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U.S. Permit Reviews, Red Tape Provoke Energy Conference Debates

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U.S. energy permitting delays and the need for streamlined new project reviews dominated conversations among oil and gas executives and lawmakers in meeting rooms and hallways at the CERAWeek energy conference this week.

The fossil fuel industry historically has objected to red tape that slows or raises development costs. But the topic has moved higher on their agenda after U.S. President Joe Biden’s administration hit pause on reviews of permits of new gas export plants as rules governing clean-energy incentives undercut enthusiasm around the Inflation Reduction Act.

Permitting for pipelines to wind farms have all been “equally daunting,” said Colin Gruending, an executive vice president at Enbridge, which transports fuels for refineries and liquefied natural gas plants, and invests in solar and wind farms.

“Policy is at bit of an intersection right now, given the energy transition and uncertainties,” he added.

The energy industry is facing “punitive executive orders, punitive polities and punitive interpretations by agencies,” said Toby Rice, CEO of top U.S natural gas producer EQT Corp.

“Permit reform is the answer,” he said.

The complaints have important allies in U.S. Senators Joe Manchin and Daniel Sullivan, both if whom vowed to work on legislation streamlining approvals for new infrastructure.

Manchin, a West Virginia Democrat, promised the legislation addressing the industry’s needs is at the top of his Senate energy committee’s agenda this year. “We want to get it done,” he said.

Sullivan, a Republican of Alaska, agreed. “It is imperative that we get it done and I do think there’s the political will,” he said.

U.S. Energy Secretary Jennifer Granholm and White House climate advisor John Podesta said President Joe Biden’s administration is willing to advance permitting changes, but blamed a lack of cooperation with legislators.

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“We’re doing what we can on the executive side,” Granholm said.”

The Biden administration’s pause on permit reviews for new liquefied gas export plants was a punching bag for gas, pipeline and energy trading executives.

Permitting reform is something they “desperately need”, said Michael Dunn, chief operating officer of pipeline operator Williams Companies. “We cannot have this continue.”

Executives regulatory uncertainty has hindered investment in the oil and gas industry and encouraged global customers, especially for liquefied natural gas, to seek supplies elsewhere.

“There’s potentially a view that there’s an uncertain policy for the long term and that inhibits or makes people take pause on investments,” said Corey Prologo, Trafigura’s North America Oil Trading chief. “There’s less certainty around investment decisions probably than there ever has been.”

LNG buyers may sign deals with suppliers in Qatar, Australia or Russia if the U.S. expansion is stalled.

“There are real world consequences happening right now. I mean, Japan just signed a contract with Russia. So would they have done that without this pause? I doubt it,” said Mike Sommers, president of energy trade group American Petroleum Institute.

Asked about the LNG permitting pause, Secretary Granholm said the reviews would be “long behind us” by this time next year.

(Reporting by Arathy Somasekhar, David French and Georgina McCartney in Houston; Writing by Gary McWilliams; Editing by Simon Webb and David Gregorio)

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