Three changes US oil and gas can expect in President Biden’s first week

Matthew Farmer 21 January 2021 (Last Updated January 25th, 2021 10:37)

Using executive orders, incoming US president Joe Biden has drawn up a list of changes he will make on “day one” of his presidency. This includes changes to oil and gas policies made by previous president Donald Trump.

Three changes US oil and gas can expect in President Biden’s first week
President Biden has a list of “day one” executive actions that will break with Trump era legislation. Credit: Gage Skidmore.

Incoming US president Joe Biden has drawn up a list of changes he will make on “day one” of his presidency. This includes changes to oil and gas policies made by previous president Donald Trump. Biden has pledged significant changes to oil and gas leasing for US operators, but this legislation would need to pass through the US congress. Using executive orders, Biden will have the ability to make some changes much faster. Here are three policies Biden seems likely to make in his first week in power.

Biden to rescind permits for Keystone XL pipeline

On Saturday, Biden’s chief of staff Ron Klain sent an incomplete list of priority actions for “the first 10 days of the administration” to senior staff. While this did not include action on the Keystone XL Pipeline, the Canadian Broadcasting Corp reports sources as saying the full list includes revoking permits for the pipeline.

The pipeline would connect the hub city of Hardisty in Alberta, Canada, to oil refineries in Texas, US. It would add to the capacity of the existing Keystone pipeline, which runs along a similar route.

Barack Obama stopped the 2,735km project in 2015, but Donald Trump campaigned on pushing it forward. In 2017, he used an executive order to permit the project and construction has since started. However, a US Supreme Court decision last year stopped his administration from fast-tracking the plans.

The pipeline has attracted protests from environmental campaigners such as Greenpeace, who describe it as “dangerous”. The company behind the pipeline, TC Energy, issued a statement this weekend saying the Keystone XL project will reach net-zero emissions when it begins operations in 2023. It has also pledged to power the pipeline with renewable energy no later than 2030.

Keystone XL president Richard Prior said: “We are confident that Keystone XL is not only the safest and most reliable method to transport oil to markets, but the initiatives announced today also ensures it will have the lowest environmental impact of an oil pipeline in terms of greenhouse gas emissions.”

Canada’s oil and gas industry has suffered with poor infrastructure to transport extracted fluids from its reservoirs. As such, the Canadian Government backs the pipeline plans. Canadian Prime Minster Justin Trudeau spoke to Biden about the pipeline in November and has said his team continues to make the case to the US leadership.

Arctic oil and gas licensing to pause, potentially stop under Biden

In January, the Trump administration pushed forward with the first leasing auction in the Arctic National Wildlife Refuge in Alaska. However, this attracted little interest from drilling companies, with the largest bidder being a state-owned company.

Licensing rounds in the Arctic are currently mandated by law, with another mandated to take place before 2024. This means Biden would need to do more than simply issue an executive order to stop the licensing. Since Biden’s party now controls all arms of Congress and the licensing rounds have not generated the expected returns for such an auction, this would not be likely to face significant opposition.

Biden has also promised to stop drilling on federal land. However, legislation of this scale would need to pass through Congress before it can take effect.

Environmental regulations face a rollback of rollbacks

Trump’s policy of deregulation has benefitted oil and gas projects previously entangled with environmental regulation. Biden has said he plans to undo Trump’s executive orders with his own.

Trump removed regulation surrounding methane flaring, allowing states to set their own limits. He also oversaw the Environmental Protection Agency (EPA) in relaxing rules around leak inspections, which attracted criticism from the industry.

The EPA also removed Obama’s Clean Power Plan. This required the energy sector to cut its overall emissions by 32% of 2005 levels by 2030. Trump replaced this with the Affordable Clean Energy rule, which would have reduced emissions by up to 2% in the same time period.

At the time, EPA administrator Andrew Wheeler said: “[The rule] would have asked citizens to bear the costs of the previous administration’s climate plan. One analysis predicted double-digit electricity price increases in 40 states.”

But on his last full day in office, Trump saw the Affordable Clean Energy rule overturned. Obama had intended the EPA to use the rule to move power generation away from oil and gas reliance. Trump’s team proposed that this was an overreach of the EPA’s power. However, the US Court of Appeals for the District of Columbia Circuit disagreed. They unanimously ruled that the law “simply does not unambiguously bar a system of emission reduction that includes generation shifting”.

The most high-profile rollback came with Trump causing the US to leave the Paris Agreement on Climate Change. Biden has repeatedly said he will immediately reinstate the agreement via executive order. If this happens, the country would have operated outside of its prescriptions for approximately three months.

You can read more about how Biden’s policies may affect extraction in the Gulf of Mexico in an upcoming edition of Offshore Technology Focus.