Oil companies concerned small businesses being harmed by Biden's new drilling regulations
“It really hurts small businesses because they’re asking for 9.2 billion in bonds," CEO of Arena Energy, LLC Mike Minarovic said.
Oil companies are expressing concerns over President Joe Biden's proposed restrictions on oil and gas leases -- particularly about how these regulations will impact smaller oil lease operators and ultimately consumers.
CEO of Arena Energy, LLC Mike Minarovic testified before the Small Business Committee’s Subcommittee on Rural Development, Energy & Supply Chains on Thursday where he spoke on behalf of the Gulf Energy Alliance.
"There are many examples I could cite today to illustrate the burdensome and unnecessary regulations crushing small businesses operating in the GOM," Minarovic said in his written testimony. "And every single one of those examples must be viewed through the lens of a President intent on shutting down domestic oil and natural gas production when and wherever possible."
Earlier this month, a federal judge in Louisiana struck down President Joe Biden's attempt to place restrictions on a forthcoming offshore oil and gas lease sale. The judge granted oil companies Chevron and Shell a preliminary injunction to block the Bureau of Ocean Energy Management's restrictions.
As the result of a settlement with environmental groups in July, BOEM tried to remove about six million acres from the sale and placed various restrictions on oil and gas vessels associated with the leases – auctioned to protect the Rice’s whale species found in the Gulf of Mexico.
"The court observes that plaintiffs have demonstrated substantial potential costs resulting from the challenged provisions," Judge Cain wrote in his decision, according to Fox News. "While the government defendants largely focus on the acreage withdrawal and dynamics of the sale itself, many of plaintiffs’ alleged hardships arise from the vessel restrictions."
Minarovic slammed BOEM's proposed rule that requires oil and gas companies to strengthen requirements that companies have to meet to demonstrate they can cover the cost of decommissioning their oil and gas assets.
“It really hurts small businesses because they’re asking for 9.2 billion in bonds," he told Just the News. "That’s the face value, not the cost. It’s going to impact businesses that are lower than the investment grade. Financially weaker companies will be asked to get those bonds. It will cost them $5.7 billion over several years."
Another oil and gas industry source referred to what was occurring as "rent-seeking."
“Big Oil and the American Petroleum Institute have partnered with the Biden Administration and anti-fossil fuel activists on these new regulations, which only benefit major oil and gas companies," an industry source told Just the News. "This is rent-seeking at its finest.”
The Office of Advocacy in the U.S. Small Business administration has also expressed concerns about this proposed rule in a letter last month.
You can read the letter here:
"This proposed rule harms small businesses holding current leases for oil and gas extraction in the OCS by ignoring the joint and several liability of large predecessor leaseholders in Department of the Interior (DOI) regulations and written into the leases," the letter reads. "It requires small businesses that have already paid for assurance bonds agreed as part of the sale of the lease to purchase duplicative assurance bonds for the federal government."
President of the U.S. Oil and Gas Association Tim Stewart said that energy consumers will also be harmed by this deal.
“The comprehensive energy policy from the Biden administration is focused on causing the most pain – for energy producers and consumers," he said. "This proposed rule disproportionately hurts the small operators which produce over one-third of energy developed in the Gulf of Mexico. The Biden Interior Department itself has said the rule will deter new exploration, development, and production offshore – which is exactly what they want.”