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Biden’s State Department Fossil Fuel Surrender In Endorsement of Methane Export Pipeline

By Tyson Slocum

News reports that Biden Administration officials convened by White House climate adviser Ali Zaidi met on Saturday to develop a policy recommendation on strengthening the Natural Gas Act’s public interest determination for most natural gas exports. While this is welcome news, and mirrors a request Public Citizen made of the Administration in 2022, we are concerned that recent State Department determination undercuts the effort.

A letter written to Public Citizen just before Christmas that we have made public for the first time explains the November decision by the U.S. Department of State to approve Oneok’s Saguaro pipeline, designed to export U.S. fracked gas from the Permian basin to a planned bevy of Liquified Natural Gas (LNG) export terminals on Mexico’s pacific coast. The letter defends the U.S. Secretary of State approval of the project because exporting natural gas will benefit the climate by “reducing the venting and flaring, and thus the greenhouse gas emissions of associated natural gas in the Permian Basin, from where the natural gas would originate.” State’s unsupported contention that increased methane exports will result in less venting and climate pollution undermines federal and state efforts to regulate and control harmful venting and flaring of methane at the wellhead. Regulations – not increased exports – are the key to reducing harmful climate pollution.

We detailed the history of our opposition at both the Federal Energy Regulatory Commission (FERC) for a Presidential Permit to construct and operate the Saguaro pipeline in our December 6 letter to U.S. Secretary of State Antony J. Blinken. The proposed pipeline would stretch 155 miles from West Texas’ Waha Hub to Mexico, connecting the Permian Basin with proposed LNG export terminals on Mexico’s pacific coast.

On November 8, Hagen Maroney, Deputy Director of the State Department’s Office of Global Change, emailed FERC requesting the agency perform “a greenhouse gas (ghg) emissions analysis for the Saguaro pipeline project that covers lifecycle upstream and downstream ghg emissions rather than only the local project construction and operation ghg emissions described in FERC’s Environmental Assessment for the project. Providing a full lifecycle ghg analysis for the Saguaro project would be consistent with the September 21, 2023, Fact Sheet: Biden Harris Administration Announces New Action to Reduce Greenhouse Gas Emissions and Combat the Climate Crisis, in which the President directs agencies to consider ghg impacts in environmental reviews conducted pursuant to the National Environmental Policy Act (NEPA).”

On November 13, FERC replied that the State Department request was “beyond the scope of the Commission’s analysis in this proceeding,” but nonetheless requested Oneok to respond to State’s email. Oneok submitted its reply on November 20, and, citing FERC’s determination that the State Department request was beyond the scope of the proceeding, declined to provide the requested GHG analysis.

Just two days later, Geoffrey R. Pyatt, the Assistant Secretary of the State Department Bureau of Energy Resources, “provided a favorable recommendation for the issuance of a Presidential permit” with no further requirement or mention of a lifecycle GHG analysis that State had requested just two weeks prior.

While most LNG exports depart from the U.S. Gulf Coast, Oneok’s proposed 48-inch export pipeline will incentivize expanded fracking to fuel exports through Mexico to serve Asian markets. Per a 1953 Executive Order, FERC must obtain a “favorable recommendation” from the Department of State prior to issuing a Presidential Permit authorizing the construction of a pipeline that crosses the borders of the United State for the exportation of natural gas.

Public Citizen is a party to the FERC proceeding and has raised a protest. America has quickly emerged as a natural gas production and exporting behemoth, producing more gas than any other nation and has vaulted to the world’s top gas exporter.

On December 6, Public Citizen wrote Secretary of State Antony J. Blinken asking for an explanation, and to State’s credit, the December 22 letter replies to our request.

The Permian Basin, straddling 75,000 square miles between Texas and New Mexico, is the world’s most prolific oil and gas field, producing nearly 6 million barrels of oil every day and more than one fifth of America’s dry gas production. The Permian has been the center of massive corporate consolidation, with ExxonMobil’s acquisition of Pioneer and Warren Buffett’s Occidental snapping up CrownRock just the latest examples of mergers of producers active in the basin.

Because of the lack of effective federal and state mandates against doing so, many Permian producers vent or flare methane at the wellhead, resulting in significant climate pollution. The solution to venting and flaring is to support regulations that mandate its curtailment, and utilize the President’s bully pulpit to call out those major Permian players to stop venting and flaring. There is no scientific assessment cited by the Biden Administration that shows that increased methane exports will reduce venting and flaring.

New pipeline capacity expansions—Kinder Morgan’s Permian Highway, private equity-backed Whistler Pipeline and the expected completion of Matterhorn Express—likely provide the economic disincentives for venting and flaring promoted by the State Department letter. The Saguaro pipeline not only isn’t needed to incentivize reduced venting/flaring, but it will lead to increased fracking in the Permian to keep up with methane exports. So any assumption that Saguaro will result in reduced greenhouse gas emissions is flimsy until the analysis is net of the climate impact of increased levels of fracking that will occur with Saguaro’s exports to Asia via Mexico.

The need for Saguaro’s additional pipeline takeaway capacity to reduce wellhead methane releases is an outdated position, as “major operators’ flaring pledges and commitment to capital discipline suggest that this time, more of the largest producers will choose to defer or shut-in production until long-haul capacity is available, delivering cleaner supplies rather than more volume.” Larger Permian players such as ExxonMobil, ConocoPhillips and Chevron Corp would likely manage infrastructure constraints by delaying completions or shutting in production rather than flaring.

This is the key that Biden’s State Department gets so wrong: rather than promoting more methane export infrastructure, the Administration should be working to cap oil and gas production and support stronger mandates to reduce venting and flaring. In fact, it is likely that the oil and gas industry will cite the State Department decision to oppose any federal or state preventions on venting and flaring, pointing to the Biden Administration’s new policy of claiming increased methane exports will address the wellhead pollution problem.