Opinion

FACTBOX - Energy Implications of a US Gov't Shutdown - S&P Global Platts

Posted by OilVoice Press - OilVoice

19-Jan-2018


(Platts)--18Jan2018/344 pm EST/844 GMT

If the US Congress fails to pass a short-term spending bill and the federal government shuts down this week, oil and natural gas permitting in federal lands and waters is expected to stall, government statistics which often move energy markets will not be updated and environmental enforcement could be suspended. The government's temporary funding is set to expire Friday and expectations of a shutdown increased Thursday. The House was expected to vote on a short-term spending bill Thursday night, but growing opposition to the bill has left its fate unclear.

Here's how the potential shutdown could impact the oil and gas industry:

DATA PAUSE

During the 16-day government shutdown in October 2013, the US Energy Information Administration continued to collect data but did not issue new reports. "The website was kept open, but without updates," said Adam Sieminski, EIA's administrator at the time. Weekly reports, including the Weekly Petroleum Status Report and the Gasoline and Diesel Fuel Update could be delayed, while the status of monthly reports, such as the Short-Term Energy Outlook and the US Movement of Crude Oil by Rail, would remain in limbo as long as the shutdown continues.     There have been 12 government shutdown since 1981, the longest lasting 21 days.

OFFSHORE INSPECTIONS

The Bureau of Safety and Environmental Enforcement, which oversee offshore oil and gas operations, will continue "critical permitting and oversight activities" and could retain roughly half of its 874 employees if the federal government shuts down, according to a contingency plan released by the agency in September. BSEE would continue to review permits and inspect offshore oil and gas operations and process offshore drilling applications amid a potential shutdown. "Routine and emergency inspections would continue to be performed," the plan states. "The permitting and enforcement activities that continue would allow industry to function during a government shutdown." In its contingency plan, the Bureau of Ocean Energy Management said if the government shuts down it will retain 73 of its 584 employees to conduct operational support, administrative services and emergency response. BOEM will not process nor review new offshore exploration and development plans, but will process and revise certain revised plans, according to the contingency plan.

ONSHORE STALL

Interior's Bureau of Land Management, which administers about 245 million surface acres and 700 million subsurface acres primarily in 12 western states, would halt all activities if the government shutdown, except for law enforcement, emergency response and any operations which pose safety risks to life, property or resources, according the agency's contingency plan. All but about 700 of BLM's 10,000 employees will be furloughed if the government is shut down, according to the plan. "Employees responsible for inspection and enforcement will be needed to perform and oversee actions such as production accountability, well shut-ins, re-completions, and downhole/equipment changes in drilling/plugging operations," the plan states. "A limited number of employees will also be needed to patrol oil and gas fields to make sure that theft of oil or condensate is not occurring."

ENVIRONMENTAL PROTECTION

The Environmental Protection Agency, which administers clean air regulations, mandates biofuel blending and regulates industry emissions, estimates that 781 of its more than 14,000 employees are "necessary to protect life and property." Relevant to energy issues, the EPA's litigation and law enforcement activities could be affected by a shutdown. During planning for potential shutdowns in 2011 and 2013, the Department of Justice said it would ask courts for delays of hearings and other deadlines. EPA said in a plan released in December that it would consult with DOJ this time and follow its guidance.

S&P Global PlattsUnited StatesUSgovernmentShutdownCongressOffshoreonshoreEnvironmental Protection

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