Plans for oil and gas lease sales in development, Interior official says

Federal planning for oil and gas lease sales, onshore and offshore, continues despite a courtroom setback, an Interior official told Congress Feb. 8.

Laura Daniel-Davis, nominated by President Biden to be Interior assistant secretary for land and minerals management, told the Senate Energy and Natural Resources Committee that a court ruling Jan. 27 invalidating the latest offshore lease sale did not stop the program. Interior continues to obey a court ruling from June 15 of last year that required Interior to resume lease sales, she said.

Daniel-Davis currently is principal deputy assistant secretary for land and minerals management, which in practical terms means she is filling in for the job to which she has been nominated. She also has served as chief of staff to both of President Obama’s Interior secretaries. Her nomination was the reason for her appearance before the committee.

The ruling Jan. 27 required the Bureau of Ocean Management (BOEM) to come up with more estimates of potential greenhouse gas emissions before it can resume Lease Sale 257 (OGJ Online, Jan. 28, 2022). Daniel-Davis said the court ruling was the subject of a lot of internal discussions at Interior, but she said she could offer no timeline on when Interior would resolve the matter.

Royalty rates may rise

The prospect that Interior will raise royalty rates at some point in future lease sales was raised during the hearing by Sen. Mike Lee (R-Utah). Lee noted that an Interior website recently posted a plan to raise the royalty rate to 17.5% from its current 12.5% for onshore oil and gas leasing on federal lands.

That was posted in error, Daniel-Davis said. The department has not finished a proposal on the subject, she said.

Lee also was concerned about an Interior report issued in November that Daniel-Davis helped prepare. It recommended that royalty rates and a variety of fees be increased. Lee said the report appeared to be little more than a cut-and-paste job compiling common proposals for such changes.

“I agree with you that it was not original work,” Daniel-Davis said, but nevertheless she said it fulfilled an obligation to provide recommendations and was written after much consultation with interested parties.

Sen. Mazie Hirono (D-Ha.), unlike Lee, was not concerned the administration would raise royalties.

“I for one am glad you are increasing the royalty amounts,” Hirono said, although Interior has not in fact said it will increase royalties.

Hirono’s remark apparently reflected a common expectation that the Biden administration will raise the rates, which would be in keeping with the November Interior report, Interior Secretary Deb Haaland’s remarks on the subject, and Biden’s frequent references to a “climate crisis” and a need for a carbon-neutral economy.

Slow progress for Willow plan

Sen. Lisa Murkowski (R-Ala.) had been worried that the Biden administration might not defend the Willow project, a ConocoPhillips Co. oil development plan, in the National Petroleum Reserve-Alaska, but her concerns apparently have been put to rest.

A federal judge blocked the permit for the development plan in August by ruling the Bureau of Land Management (BLM) had failed to provide all of the calculations needed to satisfy the National Environmental Policy Act. Murkowski had worried that the administration would not plow ahead with a supplemental environmental impact statement (EIS) for the project.

“I am pleased that the administration is willing to continue support for the Willow project,” Murkowski told Daniel-Davis.

But she obviously was not pleased when Daniel-Davis said a draft supplemental EIS likely would not be issued until the second quarter. The project plan already has been studied for a long time, and drilling seasons are short on the North Slope of Alaska, she noted.

If confirmed, Daniel-Davis will oversee BLM, BOEM, and the Bureau of Safety and Environmental Enforcement, an offshore regulator.