First oil

This issue of World Oil is running unexpectedly late, for reasons beyond our control. However, this delay also allowed us to see the new administration in Washington at work for two days. So far, it’s not pretty.

Looking at what the new Joe Biden administration did in just two days, “carnage,” comes to mind, as relates to oil and gas (O&G). A blizzard of capricious Executive Orders has emanated from the White House. In short order, this new President has undone many pro-O&G moves by former President Donald Trump. Obviously, Biden takes his orders from his party’s most radical elements, which makes his calls for “unity” in the country meaningless. Any hope of O&G cooperation has gone out the window, as his lefty shock troops steamroll a radical agenda.

During his first two days, Biden issued 17 Executive Orders, some of which revoked the permit for the Keystone XL pipeline; enforced a temporary moratorium on O&G leases in the ANWR; and re-entered the U.S. into the Paris climate accords. Additionally, Biden will declare a moratorium on new O&G (and coal) leases on federal lands. He also named Richard Glick, former general counsel for Democrats on the Senate’s Energy Committee, to chair of the Federal Regulatory Commission (FERC), to tilt that agency toward a more Democrat/anti-O&G attitude.

Reactions from folks in the U.S. industry have been predictably feisty. Various industry friends sent me comments. The ones
that are printable range from “clueless,” to “crazy as a loon,” to Biden having acquired “a raging case of dumbass.” The latter description is a common expression, here in Texas. About the kindest thing that this editor can say is that the new President’s education seems to be lacking in certain subjects.

Two bad moves. Biden’s revocation of the Keystone XL project’s $9 billion permit strands billions of barrels of Canadian oil; inhibits distribution of oil supplies; endangers U.S. national security by eliminating an alternative to sometimes-undependable Latin American oil supplies; kills thousands of jobs (many union-based); and will increase energy prices for consumers.

The Wall Street Journal remarked that “killing Keystone won’t keep fossil fuels in the ground. It will merely strand billions of dollars in Canadian investment and kill thousands of U.S. jobs while enriching adversaries and alienating an ally.” “This is a gut punch to the Alberta and Canadian economies,” said Alberta Premier Jason Kenney. “It’s an insult.”

Biden’s other move that will impact E&P immediately is putting a moratorium on lease sales on federal lands. The move affects some 700 million acres and will have long-term consequences for New Mexico’s portion of the Permian basin.

Thought patterns in France. Recent ill-founded actions are not relegated to the U.S. Indeed, two incidents of decision-making in France show such poor craftsmanship that one can only conclude that they were political stunts.

First, the French government in December pressured Engie—which delivers natural gas all over France—to call off negotiations on a 20-year, $7 billion contract with Houston-based NextDecade to export Texas natural gas. This move prompted Texas Railroad Commissioner Wayne Christian to remark, “Apparently, the French are concerned Texas gas is too dirty.” Note: the French government owns 24% of Engie.

And second, French firm Total on Jan. 15 declared that it would not renew its API membership for 2021. Total cited “Certain divergences [which] still remain today.” These include API supporting the rollback of U.S. regulation on methane emissions; API being part of the Transportation Fairness Alliance against electric vehicle subsidies; and API expressing “differing positions to those of Total” on carbon pricing. Total also remarked, “Moreover, API gave its support during the recent elections to candidates, who argued against the United States’ participation in the Paris Agreement.” That last comment indicates that these actions were orchestrated as a final middle finger toward Donald Trump.

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com