single judge places all other duly issued permits in the areas occupied by this endangered and other endangered or threatened species in jeopardy,” David Blackmon, a 40-year veteran of the oil and gas industry who now writes and consults on energy issues, told the Daily Caller News Foundation. “Operators now will have to consider whether they’re willing to risk millions of dollars in capital in projects only to find their own permits being revoked on the whims of a judge sympathetic to the radical climate lobby.”

“Absurd judicial decisions like this one threaten to destroy billions of dollars in investments in the U.S. by destroying the ability of companies and investors to have confidence in the proper, consistent application of laws and regulations,” Blackmon added. “Unfortunately, the destruction of this longstanding American advantage to attract capital has been a consistent feature of this administration and the activist judges it favors.”

The Gulf of Mexico is one of the largest sources of oil and gas in the U.S., with the region providing nearly 15% of all American crude oil production and 5% of total dry natural gas output, according to the Energy Information Administration. If it were a country, the Gulf of Mexico would be one of the 12 biggest oil producing states in the world, according to Bloomberg News.

Notably, oil produced in the Gulf of Mexico is less carbon-intensive than oil produced elsewhere; one May 2023 analysis commissioned by the National Ocean Industries Association (NOIA) found that oil extracted offshore in the Gulf of Mexico is 46% less carbon-intensive than the global average excluding the U.S. and Canada.

The biological opinion at the heart of the possible disruption to the industry was issued in 2020, and it assessed how oil and gas operations could potentially impact protected species living in the region, according to Bloomberg. Regulators typically use the biological opinion as a blanket analysis instead of issuing individual assessments on a case-by-case basis.

Provided developers are in compliance with the biological opinion, federal regulators had approved “takes,” meaning that developers are legally permitted to harm or harass a given number of particular species, an official for an industry stakeholder involved in efforts to solve the impasse told the DCNF. Without a valid biological opinion in place to limit liability via these takes, companies “will have to decide whether they continue to operate at their own risk” or instead cease their operations until the situation is resolved, according to an Aug. 29 memo published by Holland & Knight, a major law firm.

In the absence of a solid biological opinion, regulators responsible for approving development in the Gulf of Mexico would also probably have to weigh in on hundreds of different decisions each year, an amount of paperwork that could inundate the regulators, the official for an industry stakeholder told the DCNF. Such an outcome could cause problems for offshore green energy developments, in addition to disrupting things like vessels supplying offshore drilling platforms, operation of existing wells and future offshore oil and gas development, according to Bloomberg.

The NMFS has started the process of putting together a new biological opinion, but the agency may not be able to complete it until as late as the spring of next year, according to Bloomberg.

The agency “is aware of the court’s ruling on Sierra Club et al. v. National Marine Fisheries Service, and [it is] working with [its] federal agency partners on [their] next steps,” a spokesperson for the National Oceanic and Atmospheric Administration (NOAA), of which NMFS is a sub-agency, told the DCNF.

The environmental groups suing the government over the biological opinion include the Sierra Club and the Center for Biological Diversity, according to Reuters. Some industry stakeholders, including NOIA and the American Petroleum Institute (API), have intervened in the litigation on the side of the government, according to Bloomberg.

Mike Sommers, API’s president and CEO, wrote a Friday letter to Commerce Secretary Gina Raimondo to express his concern about the unfolding legal situation in the Gulf of Mexico.

“Without a solution in place, this decision will create a significant bureaucratic bottleneck for the federal government and potentially halt all oil and natural gas operations in the Gulf of Mexico,” Sommers wrote, adding that “this court decision has the potential to halt or seriously slow all operations in the U.S. Gulf of Mexico, leaving a critical source of energy supply and economic security in jeopardy.”

Additionally, industry groups and affected corporations are engaged in a lobbying blitz to try to avoid their worst-case scenario, and stakeholders have also communicated with lawmakers’ office in pursuit of a legislative solution, according to Bloomberg. They are also considering legal strategies for relief if a solution does not come together sooner than later.

“There should be a high level of concern regarding potential disruptions to the energy flow from the U.S. Gulf of Mexico, ” NOIA President Erik Milito said in a statement shared with the DCNF. “As it currently sits, the court order related to the Biological Opinion for the Gulf of Mexico energy sector could create roadblocks to continued energy development from the region. Such disruptions would likely cause considerable economic and national security harm to our country … Given the vital importance of the Gulf of Mexico, we remain optimistic that cooler heads will prevail, and we will see much-needed resolution to this issue through the judicial process, regulatory efforts, or Congressional action.”

The White House, Bureau of Ocean Energy Management and Department of the Interior did not respond to requests for comment. The Department of Justice declined to comment.

jmho