The major news out of Trumpland this week was his selection of ExxonMobil CEO Rex Tillerson to lead the State Department. Tillerson has sparked a bit of backlash, mainly revolving around his close relationship with Russia and Russian President Vladimir Putin. Indeed, ExxonMobil has some high-profile drilling projects at stake – Exxon could presumably proceed with a major project in the Russian Arctic if U.S. sanctions on Russia were removed, which should present some conflicts of interest during Tillerson’s confirmation hearings.
But while Tillerson will likely catch all the headlines this week, a much less publicized leaked memo from the Trump camp will likely prove to be more news-worthy. The Center for Media and Democracy got its hands on an internal memo from Thomas Pyle, who was selected to lead the transition team for matters related to the Department of Energy. The memo, which was written before Pyle was appointed to the transition team, details some agenda items for the Trump administration, and they will mark a huge departure from the Obama era and will upend longstanding U.S. energy policy if they implemented. Because Pyle is now working with the Trump transition team, the memo can be viewed as roadmap of sorts for energy policy priorities for the next few years.
Some of the items are predictable given Trump’s clear position on supporting oil and gas drilling and his opposition to efforts to reduce greenhouse gas emissions. For example, the Pyle memo says that Trump will withdraw from the Paris Climate Agreement, “hit the reset” on the Clean Power Plan, and increase leasing for oil and gas drilling on public lands. Related: After Burning Himself On The OPEC Deal: Gartman Says ‘’Buy Oil’’
But there are a few nuggets in the memo worth noting that might not be immediately obvious to those trying to discern what the Trump administration will mean for the energy industry (to read the full memo, click here). Trump could accelerate the approval of LNG export terminals, which is particularly relevant because just this week FERC denied a request by developers of the proposed Jordan Cove LNG export terminal on the West Coast to rehear their case. FERC rejected a permit for the LNG export facility earlier this year on grounds that the project’s detriment to landowners outweighed the potential benefits of the project. The project would see U.S. natural gas, likely from Colorado, exported to Asia.
While the Trump administration has been expected to open up more federal lands for drilling, the Pyle memo singled out the Chukchi and Beaufort Seas, the Atlantic Ocean, the National Petroleum Reserve-Alaska (NPRA), and federal lands in the Western U.S. The Arctic was just put off limits in the Interior Department’s five-year plan for 2017-2022. The Atlantic is also off limits for now. And western lands have thought to be on the list for development in the coming years under Trump; his selection for who will lead the Interior Department will be relevant for all of these issues.
A more radical move to undo U.S. climate policy would be to reconsider the “endangerment finding,” which the Pyle memo lays out. The endangerment finding was the determination by the EPA early on in the Obama administration that greenhouse gas emissions pose a threat to the public, which was used as the legal basis for regulations on CO2 in a variety of sectors – from the EPA’s Clean Power Plan to the corporate average fuel economy (CAFE) standards for passenger vehicles. Undoing the endangerment finding could strip the federal government of a lot of its tools to attack climate change and would be a boon for the industry. Related: Legit OPEC Cuts To End Global Oil Glut In H1 2017
The Pyle memo also says that the Trump administration will look at the environmental effects of wind energy, which means restricting wind power because of its effects on birds and wildlife. It is curious that the administration would suddenly be concerned about the environment when it pertains to wind and not oil and gas, but the move would be consistent with the incoming government’s efforts to boost fossil fuel over other forms of energy.
In a move that might be a bit more predictable than the rest, given Trump’s public statements, the memo places a priority on building more pipelines. Just a few days ago, Trump said that he would make a decision “fairly soon” on reviving the Keystone XL and Dakota Access Pipelines. His administration would streamline permitting, where it can, on new pipeline projects.
To enact this agenda, Trump has selected the most pro-industry cabinet out of any administration in recent memory: Tillerson at State; Oklahoma Attorney General Scott Pruitt for EPA; former Texas Governor at the Department of Energy; and the handful of candidates for the all-important Interior Department all support more development.
In recent days the Trump team has also sent a letter to the Department of Energy, asking for names of staff that worked on climate change, raising fears within the agency about a witch hunt. Staff are worried about a purge of people working on climate.
As it stands right now, there are few hurdles standing in the way of most of the agenda items in the Pyle memo.
By Nick Cunningham of Oilprice.com
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