US gov’t shutdown to impact oil industry

US Federal govt01 October 2013 – Even the world of energy will be affected by the impending shutdown of the US government, as key federal agencies face furloughs in the face of a midnight deadline with little hope for lawmakers to resolve a legislative stalemate.
Companies seeking permits to drill on federal lands from the Interior Department’s Bureau of Land Management (BLM) may be left out in the cold as the department halts onshore permitting operations.

Offshore drillers are in a better position since funding for their permitting process comes largely through revenue streams provided by industry fees and rental payments, rather than the federal allocations to which the BLM is subject.

Offshore inspections would also likely go ahead since they are deemed vital to public health and safety.

Permits for exporting LNG would cease, however. So would federal testing of oil-spill response equipment.

Regulators at the Bureau of Ocean Energy Management (BOEM) would stop processing high bids for offshore drilling rights from the lease sale last August.

“This will likely delay both the issuance of leases and the associated payments to the Department of Treasury that occur upon execution of the lease,” BOEM said in a statement.

A total of about 369 Bureau of Safety & Environmental Enforcement workers and 477 BOEM employees would be furloughed, as well as some 10,200 BLM workers and 10,000 Energy Department employees.

On the legislative side, the most likely first casualty will be a hearing at a meeting of the House Energy & Commerce Committee set for Wednesday. The committee is set address proposed legislation to speed up cross-border energy projects and cut back on environmental review, which could potentially impact the construction of the controversial Keystone XL pipeline.

That meeting and others will not happen if an agreement to fund governmental operations is not struck Monday night, The Hill newspaper reported.

However, The Hill said that a Senate hearing set for Tuesday to address implementation of the US-Mexico Transboundary Hydrocarbons Agreement will go ahead even if lawmakers fail to reach a deal to keep the government running.

The committee is scheduled to hear from senior State and Interior Department officials on the offshore agreement with Mexico.

Meanwhile, the US Energy Information Administration currently has enough resources to operate through 11 October if the government shuts down, Reuters reported.

That means the release of the weekly oil and natural gas inventory data, which are published on Wednesday and Thursday, respectively, will likely not be in danger, at least for this week.

The White House and US lawmakers have hit an impasse in agreeing how and whether to fund governmental operations for the next fiscal year, which starts Tuesday. Intransigence along party lines has characterised a historically acrimonious Congressional session, as Republicans demand deep spending cuts and a one-year delay of the Affordable Care Act, the US president’s signature piece of legislation that has come to be known as Obamacare and is set to go into effect on Tuesday.

Democrats have shown little willingness to budge on the spending cuts, and have remained staunch in their support for the president’s hard-won effort to reform US health care.

Failure to reach an agreement would force the first shutdown of the US government in 17 years.
*Luke Johnson, Upstreamonline

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