US Department of Interior features energy as a priority

The United States Department of the Interior has updated its regulatory priorities for the coming six months, with energy issues featured prominently.  The nation's principal steward of federal public lands and resources, the Department manages more than 500 million acres of Federal lands, including 401 park units, 560 wildlife refuges, and approximately 1.7 billion of submerged offshore acres on the Outer Continental Shelf.  These lands and waters are home to significant energy and mineral resources, including renewable energy sources such as solar, wind, and hydropower, as well as oil, gas, coal, and minerals such as uranium.  The Interior Department's recently-announced priorities highlight the importance of energy issues in its regulatory agenda for 2014.

The Parker River National Wildlife Refuge, managed by the Department of the Interior's U.S. Fish and Wildlife Service.

Energy issues are not new to the Interior Department.  Its mission statement, captioned, "Protecting America’s Great Outdoors and Powering Our Future", reads:

The U.S. Department of the Interior protects America’s natural resources and heritage, honors our cultures and tribal communities, and supplies the energy to power our future.

Twice a year, the Interior Department publishes a statement of its regulatory priorities.  The most recent statement, issued November 26, features several initiatives designed to promote the development of renewable resources on public lands.

As noted in the Department's statement, under the Obama Administration, the Department has focused on renewable energy issues and has established priorities for environmentally responsible development of renewable energy on public lands and the Outer Continental Shelf.  Energy producers and developers are investing in the development of wind farms off the Atlantic seacoast and solar, wind, and geothermal energy facilities throughout the West.  The Department announced its intent to continue its intra- and inter-departmental efforts to move forward with the environmentally responsible review and permitting of renewable energy projects on public lands, and to streamline regulatory processes to facilitate the responsible development of these resources.

Like most federal agencies, the Interior Department is organized as a collection of bureaus and offices.  These agencies include the Bureau of Land Management, which manages the 245-million-acre National System of Public Lands, located primarily in the western States, including Alaska, and the 700-million-acre subsurface mineral estate located throughout the nation.  The Bureau of Land Management's regulatory priorities include creating a competitive process for offering lands for solar and wind energy development.  Specifically, the Bureau is proposing competitive bidding for lands within designated solar and wind energy development leasing areas.  The proposed rule is designed to enhance BLM's ability to capture fair market value for the use of public lands, ensure fair access to leasing opportunities for renewable energy development, and foster the growth and development of the renewable energy sector of the economy.

If the Bureau of Ocean Energy Management's recent auctions for offshore wind sites on the Outer Continental Shelf are any example, the Bureau of Land Management may soon be holding competitive auctions for land-based renewable energy sites.  These auctions will likely seek to balance support for responsible resource development against conservation, as the Department also includes conservation-oriented agencies such as the U.S. Fish and Wildlife Service and the National Park Service.

Yet how these regulatory priorities translate into regulatory action -- and how that regulatory action affects the development of renewable resources -- remains to be seen. 

What federal shutdown means for energy

With Congress's failure to pass a budget, today the U.S. federal government entered shutdown mode.  For 800,000 federal workers, shutdown means being furloughed until Congress resolves the budget.  What does the shutdown mean for the energy sector?

Each federal agency is reacting differently to the shutdown.  For the Federal Energy Regulatory Commission, it means continued normal business operations - as long as it still has funds on hand.  What happens after that?  According to a contingency plan issued last week, when those funds run out, FERC will continue "only those excepted activities authorized by law" to the extent that they protect life and property.  These activities include the work of the Commissioners themselves, hydroelectric and liquefied natural gas inspections, managing the reliability of the nation's electric and gas systems, and monitoring market operations.

The U.S. Department of Energy faces similar impacts from the shutdown.  It has some funds remaining on hand, but when those funds run out, according to its "lapse in appropriations plan", of its 13,814 employees, only 1,113 excepted personnel and 11 Presidentially-appointed and Senate-confirmed employees will remain on the job.

The Bureau of Ocean Energy Management will continue some operations.  According to its contingency plan, between 35 – 40% of Bureau employees will continue to report for full time duty, and BOEM will continue to work on current offshore wind projects and other renewable energy plans.

Maine ocean energy advances

Maine's offshore wind industry may be moving forward, as the federal agency responsible for offshore wind site leasing is now considering a request by Norwegian energy company Statoil to lease a site for a Maine deepwater floating wind project.

Uninhabited Damariscove Island, off Boothbay Harbor, Maine.

The Maine site for which Statoil has applied lies over 12 miles offshore, south of Boothbay Harbor.  It lies in United States waters south of Damariscove Island.  This places the site near the pre-selected Damariscove Island wind site in Maine state-jurisdictional waters.  Statoil's proposed site is also southwest of the Monhegan offshore wind site.

Statoil's request to the federal Bureau of Ocean Energy Management was submitted on an unsolicited basis.  No BOEM Call for Information and Nominations (the agency's primary competitive solicitation tool) was in effect for these waters.  Under current regulations, unsolicited leases face a slightly different process for review, including a determination of whether there is any competitive interest in the site.

(You can read four public pages from Statoil's application here.)

Statoil is a large and diverse energy company headquartered in Stavanger, Norway, and owned primarily by the government of Norway.  Statoil's portfolio includes petroleum, gas, pipeline, and electric utility businesses.  Statoil is now exploring ocean energy opportunities, and developed the world's first full-scale floating wind turbine, the 2.3 megawatt Hywind unit.  Statoil has applied for a site lease off Maine, which could be its first US offshore wind site.

BOEM has deemed Statoil NA's lease application to be complete, and the applicant to be legally qualified.  Now BOEM is engaged in a review of Statoil's technical and financial qualifications.

Tomorrow morning, a joint state-federal task force will meet to review Statoil's request.  The Maine Task Force of the Bureau of Ocean Energy Management consists of a broad array of agency representatives.  Tomorrow's meeting will feature presentations by representatives from the governor's energy office, Maine Public Utilities Commission, United States Coast Guard, Department of Defense, NOAA, as well as BOEM and the Department of Interior itself.  This meeting will be held on December 8 at the Marriot Hotel in South Portland, Maine, at 9:30 a.m.

Separately, Statoil is negotiating with staff from the Maine Public Utilities Commission for a long-term contract to sell the project's output to utilities.  Statoil responded to the Maine commission's 2010 request for proposals for pilot floating offshore wind projects.  This offshore wind long-term contracting program was established by a Maine law designed to facilitate the development of a deep-water offshore wind energy pilot project.

If the Commission approves a long-term contract for the project's output, it could give the wind farm sufficient revenue certainty.  At the same time, the Commission is required to weigh the costs and benefits of any such contract, and must find that ordering a utility to buy the energy, capacity and renewable energy credits at the price and other terms proposed would not have an unreasonable impact on the utility's rate.