According to statistics from the Department of Energy, the U.S. is on track to be a net energy exporter in 2020–the first time this has happened in more than 70 years. However, the recent government shutdown didn’t help, and its lingering effects could potentially slow energy development in the near future.
During the shutdown, the Interior Department’s Bureau of Land Management (BLM) focused on maintaining the staff needed to keep energy production steady. This despite the fact that 7,000 of the agency’s 9,000 total employees are considered “non-essential” and were sent home.
“Despite the government shutdown, the natural gas and oil industry continues to support safe and responsible operations to ensure that affordable and reliable energy reaches U.S. consumers,” said Sabrina Fang, a senior communications associate for the American Petroleum Institute, in an email to InsideSources.
“To be clear, there isn’t a single regulation by government agencies (EPA, BSEE, BLM, USCG, PHMSA, etc.) that doesn’t continue to remain in effect regardless of a shutdown. Our industry continues to maintain compliance with all environmental regulations,” she continued.
During the shutdown, the BLM and other agencies continued to maintain skeleton crews to provide the energy industry with needed oversight.
This staff meant that, in the short term, production continued mostly as normal. But that doesn’t mean that the shutdown had no effect on production. Kathleen Sgamma, president of the Western Energy Alliance, says that the impact may be delayed and possibly won’t be seen until the DOI’s first quarter lease sales begin. This will probably not be until February. Any effects on production wouldn’t be seen for an additional six to twelve months.
“I think we will see more impacts later in the year when operators submit permits to drill,” she told InsideSources. “We have a month of applications lost and that could affect first quarter lease sales.”
The shutdown came at a key transition movement for the industry. Secretary Ryan Zinke resigned on January 2, leaving David Bernhardt, his former second in command, as acting secretary. Bernhardt may very well end up as Zinke’s replacement, but so far, Trump has yet to officially nominate him. The prospect is worrying for environmentalists given Bernhardt’s past work as a lawyer for energy companies. Democrats in the House are already promising to keep a sharp eye on him.
“We intend to continue conducting vigorous oversight of how Interior political appointees arrive at major policy decisions, who they consult, who they ignore, and who stands to benefit financially,” said Rep. Raul Grijalva (D-AZ), the incoming chair of the House Natural Resources Committee. “Deputy Secretary Bernhardt should be prepared to answer those questions early in the new Congress, and so should Secretary Zinke’s successor.”
On Thursday, House Democrats flexed their oversight muscles with a one-sided forum entitled the “Trump Administration’s Oil and Gas Favoritism During Shutdown” during which they blasted the administration’s energy policies. Since the Natural Resources Committee has not been reconstituted since the beginning of the new Congress, the meeting was not officially a hearing. That didn’t stop Democrats from using the time to go after the administration for continuing to process oil drilling applications during the shutdown.
“This Trump shutdown has become a crisis. People are struggling, our neighbors are suffering, but throughout it all — while many, many people are suffering and in great pain — the oil and gas industry has remained unscathed,” said Democratic California Rep. Alan Lowenthal, who opened the forum.
Over the course of the shutdown, the DOI approved more than 150 permits to drill on federal land. This is a notable change from the Obama administration’s policy during the 2013 government shutdown, when drilling permits were completely frozen.
Meanwhile, Republicans complained that they had not been notified of the forum and that the panel members who spoke were either tied to Democratic politics or progressive organizations.
Energy production during the shutdown foreshadows future squabbles between Democrats in Congress and the administration’s Interior Department. However, the industry feels that with a strong ally in Bernhardt and GOP control of the Senate, House hearings will be more bark than bite.
